Date of order: 25-06-2022

Key Pointers:

• The applicant namely, M/s. Kerala State Co-operative Federation for Fisheries Development Ltd. is registered as a co-operative apex federation of primary-level co-operative societies of fishermen of Kerala.
• The applicant imports marine engines of heading 8407 and spare parts used in marine engines of heading 8407. These engines and spare parts are supplied by fisheries for use in traditional fishermen's fishing vessels.
• The applicant has been paying IGST @ 28% at the time of import of marine engines and their parts dated 28.06.2017 and hence charging and collecting GST @ 28% on subsequent supply to the fishermen and paying the same to the Government.

Issue:

• Whether the applicability of GST rate of 5% on spare parts of marine engine of heading 8407, used as part of a fishing vessel of heading 8902, as per Entry Serial No.252 of Schedule I of Notification NO.1/2017 CT(R) dated 28.06.2017 & State Notification No.S.R.O.360/2017.

Order:

• The Authority has observed that as per entry at SI No. 114 in Schedule IV of Central Taxes (Rates) dated 28.06.2017 No. 51 No. 114, the marine engines imported by the applicant are classified under Customs Tariff Heading 8407 21 00 - Out Board Motors - Marine Propulsion Engines – Spark-ignition reciprocating or rotary internal combustion piston engines and attract GST at the rate of 28%.
• The Fishing vessels, factory ships, and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902 and are liable to GST at the rate of 5% as per SI No. 247 of Schedule I of Notification No. 01/2017 Central Tax. (Rate) dated 28.06.2017.
• If the marine engine is supplied for use as part of a fishing vessel subject to customs duty Marine engines of heading 8902, then as part of a fishing vessel will only Attract GST at the rate of 5%. [2.5%-CGST + 2.5% SGST] As per entry in SI Notification of Central Tax (Rates) No. 252 of Schedule I dated 28.06.2017.
• The marine engine and its spare parts supplied for use in vessels falling under Customs Tariff Heading 8902 shall attract GST at the rate of 5% [2.5%-CGST + 2.5% SGST] as per entry at SI No. 252 of Schedule I of Notification NO.01/2017 Central Tax (Rate) dated 28.06.2017. If it is supplied for use other than as parts of fishing vessels as stated above GST at the rate applicable under the respective Customs Tariff Headings in which they are classified will apply.