The Punjab Authority for Advance Ruling (AAR) Goods and Service Tax ruled that Roof Mounted Air-Conditioning would be taxable with a 28% GST.
The petitioner, M/s ESS ESS KAY Engineering Company Private Limited seeks the advance ruling on the classification of roof mounted Air-conditioning units, specifically for use in railway coaches (manufactured as per railway design) i.e if they are classifiable beneath HSN- 8415 1090- IGST at 28% or under HSN 8607 99 – IGST at 18% as parts of Railway Coaches or Locomotives.
The petitioner would be involved in manufacturing the “Roof Mounted Air-conditioning unit for Passenger Coaches of Railway as per RDSO specification and drawing” (in short impugned goods). The impugned goods would be only for use in the railway coaches, the same would secure no marketability and is merely for usage in the railway coaches. It is an integral part of Air-conditioned railway coaches and it is classifiable under I-ISN 8607 99 of the Customs Tariff Act as applicable to CST vide Notification No. 1/2017 CT (IR).
The petitioner contended that the goods, Roof Mounted Air-Conditioning unit manufactured and supplied via them, for the usage in the railway coach advantages the classification beneath FISN code 8607 of Customs Tariff Act drawing a GST levy at 18% rather than HSN Code 8415 of Customs Tariff Act, drawing a 28% levy. Towards their assistance the petitioner laid on various Chapter notes/Section notes and some judicial judgments.
For categorizing the goods beneath USN 8607, the petitioner laid on Note 3 to Section XVII of the Customs Tariff Act read with Explanatory FISN Notes to Note 3 to Section XVII (Criterion of sole or principal use), claimed that the goods manufactured again through them are only and majorly for the use in the manufacture of passenger coaches of railways, they are precisely categorized under HSN 8607. Section Note 3 to Section XVII.
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The Division Bench consisting of Varinder Kaur, Additional Commissioner of Central Tax, and Viraj Shyamkarn Tidke, Additional Commissioner of State Tax held that “The Roof Mounted Air–Conditioning unit manufactured by the applicant are classifiable under HSN Heading 8415 and the classification of the goods shall not alter on account of supply by them to Railways.”
