In re Arco Electro Technologies Pvt. Ltd. (GST AAR Maharashtra)
Question: Railway parts such as Brush Holder Assembly and parts, Lead Wires for locomotives and Insulating Rods Locomotives manufactured as per the specification and drawings of Indian Railways. These should be classified under HSN Heading 8503, 8544 and 8547 @ 18% or under HSN Heading 8607 @12%
Answer: The products Brush Holder Assembly and parts, Lead Wires and Insulating Rods are to be classified under heading 86.07 only when they are manufactured as per the drawings and specifications given to the applicant by the Indian Railways and only when the said goods are used in traction motors meant for Railway locomotives.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act” respeclively] by M/s. Arco Electro Technologies Pvt. Ltd., the applicant, seeking an advance ruling in respect of the following question.
Railway parts such as Brush Holder Assembly and parts, Lead Wires for locomotives and Insulating Rods Locomotives manufactured as per the specification and drawings of Indian Railways.
These should be classified under HSN Heading 8505, 8544 and 8547 @ 18% or under HSN Heading 8607 @12%?
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, 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
Submissions made by M/s. Arco Electro Technologies Pvt. Ltd., the applicant, are as under:-
2.1 Applicant is manufacturing and supplying Brush Holder Assembly and Parts, Lead Wires and Insulating Rods for locomotives. The application is with regard to classification of these items and applicable GST rate thereon. Subject goods are supplied to Indian Railways (IR) and other customers who ultimately supply to Indian Railways after assembly in their products.
2.2 The subject goods are manufactured as per specification and drawings of IR. Currently. Brush Holder Assembly (made of non-ferrous castings and are assembled with springs, axles etc) and Lead Wires with fittings (made of specialized Fluonlex Cables designed for Rolling stock and fitted with Terminal Lugs, Tubes.) are being classified under HSN Heading 8503 and 8544 respectively and Brush Holder Support Pin / Terminal Support / Brush Holder Arm for Locomotives (Glass Bonded Mica Insulators with steel inserts & machined for fitment in Railway machines) are classilied under HSN Heading 8547.
2.3 The said goods should be classified under HSN Heading 8607 as they are produced as per IR’s drawings/ Specs used only in IR. The exclusion given in Section XVII Note 2 [a] to [I] are not applicable as subject products are not specifically classilied in any other Chapter.
2.4 As per Note 3 to above section, references 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 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 the part or accessory.
2.5 Further as per Rule 3[a] of the General Rules of Interpretation under Customs Act 1975.
3. When by application of rule 2(b) or for any other reason, goods are, prima facie.
classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most specific description shall be preferred over headings providing a more general description However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
2.6 Therefore any other headings give only a General description. Applicant relies on the order of the Advance Ruling Authority. Karnataka (KAR ADRG 40/2020 dated 30 July 2020) in the matter of M/s Pragathi Steel Castings Pvt. Ltd. Karnataka.
3. CONTENTION – AS PER THE CONCERNED OFFICER:
submissions made by jurisdictional officer vide letter dated 16.06.2021. are as under:-
3.1 The applicant. M/s. Arco Electro Technologies Pvt ltd is engaged in the manufacture and supply of Brush Holder Assembly and Parts. Lead Wires and Insulating Rods.
