Roof Mounted Air-Conditioning Taxable at 28% GST: AAR

By Kalyani B Nair


The Punjab Authority for Advance Ruling (AAR) Goods and Service Tax held that Roof Mounted Air-Conditioning is Taxable at 28% GST.

The applicant, M/s ESS ESS KAY Engineering Company Private Limited has sought an advance ruling on the classification of roof mounted Air-conditioning units, especially for use in railway coaches (manufactured as per railway design) i.e whether they are classifiable under HSN- 8415 1090- IGST at 28% or under HSN 8607 99 – IGST at 18% as parts of Railway Coaches or Locomotives.

The applicant is engaged in the manufacture of a “Roof Mounted Air-conditioning unit for Passenger Coaches of Railway as per RDSO specification and drawing” (in short impugned goods). The impugned goods are exclusively for use in railway coaches, it has no marketability except for use in railways coaches. It is an integral part of Air-conditioned railway coaches and accordingly classifiable under I-ISN 8607 99 of Customs Tariff Act as made applicable to CST vide Notification No. 1/2017 CT (IR).

The applicant has contended that the goods, Roof Mounted Air-Conditioning unit manufactured and supplied by them, for use in railway coaches’ merits classification under FISN Code 8607 of Customs Tariff Act attracting levy of GST at 18% instead of HSN Code 8415 of Customs Tariff Act, attracting levy of GST at 28%. In their support, the applicant has relied upon various Chapter notes/Section notes and some judicial decisions

For classifying the goods under USN 8607, the applicant has specifically relied upon 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) and has primarily contended that since the goods remanufactured by them are solely and principally for use in the manufacture of passenger coaches of railways, they are specifically classifiable under HSN 8607. Section Note 3 to Section XVII.

The Division Bench consisting of Varinder Kaur, Additional Commissioner of Central Tax, and Viraj Shyamkarn Tidke, Additional Commissioner of State Tax ruled 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.”

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