JHARKHAND AUTHORITY OF ADVANCE RULING

GOODS AND SERVICES TAX

DIVISIONAL OFFICE OF STATE TAX, CIVIL COURT COMPOUND,

NEAR JAIPAL SINGH STADIUM, RANCHI, 834001

Note: Under Section 100 of the JGST Act 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of JGST Act 2017, within a period of 30 days from the date of service of this order.

The applicant M/s ASL INDUSTRIES LIMITED having GSTN No- 20AABCA4461F1ZC is a company registered under companies Act, 2013. The Company engaged in manufacturing of Water Tank Assembly and manufacturing plant at C-54, 55 & 56, Phase-IV, NS-7 & 8, Phase-VI, B-13, B-14 (P), B-27 (P) & B-28, Adityapur Industrial Area, Gamharia, Dist. - Seraikela-Kharsawan, Jharkhand - 832108. India.

The applicant company has submitted that:-

I. The Company has got a purchase order no- 11172246170070 dated 16.02.2018 from the Principal CMM's office Material Management Department, Central Railway; Mumbai, D. N. Road CSMT, Mumbai-400001 for manufacture and supply of, "Set of water Tank Assembly (capacity of 455 litres) as per the specific design provided by the central railway i.e ICF Drg. No. ICF/SK-6-3-444, Col-I, ALT-m SHEET 1 TO 3.

II. In pursuant to the said purchase order the company has manufactured and supplied of goods Water Tank assembly to the central railway, comprising of one number Left hand side water tank and one number right hand side water tank with change position in position of Item No. 13 (Filling connection) and Item No. 14 (Equalising connection) with Nut and Washer shall be fitted at opposite side respectively as shown in drawing.

III. The aforesaid manufactured and supply of goods "Water Tank Assembly"; to the Central Railways; is falling under the entry no. 241 of Schedule I. and the corresponding HSN code is as 8607; as notified u/s 5(1) of the IGST Act (Act no. 13 of 2017) and as specified under Notification no. G.S.R. 666 (E) dated 28.06.2017/IGST Notification no. 1/2017 dated 28.06.2017; and thereby IGST taxable @ 5%.

IV. There is another entry no. 272 in Schedule III of the above mentioned notification and the corresponding HSN code is as 7611 which reads as follows: "Aluminium reservoirs, tanks, vats and similar containers, for any material (other than compressed of liquefied gas), of a capacity exceeding 300 I, whether or not lined or heat-insulated, but no fitted with mechanical or thermal equipment"

V. The Applicant raises an invoice on the India Railways and recovers the agreed amount.

VI. After the water tank is manufactured, it is exclusively used by the Indian Railway and it is fitted on the top of the roof of the bogie above the toiled.

2. The applicant sought Advance Ruling on the following question/issue.-

1. Whether the goods 'water Tank Assembly of Aluminium metal' should be classified under chapter - 8607 or chapter - 7611 of the Tariff.

3. As per Section 97(2) of the Central Goods and Services Tax Act, 2017(herein after referred to as the 'CGST ACT, 2017) and Jharkhand Goods and Services Tax Act, 2017 empowers the Advance Ruling authority to decide the issue, which are as follows:-

(a) classification of any goods or services or both

(b) applicability of a notification issued under the provisions of this Act;

(c) determination of time and value of supply of goods or services or both;

(d) admissibility of input tax credit of tax paid or deemed to have been paid;

(e) determination of the liability to pay tax on any goods or services or both;

(f) whether applicant is required to be registered;

(g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term.

4. From the aforesaid provisions of Advance Ruling it is observed that the Applicant is eligible to seek Advance Ruling under sub-para(a) i.e, classification of any goods or services or both; of Section 97(2) of the CGST/SGST Act,2017.

5. The Applicant with regard to question has interpreted "MANUFACTURE OF WATER TANK TO BE FITTED WITH RAILWAY BOGIE FORMS PART OF RAILWAY BOGIE AND CLASSIFIABLE UNDER CHAPTER 8607 MENTIONED IN ENTRY NO. 241 OF SCHEDULE 1 OF NOTIFICATION NO. 1/2017-INTEGRATED TAX (RATE) DATED 28.06.2017" and submitted that

1) Linking with any other of the Tariff chapter(s) other than 8607; as regard to the manufacture and supply of such specially designed "water tank assembly"; supplied to the Central Railways; are not tenable and maintainable; under the statute.

2) The specially designed water tank assembly; as manufactured by us, is not for any general use and consumption; and is required specifically to be fitted into the Railway Passenger Coach, falling under the HSN Code 8607 and none else.

3) Section XVII of the Custom Tariff; deals with the Vehicles, Aircraft, Vessels and Associated Transport Equipment.

4) Chapter 86, deals with 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.

5) Notes 3, to Section XVII, further deals with, which is as under:

References in Chapters 86 to 88 "parts" or "accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those Chapters. A part or accessory which answers to a description in two or more of the headings of those chapters is to be classified under that heading which corresponds to the principal use of that part of accessory.

6) Further note 5(a) of the aforesaid Section, further provides as under:-

(a) In chapter 86 if designed to travel on a guide-track (hover trains);

7) Note (2) of chapter 86 further provides as under:-

2. Heading 8607 applies, inter alia, to:

(a) axles, wheels, wheel sets (running gear), metal tyres, hoops and hubs and other parts of wheels;

(b) frames, under frames, bogies and bissel-bogies;

(c) axle boxes, brake gear;

(d) buffers for rolling-stock; hooks and other coupling gear and corridor corridor connections;

(e) Coachwork.

8) Further HSN code 8607 00 00 is for, "Parts of railway or tramway locomotives or rolling-stock."

