TMI Blog2021 (12) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... 017. By mainly and only placing the reliance on these documents, the applicant argued the case during final hearing. Hence, present decision shall apply to the situation or transaction where the said transaction is supported by such documents or similar documents and not to the any other transaction. The present ruling shall not apply to transactions where the documents similar to described above are absent. Parts of goods of headings 8901, 8902, 8904 to 8907 of any chapter are chargeable to CGST/SGST @ of 2.5% each. The Applicant has submitted that they supply parts of marine diesel engines and gensets to the Indian Navy, for application/ use in ships or vessels and the parts supplied by / to be supplied by the Applicant, includes numerous and diverse parts, intended for use in marine engines or gensets, of ships or vessels (of the Indian Navy) failing under Chapter No. 89 of Customs Tariff Act, 1975, typically under tariff heading number 8901,8902,8904,8905, 8906 and 8907 - in the case of IN RE: M/S. MAN ENERGY SOLUTIONS INDIA PRIVATE LIMITED (FORMERLY KNOWN AS MAN DIESEL TURBO INDIA PRIVATE LIMITED) [ 2021 (8) TMI 49 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] , it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd natural gas engines, power generation systems, etc. The applicant's business, broadly, comprises of these three segments which includes Distribution business, wherein Applicant provides products, packages, services and solutions for ensuring uptime of equipment supplied; provides parts, new and rebuilt engines, batteries, varied services and customer support solutions. 2.2 Applicant supplies parts of marine diesel engines and gensets to customers such as the Indian Navy, and various shipyards and also other customers for application/ use in ships or vessels. The parts supplied by / to be supplied by the Applicant to the Indian Navy, include numerous and diverse parts, intended for use in marine engines or gensets, of ships or vessels (of the Indian Navy). 2.3 The classification of ships or vessels (including those used by the Indian Navy), falls under Chapter No. 89 of Customs Tariff Act, 1975, typically under tariff heading number 8901,8902,8904,8905, 8906 and 8907. 2.4 Subject application is made to seek ruling in respect of all such parts of meant for and supplied for ships and vessels of the Indian Navy, and which are used in ships or vessels of the Indian Navy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28% 8484 Ball or roller bearings 18% 8483 Transmission shaft (including cam shafts) and cranks, bearing housings and plain shaft bearings, ball or roller screws, gear boxes and other speed changers, including torque converters; flywheels and pulleys, including pulley blocks; clutches and shaft coupling (including universal joints) 18% 8484 Gaskets and similar joints of metal sheeting combined with other material or of two or more layers of metal; set or assortment of gaskets and similar joints, dissimilar in composition, put up in pouches, envelops or similar packings, mechanical seals 18% 8503 Parts suitable for use solely or principally with the machines of heading 8501 or 8502 18% 2.8 Sr. No. 252 of Schedule 1 of Notification No. 1/2017-C.T. (R), dated 28.06.2017 stipulates that Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 are taxable at the rate of 5% . The parts supplied/ to be supplied by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods answer to the description in Sr. No. 252, Applicant refers to the judgement in the case of Mahindra Mahindra Limited Vs. Commr of Central Excise, Nagpur [2007 (210) E.L. T 579 (Tribunal)] wherein 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 (I) Limited Vs. Commissioner of Central Excise, Trichy (2002 (142) E.L.T. 266 (Tribunal)], pertaining to parts of an aircraft or a helicopter. 2.14 Upon application of the ratio of these judgements, parts (goods) when supplied for use/ fit-out in ships or vessels, as in the present case, to the Indian Navy, in terms of Sr. No. 252, these goods qualify for the concessional rate of GST, irrespective of the classification of these goods. The Applicant submits that the said parts supplied / to be supplied by the Applicant are to be considered as parts of goods of heading 8901 to 8907 covered under entry at Sr. No. 252, in terms of the law declared by the Hon'ble Supreme Court in case of M.C.E. Products Sales and Services Ltd. vs. Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crankshaft and Connecting Rod and reduce friction in overall operations 6 Cup Injector (3012537) This is a part of the assembly which directs fuel on the Piston in a controlled manner for its combustion for producing power 7 Motor Starting (3026797) This is an air operated Starter used to Start the engine of the ship or vessel 8 Screen Filter (3054999) This is used to remove any foreign particles in the diesel from entering into Injector. 9 Camshaft (3074704) This is used to control engine operations i.e. opening/closing of valves, operation of injector 10 Float (3178893) This part is used in a Float Tank in the Fuel Line which maintains height of fuel above engine centre line. 11 Water pump This is used to circulate coolant in engine to maintain engine operating temperature 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Mehra Brothers v. Joint Commercial Officer (1991(51) ELT 173 (SC)] as per perusal of which, the term part' has a broad coverage and the same includes any article which is an adjunct or accompaniment or addition for the convenient use of another part. Upon an application of the ratio of the referred judgement to the present facts, any article or product that is fitted to the ship or vessel can be construed to be a part or accessary of such ship or vessel. Similar view was taken in advance ruling in case of Bharat Electronics Limited [2019 TIOL-289-AAR-GST). 2.22 Basis the Declaration-Certificate of the Indian Navy (enclosed as Exhibit F), other supporting documents and above analysis, it is this Applicant's understanding and view that parts supplied / to be supplied for use by the Indian Navy, in goods (ships or vessels) classifiable under tariff heading 8901, 8902, 8904, 8905, 8906 and 8907, are parts of ships or vessels and accordingly, supply of such parts (to the Indian Navy) can be effected at the cumulative rate of 5% GST, in terms of Sr. No. 252 of Schedule 1 of Not No. 01/2017-Central Tax (Rate). 