TMI Blog2021 (7) TMI 533X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Tariff Heading 8902 and is liable to GST at the rate of 5% as per entry at SI No. 247 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. However, as per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore, if the marine engines are supplied for use as part of fishing vessel falling under Customs Tariff Heading 8902, then the marine engine as part of fishing vessel will only attract GST at the rate of 5% as per the entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 - If it is supplied for use other than as parts of fishing vessels as stated above, GST at the rate applicable under the respective Customs Tariff Headings in which they are classified, will apply. Whether GST is applicable for the free supply of materials and labour incurred during repair works within warranty period to the fishing vessels supplied by them? - HELD THAT:- The consideration received for the original supply includes the considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of fish to reduce spoilage and to maintain freshness of fish during conveyance - The product cannot be considered as a part of fishing vessel falling under Customs Tariff Heading 8902 and hence is not eligible for the concessional rate of GST as per entry at SI No. 252 of Schedule I of N/N. 01/2017 Central Tax (Rate) dated 28.06.2017. The rate of GST applicable to marine engines of Heading 8407 when it is supplied to defence department, patrol, flood relief and rescue operations - HELD THAT:- The vessels used by the Defence and other agencies for patrol, relief and rescue operations fall under Customs Tariff Heading 8906 - Other vessels including warships and lifeboats other than rowing boats. As per entry at SI No. 252 of Schedule I of N/N. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore if the marine engines are supplied for use as part of vessel falling under Customs Tariff Heading 8906, which are used by the Department of Defence and other agencies for patrol, relief and rescue operations then the marine engine as part of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce department, patrol, flood relief and rescue operations. 4. Contentions of the Applicant: 4.1. The marine engines falling under HSN 8407 used by the applicant are taxed at the rate of 28% in spite of many changes in the GST rates of several items made by the GST Council over the period. In Circular No. 52/26/2018-GST dated 09.08.2018 it is clarified that supply of marine engine falling under heading 8408 for fishing vessel attracts 5% GST. Their product is also coming under marine engine category and used by poor fishermen during fishing along with their fishing boats of HSN 8902. 4.2. They are also a manufacturer of fishing vessels and they are giving six months warranty on supply of fishing vessels. Under this warranty period, fishing vessels are repaired free of cost or otherwise they are not charging against the supply of goods and services during warranty period from the purchasers of fishing vessels. 5. Contentions of the Jurisdictional Officer: 5.1. The jurisdictional officer submitted that; (i) the parts suitable for use solely or participating with engine of heading 8407 is liable to GST at the rate of 28%; (ii) GST is not applicable on warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax (Rate) dated 28.06.2017. However, as per entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017 parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5 %. Therefore, if the marine engines are supplied for use as part of fishing vessel falling under Customs Tariff Heading 8902, then the marine engine as part of fishing vessel will only attract GST at the rate of 5% as per the entry at SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. Further, we find that the question raised before us is already clarified by the CBIC by Circular No.52/26/2018 - GST dated 09.08.2018. The relevant Para 10 of the circular reads as follows; 10.1 Applicability of GST on marine engine: Reference has been received seeking clarification regarding GST rates on Marine Engine. The fishing vessels are classifiable under heading 8902, and attract GST @ 5%, as per S. No. 247 of Schedule I of the notification No. 01/2017-Central Tax (rate) dated 28.06.2017. Further, parts of goods of heading 8902, falling under anti chapter also attracts G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of such supplies of goods or services or both it will be liable to GST at the rate applicable for the goods I services as per the rate schedule. 7.5. The third issue to be decided is the applicability of the GST on the repair or maintenance work of fishing vessels falling under Customs Tariff Heading 8902 wherein supply of spare parts and service (labour) is involved. The activity of rendering repair or maintenance services of fishing vessels/boats etc involve supply of both goods/spare parts and services in conjunction and as naturally bundled in the ordinary course of business and is hence a composite supply. Unless the contract specifies that the goods and services supplied are to be separately charged, the nature of supply remains a composite supply. The principal supply however depends on the dominant element of the composite supply. Though in the process of maintenance or repair of fishing vessels there is supply of goods/spare parts, there is no transfer of title in the goods I spare parts as such and hence the supply of goods / spare parts are ancillary to the repair or maintenance of the fishing vessels. Hence the predominant element of the supply is not the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST + 2.5%-SGST] as per entry at SI No. 252 of Schedule I of Notification No.01/2017 Central Tax (Rate) dated 28.06.2017 and the services will be liable to GST at the rate of 18% [9%-CGST + 9%-SGST] as per SI No. 25 (ii) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. 7.8. The fourth issue to be decided is the classification and rate of GST applicable to puff insulated iceboxes produced by the applicant and used in fishing vessels for reducing fish spoilage. The puff insulated ice boxes are appropriately classifiable under Customs Tariff Heading 3923 10 30 - Articles for the conveyance or packing of goods, made of plastics - Boxes, cases, crates and similar articles - Insulated ware. The articles falling under Customs Tariff Head 3923 are liable to GST at the rate of 18% [9%-CGST + 9%- SGST] as per entry at SI No. 108 of Schedule III of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017. The ice box is used in the fishing vessels for storage of fish to reduce spoilage and to maintain freshness of fish during conveyance. The product cannot be considered as a part of fishing vessel falling under Customs Tariff Heading 8902 and hence is not eligible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST at the rate applicable for the goods / services as per the rate schedule. 3. Applicability of GST rate of 5% on supply of materials and service charges in connection with the repairs and maintenance of fishing vessels of Heading 8902 without considering its individual general tax rates as per the entry of sch. No.1, SI.No.252 of GST Act dtd.28-06-2017, being the part of fishing vessel of heading 8902. The supply of maintenance and repair service of fishing vessels is classifiable under SAC 998714 and is liable to GST at the rate of 18% [9%-CGST + 9%-SGST] as per SI No. 25 (ii) of the Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017. However, where the contract of supply of repair or maintenance specifies that the spare parts and services are to be separately charged and the value of such spare parts and services supplied are shown separately the spare parts and the services shall attract GST respectively at the rates applicable to such spare parts and service as per the GST rate schedule. In such cases the spare parts being supplied for use as part of fishing vessels will attract GST at the rate of 5% [2.5%-CGST + 2.5% SGST] as per entry at SI No. 252 of S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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