2004 (97) ECC 256 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(A)

Hon'ble Justice Smt. K.K. Usha, President and Shri C.N.B. Nair, Member (T)

O.K. Play (I) Ltd.

Versus

CCE, Delhi-III (Gurgaon)

E/CO/147/2004 & Misc.C/141/2004-NB(A)
Appeals No. E/1221 & 1210/2004-NB(A), E/1944/2004-NB(A) and E/2360/2004-NB(A)

[Arising out of Order-in-Appeal No. 118/03 deated 28.11.2003 passed by Commissioner of Central Excise, Gurgaon, 81/AKG/GGN/2004 dated 6.2.2004 passed by Commissioner of Central Excise (Appeals), Gurgaon and 11/04 dated 20.4.2004 passed by Commissioner of Central Excise, Gurgaon]

Misc Order No. 147/2004-NB(A)
Final Order No. 637-40/2004-NB(A), dt. 28.6.2004, Certified on 1.7.2004

Classification (C. Excise)

Play Pool -- Heading 9503, 3922 of CETA -- The article cannot be described as play thing with which the children can play so as to be treated as a toy. It cannot be treated as bath tub coming under 3922.10 in HSN under 3922 covering baths, shower-baths etc. It is mentioned that this heading covers fittings designed to be permanently fixed in place, in houses, etc. normally by connection to the water or sewage systems. Play pool in question neither would come under 3922.10 nor Heading 9506 of the Central Excise Tariff Act, 1985. It cannot be treated as a equipment for physical exercise, gymnastics or other sports or outdoor games of any kind. Held, more appropriate Heading would be 3926 i.e. other articles of plastics. Rockers, slides, swings, fun fliers etc. under 9503, activity desks, chairs, tables and play tables under 9401/9403 of CETA.

PRESENT :

Shri L.P. Asthana, Adv. for the appellant.

Ms. K.A. Mishra, SDR for the respondent.

Cases Cited :

1. Collector of Central Excise Hyderabad v. Bakelite Hylam Ltd., 2002 (82) ECC 3 (SC) [Para 21]

2. Gujarat State Fertilizers Co.Ltd. v. CCE, 1997 (58) ECC 1 (SC)....................... [Para 20]

3. Hindustan Polymers Co.Ltd. v. CCE Guntur 1999 (106) ELT 12 (SC)................ [Para 20]

4. Indian Oxygen Ltd. v. CCE, 1997 (89) ELT 557................................................. [Para 6]

5. Metal Extruders (India) Pvt. Ltd. v. CEGAT 1998 (97) ELT 32 (SC)................... [Para 20]

6. Metro International v. CCE, 1998 (102) ELT 379 (Tri)......................................... [Para 6]

7. Prince Khadi Woollen Handloom Prod.Coop.Indl.Society v. CCE, 1996 (88) ELT 637 (SC)            [Para 20]

8. Reckitt & Coleman of India Ltd. v. CCE, 1996 (88) ELT 641 (SC)..................... [Para 20]

9. Supreme Industries Ltd., 1999 (108) ELT 460 (Tri).................................. [Paras 18, 19]]

10. Voltas Ltd. v. CC, Bombay, 2002 (83) ECC 13 (SC)...................................... [Para 23]

11. Warner Hindustan Ltd. v. CCE, Hyd., 1999 (66) ECC 592 (SC)....................... [Para 20]

Per : Justice K.K. Usha

Appeals No. E/1221/2004 and E/1944/2004 are at the instance of assessee M/s. O.K. Play (I) Ltd. Challenging the orders passed by the Commissioner of Central Excise, Gurgaon dated 28.11.2003 and 20.4.2004. Appeal No. E/1210/2004 filed by the assessee and Appeal No. E/2360/2004 filed by the Revenue are both directed against order passed by the Commissioner (Appeals), D-III, Gurgaon dated 6.2.2004. Since the issues for consideration in these appeals are common and the assessee is the same, we propose to dispose of the appeals under a common order.

2. The assessee is engaged in the manufacture of various types of toys for children. Pursuant to two show cause notices dated 1.5.97 and 4.11.97 a duty demand of Rs. 2,31,47,904 was raised against the assessee invoking the extended time under proviso to Section 11A of the Central Excise Act, 1944. A penalty of Rs. 2,50,29,984 was also sought to be imposed. Confiscation of land, building plant and machinery was proposed under Rule 173-Q. There was also a demand of interest under Section 11AB.

