In re Rochem Separation Systems India Pvt Ltd (GST AAR Maharashtra)
The Maharashtra Authority for Advance Ruling (AAR) held that spare parts of Reverse Osmosis (RO) plants and systems supplied to the Indian Navy, Indian Coast Guard and ship-repairing companies do not qualify for the concessional 5% GST rate prescribed for parts of specified vessels under Serial No. 252 of Schedule I to Notification No. 1/2017-Central Tax (Rate), dated 28 June 2017. The applicant, Rochem Separation Systems India Pvt. Ltd., manufactures and supplies RO plants and replacement components such as membranes, cartridges, pumps, filters, valves, dosing equipment and pressure vessels. It sought clarification on whether such spare parts, supplied for RO systems installed aboard naval vessels, could be treated as parts of ships under Chapter 89 of the Customs Tariff rather than as parts of water purification machinery. The applicant contended that RO plants were specially designed for naval requirements, including shock resistance, low noise, electromagnetic compatibility and limited onboard space, and were essential for producing boiler-quality water, technical water and potable water. It relied on the functional importance of these systems, judicial precedents distinguishing parts from accessories, earlier advance rulings concerning marine equipment, and CBIC Circular Nos. 80/54/2018-GST and 113/32/2019-GST. The jurisdictional officer supported the applicant’s claim that the concessional rate should apply.
The Authority examined the relevant tariff headings, Section XVI Note 2 of the Customs Tariff, the distinction between an integral component and ancillary equipment, and the earlier Maharashtra AAR ruling dated 31 October 2022 concerning RO plants supplied for naval vessels. That earlier ruling had classified RO plants under Heading 8421 as independent filtering or purifying machinery attracting 18% GST, rather than as parts of ships. Applying the same reasoning, the Authority observed that the spare parts in question were components of the RO plant and not structural or integral parts of the vessel itself. Their installation on a naval ship did not alter their independent commercial identity as water-treatment equipment. The Authority further found that boiler-quality and technical water could be obtained through alternative treatment processes and that RO plants were not inherently indispensable to the navigation, propulsion or functioning of a ship as a vessel. Consequently, the applicant’s reliance on decisions involving railway components, crane parts and specially designed marine equipment was distinguished. The CBIC circulars relating to domestic LPG and solar water heaters were also held inapplicable to the present supplies.
The AAR concluded that spare parts not specifically classifiable elsewhere and suitable solely or principally for use with RO plants or systems are classifiable under tariff item 8421.99 as parts of filtering or purifying machinery and apparatus. Where a component is independently covered by a specific tariff heading, its classification must follow the applicable tariff rules. The Authority ruled that the benefit of Serial No. 252 of Notification No. 1/2017-Central Tax (Rate), covering parts of goods falling under headings 8901, 8902, 8904, 8905, 8906 and 8907, cannot be extended merely because the machinery in which the components are used is installed aboard a ship. Accordingly, the qualifying RO plant spare parts were held liable to GST at 18%, rejecting the applicant’s claim for the concessional 5% rate.
Cases Discussed
Saraswati Sugar Mills v. Commissioner of Central Excise (2011) (Supreme Court) — Referred to for the principle that a component part must be integral to the constitution of the whole article.
State of U.P. v. Kores (India) Ltd. (Supreme Court) — Distinguished between a part and an accessory, with reference to typewriter ribbons.
Commissioner of Central Excise v. Insulation Electrical (P) Ltd. — Referred to regarding the direct functional nexus required for an article to qualify as a part.
Annapurna Carbon Industries Co. v. State of Andhra Pradesh (1976) (Supreme Court) — Referred to for the proposition that an article necessary for the use of another product does not automatically become its integral component.
Pioneer Enterprises v. Joint Commissioner of Commercial Taxes (2004) 134 STC 138 (Karnataka High Court) — Considered regarding the distinction between a television antenna as an accessory and a component part of the television.
