1994(01)LCX0061

 BEFORE THE CEGAT, SPECIAL BENCH ‘B’, NEW DELHI

S/Shri P.C. Jain, Member (T) and S.L. Peeran, Member (J) Third Member on Reference : Shri K.S. Venkataramani, Member (T)

LEISURELAND PVT. LTD.

Versus

COLLECTOR OF CENTRAL EXCISE, CALCUTTA

 Final Order Nos. E/62 and 63/94-B1 and Misc. Order No. E/348/91-B1, dated 27-1-1994 passed in Appeal Nos. E-4164/91-B1 and 1854/92-B

 CASES CITED

Darshan Singh Pavitra Singh v. UOI —1988 (034) ELT 631............................................... [Para 3]

Atul Glass Industries Ltd. v. Collector —1986 (025) ELT 473............................................ [Para 3]

Oswal Agro Mills Ltd. v. Collector—1993 (066) ELT 37...................................................... [Para 3]

Collector v. Calcutta Steel Industries—1989 (039) ELT 175................................................ [Para 3]

Collector v. Chemphar Drugs & Liniments—1989(02)LCX0024 Eq 1989 (040) ELT 0276 (SC).............................. [Para 3]

Chemical Industries v. UOI—1980 (006) ELT 598............................................................... [Para 12]

Sonali Textile Corporation v. UOI—1986 (023) ELT 433................................................... [Para 12]

Asian Paints v. Collector—1987(03)LCX0021 Eq 1988 (035) ELT 0003 (SC)............................................................. [Para 12]

Krishna Carbon Co. v. Collector —1988(09)LCX0051 Eq 1988 (037) ELT 0480 (SC)............................................. [Para 12]

TSR & Co. v. UOI —1985(03)LCX0063 Eq 1985 (022) ELT 0701 (Mad.)............................................................... [Para 12]

 REPRESENTED BY : Shri K.K. Anand, Advocate, for the Appellants.

Shri K.K. Dutta, JDR, for the Respondents.

[Order per : S.L. Peeran, Member (J)]. - The appellants are aggrieved with the classification of the item ‘Go-kart’ under chapter sub-heading 8703.00 of Central Excise Tariff, 1985 as ‘Motor cars & other Motor vehicles principally designed for the transport of persons (other than those of Heading No. 87.02) including station wagons and racing cars’. As a consequence of this classification, CED of Rs. 81,122.63 has been confirmed under Rule 9(2) of Central Excise Rules read with proviso to Section 11 of the Central Excises & Salt Act, 1944, in respect of the said items removed from the appellant’s factory without payment of duty during the period 1988-89, 1989-90 and 1990-91 (upto 26-4-1990), which had been demanded as per show cause notice dt. 22nd Oct. ‘90. In their detailed reply dt. 4-2-1991, the appellants had claimed that the goods are not Motor cars and that they had not been ‘principally designed for transport of persons’. The goods were manufactured/assembled by them purely and primarily for use for amusement purpose in enclosed premises in parks, fairs, farm houses, court-yards, resorts. They are simply a toy for imparting amusement to the children. It is their further case that the item “Go-karts” are not roadworthy, by any stretch of imagination and that they had not been designed or manufactured or assembled for the purpose of transporting the persons. It is their further contention that no vehicle can ply on road unless it is certified by the Automobile Research Association of India (ARAI). The appellant had not applied for such road-worthiness certificate. The item also did not require registration from any transport authority anywhere in India, as Motor vehicle and no licence was also required for its plying in the enclosed places. The item was only a replica of cars, in miniature size and not a car as such. It did not have a starter, nor gears nor it could be reversed. The item was fitted with battery or dynamo to provide sufficient light for night driving purpose. There was also no turn signals or stop light or back light fitted on this toy ‘Go-karts’. It was open on all sides including the top and there were no windshield or wipers. They were designed as toys for children. Relying on page 142 of Harmonised Commodity Description and Coding System - Explanatory notes, it is pleaded that “vehicles specified for use in fair grounds e.g. ”dodgam" cars are classifiable in Heading 95.08".

2. The ld. Collector after granting a hearing has passed the impugned order rejecting the contentions of the appellants and has confirmed the demands raised in the show cause notice on the basis of the classification adopted by the Department. The ld. Collector has held :

 “A careful reading of the above Tariff description will make it clear that the Motor cars and other Motor vehicles under this sub-heading are capable of carrying persons i.e. these types of cars are so designed that they may carry persons. The said concern stressed on the point ”principally designed for the transport of persons" - here the transport is not a ‘public transport type’ like the Motor Vehicles falling under sub-heading 8702.00.

b.  As regards the points raised by the said concern in (b) and (c) above, I find that golf-cars under this sub-heading are also not plying on road and as such road-worthiness is not necessary for Go-karts for being classified under this sub-heading.

c. The point raised by the said concern at (d) above is not relevant here as because Motor vehicle the Go-kart is a type of Motor-car similar to a ‘Golf-car’ falling under sub-heading 8703.

6.3 It is also found that Shri Lalit Mohan Agarwala, Managing Director of the said concern had acted in a manner otherwise than as laid down under the provisions of the said Rules and dealt with the excisable goods knowing fully well that those were liable to confiscation under the said Rules."

3. It is these findings which are challenged before us. We have heard Shri K.K. Anand, ld. Advocate for the appellant and Shri K.K. Dutta, ld. JDR for the Revenue. Shri Anand, ld. Advocate contended that the ‘Go-kart’ is designed and manufactured not as a motor car but as an amusement item for children, to be plied in parks and other enclosed areas. Although it had an engine and the fuel used was petrol, but it was of a very small size to accommodate only two persons, and did not have gears, reverse gear, lights and also did not meet the road-worthiness. The Automobile Research Association of India had also issued a letter to the effect ‘Go-kart’ did not meet the requirement of a motor vehicle for use on public roads. Referring to Section 2(18) of Motor Vehicles Act, 1939, ld. Advocate submitted that the definition given therein of ‘Motor Vehicle’, should be as the Central Excise Tariff Act had given any definition of Motor Vehicle. In this context he referred to the ruling rendered in the case of Darshan Singh Pavitra Singh & Others v. Union of India & Others as rendered in the case of 1988 (034) ELT 631, para 9, wherein, the definition of Motor Vehicle had been adopted. He further submitted that the department had not discharged their burden of classification and in this context relied on the rulings of the Hon’ble Supreme Court as rendered in the case of Atul Glass Industries Ltd. & Others v. Collector of Central Excise & Others as reported in 1986 (025) ELT 473 and that of Oswal Agro Mills Ltd. v. Collector of Central Excise, 1993 (066) ELT 37 and the case of Collector of Central Excise v. Calcutta Steel Industries & Others [1989 (039) ELT 175] to support his plea that there is mental association of the consumer between an article and the need it supplies in his life. Therefore, it is his submission that in the present case, the item is only used as an amusement item and not as a motor vehicle. Therefore, the Counsel argued that the ‘Go-kart’ cannot be classified as a motor vehicle. The Id. Counsel further submitted that even by applying the rules of interpretation, the most akin tariff entry has to be adopted and it is Tariff Entry 95.08 which is appropriate one in the present case. ld. Counsel further argued that the appellant had corresponded with Collectorate of Central Excise & Customs, New Delhi and had sought their guidance regarding the excisability of the item and as such the benefit of time bar should also be extended to them, as they were under bona fide belief that the item is not a motor vehicle but an amusement item. In this context, he relied on the ruling rendered in the case of Collector of Central Excise v. Chemphar Drugs & Liniments as reported in 1989 (040) ELT 276.

4. Shri Dutta arguing for the Revenue submitted that the ‘Go-kart’ had all the features of a motor vehicle. The party in their specifications had clearly spelt out that the ‘Go-kart’ is

“good for in city/township transportation (subject to RTA approval. Also convenient for Tea Estates, Factories, Hotels, Farm Houses, Tourist resorts, sea-side resorts and private use (No R.T.A. approval required)”.

