TMI Blog2022 (8) TMI 807X X X X Extracts X X X X X X X X Extracts X X X X ..... t ride by both children as well as adults. The Applicant submits that the products manufactured by them are designed and shaped to run or drive only on extremely smooth, specially designed tracks or closed circuits and not on track or normal automobiles are able to operate - the Applicant states that they were under the impression that Go Karts are classifiable under Chapter Tariff Heading (CTH) 9503 but were advised to classify under CTH 8703 and pay GST at 28%. So the applicant wants to know whether 'amusement park ride karts' commonly known as 'Go karts', are to be classified under CTH 8703 taxable at 28% or under CTH 9503 taxable at 18%. Further as per the provisions of Section 39 of the Motor Vehicles Act, 1988 motor vehicles are not permitted to drive on roads without registration with the registering authority i.e., RTO - The applicant submits that as per the Motor Vehicles Act, Children below the age of 18 years are not permitted to ride or drive motor vehicles and require driving license to drive the vehicle. However, no such restrictions are imposed under any of the statute to use Go-karts by children below the age of eighteen years. Further, the & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons: i. Whether the 'amusement park ride karts' commonly known as Go-karts' manufactured and supplied by the applicant meant solely for the purpose of joy riding or amusement or recreational purpose and are designed and shaped to suit to run or drive only on extremely smooth specially designed surfaced tracks or closed circuits, are classifiable under Chapter Tariff Heading 9508 of the First Schedule to the Customs Tariff Act, 1975? ii. Whether the 'amusement park ride karts' commonly known as Go-karts' manufactured and supplied by the Applicant which are not roadworthy and cannot be registered as Motor Vehicles with the Regional Transport Authority ( RTO' for short) are classifiable as 'Motor Vehicles meant for carrying of passengers / persons' under Chapter Tariff Heading 8703 of the First Schedule to the Customs Tariff Act, 1975? iii. Whether the 'amusement park ride karts' commonly known as Go-karts' manufactured and supplied by the Applicant attracts GST at the rate of 18% under Sl.No.441A of Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28-06-2017 as amended by Notification No.18/ 2021-Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017-Central Tax (Rate) dated 28-06-2017, they are following the same. 5.5 The applicant further states that the legislature has amended the First Schedule to the Customs Tariff Act, 1975 with effect from 01-01-2022 based on realignment of the Explanatory Notes to Harmonized Systems of Nomenclature. The amended Chapter Tariff Heading 9508 of the First Schedule to the Customs Tariff Act specifically covers Amusement Park Ride Karts' commonly known as 'Go-karts'. 6. Applicant's Interpretation of Law: 6.1 'Amusement Park Ride Karts' manufactured and supplied by the applicant commonly known as 'Go-karts' are classifiable under Chapter Heading 9508 of the Customs Tariff Act, 1975- 6.1.1. The applicant submits that in order to determine the classification of the Go-karts it is necessary to see the chapter description / heading read along with the relevant section and chapter notes, and in absence thereof the classification has to be done on trade or commercial parlance. Further, the Schedule to the Customs Tariff Act, 1975 provides the following rules for interpretation of the tariff to aid in the classification of goods: i. a reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecreation. The United States of America, where the Go-kart was invented, classifies the Go-kart under Chapter 95030089 as a piece of equipment primarily meant for recreational and entertainment purpose. The United States, being the largest market for Go-karts in the world, exports their products under HSN 95030089, which is free of import duty. 6.1.7 The applicant states that as per the Motor Vehicles Act, Children below the age of 18 years are not permitted to ride or drive motor vehicles and require driving license to drive the vehicle. In case of violations, the vehicles will be seized and the person riding / driving the vehicle will be fined and also imprisoned for the contraventions of the statute. However, no such restrictions are imposed under any of the statute to use Go-karts by children below the age of eighteen years. 6.1.8 The Applicant submits that 'amusement park ride karts' commonly known as 'Go-karts' are meant for joy riding or amusement or recreational purposes and hence, are rightly classifiable as 'amusement park rides' under CTH 9508 of the I Schedule to the Customs Tariff Act, 1975. The substituted CTH 9508 ibid W.E.F., 01.01.2022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricted course including within a defined area for the primary purpose of joy riding or amusement ride or fun riding. Therefore, the applicant has submitted that the Go-kart manufactured and supplied by the Applicant is rightly and specifically classifiable under CTH 9508.10 ibid. 6.1.11 The applicant submits that it is a settled law that there cannot be static parameters for classification of goods. However, entries in the Tariff, HSN along with explanatory notes, functional utility, design, shape and predominant usage of the goods have to be taken into consideration for determining the classification. 