In the world of transporting goods, there’s a rule known as Rule 55(5) of GST that talks about sending things in different ways, like puzzles with pieces or building blocks. This rule specifically mentions sending goods in Semi Knocked Down (SKD) or Completely Knocked Down (CKD) conditions, along with batches or lots. Let’s break down what this all means in simple language.
Understanding SKD and CKD:
1. Semi Knocked Down (SKD):
- Explanation: Imagine you have a toy that’s taken apart but not completely. It’s in big pieces or modules, like when you get a model to build. That’s what we call Semi Knocked Down or SKD.
- Why It’s Done: Sending things in SKD is like making it easier and cheaper to send them from one place to another. Also, it’s good because it lets you put the pieces together in the place where you want to use them.
2. Completely Knocked Down (CKD):
- Explanation: Now, think about getting that same toy but this time, it’s completely taken apart. It’s like having all the small pieces separately, and you have to build everything from scratch. That’s what Completely Knocked Down or CKD means.
- Why It’s Done: CKD is useful when you want to build things locally, where you are. It’s a smart way to save money on shipping because you can pack many more pieces in a smaller space.
Now that we understand SKD and CKD, let’s talk about Rule 55(5) of GST and what it says about sending goods this way.
Rule 55(5) Explained: According to Rule 55(5), if someone is sending goods in SKD or CKD conditions, or in batches or lots, there are some important steps to follow:
- Complete Invoice First:
- Before the first set of goods is sent, the person sending them (we call them the supplier) must make a full invoice. This invoice is like a detailed list and price tag for all the things they are sending.
- Delivery Challan for Each Batch:
- After the first batch is sent, for each new set of goods (batch), the supplier needs to make something called a “delivery challan.” It’s like a note that goes with the goods, referring back to the detailed list (invoice) they made before.
- Copies of Challan and Certified Invoice:
- Each batch of goods must come with copies of the delivery note (challan) and a certified copy of the detailed list (invoice) they made at the start. Certified just means that someone official confirms that the list is correct.
- Original Invoice with the Last Batch:
- Here’s the tricky part – the original detailed list (invoice) must travel with the last set of goods. It’s like the final piece of the puzzle.
Applying the Right Code: Experts say that when goods are sent in CKD-SKD conditions, we need to use a special code called HSN, and it should be the one for the Complete Built Up (CBU) thing, not the individual parts. This code helps everyone understand what the thing is made of.
Caution for EPC Projects: In some big projects where goods come from different places, experts are saying that we need to be careful. The people in charge (EPC contractors) sometimes use the same code for the things they’re building as the people who made the parts. There’s a story about this in Shirke Construction Equipment Pvt. Ltd. v. CCE, Pune 1997 (95) ELT 644 (Trib.). They said the goods in that story weren’t just parts but a whole thing taken apart.
Conclusion: So, in a nutshell, Rule 55(5) is like a set of rules to make sure that when we send goods in pieces or parts, we do it in a smart and organized way. It’s about making sure we have all the right papers, use the right codes, and, most importantly, that everything comes together correctly in the end.