Referring to the technical specification, Shri Dutta, pointed out that the weight was 60 - 90 kgs., speed 40 Km/Hr. Max. and had petrol consumption of 25 Km. /litre app. Therefore, it is his contention that ‘Go-kart’ met all the specifications of a motor vehicle and hence the classification adopted by the deptt. is justifiable.

5. We have carefully considered the submissions made by both the sides and have also perused the technical details of the item in question and the rulings cited by the ld. Counsel. We have noted few technical details of the item ‘Go-kart’. Further details of the technical specification of the item as supplied by the appellants is also noted hereinbelow :

Technical Specifications

a. Passenger capacity - Single/Double

b. Weight - 60 to 90 Kgs.

c. Speed - 40 Km./Hr. Max.

d. Instrument - Speed & K.M. Meter

e. Steering - Positive

f.  Electrical - Lights & Horn

g. Wheels :

(i) Pneumatic

(ii) Spoked or solid

(iii) Base -1,000-1270 mm

(iv) Track - 750-900 mm.

h. Brakes - On both rear wheels (wire linkage)

i. Accelerator - Wire linkage

j. Start - Push/Recoil

k. Clutch - Centrifugal

l. Fuel : (i) Petrol & Mobil oil

Consumption : (ii) 25 Km/Litre app.

Capacity : (iii) 3 Lt. app.

m. Engine :

(i) Power 2.5 BHP app.

(ii) Single Cylinder

(iii) Two Stroke

n. Chassis - Tubular Steel Frame

o. Body - PBS Sheet

p. Overall Dimensions :

(i) Length 2000 m.m. app.

(ii) Width 850 m.m. app.

(iii) Height 800 to 1000 m.m.

q. Steering locking 40° app. both ways

The Automobile Research Association of India by their letter dt. 8-7-1991, has clarified after perusing the technical details of the ‘Go-kart’ that this item “does not meet the requirement of a motor vehicle for use on roads”. It is also on record that the item ‘Go-kart’ is not to be used on roads but only in enclosed areas. Now the question is as to whether the impugned item with these details is in a position to satisfy the requirement as specified in the tariff sub-heading 8702.00. The description of this sub-heading is already extracted supra. It has to be seen as to whether this ‘Go-kart’ satisfies the trade understanding and commercial parlance tests, as regards of motor car or other motor vehicle principally designed for the ‘transport of persons’. The understanding of the motor car and other motor vehicle has to be taken as per the definition given in the tariff or in the absence of such a definition in the tariff then resort has to be taken to the definition available in any other statute. The Punjab & Haryana High Court has taken the definition of motor vehicle as appearing in Section 2(18) of the Motor Vehicles Act, 1939. The said definition reads

“any mechanically propelled vehicles 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”.