CTO v. Prasoon Enterprises (2019) 19 SCC 809 (Supreme Court) — Considered regarding the functional test for identifying components forming integral parts of machinery; distinguished on the facts.
State of Karnataka v. Mysore Thermo Electric Pvt. Ltd., Kirloskar Batteries Pvt. Ltd., Southern Batteries Pvt. Ltd. and Celtek Batteries Pvt. Ltd. 2014-VIL-103-KAR (Karnataka High Court) — Distinguished because batteries manufactured for railway rolling stock were considered in a different functional context.
State of Karnataka v. Honeycomb International Inc. 2015-VIL-95-KAR (Karnataka High Court) — Distinguished regarding partition frames functionally integrated into railway coaches.
Hindustan Zinc Ltd. v. Union of India 2008 (228) ELT 517 — Cited by the applicant; held inapplicable to the facts.
BrahMos Aerospace Pvt. Ltd. v. CC&ST, Hyderabad-II 2014 (307) ELT 795 — Cited by the applicant; distinguished.
Singhal Enterprises Pvt. Ltd. v. Commissioner of Customs & C. Ex., Raipur 2016 (341) ELT 372 (Tri.-Del.) — Cited by the applicant; distinguished.
GE Industrial India Pvt. Ltd. v. CCE, Cus & CE, Bangalore-I 2016 (335) ELT 103 (Tri.-Bang.) — Cited by the applicant; distinguished.
Advance Rulings Discussed
Rochem Separation Systems India Pvt. Ltd. — Maharashtra AAR Order No. GST-ARA-2021-22/B-10, dated 31 October 2022. Earlier ruling holding that RO plants installed on naval vessels are independent water-purification machinery under Heading 8421 and not parts of ships.
Fluid Power Pvt. Ltd. (2019) GSTL 29 (AAR) — Considered regarding marine-duty hydraulic equipment specially designed for installation on vessels.
Bharat Electronics Ltd. 2019-VIL-274-AAR — Considered regarding systems, sub-systems and onboard spares specifically designed for warships and naval vessels.
C.S. Diesel Engineering Pvt. Ltd. (Maharashtra AAR) — Considered regarding marine engines, gearboxes and ship machinery claimed as vessel parts.
Five Alternative SEO Titles
18% GST on RO Plant Spare Parts Supplied to Indian Navy: Maharashtra AAR
RO Plant Spares Are Not Ship Parts for 5% GST Concession: AAR
GST Classification of Naval RO System Spare Parts Under HSN 8421.99
Supply of RO Plant Parts to Indian Coast Guard Taxable at 18% GST: AAR
GST Concession for Vessel Parts Denied to RO Machinery Spares: Maharashtra AAR
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING,MAHARASHTRA
Applicant supplies spare parts used for replacement of worn-out components
1.2 plants installed onboard ships and vessels. These parts form assemblies or emblies of the RO system.
1.3 The Applicant received a purchase order from the Controller of Procurement Material Organisation (CPMO), Eastern Naval Command, Visakhapatnam, under the Ministry of Defence, for supply of spare parts of RO plants installed on naval vessels. During contractual discussions, the buyer indicated that GST at 5% would be applicable under Sr. Nos, 250 and 252 of Notification No, 01/2017-Integrated Tax (Rate) dated 28.06.2017.
- Boiler-quality water for propulsion systems
- Technical water for machinery operations
- Potable water for crew consumption
1.7 The Applicant emphasizes that RO plants used in naval vessels are specially
-
Shock resistance (combat conditions)
-
Low noise and vibration (stealth requirements)
-
Electromagnetic compatibility
-
Space constraints onboard vessels.
1.8 The Applicant contends that spare parts of such RO systems qualify as “parts of vessels” under Heading 8906 and should attract GST at 5% under Sr. No. 252 of Notification No, 01/2017-Central Tax (Rate).
