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TMI Blog2021 (10) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of goods in entry Sl.No. 228 says Toys like tricycles, Scooters, pedal cars, etc and at Sl.No. 440 above, states as Electronic Toys like tricycles, scooters, pedal cars, etc . Thus, we see that both the entries speaks of Tricycles, Scooters, Pedal Cars, while one gives the rate for Toys , the other gives the rate for Electronic Toys . Electronic Toys are not defined in the said Notification and also in the Customs Tariff made applicable to GST - In the case at hand, Electronic Toys are not defined in the Notification and the applicable Tariff. In such a situation, there is no merit in importing the observation/decision based on a definition specific to a Notification. In the case at hand, it is seen that the Children Scooter, Activity Ride-on, Smart Tri- cycle and Kick Scooter, have an electronic circuit for flashing lights, playing music/sound and horn, which is either powered by the Battery housed in the toy or powered by the Induction force applied while playing with the toy. Thus all the four products consists of an electronic circuit as a part of the said Toy - it is not that the Scooters, Tri-cycle and Ride-on necessarily should have flashing lights, music/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T.Nagar, Chennai-600017 (hereinafter called the Applicant ) arc registered under the GST Vide GSTIN 33AAKYS4623H1ZN. They have sought Advance Ruling on the following question: When Physical force is the primary action of a toy and if the light and the music arc ancillary to it then whether it is to be classified under Electronic Toys or other than Electronic Toys The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of ₹ 5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1. The applicant has stated that they are regular importers and traders of toys from various countries, they sell these goods in India, in retail as well as through E--Commerce platforms. They also intend to manufacture these toys in India in future. The toys imported include both electronically operated toys as well as manually operated toys in which electronic parts were fitted for providing light, music and horn etc. Some of the toys and their functionalities arc listed below:- Children s Scooter SC-007: It is a scooter toy applicable for the age range ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracting the children towards the toys. These toys are manually operated and remain fully operational and functional even without light, music or horn. Electronic circuits are dedicated only for the purpose of enhancing quality of entertainment through light, music, horn etc. and it does not interfere with operational features of the toy. The applicant has placed reliance on the following case laws, wherein it was held that while classifying goods the common parlance of the goods has to be applied. Indo-International Industries Vs Commissioner of Sales Tax, U.P. 1981 (8) E.L.T. 325 (S.C.) Rarnavatar Bhudaiprasad Etc. vs. Assistant Sales Tax Officer, Akola (1961) 12 ST 286 (SC) Commissioner of Sales Tax, Madhya Pradesh vs. Jaswant Singh Charan Singh (1967) 19 STC 469 (SC) Commissioner of Central Excise vs. Connaught Plaza Restaurant (P) Ltd. (2012) 13 SCC 639 (SC). Ponds India Ltd. Vs. Commissioner of Trade Tax, Lucknow 2008 (5) TMI 46- SUPREME COURT Further, to substantiate their interpretation the applicant has relied on the decision of Hon ble Maharashtra Tribunal in Nandi Marketing Vs. The State of Maharashtra VAT Appeal No.661 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under reference in the application and procure from other importers for trading at present. They submitted the following documents: VAT APPEAL NO.661 OF 2017 M/s Nandi Marketing vs The State of Maharashtra Bill of entry No. 4394859 dated 07.08.2019 of Nandi Marketing along \vitli import invoice covering import of Cosmic Kick Scooters of various models of COSMIC KICKSCOOTER KS-630,661,231,530 Bill of entry No.9784180 dated 24.01.2019 of Nandi Marketing for Push Ride (Activity Ride) Local sales Invoice through Amazon.in Tax Invoice for supply by Navbharat Imports covering Baby Ride, Smart Tricycle and Kick Scooter Advertisement Brochure for Smart Tricycle, Cosmic Kick Scooter and EZ Ride 3.3 The applicant, further, vide their letter dated 19.11.2020 stated that no direct imports have been made by them,; they buy from another importer M/s Nandi Marketing and based on the request made by the applicant, a copy of bill of entry was provided to the applicant by the importer.; With regard to the manufacturing process, they submitted that the proposal is for proceeding with the manufacture at a future date. Hence the details could not be furnished earlier. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report of the jurisdictional administrative authority, the applicant was extended another hearing and the virtual hearing was held on 22.09.2021. Shri. S.Murugappan, Advocate and The Authorised representative appeared for the hearing virtually. He stated that the application is to arrive at the applicable rate in respect of the 4 toys namely Children s Scooter SC 007; Activity ride-on; Smart Tri-Cycle; Kick -Scooter. He reiterated the written submissions. He stated that the feature of the toys are used by manual power which is the principal power and the electricity from the battery is used for horn, to produce music etc. and therefore these products are not electronic toys. The Authorised representative referred to the decision of Maharashtra Advance Ruling Authority, Maharashtra VAT. lie was asked to explain the entry Sl.No. 410 of Schedule III, wherein, the rate is specified for Pedal Cars also as to how their product Pedal Car is different. The Authorised representative explained that the battery and circuit arc only for providing music, horn and is not the principal power and these products do not have dual option of manual/electrical. The Assistant Commissioner, T-Nagar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Standards: GB6675.1-2014; GB6675-2-2014; GB6675.4-2014; GB6675.3-2014; GB19865-2005 No flyer produced Not Produced Full plastic body. Moves forward by manually turning the steering wheel left and right alternatively. Movement not electrically powered. 2AA size batteries are provided which powers the lights and sound. Activity Ride -on 12 - 36 Months old Consists of Wheels, Steering Wheel, battery house to house 2AA battery Beautiful cute car Design; Musical Ride-On; Comfortable Broad Seat; Helps Develop Motor Skills IN-317 dated09.11.2019; EZ Playmates Baby Ride On JEEP Red; HSN: 9503; GST is raised 412% Full Plastic body on metal frame.; Movement by pushing and turning by manually moving the steering wheel. Movement not electrically powered. 2AA size batteries are provided for light and sound Smart Tri- Cycle Upto 18 months Consists of fender, fork, wheels, pedal, battery house to house 2AA battery Classic Design Smart Tricycle; Big Full Wheels For Balance And Smooth Ride ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up on the facts of the case, it is seen that the applicant arc trading the toys , viz., Children s Scooter, Smart Tri-cycle, Activity Ride-on and Kick Scooter, which they have been considering as Toys - Other than Electronic and has applied the rate as specified under Sl.No. 228 of Schedule-II of the Rate Notification. These toys are advertised to help the Kids to develop the motor skills. The Classification as per the Customs Tariff Act is CTH 9503 which states as follows: 9503 TRICYCLES, SCOOTERS, PEDAL CARS AND SIMILAR WHEELED TOYS; DOLL S CARRIAGES; DOLLS; OTHER TOYS; REDUCED-SIZE ( SCALE ) MODELS AND SIMILAR RECREATIONAL MODELS, WORKING OR NOT ; PUZZLES OF ALL KINDS 950300 - Tricycles, scooters, pedal cars and similar wheeled toys; dolls' carriages; dolls; other toys; reduced-size ( scale ) models and similar recreational models, working or not; puzzles of all kinds: 95030010 --- Of wood 95030020 --- Of metal 95030030 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apart, we find that the Tribunal has relied on the decision of Apex Court in the case of BPL. Ltd Vs. State of Andhra Pradesh , wherein the Court has stated that To sum up, since the entire activity of the machine was not controlled electronically, it is held that it is not electronic equipment and applying the above observations the VAT Tribunal has stated that It is not in dispute that even if there is no battery cell, though light, horn, etc are not functional, still the toy is operational and child can play with it. Once it is held that the toys are not powered by either electricity or electronic circuit they cannot be held to be electric or electronic toys . We find that in the case of BPL Ltd Vs. State of Andhra Pradesh, the issue is whether Fully Automatic Washing Machine can be regarded as electronic goods as defined in the notification issued by A.P. Government for the purpose to attract a lower rate of sales tax and in that context, the Court has interpreted the words of notification and has pronounced the decision therein. Hon ble Supreme Court in the case of M/s. Msco. Pvt.Ltd Vs. Union of India, 1985 AIR 76, has held as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de signification;... . Further, as given in the Brochure of the products furnished by the applicants, the required standards of execution of the products are mentioned as G136675 .1-2014 G136675.2- 2014 G136675.4-2014 GB6675.3-2014 GB19865-2005. GB 6675 standards are China s mandatory technical requirements for toy safety, first published by Standardisation Administration of the Peoples Republic of China on 13 August 1986.; These standards provide for requirements on mechanical and physical properties, flammability, chemical and electric properties, hygiene requirements, radioactive performance, labelling requirements, its implementation and supervision, legal responsibilities and requirements for specific products. GB STANDARD - GB 19865-2005 prescribes standards for Electric toys - Safety. Standard GB 19865- 2005 provides in its scope, This Standard deals with the safety of toys that have at least one function dependent on electricity Toys using electricity for secondary functions are within the scope of this standard. From the above, it is deduced that the legal definition of Toy applicable to Tariff Act includes those designed for the amusement of childre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate notification provides the rate for Electronic Toys like tricycle, scooter, pedal cars etc, . Question arises as to when does a toy like tricycle, scooter, pedal cars etc., become electronic toy ?. Obviously the notification is not talking of toys which arc powered by electric batteries; otherwise toys like pedal cars , which are human powered would not find mention under Sl.no.440. We, therefore, arc of the firm opinion that the presence of electronic circuit for providing functionalities like flashing lights, playing music/sound and horn, is what that make them electronic toys . 7.9 To sum up, we find that in the case at hand, the products are designed to develop gross motor skills in as much as they are designed to use the physical force and can be enjoyed by either pedaling, or by pushing with the leg and also fine motor skills like blinking, discrete tasks of switching on/off the music:/light etc provided through the inbuilt electronic circuit, powered with the electrical energy (battery)/ induction force. Both the functions of the toys are targeted to develop a certain skill while amusing the child playing with it. Therefore, we hold that the products in hand ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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