9911796707
TMI Blog2021 (1) TMI 495X X X X Extracts X X X X X X X X Extracts X X X X ..... view of above backdrops, the applicant has put forward his question on which advance ruling is required, as under: "Whether supply to be made by the applicant of Wear Plates and Tamping Tools as manufactured specifically as per RDSO Drawing directly to the Railway Authorities as per the Order received from M/s Trio Enterprise, should be fall under HSN 86040000 & classified under Chapter 86 and should be taxed GST @ 5%?" 3. Statement containing the applicant's interpretation of law and/or fact: 3.1 The applicant submitted that they are involved in the manufacturing of Wear plats & Tampering tools specifically manufactured as per RDSO specifications and used by Railways as a part of Ballast Cleaning Machine and Tie Tamping Machine. 3.2 Wear Plates used in Ballast Cleaning Machine: Considering the vertical thrust coming on railway track, the track is required to be cushioned with specific size of ballast (Grit/ Kapachi) to transfer the vertical thrust to the soil. During working over the period of time, this ballast becomes rigid due to accumulation of fine dust, mud and sand particles and creating hurdles to maintain track up to the standard with use of track tampers, thus requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Railways only. To justify the same, they have attached the copy of the Work Order as received by M/s Trio Enterprise from Railways and the copy of the Work Order as issued by M/s Trio Enterprise to the Applicant. 4. At the time of personal hearing held through Video Conferencing on 09.07.2020, the Authorised Representative of the applicant, CA Rachit Shah, reiterated the facts as stated in the Application. 5. The applicant, vide their letter dated 11.07.2020 stated that during the last hearing conducted on 09-07-2020 through Whatsapp calling in which they have been asked to provide various details and photographs of the product specific along with the RDSO drawings on the basis of which the said products are manufactured and the justification regarding usage of the product is only limited to Railways only. Accordingly, their further submission is as below: PHOTOGRAPHS OF THE PRODUCTS: A. TAMPING TOOL - USED IN TIE TAMPING MACHINE: 6. Railway track is cushioned with ballast to absorb the vertical thrust generated by train running on it with high speed. Due to continue jerks and vibrations it gets loose and unorganized which is required to be tamped time to time. Tie tamping m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process in 4 simplified steps. Step 1 - A basic tamping machine indexes forward and comes to a standstill with the tamping tines of the tamping unit straddling the sleeper to be tamped on both sides. Step 2 - The lifting and aligning unit works in conjunction with the measuring system and grips the rail under the crown, lifts the track to a predetermined height while correcting any vertical alignment defects in the track and at the same time slews the track to correct the horizontal alignment (simultaneous levelling and aligning). Step 3 - The tamping units are lowered. The vibrating tines/tamping tools enter the ballast and stop at a pre-determined depth. The tines/tamping tools are vibrating in order to fluidise the ballast stone to permit it to re-arrange and settle in a dense matrix. Controlled vibration greatly reduces the force required to penetrate the tamping tines/ tamping tools into the ballast without damaging or crushing the ballast stone. Step 4 - The cylinder assembly exerts a force on the tine arms which perform a squeezing motion of the tines. The taming tools compact ballast underneath the sleeper in the void created by the lifting process. The tamping mac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awing No. TM/9415/9 REV-1 THE DRAWING IS ATTACHED HEREWITH The RDSO Drawing No. is mentioned at the bottom of the right side of the drawing. 7.5 PHOTO GRAPH OF BALLAST CLEANING MACHINE - WHERE WEAR PLATE IS FIXED: BALLAST CLEANING MACHINE 7.6 Arrangements of fixing wear plates in ballast cleaning machines is shown in sketch below. These wear plates are solely used in BCM machines of railway and are not useful in any other machines elsewhere as can be seen from the arrangement sketch below: 8. DETAILS REGARDING RDSO DRAWING: SO is the sole R&D organisation of Indian Railways and functions as the technical advisor to Railway Board Zonal Railways and Production Units and performs the following important functions: * Development of new and improved designs. * Development, adoption, absorption of new technology for use on Indian Railways. * Development of standards for materials and products specially needed by Indian Railways. * Technical investigation, statutory clearances, testing and providing consultancy services. * Inspection of critical and safety items of rolling stock, locomotives, signalling & telecommunication equipment and track components. * RDSO multifa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of all kinds. HSN-86040000: Railway or tramway maintenance or service vehicles whether or not self-propelled (For Example, workshops, Cranes, Ballast Tampers, Track liners, Testing coaches and track inspection vehicles) From abovementioned details, it is very clear that both the items - wear plates and tamping tools are specifically manufactured for and used by Railways and should fall under Chapter 86. 12.1 Now, as per Notification No. 1/2017-Central Tax(Rate), dated 28th June, 2017, entry No. 238 covers rate of tax liable @ 2.5% CGST and @ 2.5% SGST in total taxable @ 5%. 12.2 Further reference is to be given to Clarification on supplies made to the Indian Railways classifiable under any chapter, other than Chapter 86- regarding, F. No.354/1/2018-TRU, Circular No. 30/4/2018-GST, dated 25th January, 2018. As Chapter 86 covers parts also for the specified items, the same should be supplied @ 5% to Railways. 