The Central Board of Indirect Taxes and Customs ( CBIC ) has issued a clarification on GST Rates and Classification (goods).
The CBIC has received Representations sought on clarification in respect of applicable GST rates on the following items:
Classification of leguminous vegetables when subject to mild heat treatment (parching):
The CBIC has clarified that, such leguminous vegetables which are subjected to mere heat treatment for removing moisture, or for softening and puffing or removing the skin, and not subject to any other processing or addition of any other ingredients such as salt and oil, would be classified under HS code 0713. Such goods if branded and packed in a unit container would attract GST at the rate of 5% [S. No. 25 of notification No. 1/2017- Central Tax (Rate) dated 28.06.2017]. In all other cases, such goods would be exempted from GST [S. No. 45 of notification No. 2/2017- Central Tax (Rate) dated 28.06.2017].
However, if the above dried leguminous vegetable is mixed with other ingredients (such as oil, salt etc) or sold as namkeens then the same would be classified under Subheading 2106 90 as namkeens, bhujia, chabena and similar edible preparations and attract applicable GST rate.
Classification and applicable GST rate on Almond Milk
Regarding GST rate on Almond Milk, the CBIC said that, Almond Milk is made by pulverizing almonds in a blender with water and is then strained. As such almond milk neither constitutes any fruit pulp or fruit juice. Therefore, it is not classifiable under tariff item 2202 99 20. Almond milk is classified under the residual entry in the tariff item 2202 99 90 and attract GST rate of 18%.
Applicable GST rate on Mechanical Sprayer
Regarding GST rate of Mechanical Sprayer, All goods of heading 8424 i.e. [Mechanical appliances (whether or not hand-operated) for projecting, dispersing or spraying liquids or powders; spray guns and similar appliances; steam or sand blasting machines and similar jet projecting machines (other than fire extinguishers, whether or not charged)] attracted GST @18% [S.No.325 of Schedule III] till 25th January, 2018. Subsequently, keeping in view various requests/ representations, the GST Council in its 25th meeting recommended 12% GST on mechanical sprayers. Accordingly, vide amending notification No. 6/2018- Central Tax (Rate), dated 25th January, 2018, GST at the rate of 12% was prescribed (entry No. 195B I Schedule II of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017) Simultaneously, mechanical sprayers were excluded from the ambit of the said S. No. 325 of Schedule III.
Accordingly, it is clarified that the S. No. 195B of the Schedule II to notification No. 1/2017- Central Tax (Rate), dated 28.06.2017 covers “mechanical sprayers” of all types whether or not hand-operated (like hand-operated sprayer, power-operated sprayers, battery-operated sprayers, foot sprayer, rocker etc.).
Clarification regarding taxability of imported stores by the Indian Navy
In accordance with letter No. 21/31/63-Cus-IV dated 17 Aug 1966 of the then Department of Revenue and Insurance, the Indian Naval ships were treated as “foreign going vessels” for the purposes of Customs Act, 1962, and the naval personnel serving onboard these naval ships were entitled to duty-free supplies of imported stores even when the ships were in Indian harbour. However, in the GST era, no such circular has been issued regarding exemption from IGST on purchase of imported stores by Indian Naval ships. The doubt has arisen as there is a no specific exemption, while there is a specific exemption for the Coast Guard (vide S. No. 4 of notification No. 37/2017-Customs dated 30.6.2017). Similar exemption has not been specifically provided for Navy.
Indian Naval ship stores are exempted from import duty in terms of section 90(1) of the Customs Act, 1962. Further, as per section 90(2), goods “taken on board a ship of the Indian Navy” shall be construed as exported to any place outside India. Also, section 90(1) and 90(3) of the Customs Act, 1962 provides that imported stores for the use of a ship of the Indian Navy and stores supplied free by the Government for the use of the crew of a ship of the Indian Navy in accordance with their conditions of service will be exempted from duty.
Accordingly, it is clarified that imported stores for use in navy ships are entitled to exemption from GST.
Clarification regarding taxability of goods imported under the lease
In respect of goods imported on temporary basis, aircrafts, aircraft engines and other aircraft parts imported into India under a transaction covered by item 1(b) or 5(f) of Schedule II of the Central Goods and Service Tax Act, 2017 are exempted from IGST vide S. No. 547A of Notification No. 50/2017-Customs dated 30.06.2017, subject to condition No. 102, which reads as under :-
The importer, by the execution of the bond, in such form and for such sum as may be specified by the Commissioner of Customs, binds himself, –
Similarly, rigs and ancillary items imported for oil or gas exploration and production taken on lease by the importer for use after import have also been exempted from IGST vide S. No. 557A of the said notification. Subsequently, all goods, vessels, ships (other than motor vehicles) imported under the lease, by the importer for use after import, were also exempted from IGST vide S. No. 557B of the said notification. Both these entries are subject to the same condition No. 102 of the said notification.
Accordingly, the CBIC has clarified that the expression “taken on lease/imported under lease” (in S. No. 557A and 557B respectively of notification No. 50/2017-Customs dated 30.06.2017) covers imports under an arrangement so as to supply services covered by item 1(b) or 5(f) of Schedule II of the CGST Act, 2017 to avoid double taxation. The above clarification holds for such transactions in the past.
Applicability of GST rate on parts for the manufacture Solar Water Heater and System
Applicability of GST rate on parts for the manufacture solar water heater and system, As per entry No 232, solar water heater and system attracts 5% GST. Further, as per S. No. 234 of the notification No. 1/2017-Central Tax (Rate) dated 28.6.2017, solar power-based devices and parts for their manufacture falling under chapter 84, 85 and 94 attract 5% concessional GST. Solar Power based devices function on the energy derived from Sun (in the form of electricity or heat). Thus, a solar water heater and system would also be covered under S. No 234 as solar power device. Thus, Solar Evacuated Tubes which falls under Chapter 84 and other parts falling under chapter 84, 85 and 94, used in the manufacture of solar water heater and system would be eligible for 5% GST under S. No. 234.
Accordingly, it is clarified that parts including Solar Evacuated Tube falling under chapter 84, 85 and 94 for the manufacture of solar water heater and the system will attract 5% GST.
Applicability of GST on the parts and accessories suitable for use solely or principally with a medical device
While concluding the Circular, the CBIC has clarified, Applicability of GST on the parts and accessories suitable for use solely or principally with a medical device.
The medical equipment falling under HS 9018, 9019, 9021 and 9022 attract 12% GST. The imports of parts of ophthalmic equipment suitable for use solely or principally with a piece of ophthalmic equipment were being assessed at 12% GST by classifying it under heading 9018. However, objection has been raised by Comptroller and Auditor General of India (CAG) on the said practice, suggesting that since such goods were not specifically mentioned in the GST rate notification, they fall under tariff item 9033 00 00 [residual entry] and should be assessed at 18% IGST.
The CBIC said that, 12% IGST would be applicable on the parts and accessories suitable for use solely or principally with a medical device falling under heading 9018, 9019, 9021 or 9022 in terms of chapter note 2 (b).
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