2. APPLICANT’S INTERPRETATION OF LAW
2.1 The Applicant relies on dictionary meanings of “parts” as integral components of a larger whole.
2.2 The applicant cited judicial precedents to support that components essential for functioning of a system qualify as parts, which are discussed in discussion part of this order.
2.3 Further, the applicant relied on advance rulings suggesting that parts may take the classification of the principal equipment, which are discussed in discussion part of this order.
2.4 The applicant relied on following circulars,
i) Circular No. 80/54/2018-GST (LPG for Domestic Use) Clarifies that classification should be based on intended use known at the time of supply. ii) Circular No. 113/32/2019-GST (Solar Water Heater Parts):-
Clarifies that parts used in solar water heaters attract the same GST rate as the main product.
5.2 The Applicant, M/s Rochem Separation Systems (India) Pvt. Ltd. (hereinafter referred to as ‘the Applicant’) being registered with the GST Department bearing GSTIN 27AABCR1955P1ZV is engaged in the business of supply of spare parts of Reverse Osmosis/Plant/System (RO Plant/System) classified under Chapter Heading 8421 to the ships belonging to Indian Navy, The Indian Coast Guard and other ship repairers/ shipping lines. The Applicant supplies parts for renewal of worn-out components in the RO Plant on ships.
5.3 The applicant has submitted sample invoices raised to Indian Coast Guard Station Vadinar, Gujarat and Shoft Shipyard Pvt. Ltd., Gujarat. It is observed that spare parts have been supplied at 18% GST. M/s. Rochem Seperation Systems India Pyt, Ltd /84/2022-23
| Sr. No. | Chapter / Heading | Description of Goods |
|---|---|---|
| 322 | 8421 | Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases |
| 252 | Any Chapter | Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 |
5.4 It is observed from the submissions that the Applicant executes contracts with the Indian Navy for providing spare parts of RO Plant/System installed on board naval vessels. The Applicant supplies parts for renewal of worn-out components in the RO Plant on ships. It is pertinent to note that each part is used to make an assembly or a sub-assembly for a single end-product i-e,, the RO Plant.
5.5 The relevant Schedule III of Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 is reproduced as under:- Sr. Chapter/Heading/Sub- Description of Goods No. | description of Goods eX heading/ Tariff Item3 8421 Centrifuges, including centrifugal dryers; ry filtering or purifying machinery and AY apparatus, for liquids or gases us, from the above we observe that RO Plant/System is classified under CH. 8421 of GST Tariff and attracts GST at the rate of 18%.
| Sr. No. | Chapter/Heading/Sub-description of Goods heading/Tariff Item | Description of Goods |
|---|---|---|
| 322 | 8421 | Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases |
Thus, from the above we observe that RO Plant/System is classified under C.H. 8421 of GST Tariff and attracts GST at the rate of 18%.
5.6 The applicant is seeking a ruling as to whether the spare parts of the RO Plant/System supplied would be chargeable to 5% GST as per S.No.252 to Schedule I of Notification No.1/2017 dated 28.6.2017. The entry No.252 reads as under:
| S.No. | Chapter/Heading/Sub-description of Goods heading/Tariff Item | Description of Goods |
|---|---|---|
| 252 | Any Chapter | Parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 |
It is clear from the above entry that goods which are parts of goods of Headings 8901, 8902, 8904, 8905, 8906 and 8907, irrespective of their tariff classification would be covered under this heading. Thus, the only criteria which has to be fulfilled is that the goods should be parts of goods of heading 8901, 8902, 8904, 8905, 8906 and 8907.Notification No. 1/2017 Central tax (Rate) dated 28 June 2017
“Explanation. – For the purposes of this notification, –
(i) …………,
(ii) …………
(iii) “Tariff item”, “sub-heading”, “heading” and “Chapter” shall mean respectively a tariff item, sub-heading, heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975).
