1985 (5) TMI 231 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility of Luna Mopeds for exemption from Central Excise duty under Notification No. 52/77.
2. Interpretation of the term "powered cycle" as per the notification.
3. Trade and common parlance understanding of "cycle" and "moped".
4. Relevance of the Explanatory Memorandum and Finance Minister's speech in interpreting the notification.
5. Validity of the Assistant Collector and Collector of Central Excise (Appeals) decisions.

Issue-wise Detailed Analysis:

1. Eligibility of Luna Mopeds for Exemption from Central Excise Duty under Notification No. 52/77:
The central issue in the appeal was whether Luna Mopeds could be classified as "powered cycles" and thus be eligible for exemption from Central Excise duty under Notification No. 52/77, dated 6-4-1977. The appellants argued that their product conformed to the definition of "powered cycle" as given in the notification, which described it as a mechanically propelled cycle that could also be pedaled if necessary. The Assistant Collector and the Collector of Central Excise (Appeals) rejected this claim, stating that Luna Mopeds did not meet the criteria set out in the notification.

2. Interpretation of the Term "Powered Cycle" as per the Notification:
The notification defined "powered cycle" as a mechanically propelled cycle that could also be pedaled if necessary. The Assistant Collector held that powered cycles were different from mopeds, emphasizing that mopeds could not be used as bicycles for long distances solely by pedaling, and that the engine in mopeds was an integral part of the vehicle. The Collector of Central Excise (Appeals) added that trade understanding should be considered, and no evidence had been produced to show that Luna Mopeds were known as cycles or powered cycles in the trade.

3. Trade and Common Parlance Understanding of "Cycle" and "Moped":
The appellants presented various dictionary definitions and trade references to argue that "moped" and "powered cycle" were synonymous. However, the Tribunal found that in common and commercial parlance, mopeds and cycles were distinct terms. The Tribunal gave more weight to printed leaflets from various manufacturers, which suggested that mopeds were different from powered cycles. The Tribunal concluded that Luna Mopeds were not understood as cycles in trade and common parlance, and thus did not qualify for the exemption.

4. Relevance of the Explanatory Memorandum and Finance Minister's Speech in Interpreting the Notification:
The Tribunal referred to the Explanatory Memorandum to the Notification No. 52/77, which stated that the exemption was granted to powered cycles because the internal combustion engines, which formed a major part of the value of such cycles, would have already borne duty. The Tribunal found that this supported the view that the exemption was intended for cycles fitted with motors, not for mopeds. The Tribunal also considered the Finance Minister's speech, which indicated that mopeds were subject to a lower rate of duty, further suggesting that the intention was not to exempt mopeds under Notification No. 52/77.

5. Validity of the Assistant Collector and Collector of Central Excise (Appeals) Decisions:
The Tribunal upheld the decisions of the Assistant Collector and the Collector of Central Excise (Appeals), albeit on slightly different reasoning. The Tribunal agreed that mechanical propulsion was not the intrinsic character of a powered cycle as per the notification, and that Luna Mopeds did not fit the definition of a powered cycle. The Tribunal dismissed the appeal, concluding that Luna Mopeds did not qualify for the exemption under Notification No. 52/77.

Conclusion:
The Tribunal concluded that Luna Mopeds did not qualify for exemption under Notification No. 52/77, dated 6-4-1977, as they did not meet the definition of "powered cycle" in common or commercial parlance. The appeal was dismissed, upholding the orders of the lower authorities.