P.S. Bajaj, Member (J)
1. The issue involved in the present appeal relates to the classification of a product, namely, “Hero Basic (four wheeled)” which according to the appellants is a toy designed to be ridden by the children. They have claimed its classification under Chapter 95 (sub-heading 9501.00 attracting nil rate of duty) of the schedule appended to the CETA whereas the Revenue has sought its classification under Chapter 87 (sub-heading 8705.00) of the schedule appended to the CETA.
2. The appellants are manufacturer of two wheeled motor vehicles falling under Chapter 87 of the schedule appended to the CETA. They on 24-10-1996 filed a declaration under Rule 173-B of the Central Excise Rules for classification of their new product named “Hero Basic” i.e. four wheeled motor vehicle and claimed its classification under Chapter 95 (sub-heading 9501.00) of the schedule appended to the CETA. But the Assistant Commissioner did not accept their classification and through order in original, dated 5-2-1997 ordered the classification of their product under sub-heading 8705.00 leviable to duty. The Commissioner (Appeals) confirmed that order of the Assistant Commissioner through the impugned order by rejecting the appeal of the appellants.
3. The appellants have come up in appeal before the Tribunal.
4. Before reverting to the contentions and the counter-contentions of both the sides, it would be beneficial to refer to the sub-headings 9501.00 of Chapter 95 (relied upon by appellants) and sub-heading 8705.00 of Chapter 87 of the CETA, referred by the Revenue. Chapter 95 relates to the classification of toys, games and sports requisites, parts and accessories thereof. Its sub-heading 9501.00 reads as under :
"9501.00 Wheeled toys designed to be ridden by children (for example, tricyles, scooters, pedal cars), dolls' carriages." Chapter 87 relates to the classification of vehicles (other than Railway or Tramway Rolling Stock and accessories thereof. Its sub-heading 8705.00 runs as under: "8705.00 Special purpose motor vehicles, other than those principally designed for the transport of persons or goods (for example, breakdown lorries, crane lorries, fire fighting vehicles, concrete-mixer lorries, road sweeper lorries, spraying lorries, mobile workshops, mobile radiological units)."
5. The learned Counsel for the appellants has contended that the product “Hero Basic (four wheeled)” is only a children’s car powered by a motor and technically designed to be ridden by the children and as such deserves to be classified under sub-heading 9501 of the CETA. He has referred to the corresponding Chapter 97 of the HSN which according to him is fully aligned to the Chapter 97 of the CETA and further argued that nomenclature of this chapter of the CETA and of HSN is the same except a minor difference in two headings not relevant to the goods in question and that the HSN Entries, have to be preferred and relied on for resolving the dispute regarding the classification of the product in question, in view of the ratio of the law laid down by the Apex Court in CCE, Shillong v. Woodcraft Products Ltd., 1995 (77) E.L.T. 23 (S.C.) and also by the Tribunal in :-
(1) Swarup Ribres Industries v. CCE 1999 (31) RLT 155.
(2) Abrasive India v. CCE [1999 (35) RLT 238.
(3) CCE, Bangalore v. Phenolite Electro [1999 (33) RLT 126.
(4) LML Ltd. v. CCE [1999 (105) E.L.T. 728]
(5) Grasim Industries v. CCE [1998 (24) RLT 598.
(6) CCE, New Delhi v. Sunrise Paper [1999 (34) RLT 156.
6. On the other hand, the learned JDR while refuting this contention of the Counsel has argued that the product of the appellants is not a children car but is a four wheeled vehicle fitted with 49 CC powered motor and can be plied on the road. Therefore, it has been rightly classified under sub-heading 8705.00 of the CETA.
7. We have heard both the sides and gone through the record.
8. The product of the appellants, as named by them is “Hero Basic”. It is four wheeled vehicle having 49 CC powered motor. It is driven by that powered motor. It has got designed handle and big four wheels. Its seat can accommodate two persons. In the advertising pamphlet (copy of which has been placed on record by the appellants) this vehicle has been described as “training-cum-recreation mobile” and not as children car or toy. The other features of this mobile mentioned in the pamphlet, are that it prepares the children aged six years and above for safe driving in the future and is immensely popular abroad. And by the time the kid hits the roads with his first vehicle, he is already a seasoned driver. The Technical Highlights of this vehicle mentioned in the pamphlets are, that it has got single cylinder, two stroke, Air cooled, Displacement-49 CC, Flywheel magneto ignition system, Electric start, crankshaft to rear wheel through centrifugal automatic clutch, single speed constant mesh gear train and roller chain. In this pamphlet, the product “Hero Basic” had not been described as children’s toy or car, but as a training-cum-recreation mobile meant for giving driving training to the children.