03. CONTENTION - AS PER THE CONCERNED/JURISDIC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sification to deny it the parentage and consign its residuary item . In case of Commissioner of VAT v Taneja Mines (2011) 273 ELT 228 (Delhi)(DB) it was held that religious picture would mean pictures used for purpose of religious worship and propagation. The mere fact that the religious pictures are mounted/framed is a matter of irrelevance. 3.3 Additionally, It is seen that parts supplied/to be supplied to the Indian Navy by the Applicant falls under Chapter headings 8414, 8482, 8483,8484 etc. occurring in Central Excise Tariff Customs Tariff are basically related to Machinery and Mechanical Appliances and attracting chargeable duty on the classification of this Tariff heading, i.e. 9% CGST SGST, 18% IGST. Whereas, the chapter 89 is related to classification of Ships/ Boats/Floating Structures and attracts chargeable duty on the classification of this Tariff heading, i.e. 2.5% CGST/SGST, 5% IGST. 3.4 Classification of parts is subject to the notes in the Sections and Chapters. Broadly, parts suitable solely for a particular machine generally fall under the same heading/ sub -heading in which the main item falls. However, there are certain exceptions to this gener ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertakes the activity of overhaul and repair of engines which typically involves the customer sending engines/equipment to the applicant. As a part of overhaul and repair arrangement/engagement, the applicant is generally required to render various services and supply different parts/sub-assemblies to its customers. The applicant is contemplating entering into such agreement with Oil and Natural Gas Corporation Limited (ONGC) for overhaul and repair of engines and sub-assemblies. 3.10 The applicant seeks an Advance Ruling to ascertain whether: i) Arrangement for overhaul and repair of are composite supply ii) The principal Supply is that of 'service' and iii) Resultantly, the rate of tax (GST) for all supplies (consisting of parts/sub-assemblies and repair services) is 18% 3.11 Clause (30) of Section 2 of the CGST Act, 2017 defines the term Composite Supply and a reading of the definition of 'Composite supply' shows that there should be- -Two or more taxable supplies of goods or services or both, or in combination thereof which are naturally bundled and supplied in conjunction with each other In the ordinary course of business, one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar and need to be replaced by the applicant. Further, the applicant in their contract named 'RATE CONTRACT FOR OVERHAUL AND REPAIR OF CUMMINS MAKE ENGINES AND SUB-ASSEMBLIE', in the Annexure IV Price schedule format - Overhaul/rebuild of Sub-assemblies shows the minimum items which shall be replaced / reconditioned for major overhaul by the applicant. 3.16 From a reading of the said contract, it is evident that the applicant can supply these parts individually and also along with the package of the services too. Supply of parts and services are known and can be supplied individually to the customers, hence, these supplies fall under the services specified under Section 2(74) of the CGST Act, 2017 and they are chargeable to GST at applicable rates such as 12%, 18%, 28%, etc. whichever is higher. 3.17 As per Section 2 (74) of GST Act, mixed supply means two or more individual supplies of goods or services, or any combination thereof made in conjunction with each other by a taxable person for a single price where such supply does not constitute a composite supply. In the present case the applicant can supply the parts or services individually or any combination thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on these documents, the applicant argued the case during final hearing. Hence, present decision shall apply to the situation or transaction where the said transaction is supported by such documents or similar documents and not to the any other transaction. The present ruling shall not apply to transactions where the documents similar to described above are absent. 5.3 Applicant has stated that they supply parts of Marine Engines and Gensets to the Indian Navy 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, as per the applicant's submissions, in the subject case are specific to and tailor-made for this sector's usage. Applicant feels that the subject goods are parts of ships, boats, etc., hence, can be supplied in terms of Entry No. 252 of Schedule I of Notification No. 01/2017-C.T. (Rate). 5.3 The relevant schedule entry reads as under: Sr. No. 252 of Notification No. 01/2017 - C.T (Rate) dated 28.06.2017 is as under :- Schedule No. Sr.No. Chapter / Heading / Sub-heading / Tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments as per Annexure B to Annexure F as described above only if they are supplied to the Indian Navy, for application/ use in ships or vessels. Hence, we accordingly hold that the said transaction is covered by the scope of Notification entry no. 252 as described above. However we once again reiterate that, the present decision shall apply to the situation or transaction where the said transaction is supported by such documents (submitted by the applicant) and similar documents and not to the any other transaction. The present ruling shall not apply to transactions where the documents similar to described above are absent. 5.7 In view of the above, we are not in agreement with the reply filed by the jurisdictional/concerned officer made vide submissions dated 27.05.2021. Further, the concerned jurisdiction officer has not rebutted the claim of the applicant, by filing point wise (or annexure/document wise) counter reply in response to each of documents referred to and produced by the applicant from Annexure B to Annexure F. Also, the reply filed by the jurisdictional/concerned officer made vide submissions dated 09.07.2021 are not pertaining to the questions raised by the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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