6.1.12 The Applicant has placed reliance on the following decisions: O.K. Play (India) Limited Vs CCE Delhi-III reported in 2005(180) ELT 300 (SC). CCE, New Delhi-III Vs. Uni Products India Limited reported in 2020 (372) E.L.T.465 (S.C.) Cast Metal Industries (P) Limited Vs CCE., Kolkata-2015 (325) E.L.T 471 (SC) G.S. Auto International Ltd Vs Collector-2003 (152) E.L.T 3 (S.C) 6.2 The Applicant states that Go-karts manufactured by the Applicant are not meant for travelling or carrying of passengers but are meant for joy riding and hence, ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nclude 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 twenty-five cubic centimetres; 6.2.3 The Applicant states that on perusal of the above definition, it is clear that any motor vehicle is considered as motor car other than the one specified. Further motor vehicle or vehicle means any mechanically propelled vehicles adapted for use upon roads and includes chassis. Further as per the provisions of Section 39 of the Motor Vehicles Act, 1988 motor vehicles are not permitted to drive on roads without registration with the registering authority i.e., RTO. 6.2.4 In the present case, it is an undisputed fact from the ARM certificate that the Go-karts are not certified as motor vehicles and are not fit to run on roads and hence, no registration is possible under the provisions of the Motor Vehicles Act, 1988. 6.2.5 Further, the expression 'persons' used after motor cars and other motor vehicles principally designed for transport of in the chapter tariff heading appears to be plural which means the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as ' amusement park ride karts' commonly known as 'Go-karts' and rightly satisfies the requirement of Chapter Tariff Heading 9508 in terms of HSN. It is submitted that it is a well settled law that when the statute define the words in the statute book there is no need to go into the test of marketability and functional utility of the product. 6.3.2 The Applicant in support of the above submission, place reliance on the decision of the Hon'ble Apex Court in the case of Indo-International Industries vs. Commissioner of Sales Tax, UP reported in 1981 (8) ELT 325 (SC), wherein it has been held that the trade parlance' is relevant when the statute does not define the words. 6.3.3 The Hon'ble Apex Court in the case of Commissioner of Central Excise vs. Wockhardt Life Sciences Limited reported in 2012 (277) ELT 299 (SC), has held that the marketing of goods is also relevant criteria for the purpose of classification of the products. 6.3.4 The Applicant also places reliance on the following decisions in support of their above submissions: Kedia agglomerated Marbles Limited vs. Collector of Central Excise - 2003 (152) ELT 22 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No. 01/2017-Central Tax (Rate) as amended by Notification No. 18/2021-Central Tax (Rate) dated 28.12.2021 is extracted as below: SCHEDULE III - 9% Sl.No. Chapter/ Heading/ Sub-heading /Tariff item Description of Goods (1) (2) (3) 441A 9508 Travelling Circuses and Travelling menageries; Amusement Park Rides and Water Part amusements; Fairground Amusements, including shooting Galleries; Travelling Theatres 6.4.3 In view of the above, it is clear that the rate of tax payable on supply of goods falling under Chapter 9508.10 of the CTA would be at the rate of 9% under the CGST Act, 2017 and 9% under the Karnataka GST Act, 2017. 6.4.4 The Applicant also submits that, if for any reasons, the supply of Go-karts does not fall under serial number 441A of Schedule-III to Notification No. 01/2017-CT (Rate) then the same are leviable to GST under miscellaneous category falling under Schedule-III of the Notification. The relevant serial numbers of Schedule-III to Notification N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions in the KGST Act. 9. We have considered the submissions made by the applicant in their application for advance ruling. We have also considered the issues involved on which advance ruling is sought by the applicant and the relevant facts along with the arguments made by the applicant and also their submissions made during the time of hearing. 10. The applicant states that they are engaged in manufacture and supply of amusement park ride karts' commonly known as 'Go karts', which are mainly used for joy riding or amusement ride by both children as well as adults. The Applicant submits that the products manufactured by them are designed and shaped to run or drive only on extremely smooth, specially designed tracks or closed circuits and not on track or normal automobiles are able to operate. 11. The Applicant states that they were under the impression that Go Karts are classifiable under Chapter Tariff Heading (CTH) 9503 but were advised to classify under CTH 8703 and pay GST at 28%. So the applicant wants to know whether 'amusement park ride karts' commonly known as 'Go karts', are to be classified under CTH 8703 taxable at 28% or under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Vehicles Act, Children below the age of 18 years are not permitted to ride or drive motor vehicles and require driving license to drive the vehicle. However, no such restrictions are imposed under any of the statute to use Go-karts by children below the age of eighteen years. 14. From the above, it is observed that the 'amusement park ride karts' supplied by the applicant neither qualify as 'motor cars' nor as 'motor vehicle' under the Motor Vehicles Act, 1988 as they are not road worthy. They are also not designed for transport of persons and are meant only for amusement or entertainment for use on a fixed or restricted course. Hence they are not classifiable under CTH 8703. 15. We now proceed to examine whether the 'amusement park ride karts' supplied by the applicant are classifiable under CTH 9508. First schedule to the Customs Tariff Act, 1975 has been amended with effect from 01.01.2022 and the amended chapter tariff heading 9508 covers travelling circuses and travelling menageries; amusement park rides and water park amusements; fairground amusements, including shooting galleries; travelling theatres . In the Notes to the chapter 9508 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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