In re Exide Industries Limited (GST AAR Maharashtra)
Batteries will 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 batteries 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 batteries is only available if the said batteries 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 subject batteries supplied for use in goods other than goods of heading 8901, 8902, 8904 to 8907 of the GST Tariff.
we find that, batteries are essential requirements in manufacture of submarines and are classified under heading 85 of the GST Tariff and are parts of submarines. Since the subject goods are meant for use in manufacture of submarines and are supplied for purpose of use or application in manufacture of goods that are classifiable under Tariff headings 8901, 8902, 8904, 8905, 8906, 8907, the said goods can be considered as parts of a submarine. Entry at Sr. No. 252 covers goods which merit classification under “Any Chapter” of the GST Tariff wherein the description in Sr. No. 252, is “Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907”. Accordingly, in the present matter, the Subject Goods will be covered under Sr. No.252.
During the course of the hearing held on 27.08.2021, the applicant informed this Bench that, the subject product, Viz. batteries, were not being supplied by them for use in and manufacture of vessels falling under Heading 8903 of the GST Tariff. Applicant has also submitted an end user certificate provided by the Indian Navy wherein it has been certified that the batteries, spares and interconnecting links supplied by the Applicant are intended for bonafide use towards warship applications of Indian Navy of Indian Armed Forces.
In view of above, we conclude that, the supply of batteries by the Applicant exclusively and directly to the Indian Navy for use in the manufacture of submarines will be classified under Sr. No. 252 of Notification No. 1/2017- C.T. (Rate), dated 28-6-2017.
FULL TEXT OF THE ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
PROCEEDINGS
(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
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 M/s. Exide Industries Limited the applicant, seeking an advance ruling in respect of the following question.
Whether the supply of batteries by the required Applicant for the use in warships such as submarines of the Indian Navy falls under Entry 252 of Schedule I to Notification No. 01/2017-integrated Tax (Rate) dated 28.06.2017 and hence is taxable @ 5% GST?
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
The submissions, made by the applicant are as under:-
2.1 M/s. Exide Industries Limited, the applicant is a registered person under GST Laws in the State of Maharashtra. Applicant manufactures and supplies of lead acid storage batteries falling under Chapter 85 of the First Schedule to the Customs Tariff Act 1975.
2.2 Applicant is seeking an advance ruling on the rate of GST leviable on supply of batteries for use in warships, specifically submarines, by Indian Navy. Applicant also seeks applicability of Entry No. 252 of Notification No. 01/2017-lntegrated Tax (Rate) for supply of batteries for use in warships, specifically submarines, to Indian Navy.
2.3 Applicant has been awarded orders by the Ministry of Defense, Government of India, requiring the Applicant to supply specific types of batteries for use in warships, specifically submarines, for instance, Applicant was awarded a purchase order No. HLB/111/Type II MB/S4/479 dated 02.02.2018 from the Defense Machinery Design Establishment, Department of Defense Research & Development to supply submarine batteries, spares, interconnecting links and also provide inspection, testing and acceptance trials. The said Department is under the Ministry of Defense, Government of India.
2.4 Supply of submarine batteries under the Purchase Orders consists of a combination of goods and ancillary services with the supply of goods as the principal supply. Moreover, the supply of spares and services of inspection and testing are naturally bundled with the supply of batteries. Hence, the same is a composite supply, the principal supply being supply of battery.
2.5 Applicant feels that the rate of tax applicable would be 5% in terms of SI.No.252 of Schedule I of the Notification No. 01/2017-lntegrated Tax (Rate) which is reproduced as under:
