Page 188 - GSTL_14th May 2020_Vol 36_Part 2

290 GST LAW TIMES [ Vol. 36
Note 3 to Section XVII of the said Tariff stipulates that “References in Chapters 86
to 88 to “parts” or “accessories” do not apply to parts or accessories which are not suita-
ble for use solely or principally with the articles of those chapters. A part or accessory
which answers to a description in two or more of the headings of those Chapters is to be
classified under that heading which corresponds to the principal use of that part or acces-
sory”.
6.18 Further we [***] draw reference to the Explanatory Notes of the
relevant Section and Chapter. Explanatory Notes to Section XVII at General (III)
Parts & Accessories stipulate that all the following three conditions should be sat-
isfied, for a product to be classified as a Part under the said Section.
(a) They must not be excluded by the terms of Note 2 to Section XVII [see
paragraph (A) below]
(b) They must be suitable for use solely or principally with the articles of
Chapters 86 to 88 [see paragraph (B) below]
(c) They must not be more specifically included elsewhere in the Nomencla-
ture [see paragraph (C) below]
6.19 The communication satellite transponders are not covered in the
list of parts/parts and accessories appearing under Note 2. Therefore the tran-
sponders are not excluded by the terms of Note 2 to Section XVII. Therefore the
first condition stands complied with.
6.20 The second condition prescribes criterion of sole or principal use
[paragraph (B)] inter alia stating that under Section Note 3, parts and accessories
which are not suitable for use solely or principally with articles of Chapters 86 to 88
are excluded from those chapters. The effect of Note 3 is therefore that when a part or ac-
cessory can fall in one or more other sections as well as in Section XVII, its final classifi-
cation is determined by its principal use. Further in case parts and accessories classifiable
in two or more headings of the Section i.e. when certain parts and accessories are suitable
for use on more than one type of article/product they are to be classified in the heading
relating to the parts and accessories of the articles/products with which they are princi-
pally used.
In the instant case the product “Transponder” being an integral part of
the communication satellite can be used solely or principally with the communi-
cation satellite falling under Tariff Heading 8802. Hence the second condition is
also complied with.
6.21 The third condition lists certain parts and accessories covered
more specifically elsewhere in the Nomenclature [paragraph (C)]. Such parts and
accessories, even if identifiable as for the articles of Section XVII, are excluded if
they are covered more specifically by another heading elsewhere in the nomen-
clature. It is observed from the list that the transponder does not find a place.
Moreover the transponders are not more specifically classified elsewhere in the
Tariff. Therefore the third condition is also complied with.
6.22 On the basis of the discussions above we find that Communication
Satellite Transponders are appropriately classifiable under Tariff Heading 8803,
more specifically under 8803 90 00.
6.23 Transponders, being parts of communication satellites, are covered
under 8803 90 00 and any leasing of such transponders would be covered under
the Entry No. 17 of Notification No. 11/2017-Central Tax (Rate), dated 28th June
2017 at the rate applicable as on the supply of like goods involving the transfer of

GST LAW TIMES  14th May 2020  188