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TMI Blog2021 (8) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 1/2017-Central Tax (Rate), dated 28-6-2017?" At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression `GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT 2.1. MAN Energy Solutions India Private Limited, the Applicant, is engaged in design and manufacture of two-stroke and four-stroke engines. Applicant's range of products includes complete marine propulsion systems, turbo machinery units for the oil & gas as well as the process industries and turnkey power plants. Applicant is also engaged in manufacturing and supply of parts of engines, like piston, con rod, etc. 2.2 Applicant assembles and manufactures diesel engines by using various imported or locally procured parts and also trades in imported diesel engines. The supply of engines and parts of engine is made by im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uitable for use solely principally with the engines heading 8407 or 8408 14% 28% 2.7 Similarly, the said Notification No. 1/2017-C.T.-(R), and Notification No. 1/2017-I.T. (Rate), specifies CGST & IGST rates respectively, for classification of above mentioned goods under different Schedules. Schedule entries applicable to the ships, boats, etc. (goods manufactured by Applicant's customers) are as under: Schedule No. Sr.No. Chapter Heading Description of goods CGST/SGST Rate IGST Rate I 246 8901 Cruise-ships, excursion boats, ferry-boats, cargo-ships, barges and similar vessels for the transport of persons or goods 2.5% 5% I 247 8902 Fishing vessels; factory ships & other vessels for processing or preserving fishery products 2.5% 5% I 248 8904 Tugs and pusher crafts 2.5% 5% I 249 8905 Light-vessels, fire floats, dredgers, floating cranes and other vessels the navigability of which is subsidiary to their main function; floating docks, floating or submersible drilling or production platforms 2.5 5% I 250 8906 Other vessels, including warships and lifeboats other than rowing boats 2.5% 5% I 251 8907 Other floating structures (for example, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der heading 8902, 8904, 8905, 8906, and 8907. 2.14 Applicant is of the view that the entry at Sr. No. 252 implies that for goods which merit classification under any specific Chapter heading (covered under another entry of the Notification), these will (in present case) merit the rate of 5%, so long as the goods answer to the description in Sr. no. 252. In support, Applicant refers to the decision in the case of Mahindra & Mahindra Ltd. vs. Commr. Of Cen. Ex., Nagpur (2007 (210) E.L.T. 579 (Tribunal)] where the Hon'ble Tribunal evaluated availability of exemption to goods falling under "any Chapter", when used as parts of goods of Heading 8701. Similar view was taken by the Hon'ble Tribunal in the case of High Energy Batteries (1) Ltd. v.v. Commr. of Central Excise, Trichy (2002 (142) E.L.T. 266 (Tribunal)" wherein it was held that parts of an aircraft or a helicopter, classified under other specific headings are entitled to benefit of an exemption notification, which covers parts of aircraft and helicopter under any Chapter heading. 2.15 As per these judgements, it is indisputable that marine diesel engines when supplied for marine purposes, in terms of Sr. No. 252, qual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (S. C.)], which is to the effect that where two rates are available, the more beneficial to the taxpayer may be selected/chosen by the taxpayer. Applicant also refers to the Decision in the case of Mahindra & Mahindra Limited Vs. CCE, Nagpur [2007 (210) E.L.T. 579 (Tribunal)], Circular No. 512/8/2000-CX dated 10-2-2000, issued by the CBEC, which clarified that goods falling under chapters other than 86, but being parts of goods falling under heading No. 86.01 to 86.06 will also be covered by these notifications and Circular No. 839/16/2006-CX dated 16-11-2006, of the CBEC. 2.22 These judgements and Board Circulars amply reveal that the doubt as to availability of concessional rate and indeed classification of various parts useable for motor vehicles or aircrafts (as the case may be) was resolved in favour of the assessee-taxpayer and against the Revenue Department and deserve to be whole-heartedly followed. 2.23 The Applicant states that : The application is in respect of marine diesel engine and parts thereof (illustrated in Exhibit D) which are exclusively supplied to ship building companies/shipyards and is not intended to or meant to cover other supplies like 'training fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 6 to 9 Main /Auxiliary Propulsion Engine which includes Tugboats / Anchor handling ships/ Fishing trawlers / Offshore vessel etc. used for marine commercial and naval purposes. 27/38 6 to 9 Main / Auxiliary Propulsion Engine which includes Tugboats/ Anchor handling ships / Fishing trawlers / Offshore vessel/ Survey vessel etc. used for marine commercial and naval application 28/33 12 to 20 Naval ships and Coast Guard Patrol vessels We wish to clarify that these are the only types of marine engines manufactured and supplied by the Company. We further place on record that factually, the Applicant has not supplied marine diesel engine and parts for engine for use in or for yachts or other vessels for pleasure or sports; rowing boats and canoes that fall for classification under Chapter Heading 8903". 