The GST Tariff is largely aligned with the Customs Tariff and the details of goods covered under heading 8901, 8902, 8904, 8905, 8906 and 8907 in the Customs Tariff are as under:-
| Tariff Item | Description of goods |
|---|---|
| 8901 | Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for transport of persons or goods |
| 8902 | Fishing vessels, factory ships and other vessels for processing or preserving fishery products |
| 8904 | Tugs and pusher craft |
| 8905 | Light vessels, fire-floats, dredgers, floating cranes and other vessels |
| 8906 | Other vessels, including warships and lifeboats other than rowing boats |
| 8907 | Other floating structures |
Thus, in order to avail the benefit of S.No.252 of Schedule I of Notification No.1/2017 Central Tax (Rate)dated 28.6.2017, the goods supplied by the applicant should be parts of goods falling under the aforesaid tariff items.
5.7 The dispute hinges on whether the impugned goods—i.e., spare parts of RO plants—can be regarded as parts of vessels, or whether they are parts of merely ancillary or auxiliary equipment used onboard ships.
“a separate piece of something, or a piece that combines with other pieces to form the whole of something; one of the pieces that together form a machine or some type of equipment”
The term ‘Part’ as defined under The Black’s Law Dictionary
‘an integral portion, something essentially belonging to a larger whole, that which ; gether with another or others makes up a whole.’
The meaning of the term ‘part’ in common parlance is that it is a component ary for the constitution of the whole article and without it, the article will ‘ot be complete’. From the above, it could be understood that anything which is an integral element and is also essential to an article, could be considered as part of that article.
While interpreting the issues like the one at hand, we may refer to certain judgments which throw light on the disputed issue.
i. In case of Saraswati Sugar Mills v. CCE (2011) the Hon’ble Supreme Court laid down the definitive test: A component part is an integral part necessary to the constitution of the whole, without which the article would be incomplete.
ii. Similarly, in State of U.P. v. Kores (India) Ltd., it was held that: A typewriter ribbon, though necessary for typing, is only an accessory and not a part of the typewriter.
iii. Similarly, in CCE v, Insulation Electrical (P) Ltd., the Court held that: M/s. Rochem Seperation Systems India Pyt. Ltd /84/2022-23
A “part” must have a direct nexus with the functioning of the final product and must not be merely an accessory or ancillary item.
iv. In Annapurna Carbon Industries Co.
v. State of Andhra Pradesh (1976), the Hon’ble Supreme Court held: Even if an item is necessary for use of another product, it does not automatically become a “part” unless it forms an integral component.
5. 9 It is the contention of the applicant that, The RO plant is essential for the efficient ioning of the warships and therefore the parts thereof which are ancillary to plant are equally important, thereby qualifying RO plant as requisite part ship. According to the applicant an RO, Plant/System cannot be excluded the scope of parts of a warship covered vide Sl. No. 252 of the above stated seeking an advance ruling regarding the applicable GST rate on supply of RO” plants / water purification systerns to the Indian Navy / Indian Coast Guard, which would be installed on warships. The said application was decided vide Advance Ruling No. GST-ARA-2021-22/B-10 dated 31.10.2022. In the said ruling, the issue examined was whether RO plants supplied to the Indian Navy could be treated as “parts of vessels” so as to qualify for concessional GST rate under Sr. No. 252 of Notification No, 01/2017 – Central Tax (Rate) dated 28.06.2017, After detailed examination, this Authority held that RO plants are independent machinery used for purification of water and are classifiable under HSN 8421. It was further observed that such systems cannot be regarded as integral parts of ships, as ships can exist and function without such equipment. The ruling further clarified that RO plants are auxiliary equipment used primarily for providing purified water for crew members and personnel on board ships and are not essential components required for navigation or functioning of the vessel itself. Accordingly, it was held that the supply of RO plants does not qualify as supply of parts of vessels and therefore the applicable GST rate on such goods would be 18%.