3. The demand under the first show cause notice was in respect of moulding powder prepared by the assessee and consumed captively in the manufacture of exempted final products during the period from October 1996 to March 1997. Under the 2nd show cause notice apart from the allegation that the appellant had not discharged duty on the moulding powder it was further alleged that the assessee had incorrectly declared rockers, swings, play pool, body chairs, baby desk tables, pay table etc. as children toys and cleared the same under Heading 95.03 without payment of duty. According to the department, the goods were to be classified under 95.06, 94.01, 94.03 and 3922.10 and, therefore, chargeable to duty. The assessee submitted detailed reply to the show cause notices. They contended that moulding powder produced by them were not marketable and therefore, would not be goods in terms of Section 2 of the Central Excise Act. They challenged the manner of valuation also. With respect to the rockers, slides, chairs etc. it was contended that those items were for the exclusive use of small children and therefore, they have been correctly declared as toys. It was also submitted that the demand was barred by limitation since the goods had been cleared against the approved classification list.

4. By order dated 28.11.98 Commissioner of Central Excise confirmed the entire demand of duty, penalty and interest. Assessee filed an appeal before this Tribunal. By order dated 18.7.2000, Tribunal took the view that conversion of granules into moulding powder amounts to a process of manufacture that modvat credit on granules will be available on payment of duty on the moulding powder and remanded the matter back to the Commissioner for ascertaining the quantum of eligibility to credit and to pass orders accordingly. Tribunal further held that there was justification for invoking the longer period of limitation under proviso to Section 11A in respect of the duty demand on moulding power. In respect of the classification of rockers, slides, chairs etc. the matter was remanded for examination of commercial parlance understanding and actual use. It was further held that if these items are understood by the persons dealing with them as Baby Toys/games then the charge of deliberate attempt at misleading by adding the words Baby and Toys in the classification list would not survive. Allegation of suppression and misstatement cannot also be upheld. Aggrieved by the above order, the assessee filed an appeal before the Hon'ble Supreme Court challenging the finding that the process of making moulding powder amounts to manufacture and that it is a marketable commodity. The issue of limitation is also raised and claimed the benefit of Notification No. 217/86. As regards the toys it was contended that since the clearances were made against the approved classification lists the demands could not be raised retrospectively.

5. Pursuant to the order of remand made by this Tribunal dated 18.7.2000 Commissioner of Central Excise, Gurgaon passed an order dated 28.11.2000 which is impugned by the assessee in Appeal No. E/1221/2004. In the above order the Commissioner confirmed the classification as proposed in the show cause in respect of all items. The demand of duty was also confirmed for the entire period.

6. In Appeal No. E/1210/2004 filed by the assessee challenge is against the order passed by the Commissioner (Appeals) dated 6.3.2004. In the above appeal, the Revenue has filed a cross-objection as E/147/2004. The Revenue has also filed a separate appeal as E/2360/2004 challenging that part of the order of the Commissioner (Appeals) by which the Revenue is aggrieved. The demand involved in this appeal is also in respect of the very same items as in Appeal No. E/1221/2004. The Commissioner (Appeals) took the view that Baby Swing/Flier, Rocker and Slides were wrongly classified by the original authority under 9506. According to the Commissioner (Appeals) the assessee had correctly classified them under 95.03. As far as Chairs, Tables, Desks, School equipments are concerned, Commissioner (Appeals) upheld the classification approved by the original authority under 9401/9403 rejecting the claim of the assessee to classify them under 9503. In respect of Play Pool the Commissioner (Appeals) was inclined to accept the classification made by the assessee under 9503 as correct. He did not agree with the classification under sub-heading 3922.10 as bath tub approved by the adjudicating authority. The Commissioner upheld the submission made by the assessee that the price at which the goods are sold has to be treated as cum-duty price and directed the original authority to take into consideration the ratio of the decisions in Metro International v. CCE, 1998 (102) ELT 379 (Tri) and Indian Oxygen Ltd. v. CCE, 1997 (89) ELT 557 while recalculating the duty demand. He also held that the assessee was entitled to modvat in respect inputs used in the manufacture of goods held dutiable provided the assessee was able to substantiate to the satisfaction of the original authority that they had obtained duty paid inputs and used the same in the manufacture of their final product on which duty has become payable. He set aside the penalty imposed under Rule 173Q and also demand interest under Section 11AB.

7. In Appeal No. E/1221/2004 the only contention raised by the assessee is that the Commissioner (Appeals) should have classified Chairs Tables etc also under 9503 and not under 9401/9403.

8. Appeal No. E/1944/2004 is at the instance of the assessee which is directed against the order passed by the Commissioner of Central Excise, Gurgaon dated 20.4.2004 pursuant to the order of remand by Tribunal dated 18.7.2000 and in continuation of Order-in-Original dated 28.11.2003 quantifying the duty demand. Invoking the larger period of limitation under proviso to Section 11A of the Central Excise Act a duty of Rs. 1,12,93,053 was confirmed on the assessee including on moulding powder and the final products. A penalty of an equivalent amount was also imposed.

