AAR
Advance RulingsCase Briefs

   

Authority for Advance Ruling (Karnataka): In an application filed to sought advance ruling regarding the classification of the applicant’s product, the two-member bench of M.P Ravi Prasad and T. Kiran Reddy has ruled that the bus air-conditioning system inclusive of rooftop unit, compressor and installation kit for one consolidated price to a single customer merits classification under heading 84152010; and when sold to single customer for a single fitting at customer end, but price negotiated and agreed separately for each unit then under heading 84152010; and when rooftop unit, compressor and installation kit sold individually or in combination then under heading 8415.90.00.

In the present case, the applicant manufactures and supplies Bus Rooftop air conditioning systems which include Rooftop Unit, Compressor and Installation kit; undertakes installation and servicing of air conditioning system as per the requirement of customers through dealer network, and specially caters exclusively to the needs of passenger buses.

The applicant sought advance ruling on the following questions:

  1. Classification of bus air-conditioning system inclusive of rooftop unit, compressor and installation kit for one consolidated price to a single customer

  2. Classification of rooftop unit, compressor and installation kit sold to single customer for a single fitting at customer end, but price negotiated and agreed separately for each unit

  3. Classification of rooftop unit, compressor and installation kit sold as mentioned below:

    • Roftop unit alone

    • Rooftop unit and compressor

    • Compressor

    • Installation kit

    • Compressor and installation kit

    • Rooftop unit and installation kit

    • Rooftop unit and compressor

The Authority took note of the explanation (iii) and (iv) given in Notification No. 1/2017 of the Central Tax Rate that is relevant to the classification of the goods under GST and observed that Chapter 84 of the Customs Tariff Act covers machinery and mechanical appliance and parts thereof, and heading 8415 covers Air conditioning machines, comprising a motor driven fan and elements for changing the temperature and humidity, including those machines in which the humidity can’t be separately regulated. Further, heading 841520 covers air conditioning machines of a kind used for persons in motor vehicles and the heading 84152010 covers the said machines for buses.

The Authority viewed that in the present case, the applicant supplies air conditioning system, comprising rooftop unit, compressor and installation kit, as a single product for a consolidated price for a single customer, exclusively for buses. Thus, the said air conditioning system for buses merits classification under heading 84152010 as the same is specifically classified under the said heading.

The Authority concerning the second question noted that the applicant is supplying bus air condition system, only comprised of all the three major components, but the price of individual components has been negotiated and agreed separately for each of the units and these parts are meant for a single fitting at customer end. Further, the Authority referred to Notes 2 to 5 of Section XVI of the Customs Tariff Act, 1975, and observed that Note 3 provides that parts of composite machines consisting of two or more machines fitted together to form a whole are to be classified as if consisting only of that component or as being that machine, which performs the principal function. Further, as per Note 4, where a machine consisting of individual components intended to contribute together to a clearly defined function covered by one of the headings in Chapter 84 or 85, then the whole falls to be classified in the heading appropriate to that function. Thus, the product of the applicant amounts to supply of a composite machine designed for the purpose of performing the principal function of a bus air conditioning system, and hence such supply is classifiable under tariff heading 84152010 and attracts GST accordingly.

The Authority regarding the third question observed that the Rooftop unit and installation kits are not classified individually under the Customs Tariff Act, 1975, but are identifies /recognised as parts of the composite machine i.e., air conditioning system for a bus. Thus, they merit classification under parts of air conditioning machines. Further, the gas compressor of the kind used in the air conditioning equipment is classified under tariff heading 84148011.

[Eberspaecher Suetrak Bus Climate Control System India Pvt. Ltd., In re, Advance ruling no. KAR ADRG 34/2022]


Advocate who appeared in this case :

Represented by: CA Anant Nyamannavar

Advance RulingsCase Briefs

West Bengal Authority for Advance Ruling, GST (WB AAR): A Division Bench of Susmita Bhattacharya, Joint Commissioner, CGST & CX and Parthasarathi Dey, Additional Commissioner, SGST, addressed the question with regard to classification of a three-wheeler battery operated vehicle.

In the present application, the applicant is a manufacturer of “three-wheeled motor vehicles”  commonly known as “Toto”.

Question raised in the present application

Whether the stated three-wheeled vehicle is classifiable as an ‘electronically operated motor vehicle’ under HSN 8703 when supplied with a battery pack?

Another question raised by the applicant is the classification of the stated vehicle if supplied without the battery pack.

Observations of the Advance Authority Ruling:

The goods supplied by the applicant have been described as electronically operated three-wheeled vehicles. It is an e-rickshaw as defined in the Section 2A (2) of the Motor Vehicles Act, 1988.

The Authority notes that, a combined reading of the provisions of Section 2A (2) of the MV Act and Entry No. 242A of Schedule I of the Rate Notification establishes that the battery pack is an essential character of an e-rickshaw.

If the battery pack is withdrawn, it will no longer be a three-wheeled electrically operated vehicle.

Heading 8703 of First Schedule of Customs Tariff Act, 1975

Further, Motor vehicles for carrying less than ten passengers are classified under Heading 8703 of the First Schedule of the Customs Tariff Act, 1975, which is adopted in the GST Act for classification.

Sub-heading 8703 10 covers the vehicles specially designed for travelling on snow, golf cars and similar vehicles.

Adding to the above, it has been stated by the AAR that all other sub-headings except the residual subheading 8703 90, refer to vehicles fitted with an internal combustion engine.

E- rickshaws or electrically operated three-wheeled vehicles are, therefore, classifiable under Tariff heading 8703 90 10 of the Tariff Act.

Hence, a three-wheeled motor vehicle is classifiable under HSN 8703 as an electrically operated vehicle, provided it is fitted with the battery pack. Otherwise, it will be classifiable under HSN 8706. [Hooghly Motors Pvt Ltd., In Re., 2020 SCC OnLine WB AAR-GST 8, decided on 10-08-2020]