| Sr. No. | Tariff heading | Description |
|---|---|---|
| 322 | 8421 | Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases |
5.13 Classification and Applicable GST Rate Now, let us discuss, whether parts of the
RO Plant/System fall under Heading 8421, which reads as follows, The relevant Schedule II o Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017 is reproduced as under:- Sr. | Chapter/Heading/Sub- Description of Goods No. | description of Goods heading/ Tariff Item
| Sr. No. | Chapter/Heading/Sub-description of Goods heading/Tariff Item | Description of Goods |
|---|---|---|
| 322 | 8421 | Centrifuges, including centrifugal dryers; filtering or purifying machinery and apparatus, for liquids or gases |
Thus, from the above we observe that Reverse Osmosis/Systems (RO. Plant/System) classified under C.H. 8421 of GST Tariff attracts 18% GST. The classification of parts is governed by Section XVI Note 2 of the Custom Tariff/HSN. The rule is as under
1. If component is itself covered by specific heading in Chapter 84 or 85, it must = be classified in that specific heading. Qnly those parts which are not specifically covered elsewhere and are suitable oN are not specifically classifiable elsewhere and are suitable solely or principally for use with the RO system would generally fall under tariff item 8421.99 (Parts of filtering or purifying machinery and apparatus). Parts of RO Plant/System that are not independently classifiable elsewhere are classifiable under Heading 8421.99.
5.14 The applicant has cited following caselaw in support of his contention. Pa
i) Pioneer Enterprises v. Joint Commissioner of Commercial Taxes (2004) 134 STC 138 (Kar): In this case Hon’ble Karnataka High Court held that a TV antenna is only an accessory and not a component/ part of a TV set because the T’V can function without it, The case discusses the distinction between a “part” and an “accessory”. In the present case, the RO membranes, cartridges, pumps, filters, dosing equipment, pressure vessels etc. are commercially known as RO plant parts, not ship parts. Just as the antenna retained a separate commercial identity, RO spares retain their identity as water-treatment equipment. Therefore, this judgment supports the contention that RO plant spares are not ship parts.
ii) CTO v, Prasoon Enterprises (2019) 19 SCC 809 (Supreme Court) [2019] 19 Supreme Court Cases 809: In this case, Hon’ble Supreme Court held that mobile crane wire ropes were parts of mobile cranes because the crane could not function as a crane without them. The Court reiterated: Ze RULIIS oy YX A thing is a part of another if the other is incomplete without it” and “cannot function eo fq Without it.”.
This judgment is not applicable in present case as an RO plant on essel is itself a distinct machine/system and its spare parts retain their fndependent commercial identity as RO consumables/spares. They are procured for maintenance of a water treatment plant installed onboard. They do not become structural or integral components of the ship’s hull, propulsion, navigation, communication or other ship systems. Thus, the nexus between the spare part and the ship is one step removed: the spare part is a part of the RO plant, which in turn is installed on the ship.
iii) State of Karnataka v. Mysore Thermo Electric Pvt Ltd, M/s Kirloskar Batteries Pvt Ltd, M/s Southern Batteries Pvt Ltd, M/s Celtek Batteries Pvt Ltd (Karnataka High Court) 2014-VIL-103-KAR (2014-VIL-103-KAR); In this case, Hon’ble High Court held that, that batteries manufactured according to railway specifications and used in railway coaches, engines and wagons were covered by the entry relating to rail coaches, engines, wagons and “parts thereof”, This judgment is not applicable in present case as unlike the batteries, the RO plant is merely auxiliary equipment installed on board, RO spare parts are not indispensable to the navigation or operation of the ship asa ship. They are parts of an independent machine mounted on the vessel. iv) State of Karnataka v, Honeycomb International Inc. (Karnataka High Court) 2015- VIL-95-KAR: In this case, the issue was determining whether the honeycomb partition frames manufactured and supplied by Honeycomb International to the Indian Railways should be taxed at a concessional rate of 5% as a “part” of rail coaches, or at the standard/higher rate, The Karnataka High Court examined e functional character of the partition frames. It ruled that because these frames exclusively used for partitioning rail coaches, they functionally integrate and
v) Hindustan Zine Ltd. v. Union of India 2008 (228) ELT 517. vi) BrahMos Aerospace Pvt. Ltd. v. CC&ST, Hyderabad-II-2014(307)ELT 795. vii) Singhal Enterprises Pvt. Ltd. V Commissioner of Customs & C. Ex., Raipur 2016(341) ELT 372 (Tri-Del).
