Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs Advance Auto Concepts (P) Ltd on 8 June, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I Appeal No. E/1327 to 1329/05 (Arising out of Order-in-Appeal No. PI/7 to 9/2005 dated 07.01.2005 passed by Commissioner of Customs & Central Excise (Appeals), Pune I) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) ================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
Commissioner of Central Excise Pune I Appellant Vs. Advance Auto Concepts (P) Ltd.
Shri Shrikant Shah Respondent Appearance:
Shri Ashutosh Nath, Asst. Commr (AR) for appellant Naresh Thacker, Advocate with Shri Chirag Shetty, Advocate for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing: 08.06.2016 Date of Decision: 21.06.2016 ORDER NO 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 manufactured by the respondent are classifiable under chapter sub-heading number 8703.90 and that they have manufactured the products without licence. After investigation, show cause notice was issued to the respondent directing them to show cause as to why the duty payable on the go-karts cleared be not demanded with interest and penalty not imposed. The respondent contested the show cause notice on merits inter alia stating that the classification of the product would be under chapter sub-heading 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 case records would submit that the products manufactured by the respondent i.e. Go-karts are classifiable under chapter heading number 8703. He would draw our attention to the fact that the respondent had not taken the registration certificate claiming the benefit of small scale industry exemption notification. It is his submission that the first appellate authority has erred in applying the principle that the classification of the product needs to be done on the basis of commercial parlance test 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. (supra) has been upheld by the Apex Court as reported at 1996 (84) E L T A49 (SC). He produces the copies of the said judgements
4. Learned Counsel appearing on behalf of the respondent while defending the decision of the first appellate authority in setting aside the order in original would submit as under:-
I. CLASSIFICATION The correct classification of Go-Karts is under CeTH 9508 of the CETA A. The impugned order has rightly held that Go-Karts are other fairground amusements to be classified 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 the purpose of fun. Therefore, the appropriate classification can only be under CeTH 9508.00.
C. The HSN Explanatory Notes provide that the fairground amusements falling in the aforesaid Heading would include the following:
a. Roundabouts of all kinds.
b. Dodgeem car installations.
c. Water-Chutes.
d. Scenic railways and slides.
e. Swinging boats.
f. Shooting galleries and coconut shies.
g. Mazes.
h. Freak shows i. Lotteries.
D. The aforesaid is an inclusive explanation and therefore, Go-Karts which are used for joy rides are more akin to Dodgeem 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 Appellants 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 part of the Appeal Paper book before the Commissioner (Appeal). The Respondents places reliance on the same.
F. The Appellants contention that Go-Karts are sports vehicles which are excluded under Chapter Note 1 (m) to Chapter 95 was not raised in the Show cause notice, hence the same is beyond the scope of Show cause.
G. The impugned order has correctly held that Go-Karts also are not treated as motor vehicles as per commercial parlance or trade understanding. It is settled law that classification 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 entertainment purposes. The relevant extracts from the expert opinions are reproduced herein below-
- Arvind Pangaonkar, General Manager (R&D), TVS Motor Company Ltd. It (Go-Karts) is only designed for recreational and entertainment purposes. (Clarification provided) (at Annexure A1 to the Appeal paperbook at pg 54)
- Gautam Sen, Editor in Chief, Auto Motor & Sport magazine, Go-Karts have been in existence all over the world since the mid-fifties and these have always been used purely for 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 to the Appeal paperbook at pg 57).
- A. Akabar Badusha Assistant Director ARAI, Such vehicle are not covered under CMVR, as they are not meant for running on roads, hence no CMVR certification would be applicable for such vehicle ( at Annexure B to the Appeal paper at pg 61 I. It is settled legal position that the assessing authority are required to follow the expert opinion. It is pertinent to mention that above mentioned expert opinion unequivocally stated that the Go-Karts in the present case 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 Customs 1990 (107) ELT 398 Go-Karts are not principally designed for transportation of persons or goods.
