M/s. MAN Energy Solutions India Pvt. Ltd. (Applicant) has sought an advance ruling on, whether the supply of marine diesel engines (MDEs) and parts exclusively and directly to shipyards or Indian Navy by the Applicant for use in manufacture of ships, vessels, boats, floating structures are to be classified under Sr. No. 252 of Notification No. 01/2017-Central Tax (Rate), dated June 28, 2017 (Goods Rate Notification):
|Schedule No.||Sr. No.||Chapter||Description of goods||CGST/SGST Rate||IGST Rate|
|I||252||Any Chapter||Parts of goods of 8901, 8902, 8904, 8905, 8906, 8907||2.5%||5%|
The Hon’ble Maharashtra Authority for Advance Ruling (“MAAR”) relied upon the judgment passed by the Hon’ble Supreme Court in case of Saraswati Sagar Mills v. Commissioner of Central Excise [ Civil Appeal No. 5295 of 2003 decided on August 02, 2011] to hold that MDEs will be considered as part of vessels falling under heading 8901, 8902, 8904 to 8907 , only if MDEs and other parts are used in manufacturing goods falling under 8901, 8902, 8904 to 8907.
Held that, since subject goods are meant for ship manufacture and 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 ships, boat, vessels etc.
Further noted that, the supply of MDEs and parts thereof exclusively and directly to shipyards or Indian Navy by the Applicant for use in manufacture of ships, vessels, boats, floating structures. Hence, classifiable under serial no. 252 of Schedule I of the Goods Rate Notification and taxable @ 5% IGST (2.5% CGST and 2.5% SGST).
Directed that, if the Applicant supplies the MDEs and parts thereof to parties other than ship building companies and for other purposes, it would not be covered in the said entry and is liable to be taxed at respective higher rates as per schedule entry.
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