viii) GE Industrial India Pvt. Ltd. v. CCE, Cus & CE Bangalore-I (2016 (335) ELT 103 (ri Bang) RO membranes, filters, pumps, cartridges, valves, dosing systems etc. are parts of an independent water-treatment plant. Merely because the RO system is installed on a vessel does not convert spare part of the RO system into a “part of a ship”. The functional identity remains that of a water purification system. Hence, the above case laws are not applicable to the facts of this case.
5.15 The applicant also relied on following AAR
1)Fluid Power Pvt Ltd (2019 GSTL 29 AAR):- in this case applicant supplied marine- M/s. Rochem Seperation Systems India Put. Ltd 2022-23 duty hydraulic equipment (hydraulic power packs, winches, cylinders, etc.) specially designed and custom-built for a barge. AAR authorities held that, The equipment was designed specifically for installation on the vessel and was necessary for its operation. 2) Bharat Electronics Ltd. (2019-VIL-274-AAR) :-
The applicant supplied Systems, sub-systems and onboard spares supplied for warships, vessels and submarines. AAR authorities held that, where systems/sub-systems are specifically designed for and fitted on naval vessels, they may qualify as parts of ships notwithstanding classification in other chapters,
3) CS. Diesel Engineering Pvt Ltd (Maharashtra AAR):- The applicant supplied (SEE RUReriows marine engines, gearboxes and ship machinery items claimed as parts of treatment system. They do not become parts of the ship as such and are not indispensable to the existence, navigation or seaworthiness of the vessel. Therefore, they are distinguishable from the goods considered in the above rulings and do not qualify as “parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907” under Entry 252 of Notification No. 1/2017-CT(Rate).
i. Circular No. 80/54/2018-GST (LPG for Domestic Use) :-Clarifies that classification should be based on intended use known at the time of supply
The above circular is in respect of the usage of LPG for domestic supply and is known at the time of supply being made by refiner/fractioners to OMCs. Secondly as discussed above RO plant/system is not part of vessels ship. This circular is issued for specific product i.e. LPG. It cannot be applicable to other products, Ms. Rochem Seperation Systems India Pvt. Lid /4/2022-23
ii. Circular No. 113/32/2019-GST (Solar Water Heater Parts): – Clarifies that parts used in solar water heaters attract the same GST rate as the main product. The above circular is not applicable in present case as it is in respect of parts used in solar water heaters. Secondly as discussed above RO plant/system is not considered to be part of vessel or ship.
5.17 Therefore, the concessional GST rate prescribed under Sr. No. 252 of Notification No. 01/2017 – Central Tax (Rate)dated 28.06.2017 for supply of spare parts in respect of ships and vessels cannot be applied merely because the machinery being serviced is installed on board a ship.
6. In view of the extensive deliberations as held hereinabove, we pass an order as follows:
ORDER
(Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
NO.GST-ARA- 84/2022-23B-\5 | Mumbai, dt. 23/09/ 2026
For reasons as discussed in the body of the order, the question is answered thus –
Question: What is the applicable rate of GST on the supply of spare parts of a Reverse Osmosis Plant/System (RO Plant/System) supplied to the Indian Navy / Indian Coast Guard / Ship Repairing Company?
Answer: – Spare parts that are not specifically classifiable elsewhere and are suitable solely or principally for use with RO Plants/Systems are classifiable under tariff item 8421.99 as parts of filtering or purifying machinery and apparatus. Such goods are not covered under Serial No. 252 ofNotification No. 01 /2017- Central Tax (Rate) and are therefore liable to GST at the applicable rate 18%.