J. The impugned order has rightly held that Go-Karts are not principally designed for transportation of persons or goods which is the essential requirement for classification under CeTH 8703.90. The entry reads as follows, Heading Subheading Description Rate of Duty (1) (2) (3) (4) 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 8703.90 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-Karts are not the same as motor cars or other motor vehicles. It is submitted that motor car or motor vehicle are not defined under the Act or the CETA. Motor vehicle has been defined in Section 2(28) of the Motor Vehicles Act, 1988 as follows, "motor vehicle" or "vehicle" means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has 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-Karts are not motor vehicles.
N. It is further submitted that the Regional Transport Authorities also refuse to recognize the said goods as motor vehicles and, therefore, refuse to register the same for use on roads.
O. It is further submitted that in terms of the ITC HS Exim Policy (Classification of Export and Import items) for the period April 2002 to March 2007, in Chapter 87, under the heading Import License notes, para 2(II) b and c it is mandatory that vehicles imported into the country conform 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 Machinery Training and Testing institute, Budni, M.P. P. From the above, it is clear that even statutorily it is a mandatory requirement that the above agencies certify that the vehicles imported comply with the Motor Vehicles Act and CMVR Rules. Accordingly, if the Go-Kart in the present case was imported, then it would necessarily have to be certified by ARAI or other institutes as complying with the aforesaid provisions before classifying the same under Chapter 87.
Q. In the present case, the ARAI 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 Edn)- Principally- for the most part; chiefly b. Websters Third New International Dictionary (Vol.II, Pg. 1830)- Principally: in principal manner: in the chief place or degree: PRIMARILY, CHIEFLY, MAINLY .
S. The fact that the Go-Kart is not principally designed for transport is apparent from the fact that A Go-Kart can only operate on specialized tracks that are specifically developed for such Go-Karts. The Go-Kart cannot function outside of such specialized tracks as its ground clearance is 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, the Go-Karts are rightly classified under Chapter 9508.Reliance is placed on the following decision to buttress the contention Atul Glass v/s Collector 1986 (25) ELT 30 U. It is pertinent to mention that under a notification dated 4th May 2002 issued by the Government of Maharashtra an Entertainment Tax of Rs 2000/- per Go-Kart is levied. This corroborates the contention that the Go-Karts in the present case are used for amusement. Hence, for this reason also the classification adopted by 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 considered as motor vehicle. Contrary to these facts, the Go-Karts in the present case are used for amusement and not for transportation of person. Furthermore, the fact that the Go-Karts in the present case are for amusement and can not be considered as motor vehicle was corroborated by expert opinion.
W. It is settled legal position that a judgment must be read applicable to particular facts and doctrine of precedent orders not applicable when the facts in two cases are dissimilar. As stated above 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 Policy was not placed before the Honble Tribunal. Since, these arguments were not placed before the Honble Tribunal in the case of Nishiland although it was logically involved in the facts, the decision is not an authority on these points and said be sub-silentio. It is submitted that precedent sub silentio is neither authoritative nor is binding nor would be followed. Hence, the decision of Nishiland Pvt Ltd can not be followed in the present case. Reliance is placed on the following decision-
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 demand is barred by limitation as the Respondents were under bonafide belief that the Go-Karts cleared were not liable for duty AA. It is submitted that the Respondents were under bonafide belief that the Go-Karts manufactured were not chargeable to duty under heading 87.03 and never suppressed any fact. This belief was also based on the fact that Customs department were classifying the Go-Karts under Chapter 95.08, as evident from the Two Bills of Entry filed by them during the reply where Go-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 Rs 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 total clearance value being less than the exemption limit, hence the demand of duty is not sustainable on the said parts.
CC. Without prejudice to the above, it is submitted that the price of Go-Karts is inclusive of all taxes, hence all taxes and duties needs to be abated from the said price.
DD. In view of the submissions made above, it is submitted that the appeal filed by the Department be dismissed.
4.1 He would also rely upon the Motor Vehicles Act to submit that the product manufactured 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 motor vehicle in the Central Excise tariff act hence the definition of motor vehicle under the motor vehicle act needs to be considered.
5. We have considered the submissions made by both sides and perused the records.
6. The dispute between the revenue and the respondent assessee is regarding the classification of the products manufactured by them which is go-kart. The assessee claims the classification of the same under chapter heading number 9508 while revenue claims the classification under 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 fairground amusements.
6.1 It can be seen from the above reproduced chapter subheading number, revenue wants to classify the product as motor cars while the assessee wants to classify the same as article of Fairground amusements.
6.2 It is undisputed that the go-kart manufactured by the respondent assessee is used for racing in go-kart racing. The differentiation brought out by the learned Counsel in the case of Leisureland Pvt. Ltd. (supra) and Nishiland Park Ltd. (supra) does not instill any confidence 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 products manufactured by the respondent assessee herein as can be ascertained from the technical specification provided by the respondent and as reproduced in show cause notice.
The Tribunal in the majority decision in the case of Leisureland Pvt. Ltd. (supra) in paragraph number 14 held as under.
14. .The submissions made have been carefully? considered. Tariff Heading 87.03 CETA covers motor cars and other motor vehicles principally designed for transport of persons. The definition of vehicle as 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. Its use as a vehicle on roads (though private) is in fact established by evidence of its purchase for use in tea estates which usually have a network of private roads within the estate. Moreover, the tariff heading requires only that the goods should be principally designed for the transport of persons. That the go-karts are so designed is evident from its specifications and also description of its Special Features as, Good for in-city/ township transportation (subject to R.T.A. approval, Also convenient 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 it can be shown that it is a motor vehicle and that it is principally designed to transport persons. In fact, the Caution in their invoices for the sale of go-karts is 1. Use on private property only; 2. Illegal to ply on public roads. Therefore, even if the goods are designed for plying on private roads for transport of persons, they will be covered by Heading 87.03 CETA. In such a context and having regard to the wording of the tariff heading, it may not be necessary to invoke the definition 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 Honble 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 contends that the go-kart considered by the Tribunal was significantly different from the go-kart that is presently under consideration. He emphasised that the go-kart imported by the appellant can only accommodate one person and, unlike the two seater dealt with in Leisureland Pvt. Ltd. v. CCE, does not have lights and horn, and does not have instrumentation such as speedometer. We agree that the go-kart considered in Leisureland Pvt. Ltd. v. CCE was fitted with a speedometer and odometer, lights 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 odometer, lights and horn, and it meant for seating only one person, it ceases to be a motor vehicle for the transport of persons but it becomes only an item for use in the amusement park. A vehicle which lacks significant instrumentation, lights and horn is still capable of being used on public roads. The capability for use on public roads is not, however, the criteria. The majority view in Leisureland Pvt. Ltd. v. CCE was that Heading 87.03 was not limited to motor vehicles designed for use upon 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 public roads of all kinds at all times, day and night, will not mean that it is not classifiable under Heading 87.03.
9.? On the other hand we had found very considerable similarity with regard to such aspects as engine capacity, speed, passenger capacity, overall dimensions etc. as will be evident from the following chart.
In the present case In Leisureland Passenger Capacity Single seater Single/double Weight 180 kgs.
60 to 90 kgs Speed 45 kmph 40 kmph Instrumentation None Speedometer and KM meter 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 On both rear brakes operating to both rear wheels 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 Engine Honda 5.5 HP, 4 stroke engines 2.5 BHP, single cylinder, two stroke Chassis Steel tubing braced and reinforced Tubular steel frame Bodyshell Glass reinforced plastic PBS sheet
10.? A consideration of these features it does not impel us to conclude that the difference between the vehicle under consideration and the one found in Leisureland Pvt. Ltd. v. CCE is not significant enough not to apply the ratio of the earlier decision.