As can be seen from this definition, the motor vehicle has to be mechanically propelled vehicle adapted for use upon roads. We have to see as to whether the ‘Go-kart’ satisfies in the first instance the definition of motor vehicle as given in the Motor Vehicles Act, 1939. The admitted fact in this case is that this ‘Go-kart’ does not require registration under the Motor Vehicles Act and that the same is not fit for use upon the road. This is supported by the letter dt. 8-7-1991 issued by the Automobile Research Association of India. The motor vehicle in the first instance should be one which should be adapted for use upon roads. This ‘Go-kart’ no doubt is mechanically propelled and the power of propulsion is transmitted thereto from an internal source, i.e. the engine and the use of petrol, however, the vehicle not being suitable for use upon the road, which means a public road, the item ‘Co-kart’ does not come within the definition of ‘Motor Vehicle’ as defined under the Motor Vehicles Act, 1939. The second test that we have to see as to whether this ‘Go-kart’ satisfies the trade and commercial understanding of motor car or motor vehicle. The tariff entry states that motor cars or other motor vehicles principally designed for the transport of persons, would be classifiable under the sub-heading. The Department has not placed any evidence of trade and commercial understanding about this item being considered as motor car or a motor vehicle principally designed for the transport of persons. The technical specification given by the appellant discloses that, although the design of the ‘Go-kart’ is like a motor car and has got the features of a motor car but yet it has not been designed for transport of persons. The ‘Go-kart’ has been principally designed for the purpose of amusement as has been contended by the appellants. The appellants have stated in the technical brochure that it could be used in enclosed premises like farm houses, court yards and resorts. The appellant has not claimed in their technical brochure that this use within the enclosed premises is for the purpose of transporting persons. Their main claim is that it is principally designed for amusement for children. The adults may also join with the children in amusing themselves, but that by itself would not make the item a motor car or a motor vehicle designed for transport of persons. In that view of the matter, the classification adopted by the department under sub-heading 8703.00 of Central Excise Tariff ‘85 is not correct and it fails. As regards the claim of the appellant for classification under sub-heading 9508 which reads “roundabouts, swings, shooting galleries and other fairground amusements”. It has to be observed that this tariff item has not been considered by the lower authorities and therefore, it is but proper that the matter be remanded to the lower authorities to consider the claim of the appellants and also to reconsider the question of classification of the impugned goods. Ordered accordingly.

6. [Order per : P.C. Jain, Member (T)]. - I have carefully gone through the order proposed by my learned Brother, Shri S.L. Peeran, Judicial Member, but I regret, with respect, that I am unable to agree with him.

7.1 Chapter 87 of the CETA, 1985 speaks of all “Vehicles other than Railway or Tramway Rolling Stock, and parts and accessories thereof”. To cut down the scope of Tariff Heading 87.03 (already set out in para 1 of learned Judicial Member’s order) to vehicles adapted for use upon roads, based on the definition of a motor vehicle as appearing in Section 2(18) of the Motor Vehicles Act, 1939, would not be correct in my view.

7.2 It is a settled proposition of law that a definition of an expression given in one enactment should not be adopted for the purpose of another enactment unless the two enactments are allied and cognate to each other. Each enactment has a different purpose and scheme. Purpose of the Motor Vehicles Act, 1939 is to regulate transport. As mentioned in the Statement of Objects and Reasons to the Bill culminating in the said Act, purpose is as follows :-

“In the interests alike of the safety and convenience of the public and of the development of a coordinated system of transport, much closer control is required than the present Act permits, and it is necessary to take powers to regulate transport.”

whereas the purpose of the Central Excise Tariff Act is to give description of all goods manufactured and traded in the course of commerce and trade of the country and to impose tax on manufacture of such goods. It will not, therefore, be appropriate, in my view, to adopt the definition of ‘motor vehicle’ in the Motor Vehicles Act, 1939 in interpreting the scope of entries in Chapter 87 of the CETA, 1985.

 7.3 It is also worth noting down that Tariff Item 34 of the erstwhile Central Excise Tariff i.e. First Schedule to the Central Excises & Salt Act, 1944 had given a definition of ‘motor vehicle’, based on the Motor Vehicles Act, in the following manner :-

 “Motor vehicles means all mechanically propelled vehicles, other than tractors, designed for use upon roads’

 Tariff Item 34 read as :

“Motor Vehicles and Tractors, including Trailers”.

Present tariff, by not adopting the definition of motor vehicles, as stated above, has to be interpreted in a different manner without the use of the said definition.

7.4 No evidence of ‘Motor Vehicle’, as known to Commercial Circles, has been brought on record by the respondents. On the other hand, pamphlet of the appellants themselves and their sales to various customers, such as a Transport Company, industrial houses, hotels. Tea Estates support the department’s contention that ‘go-kart’ is meant for transport of persons in large private areas/estates serving the purpose of a ‘motor vehicle’. Sale invoices indicate ‘two seaters’ meaning transport of two persons. Although, the ‘goods’ under consideration have been sold under the nomenclature ‘go-kart’ - the trade name of the goods, no doubt is left about their character and use as a motor vehicle for transport of persons. It is immaterial, for the purpose of the CETA, 1985, that these ‘go-karts’ are not allowed to be used on public roads and streets, because of the restrictions placed under the Motor Vehicles Act.