12.3 Further, w. e. f. 1st October, 2019, as per Notification No.14/2019- Central Tax (Rate) dated 30th September, 2019, it would be liable to be taxed @ 6% CGST and @ 6% SGST in total taxable @ 12% as per new entry No. 205D in Schedule II. 12.4 Considering abovementio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely supplied as a back to back supply to the Railways by Trio Enterprise. So, there is no general usage of the said product as covered above. (ii) In their submission supra, they have attached photographs of both the products along with the photographs of Railway Track Maintenance Machines (Ballast Cleaning Machinery & Tie Tamping Machinery) along with the place where both the products are fixed in the abovementioned machinery and working of the same. This also justifies the usage of the products is only for Railways and not for general use. (iii) The 'Wear plates' and 'Tamping tools' supplied by them are used as parts of the Railway Track Maintenance Vehicles viz. the Ballast Cleaning Machine and the Tie Tamping Machine and, hence, both products should fall under HSN Code 86040000 as a part of track maintenance vehicles. (iv) As per Notification No. 1/2017-Central Tax(Rate), dated 28th June, 2017, entry No. 238 covers rate of tax liable @ 2.5% CGST and @ 2.5% SGST in total taxable @ 5%. (v) Further reference is to be given to Clarification on supplies made to the Indian Railways classifiable under any chapter, other than Chapter 86- regarding, F. No.354/1/2018-TRU, Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Tool used in Tie Tamping Machine: Railway track is cushioned with ballast to absorb the vertical thrust generated by the train running on it with high speed. Due to continue jerks and vibration, it gets loose and unorganized which is required to be tamped time to time. Tie Tamping Machine is another self-propelled track maintenance vehicle which does ballast tamping work and Tamping Tools is the key component of machine which get wear out after few days of working due to friction between ballast and tools. These tools required being replaced time to time to keep the machine and in turn the railway track working. As tamping tool is important part of this self-propelled track maintenance vehicle, it should fall under HSN code 86040000. 17.1 From the above submission, we find that the 'Wear Plates' and the 'Tamping Tools' are used in the Ballast Cleaning Machine and the Tie Tamping Machine, respectively. These machines are used for the servicing and maintenance of the railway track lines. 18. Further, we have also perused the photographs of both the products, viz. 'Wear Plates' & 'Tamping Tools' along with the photographs of Railway Track Maintenance Machines viz. Ballast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pter" shall mean respectively a tariff item, sub-heading, heading and chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975). (iv) The rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this notification. 21. As claimed by the applicant that Wear plates' and 'Tamping tools' should fall under HSN Code 86040000 as a part of Railway Track Maintenance Vehicle, we have to examine the said entry as appearing in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and Chapter Note 3 of Chapter 86, which reads as under: "Chapter 86: Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds. Chapter sub-heading 8604 00 00: Railway or Tramway Maintenance or Service Vehicles whether or not Self Propelled (For Example, Workshops, Cranes, Ballast Tampers, Track Liners, Testing Coaches and Track I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Tie Tamping Machine will fall under sub-heading No.8604 00 00. Further, the applicant has 'specifically manufactured the products, viz. 'Tamping Tool' and 'Wear Plates' as per RDSO drawings of the Railway and supplied the same to M/s Trio Enterprise, which ultimately supplied as a back to back supply to the Railways by M/s Trio Enterprise. Said 'Wear plates' and 'Tamping tools' are parts of the Railway Track Maintenance Vehicles viz. the Ballast Cleaning Machine and the Tie Tamping Machine. We further note that there is no specific sub heading provided for the parts of said Railway Track Maintenance Vehicles falling under Chapter sub-heading No.86040000 of the Customs Tariff Act, 1962 and, therefore, we hold that said 'Wear plates' and 'Tamping tools', being parts of the said Railway Track Maintenance Vehicles, are classifiable under residuary entry of Chapter 86 i.e. sub-heading No. 860799 (Other Parts of railway or tramway locomotives or rolling stock), as extracted herein above. 26. To determine the rate of GST in respect of the products in question, we have gone through the respective entries of the Chapter heading 8604 and 8607 in the Notification No.01/2017-Central T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the "Wear plates" and "Tamping Tool" manufactured specifically as per RDSO Drawing and supplied to the Railways through M/s Trio Enterprise, being a parts of a self-propelled track maintenance vehicles (viz. the Ballast Cleaning Machine & the Tie Tamping Machine), under chapter sub-heading 860799 (Other Parts of railway or tramway locomotives or rolling stock), and, hence, same will attract GST @ 5% under S. No. 241 of the Schedule I till 30.09.2019 and w. e. f. 01.10.2019, @12% under S. No.205G of the Schedule-II to the Notification No.01/2017- Central Tax (Rate) dated 28.06.2017, as amended. 28. In light of the above discussions, we rule as under - R U L I N G Question: "Whether supply to be made by the applicant of Wear Plates and Tamping Tools as manufactured specifically as per RDSO Drawing, directly to the Railway Authorities as per the Order received from M/s Trio Enterprise, should fall under HSN 86040000 & classified under Chapter 86 and should be taxed GST @ 5%?" Answer: No. The products, "Wear plates" and "Tamping Tool" manufactured specifically as per RDSO Drawing and supplied to the Railways through M/s Trio Enterprise, being a parts of a self-propelled tra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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