In re Prag Polymers (GST AAR Uttar Pradesh)
Ques- ‘Classification of Coach Work like DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock’.
Ans- The ‘Classification of DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains’ manufactured as per the specific design and layout provided by the Railways and supplied to the Indian Railways only and no-where else, falls under Chapter 86.07 of the GST Tariff.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, UTTAR PRADESH
ORDER UNDER SECTION 98(4) OF THE CGST ACT, 2017 & UNDER SECTION 98(4) OF THE UPGST ACT, 2017
1. M/s Prag Polymers, B-l & A-40/41, Talkatora Industrial Estate, Lucknow-226011, UP (here in after referred to as the applicant) is a registered assessee under GST having GSTN: 09AAVFP5915G1ZO.
2. The applicant is engaged in manufacture and supply of Railway Locomotive parts and Coach Parts as per Railways Drawings approved by RDSO.
3. The applicant has sought advance ruling on following question as per Form GST ARA-01 –
Classification of Coach Work like DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock
4. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant.
5. The applicant vide letter dated 12.08.2021 have submitted that-
(1) The Applicant is licensed & approved by Indian Railways for manufacturing of parts of Rolling Stock and Coach work as per design & drawings developed by them. They have also been approved by Railways for DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains to be supplied to its vendors for its ultimate use by the Indian Railways.
(2) Accordingly, they are supplying DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains to vendors approved & accepted by Indian Railways as per Specifications.
(3) This product is to be manufactured Strictly as mandated by Railways specification, according to the approved QAP and drawings of Indian Railways, for its use in EMU/MEMU Trains in Drivers’ cabin for the purposes of Air Conditioning (Cooling)
(4) In their opinion, this manufactured item should be covered under chapter heading 8607 as parts of Coach Work.
(5) the Chapter note 2 of Ch.86 clearly says heading 8607 applies, inter alia, to (e) Coach work.
(6) Further, Tariff heading 8607 says: Parts of Railway or tramway locomotive or Rolling Stock – such as bogies, bissel -bogies.
(7) The Google Search – maintenance Manual for BG Coach -has defined & clarified that the parts and spares used in Coaches/Running Stock shall be defined as PARTS OF COACH WORK/Railway Running stock – the Coach.
(8) Hence the best suitable classification for DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains is Tariff heading 8607.
(9) To substantiate the classification, Section note 3 of Chapter XVII may be referred which says ” References in Chapter 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 chapter. 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 or accessory.
(10) In view of the above, it appears correct & justified that the DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains manufactured by them & supplied exclusively to the Indian Railways through its approved vendors and that too exclusively for use in Railway Coaches / Running Stock and parts of Railways Rolling Stock has to be classified as Coach work/ Parts of Rolling Stock material” of CE Heading 8607, of the C.Ex. Tariff/ GST Tariff.
(11) In the case of Advance Ruling of M/s Tool & Gage Co., A’-6, Talkatora Industrial Estate, LUCKNOW- order No. 44 dated 11/11/19 it has been concluded by the Advance Ruling Authorities of Lucknow on the basis of various analogies of the case laws, as under;-
” Accordingly, we are in unison with the applicant and the jurisdictional GST officer that the classification of the seats and berth, manufactured as per the specific design and layout provided by the Railways and supplied to the Railways only and no-where else, falls under Chapter 86.07 of the GST Tariff.”
(12) Similarly, in another case vide Order No. 31 dated 03/06/19 in the Advance Ruling case of M/S G S Products, Lucknow, the Note 3 of Chapter XVII of Customs Tariff Act, 1975 has been relied and following observation has been made,-
” The above note indicates that the term parts or accessories mentioned in Chapter 86 to 88 is applicable to those parts or accessories which are solely or principally being used with the articles of those chapters. Since, the aforesaid items manufactured by the party are being principally used for Railway locomotive as per aforesaid Quality Assurance Plans duly approved by the competent Authority, the same appears to be appropriately covered under Customs Tariff Heading No. 8607 as parts of railway locomotives.”
(13) Therefore, it is requested that;-
1. The correct Classification of DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock of Railways (Parts of Coach Work) for the Railways Running Stock – be given, in order to avoid any dispute in future.
2. That if the above product is supplied to the Indian Railways through other Vendors/suppliers, what would be the provision and the classification of the products.
3. The correct rate of GST Tax on the said products, supplied exclusively to the Indian Railways through its vendors for its Coaches.
6. The application for advance ruling was forwarded to the Jurisdictional GST Officer to offer their comments/views/verification report on the matter. The Assistant Commissioner, CGST & Central Excise Division-Lucknow II, Lucknow vide his F.No. GEXCOM/TECH/MISC/432/2021-TECH-CGST-DIV-II-LKO/921 dated 22.10.2021 has opined that the Chapter sub heading 8607 is the correct classification for “Driver Cab Air Conditioning unit for EMU/MEMU manufactured by the applicant for fitment on locomotive and Rolling stock of railways. He also confirmed that no proceeding is pending or decided on the question raised in the application.
7. The applicant was granted a personal hearing on 25.10.2021 which was attended by Shri T.K. Srivastava, Authorized representative during which he reiterated the submissions made in the application of advance ruling and also furnished a copy of Appeal Order No. 16/AAAR/28/06/2021 dated 28.06.2021 passed by the Appellate Authority for Advance Ruling, UP in the case of appeal filed by the applicant.
DISCUSSION AND FINDING
8. At the outset, we would like to make it clear that the provisions of both the CGST Act and the UPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the UPGST Act. Further for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act I UPGST Act would be mentioned as being under the ‘CGST Act’.
9. We have gone through the Form GST ARA-01 filed by the applicant and observed that the applicant has ticked following issue on which advance ruling required-
(1) classification of any goods or services or both;
At the outset, we find that the issue raised in the application is squarely covered under Section 97(2) of the CGST Act 2017. We therefore, admit the application for consideration on merits.
10. We have gone through the submissions made by the applicant and have examined the same. We observe that the applicant has sought advance ruling on the following question-
‘ Classification of Coach Work like DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock ‘
11.1 We find that the applicant is registered under the GST Act and intend to supply ‘DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock’. The applicant had arrived classification under HSN 8607 for the product ‘DRIVER CAB AIR CONDITIONER UNIT for EMU/MEMU trains of Railway Rolling Stock’.
11.2 We understand that the applicant has sought ruling on classification of ‘Driver Cab Air Conditioner Unit for EMU/MEMU trains’ and applicant has added prefix ‘coachwork like’ and suffix ‘of Railway Rolling Stock’ which are wide terms and may include some other products also. We want to make it clear that we are examining classification of ‘Driver Cab Air Conditioner Unit for EMU/MEMU trains’ only.
12. We find that Chapter 86 of the Customs Tariff cover 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 kind. Further, Note 2 of Chapter 86 mentions that “Heading 8607 applies, inter alia, to-:
(a) axles, wheels (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 connections; and
(e) coachwork.
13. Further, the note 1 of Chapter 86 reads as under-
This Chapter does not cover :-
(a) railway or tramway sleepers of wood or of concrete, or concrete guide-track sections for hover trains (heading 4406 or 6810);
(b) railway or tramway track construction material of iron or steel of heading 7302; or
(c) electrical signalling, safety or traffic control equipment of heading 8530.
14. The Chapter 8607 of the Customs Tariff is reproduced below-