9) M/S ASL Industries Ltd., sells water tank which are not for common use in the general market. They are manufactured as per specific designs to be fitted in passenger coaches and bogies. These tanks made of aluminium are fully covered as per si. No. 241, tariff item 8607 of schedule I, taxable @ 5% only. They are manufactured to suit requirements of railways, to be fitted in coaches and wagons. They have no other use. Therefore, "principal use" provision for interpreting such aluminium tanks also favours the stand taken by the company.

10) The tanks are specifically designed and manufactured to be used in railway coaches and bogies. They have no other use. No person in common market purchases these tanks. They are part of coaches and bogies alone.

11) That Section XVII; deals with the Vehicles, Aircraft, Vessels and Associated Transport Equipment and in this regard: note/cause 3 of Section XVII is as under:-

Clause 3 of the Section XVII which categorically stipulates that "Reference in chapters 86 to 88 to "parts" or "accessories" do not apply to parts or accessories which are not suitable for use solely or principally with the articles of those chapters. A part of accessory which answer to a description in two or more of the headings of those chapters is t be classified under that heading which corresponds to the principal use of that part of accessory.

12) Section XV deals with base metals and articles of base metal.

13) Note 1(g) of section XV further provides as under:-

Notes:

1. This Section does not cover:

(g) assembled railway or tramway track (heading 8608) or other articles of Section XVII (vehicles, ships and boats, aircraft);

That, Chapter 76 in Section XV deals with the aluminium and articles thereof

That, note (a), (b), (c), (d), (e), deals with the :- Bars and rods, Profiles, Wire Plates, sheets, strip and foil, Tubes and pipes respectively.

That, HSN code 7611 00 00 deals with the Aluminium reservoirs, tanks, vats and similar containers, for any material (other than compressed or liquefied gas), of a capacity exceeding 300 I, whether or not lined or heat-insulated, but not fitted with mechanical or thermal equipment.

14) The aforesaid respective notes/ clauses in different Sections of the Customs Tariff; which are read with different chapters; such as chapter 76 and or HSN code 7611; has no relation, to the such items, as specified in HSN code 8607 00 00; which specifically deals with, "Parts of railway or tramway Locomotives or rolling-stock" and the same has been specified in entry no. 241 of Schedule I, and the corresponding HSN code is as 8607; as notified u/s 5(1) of the IGST Act (Act no. 13 of 2017) and as specified under Notification no. G.S.R. 666(E) dated 28.06.2017/IGST Notification no. 1/2017 dated 28.06.2017; and thereby IGST taxable @ 5%.

15) The aforesaid specially designed water tank assembly; are the components of a Railway Passenger Coach: without which, a Passenger Coach shall not be functional; and as such; a Railway Coach shall cease; to be a Railway Passenger Coach.

16) Specially designed water tank assembly, as manufactured under specific design/diagram; and is for its specific use for the purpose of Railway Passenger Coaches only, and none else: it is therefore immaterial that, such specially designed water tank assembly; is made of a metal or of plastic.

17) Such specially designed water tank assembly: are inseparable component; for the purpose of a Railway Passenger Coaches.

18) To support his interpretation and submission various judgements have been cited and contended that the purchase order or the contract of sale; as made by the central railway and M/S ASL Industries, specifically mandate to manufacture and supply of aforesaid goods of specific design under specific diagram which further mandate the intension to the parties, to purchase and or sale of the aforesaid specially designed water tank assembly; for the specific use of the purchaser.

19) For the aforesaid reasons, facts, statutory provisions and judicial pronouncements of the Hon'ble Supreme and High Courts: it is being established that the aforesaid specially designed Water Tank Assembly is falling under the HSN Code "8607" and the same has been specified in the entry no. 241 of Schedule I; as notified u/s 5(1) of the IGST Act (Act no. 13 of 2017); and as specified under Notification no. G.S.R. 666 (E) dated 28-06-2017/IGST Notification no. 1/2017 dated 28.06.2017; and thereby is IGST taxable @5%.

6. Personal Hearing Proceedings:

The Personal hearing of the applicant's Representatives as well as the concerned Jurisdictional Officer was conducted and concluded on 04-12-2018.

7. Findings & Discussions:

7.1 We have considered the submissions made by the Applicant in their application for Advance Ruling as well as the submissions made by the concerned Jurisdictional Officer during Personal Hearing. We also considered the questions/issues on which Advance Rulings have been sought for by the applicant, relevant facts having bearing on the questions/issues raised, the applicant's understanding/interpretation of law in respect of the issue.

7.2 The applicant sought Advance Ruling on one question i.e. "whether the goods 'water Tank Assembly of Aluminium metal' should be classified under chapter - 8607 or chapter - 7611 of the Tariff"

7.3 In view of the above, issues before us to decide whether the goods 'water Tank Assembly of Aluminium metal' should be classified under chapter - 8607 or chapter - 7611 of the Tariff, we have studied the provisions laid down and notification issued in this regard as serial number 241 of notification 1/2017 under heading 8607 of GST. As per the above mentioned notification issued by the Central Government the following description of goods shall be taxed @5%.

"Parts of railway or tramway locomotives or rolling-stock; such as Bogies, bissel-bogies, axles and wheels, and parts thereof"

7.4 In the present case the applicant M/s ASL Industries Limited sales water tank which are not common use in general market. Since, they are manufactured as per specific design provided by the central railway and to be fitted in passenger coaches hence it is a part of railway bogies.

8. In view of the foregoing, we pass the following:

ADVANCE RULING

The aforesaid specially designed water tank assembly specifically made for Indian railways is falling under the HSN Code-8607 and the same has been specified in the entry no- 241 in notification no- 1/2017 dated 28.06.2017 of schedule I as notified u/s 5 (1) of the IGST Act (act no-13 of 2017) shall be taxed @5%.