9. Under Chapter 95 of the CETA the Expression “wheeled toy” had not been defined. However, in the corresponding Chapter 95 of the HSN, it has been specified that these toys include :
(1) Children’s tricycles and the like, but excluding bicycles of heading 87.12.
(3) Pedal-or hand propelled wheeled toys in the form of animals.
(4) Pedal cars, frequently in the form of miniature sports cars, jeeps, lorries, etc.
(5) Wheeled toys, propelled by hand levers.
(6) Other wheeled toys (with no mechanical transmission system) which are designed to be .
(7) Children’s cars powered by a motor.
10. Chapter 87 of the CETA under which the classification has been sought by the Revenue is also fully aligned to the Chapter 87 of HSN. Sub-heading 87.05 of this Chapter covers special purpose motor vehicles other than those principally designed for the transport of persons or goods. However, this Chapter as per the HSN Explanatory Notes excludes wheeled toys designed to be ridden by children and children’s cycles (other than children’s bicycles Heading 95.01).
11. The expression “motor vehicle” under the Motor Vehicle Act had been defined to mean 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 chassis to which a body has not been attached and a trailor, 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 25 cc.
12. There is no dispute with the proposition of law as laid down by the Apex Court in CCE, Shillong v. Woodcraft Ltd. supra, and in the cases decided by the Tribunal (detailed above) that dispute regarding the Tariff classification so far as possible should be resolved with reference to the nomenclature indicated by the HSN. In the instant case, the dispute to be resolved is, as to whether the product of the appellants is classifiable under Heading 87.05 or under Heading 95.01 of the CETA with reference to the HSN Notes of both these Chapters referred to above. But for this purpose, the nature of the product, the price, the mode and manner in which it has been described in the advertising pamphlets or brochures for sale to the public, and the manner in which it is being cleared from the factory premises for export as according to the appellants the product is being exported by them, have to be taken into consideration. The product has been named by the appellants as “Hero Basic, the training-cum-recreation mobile” in their advertising pamphlet, the copy of which has been placed on record. In that pamphlet it has also been mentioned by them that it is four wheel traffic training vehicle for kids aged 6 years and above and prepares them for safe driving in the future, immensely popular abroad, manufactured for unlimited thrills guarantees hours of uninterrupted fun and zip. Apart from this, the Hero Basic offers a host of other educational benefits for the kids too. For instance, it helps the kids to know everything about driving safety, vehicle control and other factors that are essential for safe driving. The Technical Highlights of the product “Hero Basic” mentioned in the pamphlet are :
“Single cylinder, Two stroke, Air cooled. Displacement : 49 cc Ignition : Fly-wheel magneto ignition system, Electric start. Transmission : Crankshaft to rear wheel through centrifugal (automatic) clutch, single speed constant mesh gear train and roller chain.”
Its price though not mentioned in the brochure is round about Rs. 30,000/- which is more than the price of a scooter (two-wheeler) and Kinetic Honda. It can accommodate two persons on the seat and have got four big wheels as is clear from its pictorial diagram given on the pamphlet. The plea of the appellants that the vehicle is a children’s car or toy, designed to be ridden by the children and as such is classifiable under Chapter 95 of the Tariff read with the corresponding Chapter of the HSN, cannot be prima facie accepted in the light of what has been described by them in their advertising pamphlet, referred to above. They have not described the vehicle as a children’s car or children’s toy in the pamphlet. Moreover, the appellants are admittedly exporting this vehicle, but they have not produced copies of their export entries, bill of lading to show that this product had been described therein as children’s car or wheel toy for the children. They have also not disclosed by placing any material on record the classification claimed or made under the Customs Tariff by them for export purposes. All these facts have been with-held by them but these are very essential and important for determining the true classification of their product. In the impugned order also these facts have not been noticed by the adjudicating authority. The stand of the Revenue that the product is covered under Chapter 87 sub-heading 8705.00 being a special purpose motor vehicle, can be also more appropriately appreciated if all these facts are brought on record. Therefore, the matter deserves to be readjudicated, in the interest of justice, and for proper classification of the product in question once for all.
13. In the light of the discussion made above, the impugned order of the Commissioner (Appeals) is set aside and the matter is sent back to the adjudicating authority for determining the classification of the product in question afresh in the light of what has been discussed above, after hearing both the sides.