2008 (6) TMI 495 - AT - Central Excise

Issues Involved:
1. Classification of items manufactured by the respondents.
2. Eligibility for Small Scale Industry (SSI) exemption.
3. Applicability of the extended period of limitation under Section 11A of the Central Excise Act, 1944.

Issue-wise Detailed Analysis:

1. Classification:
The primary issue was the classification of various items manufactured by the respondents, including "Around the World," "Moneyply," "Moneyply Delux," "Indoor Badminton Tennis," "City Traffic," and "Four Wins." The Revenue contended that these items should be classified under CET sub-heading 9504.90 as "Table or Parlour Games," while the respondents argued they were "Educational Toys" under CET sub-heading 9503.00, attracting a nil rate of duty.

The Tribunal found that the goods in question are neither educational toys nor sports goods but are games played by more than one individual (child). The competitive element present in these games, involving winning or losing, aligns them with the definition of "Table or Parlour Games" under Chapter Heading 95.04. The Tribunal referenced the HSN Notes to Chapter Heading 95.04 and previous decisions, such as the case of Pleasantime Products v. CCE, Mumbai-I, which classified "Scrabble" as a table or parlour game. Consequently, the Tribunal set aside the lower appellate authority's classification and classified the disputed items under CETA sub-heading 9504.90.

2. Eligibility for SSI Exemption:
The goods bore the name of the manufacturer and the monogram/logo of the marketing firm, M/s. Shadilal & Sons. The Tribunal noted that the expression "brand name" or "trade name" as defined in the small scale exemption Notification No. 1/93-C.E., dated 28-2-1993, includes any name or mark used to indicate a connection in the course of trade between the specified goods and the person using such name or mark.

The Tribunal found that the printing of "marketed by M/s. Shadilal & Sons" and "brought to you by M/s. Shadilal & Sons" with the logo/brand name "Shadilal Toys and Games" on the cartons indicated a trade connection. The plea that the names of the games were brand names of the manufacturers was a new factual plea and could not be considered at this stage. Therefore, the goods were branded goods and not eligible for the SSI exemption.

3. Applicability of the Extended Period of Limitation:
The Tribunal held that the extended period of limitation was available to the department because the assessees did not inform the department that they were manufacturing specified goods affixed with the brand name of the trading company. This non-disclosure was a vital piece of information required by the excise authorities. The respondents' claim of a bona fide belief that their goods were children's toys classifiable under Chapter Heading 95.03, attracting a nil rate of duty, was not tenable as no basis for such a belief was established.

Conclusion:
The Tribunal concluded that the disputed items fall for classification under CET sub-heading 9504.90 as board games, attracting Central Excise duty at the appropriate rate. The goods were not exempt from payment of duty under the relevant notifications covering sports goods, and the benefit of SSI exemption was not available as the games were affixed with the brand name/monogram of the trading company, M/s. Shadilal & Sons. The demands were not hit by time-bar, and the impugned orders were set aside, restoring the orders of the adjudicating authority, which confirmed duty demands with interest and imposed penalties on the respondent manufacturers. Appeals were allowed.

Pronounced in Court on 25-6-2008.

← Previous Next →