In re MAN Energy Solutions India Private Limited (GST AAR Maharashtra)
Question. Whether the marine diesel engine, and parts thereof illustrated in Exhibit D, supplied by the Applicant exclusively to ship building companies / shipyards or Indian Navy for use and application in ships, vessels, boats, floating structures etc. are to be classified under Sr. No. 252 of Notification No. 1/2017-Central Tax (Rate), dated 28-6-2017?
Answer:- Marine diesel engine, and parts thereof will be covered under Sr. No. 252 of Notification No. 1/2017-C.T.(Rate), dated 28-6-2017, only when used in the manufacture of goods falling under 8901, 8902, 8904, 8905, 8906, 8907 and supplied only to ship building companies/shipyards or Indian Navy. Items which do not conform to “parts of marine diesel engines” will not be covered under the said Sr. No. 252 of Notification No. 1/2017-C.T.(Rate), dated 28-6-2017.
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” respectively] by MAN Energy Solutions India Private Limited (Formerly known as MAN Diesel & Turbo India Private Limited), the applicant, seeking an advance ruling in respect of the following question.
“Whether the marine diesel engine, and parts thereof illustrated in Exhibit D, supplied by the Applicant exclusively to ship building companies / shipyards or Indian Navy for use and application in ships, vessels, boats, floating structures etc. are to be classified under Sr. No. 252 of Notification 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.
02. 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 importing or locally procuring the parts. These parts are not assembled by the Applicant in India.
2.3 Applicant supplies marine diesel engines and parts thereof (hereinafter referred to as said goods) to shipping companies or, shipyards such as Mazagaon Dock Limited, L&T shipbuilding Ltd etc. engaged in the manufacturing of ships, vessels, boats etc. that fall for classification under Chapter 89 of the Customs Tarff Act, 1975.
2.4 In respect of the supply of the said goods to the marine maritime sector, which are specific to and tailor-made for this sector’s usage, the relevant documents and material are: (a) Purchase order raised by customer specifying the description of goods to be supplied. (b) Tender documents. (c) Sample copies of invoices packing lists of the goods supplied. (d) Standard process to showcase that either after assembly of marine engine, however prior to supply, the Applicant is supposed to affix proper specifications name/number plate on the face of the marine diesel engine to describe the engine number, net weight, rated speed may power and the date of manufacture of the said engine etc. (e) Chartered engineer’s certificate which specifies that the marine diesel engines and parts thereof manufactured supplied by the Applicant are parts of ship. 0 Sample undertaking from customer which specifies that marine engines and parts thereof manufactured/ supplied by the Applicant are used as parts of ship and (g Photographs of marine diesel engines to show that the said marine diesel engines installed on the vessels.
2.5 As per Relevant entries of the Customs Tariff Act, 1975 for classification of the subject goods adopted by GST laws, Compression-ignition internal combustion piston engines (diesel or semi diesel engines) are classified under Chap. Hdg. 8408 and Parts suitable for use solely or principally with the engines of heading 8407 or 8408 are classified under Chap. Hdg. 8409.
2.6 Notification No. 1/2017-C.T.-(R), and Notification No. 1/2017-I.T.-(R), both dated 28.06.2017, specifies CGST and IGST rates respectively, for classification of subject goods under different Schedules which are as under:
