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CASE NO.: Appeal (civil)  6980-6983 of 2004

PETITIONER: M/s O.K. Play (India) Ltd.                       

RESPONDENT: Comm.of Central Excise,Delhi-III, Gurgaon  

DATE OF JUDGMENT: 03/02/2005

BENCH: S.N. VARIAVA,Dr. AR. LAKSHMANAN & S.H. KAPADIA

JUDGMENT: J U D G M E N T WITH

CIVIL APPEAL Nos.6776-6779 OF 2004

Commissioner of Central Excise, Delhi-III, Gurgaon                              \005            Appellant

Versus

M/s O.K. Play (India) Ltd.                      \005                    Respondent

KAPADIA, J.

       The short question which arises for determination in  these Civil Appeals filed by the assessee and by the department,  respectively, under Section 35L(b) of the Central Excise Act,  1944, is \026 whether the assessee was right in classifying the  following articles under Chapter Heading 95.03 and clearing  the same without payment of duty.  The said articles are  Activity Desks and Chairs, Fun Fliers, Play Table, Play Pool,  Rockers, Slides and Swings.                  The assessee is engaged in the manufacture of toys.  On  24th April 1987, a team of officers from Anti Evasion Branch of  the Delhi Commissionerate visited the factory premises of the  assessee situate at Gurgaon, Haryana, when they found that the  assessee was manufacturing the above articles with the help of  machines and which were being cleared without payment of  duty.    

       On 4th November, 1997, a show-cause notice was issued  to the assessee alleging mis-declaration in the classification list  by prefixing and suffixing each of the above items with the  words "baby" and "toys" respectively.  Consequently, "Activity  Desks and Chairs" were described as "Baby Chair Toy" and  "Baby Desk Toy"; Rockers were described as "Baby Rocker  Toy"; Slides were described as "Baby Slide Toy".  According  to the department, the said prefix and suffix was inserted to  each of the above articles to mislead the department into  believing that each article was a toy.  Hence, the department  sought to recover duty for the period from 1.4.1992 to  28.2.1997 by invoking the proviso to section 11A(1) of the  Central Excise Act, 1944 (hereinafter referred to for the sake of   brevity as "the 1944 Act").  According to the department, the  said items were classifiable under Chapter Headings 95.06,

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94.01, 94.03 and 39.22 and, therefore, chargeable to duty.

       The basic question which arises for determination in  these Civil Appeals is \026 whether the aforestated seven articles  are "toys" classifiable under Tariff Heading 95.03 as claimed  by the assessee?

       For the sake of clarity, since classification of seven  articles is in issue, we have divided this judgment into three    categories.

       Before dealing with the issue of classification, certain  points are required to be clarified.

       In the case of A. Nagaraju Brothers v. State of Andhra  Pradesh reported in [1994 (72) ELT 801], it has been held by  this Court that no one single universal test can be applied for  correct classification.  There cannot be a static parameter for  correct classification.

       Further, the scheme of the Central Excise Tariff is based  on Harmonized System of Nomenclature (for short "HSN") and  the explanatory notes thereto.  Therefore, HSN along with the  explanatory notes provide a safe guide for interpretation of an  Entry.

       Further, equal importance is required to be given to the  Rules of Interpretation of the Excise Tariff.  Under rule 3(a), it  is provided that the heading which provides a specific  description shall be preferred to a heading having a more  general description.  For example, in the case of "toys" referred  to in the HSN Heading and the Tariff Heading, the description  refers to reduced size model of an Article used by adults.  This  test helps us to understand the difference between "toys" and  "furniture".

       Lastly, it is important to bear in mind that functional  utility, design, shape and predominant usage have also got to be  taken into account while determining the classification of an  item.

       The aforestated aids and assistance are more important  than the names used in the trade or common parlance in the  matter of correct classification.

A)      CLASSIFICATION OF PLAY TABLE, TABLES,          ACTIVITY DESKS AND CHAIRS.          

       The assessee has classified the above articles under Tariff  Heading 95.03, whereas the revenue has classified the same  under Tariff Headings 94.01 and 94.03, which read as follows:- Heading No. Description of Goods Rate of  Duty 94.01 Seats (other than those of heading  No.94.02), whether or not convertible  into beds, and parts thereof. 20% 94.03 Other furniture and parts thereof. 20%

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95.03 Other toys; reduced-size ("scale")  models and similar recreational  models, working or not; puzzles of all  kinds. 15%

       Mr. S. Ganesh, learned senior counsel appearing on  behalf of the assessee submitted that "Activity Desks and  Chairs" were specifically designed for amusement of small  children.  He submitted that the said Desk has a slate with a  removable desk top with twin wells for crayons, toys, books  etc.  The children can even draw or learn the basics of writing  on this table.  Similarly, the play table is designed for group  play.  These articles were aids for the play of small children.   They were bought and sold in the market as toys.  They were  exclusively available in toy shops and not in furniture shops.  It  was submitted that the usage and commercial parlance show  that the articles were toys classifiable under Tariff Heading  95.03 as toys.  In this connection, reliance was placed on the  Certificates obtained from Toys Association of India and from  Sports Goods Export Promotion Council, letters from various  distributors and catalogues of various international  manufacturers and rotational moulding association.  It was  submitted that the department has not adduced any evidence to  show that in commercial parlance, these articles are not known  as toys.  Reference was also made to Note-1 under Chapter 94  to show that the said chapter did not cover the toy furniture.   According to the assessee, toy furniture has not to be  understood as furniture under Chapter 94 but should be  excluded therefrom as a toy furniture was specifically designed  for play and amusement of children.  It was also not  synonymous with doll furniture.  These articles, according to  the assessee, were aids for play and, therefore, classifiable  under Heading 95.03.  Reliance was also placed on the product  catalogue to show the shape, colour and size of these articles  indicating that they were toys and not furniture.

       Per contra, Mr. Rajiv Dutta, learned senior counsel  appearing on behalf of the department submitted that the mere  fact that an article was meant for exclusive use of children  would not place that article in the category of toys.  Baby  chairs, desks and tables were used predominantly by children to  sit on and write on.  They were smaller versions of tables and  chairs used by adults and, therefore, rightly classified as  furniture under Headings 94.01 and 94.03.  He submitted that  what was excluded from Chapter 94 was doll’s furniture.  In  this connection, reliance was placed on Note (A)(12) of HSN  Heading 95.03 which refers to Dolls’ houses and furniture  including bedding.   It is this type of furniture that can be  treated as toy furniture which is excluded from Chapter 94.   Reliance was also placed on the note to HSN Heading 94.01  which refers to different types of chairs like infant’s chair,  children’s seat etc.  Therefore, according to the department, the  aforestated articles were classifiable under Headings 94.01 and  94.03.

       We are inclined to agree with the department.  The mere  fact that an article is meant for exclusive use of children would  not place it in the category of toys.  The word "toys" is not  defined.  However, Tariff Heading 95.03 describes "toys" as

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reduced-size models and similar recreational.  This tariff  heading is identical to HSN Heading 95.03 which also refers to  "toys" as reduced-size models.  Both the headings describe  "toys" as representing animals or non-human objects.  They  refer to toy musical instruments, apparatus, appliances etc.   Heading 95.03 is a residuary item.  It covers Doll houses and  furniture.  Under the explanatory notes to HSN Heading 95.03,  reference is made to toys like sewing machines, musical  instruments etc. distinguishable by their size and limited  capacity from real sewing machine, musical instrument etc.   Similarly, under the explanatory Note (B) to HSN Heading  95.03, reduced-size model includes models of aircraft, trains  etc. which are reproductions of Articles.  It is important to note  that Section XX of the Central Excise Tariff Act, 1985  (hereinafter referred to for the sake of brevity as "the 1985  Act") covers Chapters Nos.94, 95 and 96 under the caption  "Miscellaneous Manufactured Articles".  Chapter 94 deals with  Furniture.  Chapter Note 1(k) excludes toy furniture or toy  lamps from Chapter 94.  Chapter Note 2 refers to the articles of  furniture, falling in Chapter 94, subject to the condition that  they are for placing on the floor or ground.  Tariff Heading  94.01 refers to Seats.  Further, the HSN Heading 94.03, which  is similar to Tariff Heading 94.03, refers to any movable article  which can be placed on the floor and mainly used in dwelling  house, schools, cafes etc. as furniture.  It covers desks, chairs  etc.  Basically, toys, as indicated by HSN Heading, are  miniature reproduction of the articles used by the adults, like,  furniture, musical instruments etc.

       In the light of what is stated above, we are of the view  hat play tables, activity desk etc., enumerated above, are more  akin to furniture under Headings 94.01 and 94.03 than toys  under Heading 95.03.

       In Corpus Juris Secundum, Volume 37 at page 1412, the  word "furniture" is defined as under:-         "A comprehensive term of very broad  meaning and general application whose meaning  changes so as to take the colour of, or be in accord  with, the subject to which it is applied.   It has been  variously defined as meaning anything which  furnishes or equips; a supply of necessary,  convenient or ornamental articles, for any business  or residence, or with which a residence is supplied,  equipment, outfit, supplies, that which fits or  equips for use or action, that which fits or supplies  a house for use or which furnishes or is added to  the interior of a house for use or convenience; that  with which anything is fitted, out, furnished, or  supplied, that with which anything is furnished or  supplied for use, those movables required for use  or ornament in a dwelling, a place of business or of  assembly; those readily movable articles which  would be serviceable generally as household  furniture without any special reference to a  particular building.  It is not confined in its  meaning to such things as are necessaries to a  family, but embraces about everything with which  a house or anything else is or can be furnished.   The term ordinarily relates to movables chattel;  personal chattels in the use of a family and applies  to all personal chattels which may contribute to the  use or convenience of the house-holder or the  ornament "of the house".  "Furniture" is not  generally included by the term "fittings"."

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       According to Concise Oxford Dictionary, "toy" is an  object for a child to play with.  It is a model or a miniature of  something.   

       According to Encyclopedia Americana, a "toy" is a  trifle.   It is a thing of little or no value.  It is a play thing.  It has  no practical use.   

       According to Oxford Classical Dictionary, a Doll’s  house furniture is a "toy".  

       According to Random House Dictionary, a "toy" is an  object.  It is a small representation of something familiar to the  child such as an animal an object, person etc. It is something  diminutive.   

       According to Collins Cobuild Dictionary, a "toy" is an  object that the children play with, for example, a doll or a  model car or an air-craft.                    In the circumstances, we hold that play table, activity  desks and chairs constitute "furniture" in terms of Tariff  Heading 94.01/94.03.  

B)      CLASSIFICATION OF "SWINGS, SLIDES, FUN                FLIERS AND ROCKERS".

       The next question which arises for determination is \026  whether the above items are "toys" under Tariff Heading 95.03,  as contended by the assessee; or whether they are equipments  for general physical exercise, gymnastics and athletics, as  submitted on behalf of the department.

       To decide the above controversy, we quote hereinbelow  Tariff Headings 95.03 and 95.06: Heading No. Description of Goods Rate of  Duty 95.03

Other toys; reduced-size ("scale")  models and similar recreational models,  working or not; puzzles of all kinds. 15% 95.06 Articles and equipment for general  physical exercise, gymnastics, athletics,  other sports (including table-tennis) or  out-door games, not specified or  included elsewhere in this Chapter. 15%

       As stated above, Tariff Heading and HSN Heading 95.03  describe "toys" as reduced-size models.  Toys are miniature  replica of articles used by adults.  Tariff Heading 95.06 is  similar to HSN Heading 95.06.  According to explanatory notes  to HSN Heading 95.06, equipments for exercise etc. are parallel  bars, rings, trapeze etc.  The said note excludes toys under  Heading 95.03.  However, it covers swings, slides etc. used in  the playground.  Therefore, on a bare reading of these

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explanatory notes, we find that the articles in question are not  equipments for general physical exercise.  They are toys under  Tariff Heading 95.03.

       In Black’s Law Dictionary, the word "equipment" is  defined to mean an article or implement used for a specific  purpose or activity.                    In Random House Dictionary, an "equipment" is defined  as an article used for gaining skill.   

       According to Collins Cobuild Dictionary, "equipment" is  a thing which is used for a particular purpose.  

       Applying the above tests, we hold that the purpose of  reduced size models of slides, swings etc. is amusement and not  physical exercise.  The Tribunal was, therefore, right in  classifying these items under Tariff Heading 95.03.

       C)      CLASSIFICATION OF PLAY POOL          In this case the Adjudicating Authority had classified  "Play Pool" as "Baths" under Tariff Heading 39.22, as against  the claim of the assessee that "Play Pool" was a toy under Tariff  Heading 95.03.  The Tribunal, however, held that "Play Pool"  was neither a toy under Heading 95.03 nor did it fall in category  of "Baths" under Heading 39.22.  The Tribunal classified it  under Heading 39.22, against which the department has not  come in appeal.

       We quote hereinbelow the aforestated Tariff Headings  39.22, 39.26 and 95.03: Heading No. Description of Goods 39.22 Baths, shower-baths, wash-basins, bidets,  lavatory pans, seats and covers, flushing  cisterns and similar sanitary-ware, of plastics 39.26 Other articles of plastics and articles of other  materials of heading Nos.39.01 to 39.14 95.03 Other toys; reduced-size ("scale") models and  similar recreational models, working or not;  puzzles of all kinds.

       In the present case the evidence on record indicates that  the "Play Pool" has a diameter of 5 ft.; it has a depth of 2.5 ft.;  it has steps to go down; it has a seat and a slide.  Its water  carrying capacity is 1000 to 1500 litres.  During summer,  children can take a cool dip in it.  During winter, it can be used  as a play-pen.  Adults can also sit in it.   

       In view of the above specifications, "Play Pool" cannot  be said to be a toy under Tariff Heading 95.03.  Further, in the  explanatory notes to HSN Heading 39.22, it is clarified that  "Baths" in the said heading would cover baby baths and  camping toilets.  Therefore, in our view, the department was  right in classifying "Play Pool" as "Baths" under Heading  39.22.

       We would have remanded the matter to the Tribunal, if  there was any ambiguity about the classification of "Play Pool"  under Tariff Heading 39.22.  However, we are not inclined to  remit the matter as the item stands fully covered by the  explanatory notes to HSN Heading 39.22.  Moreover, at the

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stage of show-cause, full opportunity was given to the assessee  to disprove that it was not falling under Heading 39.22.  On the  facts and circumstances of this case and without going into the  question as to what course the department should follow when  the Tribunal classifies the item in a different category, we hold  that the Adjudicating Authority was right in classifying "Play  Pool" under Tariff Heading 39.22.

       On the question of limitation, it may be stated that one of  the show-cause notices is dated 4.11.1997 claiming duty from  the assessee for the period commencing from 1992-93 to  28.2.1997.  By the impugned judgment, the Tribunal came to  the conclusion that the assessee had filed its classification list  giving exact description of the goods; that all the relevant  features of the products manufactured were available with the  department; that it was for the officers of the department to  conduct further examination to see whether the classification  given by the assessee was correct or not and, therefore, the  department was not entitled to invoke larger period of  limitation.  Consequently, the Tribunal directed the department  to drop the proceedings pursuant to show-cause notice dated  4.11.1997.

       Being aggrieved, the department has come to this Court  by way of Civil Appeal Nos.6776-6779 of 2004.  We do not  find any infirmity in the decision of the Tribunal.  The  classification list was filed as far back as on 22nd October, 1992.   Under the said list, the goods were declared as "Baby Slide  Toy", "Baby Chair Toy", "Baby Rocker Toy" etc.  The said list  was approved without enquiry by the department on the  description of the product.  The department did not call for the  product catalogue during the aforestated period till February,  1997.  According to the impugned show-cause notice dated  4.11.1997, the product catalogue described the above items as  "Rockers, Slides, Swings" and not as "Baby Rocker Toy, Baby  Slide Toy" etc.  According to the department, on reading of the  product catalogue with the classification list, it becomes clear  that the word "Baby" has been deliberately prefixed and the  word "toy" has been wilfully suffixed to the "Rockers, Slides,  Swings" etc.     in order to mislead the department into believing  that the said products were toys.

       We do not find any merit in these arguments.  Nothing  prevented the department from calling upon the assessee over  the years to produce their catalogues.  The classification lists  were duly approved by the department from time to time.  All  the facts were known to the department, whose officers had  visited the factory of the assessee on at least 12 occasions.  In  the circumstances, we do not find any infirmity in the reasoning  given by the Tribunal in coming to the conclusion that there  was no wilful suppression on the part of the assessee enabling  the department to invoke the extended period of limitation  under the proviso to section 11A(1) of the 1944 Act.  However,  we may clarify that the show-cause notices dated 24.6.1997,  27.5.1998, 15.10.1998, 31.3.1998 and 30.9.1999 are in time as  held by the Tribunal.

       Subject to what is stated hereinabove regarding  classification of "Play Pool" under Tariff Heading 39.22, we do  not find any infirmity in the impugned judgment of the  Tribunal.  Hence, the Civil Appeals filed by the assessee and  the cross-appeals filed by the department are dismissed.   However, in the facts and circumstances of this case, there will  be no order as to costs.

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