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2016 (7) TMI 295 - CESTAT MUMBAI

2016 (7) TMI 295 - CESTAT MUMBAI - TMI - Demand of duty of manufacturing of go-kart and parts thereof - classifiable under chapter sub-heading number 8703.90 or not - respondent / manufacturer contended that the product would be under chapter sub-heading number 95.08 as Fairground amusements - Held that:- It is undisputed that the go-kart manufactured by the respondent assessee is used for racing in go-kart racing - The specific notes to the heading therefore do not justify its classification un .....

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Dated:- 21-6-2016 - MR. M.V. RAVINDRAN, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Ashutosh Nath, Asst. Commr (AR), for appellant Naresh Thacker, Advocate with Shri Chirag Shetty, Advocate, for respondent ORDER Per: M.V. Ravindran This appeal is filed by the revenue against Order-in-Appeal No. PI/7 to 9/2005 dated 07.01.2005. 2. The relevant facts that arise for consideration are the respondent herein are manufacturers of go-kart and parts thereof. It is alleged that the go-karts .....

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ding number 95.08 as Fairground amusements. The adjudicating authority after following the due process of law confirmed the demands raised and also imposed penalties besides demanding interest. Aggrieved by such an order an appeal was preferred before the first appellate authority. The first appellate authority after following the due process of law set aside the order in original and held in favour of the respondent herein.. 3. Learned departmental representative after taking us to the entire c .....

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st and the assessing authority has to follow expert opinion. It is his submission that the adjudicating authority has correctly come to a conclusion that the products manufactured by the respondent are classifiable under chapter sub-heading 8703. He would submit that this has been settled by the Tribunal in the case of Leisureland Pvt. Ltd. v. CCE 1994 (71) ELT 489 (Tri) and Nishiland Park Ltd 2002 (142) ELT 174. He would submit that the judgement of Tribunal in the case of Leisureland Pvt. Ltd. .....

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ied under CeTH 9508 of the CETA. The relevant portion of the provision is reproduced herein below, Heading Subheading Description Rate of Duty (1) (2) (3) (4) 95.08 9508.00 Roundabouts, swings, shooting galleries and other fairground amusements 16% (Central Excise Tariff of India 1999-2000) B. It is an admitted fact that Go-Karts in the present case are only used and can only function on specialized tracks in the amusement park. It is also an admitted fact that the Go-Karts are used solely for t .....

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hich are used for joy rides are more akin to Dodge-em cars, ought to be classified under CeTH 95.08. E. Go-Karts also do not fall under any of the exclusions provided under Chapter 95 of the CETA. The Appellant s submission that Go-Karts are sports vehicles which are excluded under Chapter Note 1 (m) is erroneous since Go-Karts are not sports vehicles. The Respondents submit that they have provided detailed charts, and opinions as to how Go-Karts are different from sports vehicles which were a p .....

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ation of the goods for the purpose of tax must be determined on the basis of commercial parlance and trade understanding. Reliance is placed on the following decisions- a. CST v. Jaswant Singh Charan Singh AIR 1967 SC 1454 b. Alpine Industries v. CCE 2003(152) ELT 16 c. G.S. Auto International Ltd. v. CCE 2003(152) ELT 3. H. The impugned order has correctly considered the expert opinions furnished by the Respondents which have categorically stated that Go-Karts are designed for recreation and en .....

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recreation purpose. In our view, a go-kart cannot in any way be termed a mode of transport. A go-kart is principally designed for fun, recreation and entertainment. (at Annexure A2 to the Appeal paperbook at pg 56) - Raja Warrior, Editor, Auto India magazine, It is my considered opinion that go-karts cannot be classified as motor cars or automobiles. The go-cart has developed from childrens pedal cars and push cars and should not be seen as a downgraded car (Emphasis supplied) (at Annexure A3 t .....

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cannot be called motor vehicle. Hence, the contention of the department to classify the Go-Karts under Chapter heading 87.03 is misplaced as the same applies only to motor vehicle. Reliance is placed on the following decisions to buttress the contention that the expert opinion should be considered by the department and can not be rejected- M/s Ahuja Radiosm v/s Collector of Customs 1997 (93) ELT 344 Collector of Customs v/s Vishal Surgical 1996 (88) ELT 655 M/s Wipro Ltd V/s Commissioner of Cust .....

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ding the driver, including racing cars 8703.90 Other 24% (Central Excise Tariff of India 1999-2000) (Emphasis supplied) K. For a good to be classified under CeTH 8703.90 the following requirements have to be satisfied- a. It should be a motor car / other motor vehicles b. Such motor car / other motor vehicles must be principally designed for transport of a set number of persons. Such motor cars include racing cars. L. In the present case, it has been rightly held in the impugned order that Go-Ka .....