7.5 Scope of the Tariff Heading 87.03 is self-explanatory. It is, however, further clear from the Explanatory Notes to HSN which lay down that the said heading includes, inter alia, “golf cars and similar vehicles”.

8. It will not be correct to say that the adjudicating authority has not considered the alternative classification under Heading 95.08 (dodgam cars) suggested by the appellants. The said authority has, recorded the contention in para 4(h) of the impugned order but this has not found favour with the said authority. We also find that the appellants have not placed any material on record as to what ‘dodgam cars’ are to look into their contention at this stage. A mere bald assertion is not enough to classify the goods as ‘dodgam car’.

9. Taking the overall view of the entire material on record, including the specification of the goods, and the submission of the learned counsels for both sides, I hold that the goods have been correctly classified under Tariff Heading 87.03 of CETA, 1985.

10. I do not find any merit in the plea of time bar. The appellants had been manufacturing goods without licence and without the knowledge of the department.

11. In short, I dismiss the appeal.

POINT OF DIFFERENCE AMONG THE MEMBERS

 “Whether the matter is to be remanded in the light of the directions given in the judgment of the Judicial Member or the appeal is to be dismissed as held by the Technical Member under the facts and circumstances of the case.”

12. [Order per : K.S. Venkataramani, Member (T) agreeing with P.C. Jain, Member (T)]. - Arguing on the point of difference, the ld. Counsel for the appellants, Sh. K.K. Anand reiterated the submissions made before the Bench and the relevant case law as recorded in the order proposed by Hon’ble Member (Judicial), and submitted with reference to the order proposed by the Hon’ble Member (Technical) that when the term Motor Vehicle is not defined in the CETA, 1985, it will be reasonable to construe it with reference to the meaning given to it in other enactments. In this respect, ld. Counsel cited and relied upon the M.P. High Court decision reported in 1980 (006) ELT 598 in the case of Chemical Industries v. Union of India and on Gujarat High Court decision in Sonali Textile Corporation v. Union of India reported in 1986 (023) ELT 433. It was held that the definition of drugs in Drugs & Cosmetics Act could be considered for classification under Central Excise Tariff. The ld. Counsel further submitted, relying upon Asian Paints v. Collector of Central Excise -1987(03)LCX0021 Eq 1988 (035) ELT 0003 (SC) and 1988(09)LCX0051 Eq 1988 (037) ELT 0480 (SC) in the case of Krishna Carbon Co. v. Collector of Central Excise that tariff item is to be construed in accordance with commercial understanding and also urged that how a manufacturer advertises his product is most conclusive for its classification under the tariff for which the ld. Counsel cited Madras High Court decision in the case of T.S.R. & Co. v. Union of India, 1985(03)LCX0063 Eq 1985 (022) ELT 0701 (Mad.). The Ld. Counsel pleaded that the order proposed by Hon’ble Member (Judicial) is just and fair.

13. Shri K.K. Dutta, ld. D.R. contended that the order proposed by the Hon’ble Member (Technical) fully and properly covers the issue. It was urged that there is no indication in Heading 87.03 CETA 1985 that registration under Motor Vehicles Act is a condition for classification thereunder and its scope is wide enough to cover any motor vehicle. The ld. D.R. argued when the tariff description is clear enough there is no necessity to import definition of the term motor vehicle from other enactments whose object is different, or to resort to the common parlance test. The ld. D.R. further pointed out that the description and product specification given by the manufacturer is an important and relevant factor for classification indicating their own understanding of the product and that it may further be noted in this case the appellants are the sole manufacturers of the product.

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 Hon’ble Member (Technical) is, therefore, concurred with.

FINAL ORDER

15. In view of the majority opinion, the appeal is dismissed.

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Equivalent 1994 (71) ELT 489 (Tribunal)