In re Cummins India Limited (GST AAR Maharashtra)
Whether parts of diesel marine engine or genset supplied or to be supplied by the Applicant to the Indian Navy are chargeable to 5% IGST or 2.5% CGST + 2.5% SGST as ‘parts of heading of 8902, 8904, 8905, 8906 and 8907’ in terms of Sr. No. 252 of Notification No. 1/2017-Central Tax (Rate), dated 28 6-2017?
Answered in the affirmative, only if they are used in diesel marine engine or genset which are further used in ships and vessels falling under chapter headings 8902, 8904, 8905, 8906 and 8907 of the GST Tariff.
FULL TEXT OF THE 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 M/s. Cummins India Limited , the applicant, seeking an advance ruling in respect of the following question.
Whether parts of diesel marine engine or genset supplied or to be supplied by the Applicant to the Indian Navy are chargeable to 5% IGST or 2.5% CGST + 2.5% SGST as ‘parts of heading of 8902, 8904, 8905, 8906 and 8907’ in terms of 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.
A. FACTS AND CONTENTION — AS PER THE APPLICANT
2.1 M/s Cummins India Limited, the Applicant manufactures diesel and 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.
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
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.
2.5 Applicant supplies parts such as sea water pump, gasket, connection, link injector plunger, gasket
flange, seals, shield for shut of the valve, thermostat, plug injector orifice, etc. to the Indian Navy, for their use and fit-out in the marine diesel engine or genset of the ships and vessels.
2.6 In respect of the supply of the parts to the Indian Navy for fit- out in, use in ships or vessels, the following information and documents are relevant: (a) Tender documents issued by the Indian Navy (a sample is enclosed and marked as Exhibit B) ; (b) Standard sourcing process which showcases that supplies by the Applicant are for use in ships or vessels ; (c) Purchase order raised by the Indian Navy, in the context of this application, specifies the description of goods to be supplied; sample purchase orders (dated 12 March 2019 and 7 December 2019) are enclosed with this application and marked as Exhibit D ; (d) Chartered Engineer’s certificate specifies that the parts supplied by the Applicant to the Indian Navy are capable of being used as part of the ships or vessels (enclosed as Exh E, is a certificate dated 15.01.2020 issued by Kamal Biyani Associates); and (e) Declaration-Certificate from the Indian Navy (copy marked as Exhibit F) ceriibling that goods supplied by the Applicant are for the exclusive use of the Indian Navy, and fall under entry at Sr. No. 252 of Notification No. 1/2017-Central Tax (Rate), dated 28 6-2017.
2.7 The classification and GST rates, applicable to a sample list of parts supplied/to be supplied to the Indian Navy is reproduced below, solely for illustration purposes:-