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not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding thirty five cubic centimetres. M. In the present case, Go-Karts cannot be adapted for use upon roads. As aforesaid, Go-Karts can only operate on tracks specifically made and maintained for the said Go-Karts. Therefore, Go-Kar .....

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orm to the provisions of the Motor Vehicles Act, 1988 and the Rules made thereunder. Further importers and dealers in motor vehicles have to get a valid certificate of compliance as per the provisions of Rule 126 of the Central Motor Vehicle Rules, 1989 (CMVR for short). It is also mandatory for the vehicle imported to be submitted for test by the Vehicle Research and Development Establishment, Ahmednagar or the Ministry of Defence of the Government of India or ARAI, Pune or Central Farm Machi .....

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has categorically stated that the Go-Karts of the Respondents do not require any certification. Therefore, the impugned order has rightly held that Go-Karts are not principally designed for transportation of persons, hence classifiable under Chapter 9508. R. Go-Karts are also not principally designed for transportation of persons. The word principally means primarily and / or mainly. The definition of principally in various dictionaries is as follows- a. Concise Oxford Dictionary (Page 948- 8th .....

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only around an inch and even a small pebble on a road can bring the Go-Kart to a complete stand still. Classification for excise duty must be based on the primary function of the Product T. It is settled legal position that for purpose of excise duty classification must be based on the primary function of the product, in other words its final use. As aforesaid, the primary function of the Go-Karts in the present case is for amusement and not principally designed for transport of persons. Hence .....

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the department is misplaced and misconceived. II Jugedment of Leisureland Pvt Ltd and Nishiland Park Ltd is not applicable to the present case as the facts are different and certain law point was not considered in these judgments. Hence, these judgements is not binding and can not be followed V. It is submitted that in the case of Leisureland Pvt Ltd, the Go-Karts were used for transportation of person on private road and there was no expert opinion on the fact that whether the Go-Karts can be .....

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bove the facts of Leisureland Pvt Ltd are different from the present case, hence it can not be followed and does not have a binding effect. Reliance is placed on the following judgment to buttress this contention- Alembic Glass Industries Ltd v/s Commissioner of C.ex 2001(135) ELT 1230 X. It is submitted that although the Go-Karts in the case of Nishiland Pvt Ltd are similar to the Go-Karts in the present case, the legal arguments of expert evidence and mandatory requirement of the ITC HS Exim P .....

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COLLECTOR OF CENTRAL EXCISE, Rajkot V/s Surgichem 1987(27) ELT 548 COLLECTER OF CENTRAL EXCISE, Meerut V/s Maruthi Foam (P) LTD 1996 (85) ELT 157 Y. It is submitted that there is no principle of res judicata operating on subsequent matters nor Rule of estoppel arises in fiscal matters if fresh facts comes to the light. Reliance is placed on the following decisions- A.b. Mauri India Pvt. LTD.V/s Commissioner Of C. EX., PUNE-II 2010 (260) ELT 424 III Without prejudice to the above contention, the .....

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Karts imported have been cleared under Chapter 95.08 of the Customs Tariff Act,1975. Hence, the proviso of Section 11A is not applicable and demand is of ₹ 25,23,842 is barred by limitation. Reliance is placed on the following decisions- Padmani Products v/s Collector 1989 (43) ELT 195 BB. Without prejudice to the above, it is submitted that various parts manufactured and cleared by the Respondents being classified under the headings which are covered under the SSI exemption and that their .....

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by the respondent is different than the products as is considered by the Tribunal in the case of Leisureland Pvt. Ltd (supra). He would then draw our attention to the differences between the case in Leisureland Pvt. Ltd (supra) and in the case in hand before us. To support his case he would draw our attention to their submission to submit that the motor vehicle is different than the go-kart. He would urge that the common parlance test the applied in the case in hand as there is no definition of .....

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chapter heading number 8703. Both sides have relied upon various documents to justify their claim of classification. In order to appreciate the correct position of law, the relevant chapter sub-heading numbers are reproduced. 87.03 Motor cars and other motor vehicles principally designed for the transport of not more than six persons, excluding the driver, including racing cars 8703.10 Three-wheeled motor vehicles 8703.90 Other 95.08 9508.00 Roundabouts, swings, shooting galleries and other fair .....

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dence in us to reconsider the issue afresh. We find that the issue is now squarely settled by the judgement of Leisureland Pvt. Ltd. (supra) wherein majority order records that product in question are identical goods manufactured, classifiable under chapter heading number 8703. There is no dispute that the products manufactured by the appellants in the case of Leisureland Pvt. Ltd. (supra) (as per the technical specification indicated in paragraph number 5 of the said order) are similar to the p .....

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given in McGraw Hill Dictionary of Scientific and Technical Terms and Shorter Oxford Dictionary is a self-propelled wheeled vehicle to move people or goods for use on or off the road. The expression motor vehicle is a genus and it means mechanically propelled vehicle. The go-kart manufactured by the appellants herein as per its specifications is one such mechanically propelled vehicle and has a capacity to carry one or two passengers, with a 2.5 HP engine capable of speed upto 40 KM per hour. It .....