03. SUBMISSIONS OF THE CONCERNED OFFICER 3.1 It appears that the applicant is not registered under heading of 8902,8904,8905,8906 and 8907 for which they sought exemption. 3.2 Notification No. 01/2017-C.T. (Rate) and Notification No.01/2017 I.T. (Rate) specifies the CGST/IGST rates for the classification of above mentioned goods under different schedules. The schedule entri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally procured parts and trading of imported diesel engines. 5.3 Diesel engines are known as compression ignition internal combustion piston engines. Diesel Engines are classified under CTH 8408 and are mainly differentiated as Marine Propulsion Engines, Engines of a kind used for the propulsion of vehicles of Chapter 87 and as Other Engines. They can further be classified on the basis of operations viz. 2-stroke, 4-stroke, single acting, double acting and finally, on the basis of Cylinder arrangement namely, horizontal, vertical, radial, etc. Marine Diesel Engines (MDE) are those engines which are used in marine vehicles namely boats, ships, etc. Both 2-stroke as well as 4-stroke engines are used in the marine industry. MDEs are used for the main propulsion or turning the propellers of the normal ships and also for providing auxiliary power. 5.4 Applicant has stated that they supply the MDEs to various shipping companies/shipyards for further application and use in manufacture of ships, vessels, boats etc. classifiable under Chapter 89 of the Customs Tariff Act, 1975. The supply of the subject goods in the subject case are specific to and tailor-made for this sector's usage. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l meaning of the word 'Part/Parts' which is of relevance to us in the present case. ------We find that as per Cambridge English Dictionary: Part as a noun - a separate piece of something or a piece that combines with other pieces to form the whole of something -------One of the pieces that together form a machine or some type of equipment. It has other meanings also in other context which are not of relevance in present context like: ----a single broadcast of a series of television or radio programme or Division of a story. ----one of two or more equal or almost equal measures of something etc. 5.7.1 In view of the above meanings/definitions of parts, we are required to examine as to whether the subject goods/spares as mentioned by the applicant can be taken to be covered within the meaning of Parts of Goods of CTH 8901, 8902, 8904, 8905, 8906 and 8907 and for Sr. No. 252 of Notification No. 1/2017 Integrated Tax (Rate) dated 28.06.2017. 5.7.2 We find that MDEs are the very essential parts of a ship or vessel and are quite clearly parts of a vessel/ship. A ship or a vessel cannot be imagined to be in existence without MDEs because they are essential for the ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be considered as parts of vessels falling under heading 8901, 8902, 8904 to 8907, only if they are used in manufacturing goods falling under Tariff Headings 8901, 8902, 8904 to 8907. We agree with the applicant's contention that the MDEs supplied by them for exclusive use in goods falling under heading 8901, 8902, 8904 to 8907 will be taxable @ 5% IGST (2.5% CGST and SGST each). However it is to reiterate that the benefit of reduced CGST and SGST for such MDEs are only available if the said engines are used as parts of goods falling under heading 8901, 8902, 8904 to 8907 of the GST Tariff. The benefit of reduced GST rates would not be available in respect of Engines supplied for use in goods other than goods of heading 8901, 8902, 8904 to 8907 of the GST Tariff:" 5.8 In the present case applicant supplies subject goods and has listed many items in the Exhibit D submitted by them, and stated that the same are parts of MDEs supplied by them to the shipyards manufacturing ships and vessels. Applicant has not spelt out in detail as to how each and every item mentioned in Exhibit Rs. 13' are to be considered as parts of Marine Diesel Engines. In absence of such details, we c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21, the applicant informed this Bench that, the MDEs and parts thereof were not being supplied by them for use in and manufacture of vessels falling under Heading 8903 of the GST Tariff. This was reiterated by them in their submissions made vide email dated 14.07.2021 wherein they also stated that the marine engines manufactured and supplied by the Applicant-Company are medium speed heavy duty engines with high power which are required for / suitable for propulsion of ocean-going merchant / naval ships and these engines are not suitable for yachts or other vessels for pleasure or sports; rowing boats and canoes that fall for classification under Chapter Heading 8903 of the Customs tariff (First Schedule) and the GST tariff. 5.12 In view of above, we conclude that, the supply of MDEs and parts thereof supplied by the Applicant exclusively and directly to ship building companies/shipyards or Indian Navy for use in manufacture of ships, vessels, boats, floating structures etc. will be classified under Sr. No. 252 of Notification No. 1/2017- C.T. (Rate), dated 28-6-2017. If the applicant supplies the impugned goods to parties other than ship building companies and for other purposes, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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