11.? Nor we are able to accept the contention of the Counsel that the 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 amusement park.
12.?The meaning of the word transport with which we are concerned is to carry goods or persons from one place to another. The argument that because the transport begins and ends at one point around a track there is no transport is simplistic. It is like saying that a person who returns home after going to his place of work has not been transported. No doubt the transport in a go-kart of a person may not be for a purpose such as business, etc. It is transport for pleasure or for the 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 absence of gears and reversing facility, lights etc. This aspect has already been considered by us. The fact that it is an amusement and recreation vehicle does not necessarily mean that it must be classifiable under Heading 95.08 and cannot be classifiable under Heading 87.03. A golf cart classifiable under Heading 87.03 is intended for amusement and recreation. There is considerable emphasis in the certificate that the go-kart is fitted with control receivers and operated with a master control as the 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 which can be stopped or controlled by an external agency. It is a vehicle whose operations are completely under the control of its driver. The certificate is therefore, incorrect to the extent that it lay emphasis upon the master control. It would not have any impact upon the classification of the go-kart.
14.?Even independently of decision of the Tribunal in Leisureland Pvt. Ltd. v. CCE we are unable to accept classification of these goods under Heading 95.08. Classification is claimed under this heading 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 amusement. Therefore the view that since the go-cart is intended to transport persons only for purposes other than commercial, it should be classified under Chapter 95 is rebutted. The Explanatory Notes to Heading 95.08 under the HSN reads as follows.
Fairground amusements, travelling circuses, travelling menageries and travelling theatres fall in this heading provided they comprise all the essential units required for their normal operation. The heading also includes items of auxiliary equipment 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 swings and water-chutes), remain classified here when presented separately.
15.?The go-kart that is under consideration before us is an individual item, capable of being operated on its own, and had not been shown to be a part of a larger installation. As we have noted, it has not been demonstrated that it cannot function on its own. The specific notes to the heading therefore do not justify its classification under Heading 95.08. Therefore, as between the alternative classifications, once Heading 95.08 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 transporting golfers on a golf course. Such a vehicle clearly is not adopted for use on public roads nor is the transport that it provides any utilitarian purpose since it only enables the players to go from one part of a golf course to the other for the purpose of playing the game. It would therefore follow that any motor vehicle principally designed for the transport of persons unless it is specifically excluded from the Heading 87.03 would be classifiable under this heading. The Explanatory Notes under this make a significant exemption in the case of dodgeem cars which are specialised use in the fairground. It has not been claimed before us that the go-karts under consideration by us are dogent cars or similar to them. Classification, therefore has been correctly determined under Heading 87.03. We may also mention that in the course of hearing our attention was drawn, by one of the Counsel present, to a classification opinion of the World Customs Organisation (as the Customs Cooperation Council is now known) contained in a CD-ROM, of which an extract was produced, that go-karts motor vehicles single seater/sports vehicle are correctly classifiable under Heading 87.03. 6.4 It is also brought to our notice that the civil appeal filed by the assessee Leisureland Private Limited against the Tribunals order has been dismissed by the Apex Court which would mean that the classification of Go-kart is to be under chapter heading number 8703.
6.5 In view of the foregoing and authoritative judicial pronouncements on the issue, the impugned order is unsustainable and liable to be set aside and we do so. The impugned order is set aside and appeal is allowed restoring the order of the adjudicating authority. However, since the issue is of interpretation and classification of the products, penalties imposed on the appellant Advance Auto Concepts Pvt. Ltd., under Rule 173Q of erstwhile Central Excise Rules, 1944, penalties imposed under Section 11AC of Central Excise Act, 1944 as also the penalty imposed on Director of Advance Auto Concepts Pvt Ltd., are set aside.
(Pronounced in Court on 21.06.2016) (Raju) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
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1 24 Appeal No. E/1327 to 1329/05