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onvenient for Tea Estates, factories, Hotels, Farm Houses, Tourist resorts. Sea-side resorts and Private residence. (No RTA approval required). It is clear from the above that go-kart would satisfy the criteria for classification under Heading 87.03 CETA. The fact that its specifications are such that it may not qualify for being registered under the provisions of Motor Vehicles Act and Rules thereunder will not come in the way of its classification under Heading 87.03 as it is worded so long as .....

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of the term Motor Vehicle from the M.V Act for construing the tariff heading. In the result, the go-karts have been correctly held to be classifiable under Heading 87.03 CETA -85. The order proposed bv Hon ble Member (Technical) is, therefore, concurred with. 6.3 Similar issue as to the import of the very same item go-kart was being considered by this Tribunal in the case of Nishiland Park Ltd therein the Tribunal in paragraph number 8 to 15 held as under. 8. The Counsel for the appellant next .....

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ts and horn, when the goods under consideration lacks them. However, the presence of a speedometer and odometer, as far as we can see, is only relevant for the purpose of the Motor Vehicles Act and the rules framed therein. That Act makes it mandatory for the speedometer to be fitted to a vehicle although we do not think that it requires an odometer to be fitted. We do not find it possible to agree that, because the go-kart under consideration by us lacks such instrumentation as speedometer and .....

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on roads. It had noted that Tariff Item 34 in the earlier Central Excise Tariff, which is for motor vehicles and tractors including trailors contained definition of motor vehicles as meaning of mechanically propelled vehicles other than tractors designed for use upon roads. It had noted that 87.03 was not so worded as to permit its scope to be limited to vehicles designed for use upon roads. Applying that criteria the fact that the go-kart under consideration is not capable of being used on publ .....

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Steering Positive Positive Electrical No lights Lights and Horn Wheels 4.10 W 350, 4 ply tyres and tubes. Front 1000-1270 mm base and 750-900 mm track Overall length 1400 mm 2000 mm Overall width 1200 mm 850 mm Overall height 650 mm 800 to 1000 mm Brakes Twin hydraulic disc brakes operating to both rear wheels On both rear wheels Accelerator Wire linkage Wire linkage Start Recoil starter Recoil starter Fuel Petrol Petrol and Mobil oil Consumption 30 kmpl 25kmpl Fuel Capacity 3 litre 3 litre Engi .....

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he appellant that the go-kart is not principally designed for the transport of persons. According to him since it is not capable of being driven on roads and it is used to carry one person around a fixed track, it is not designed for such purpose. The term transport should not be construed in the narrow sense that carrying persons around a fixed tract is transportation. He also contends that the manufacturers in the present case has made a claim that it is principally designed for use in an am .....

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thrill of racing. It however, continues to be transport. A person who goes for a joy ride in an aeroplane has certainly been transported from the ground up to a certain height and a certain distance and back again. 13. The certificate issued to the appellant by Formula K. International Limited, the manufacturer, has been cited in support. This certificate assumes that this go-kart is made for amusement and recreation and is not designed for overall use of regular rides. It emphasises the absenc .....

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e result of which it can be stopped at any time. The Counsel for the appellant agree that these controls whereby the go-kart can be stopped by a person at the starting point are an additional accessory. He also says, after receiving instructions from his client, that for the use of this control mechanism special split lead wires are essential which has not been imported. It is thus clear that the go-kart which has been imported without the master control and the split leads, etc. is not one whic .....

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eading are on the ground that the goods fall in the category of other fairground amusements. Note (1) to Chapter 95 excludes from that Chapter in Clause (n) sports vehicles other than bobsleighs, toboggans and the like of Section XVII and sports craft such as canoes and skiffs, childrens bicycles. Now not one of this category of vehicles or craft is intended for commercial transportation of persons or goods. Each of them is intended to provide transportation but for reasons of pleasure and am .....

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provided they are presented with, and as components of, these various amusements, notwithstanding that when presented separately such items (e.g., tents, animals, musical instruments, power plants, motors, lighting fittings, seats, and arms and ammunition) would fall in other headings of the Nomenclature. Subject to the provisions of Note 1 to this Chapter, articles which are identifiable as designed solely or principally for use as parts and accessories of such amusements (e.g., boats for swing .....

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.08 is excluded the other one 87.03, will apply. Notes under Heading 87.03 also make it eminently clear that it covers motor vehicles for the transport of persons, for whatever purpose the transport may be required. Racing cars which clearly transport persons for pleasure or amusement around the fixed tracts, are specifically included in the heading. The Notes makes it clear that golf carts and similar vehicles fall under that heading. Golf carts are designed and are primarily used for transport .....

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