Supply of un-assembled parts & components to railways not classifiable under Chapter 86 for lower rate of GST
The Hon’ble AAR Haryana in M/s. JSL India Private Limited [Advance Ruling No. HAR/HAAR/R/2018-19/51 decided on April 24, 2019] held that supply of un-assembled rail coach from one unit to another unit where these goods would be assembled together (including fabrication and adding components) to form complete assemblies cannot be classified under Chapter 86 of Notification No. 1/2017-Central Tax (Rate), dated June 28, 2017 (“Goods Rate Notification”) to attract GST @ 5% and rather, they would attract the general applicable rate of duties as per the classification of each item in their respective chapters.
M/s. JSL India Private Limited (“Applicant”) is engaged in manufacture and supply of various parts and components of railway coaches to the Indian Railways. The parts and components include roof assembly, retention tank, toilets, side wall assembly, end-walls, carlines, partition profiles, roof-arch etc. (“Rail Coach Components”) which are manufactured according to the specifications and drawings provided by the Indian Railways, which are classified under customs tariff item 8607 99 10 of the First Schedule of the Customs Tariff Act, 1975
The Applicant received a tender from Indian Railway which required supply of ‘assemblies’ (i.e., Roof Assembly, Welding Pin Assembly & End roof Assembly) to the Indian Railways.
Due to the inconvenience for transportation of Rail Coach Components in assembled condition, the Applicant has created a manufacturing facility at Chennai and declared such place as “Additional Place of Business”.
The rail coach components manufactured at Pathredi would be dispatched in un-assembled condition to Chennai. Upon receipt in Chennai, these parts would be assembled together by welding or bolting to form complete assemblies I.e. roof assembly, roof end assembly etc.
What would be the tariff classification of sub-assemblies supplied from Pathredi unit to Chennai unit as well as the rate of IGST applicable?
The Hon’ble AAR Haryana in Advance Ruling No. HAR/HAAR/R/2018-19/51 decided on April 24, 2019 has held that:
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