9. When the appeals filed by the assessee before the Hon'ble Supreme Court came up for hearing on 6.4.2004 it was submitted by the assessee that the issue of classification of its final products, namely, rockers etc. are pending consideration before the Tribunal. The Hon'ble Supreme Court, therefore, directed the Tribunal to decide the appeals expeditiously. It was also directed that the appeals before the Hon'ble Supreme Court will be listed after the decision of this Tribunal on the appeals pending before it.

10. Following are the issues that arise for consideration in the above appeals:

(1) Whether 3 way rocker, slide, swings and fun flier manufactured by the assessee are to be classified under Heading 9503 as toys or under 9506 as articles and equipments for general physical exercise, sports, etc.?

(2) Whether the play pool is classifiable under Heading 9503 as toys or under Heading 3922 as bath tub? Whether the demand of duty can be sustained on the basis of any tariff entry or heading other than that proposed in the notice?

(3) Whether the play table, activity desk and chair, etc. are classifiable and Heading 9503 as toys or under Heading 9401 and 9403 as seats and other furniture.

(4) Whether the demand of duty under show cause notice 4.11.97 which is the subject-matter of Appeal No. E/1221/2004 is barred by limitation.

(5) Whether the imposition of mandatory penalty as also demand of interest is justified.

(6) Whether the quantification of duty is appropriate.

The relevant Chapter Headings for classification of the goods involved in these appeals are as follows:-

TOYS, GAMES AND SPORTS REQUISITES, PARTS AND ACCESSORIES THEREOF-

Classification of Rocker, Slide, Swing and Fun Fliers.

11. It is the case of the appellant that the above are toys which would come under 9503. According to the appellant, the basic characteristic of a toy is that it must provide amusement to the child. The learned counsel for the appellant refers to the definition of the word "toy" in The New Encyclopaedia Britannica as `plaything'. Play with toys follows two main directions, imitative and instructive. It is stated that balance and counterbalance, the wheel, the swing, the pendulum, flight, centrifugal force, magnetism, the spring and a multitude of other devices and principles have been utilized in toys. It is contended that the 3 way rocker, slides, swings etc. are items which provide amusement of the child. The toys assist in the development of motor skills of small children. The size of the subject items is so small that they can be considered as miniatures of the real swings, slides etc. used by older children and often found in playgrounds. Complaint of the appellant is that when this Tribunal under order dated 18.7.2000 remanded the case to the Commissioner to examine how these articles are understood in commercial parlance, no such consideration was made by the Commissioner. The appellant had produced certificate of Toy Association of India which is a trade association representing manufacturers, dealers, distributors, etc. of toys. They have confirmed that these items are known in the trade as toys and have been displayed to toy exhibitions. Similar certificates have been produced from the distributors, retailers and the Sports Goods Export Promotion Council certifying that these items qualify as toys. The appellant also points that the Customs authorities are also treating these goods as toys for the purpose of assessment under the Customs Tariff Act. In support of the above contention reliance was placed on Bill of Entry No. 600795 dated 11.3.2004. The appellant and produced photographs and catalogue of the subject goods.

12. It is the contention of the Revenue that rockers, swings etc. are equipments of a kind used in children's playground. They are covered under Heading 9506 of HSN, The swings/slides manufactured by the assessee can be placed outside as well as inside and serve as equipments for games. They are of highly durable nature. In play schools where there is sufficient space outside the building such swings and slides are placed outside otherwise they are kept inside the building. Similar goods manufactured by M/s. Arihant Industrial Corporation Ltd. at Vasai East are being classified and assessed to duty under sub-heading 95.06. The learned DR placed reliance on the meaning of the term "toy" as per Random House Compact Unabridged Dictionary as follows:

"An object, often a small representation of something familiar, as an animal or person, for children or others to play with; play thing."

As per the New Webster's Dictionary of the English Language, the term "toy" means --

"An object often a small imitation of same familiar thing, for children or others to play with; a play thing."

As per the Concise Oxford Dictionary, the term "toy" means --

"As object for a child to play with, typically a model or miniature replica of something."

The Dictionary meaning read alongwith the Chapter notes of Chapter 95 of the HSN shows that `toys' are designed mainly for the amusement of children or others and the Chapter Heading 95.03 specifically covers `toys' which are operated by hand. The above heading would not take in rockers, slide, swings etc. produced by the appellant.

13. By order dated 28.11.2003 the Commissioner rejects the claim of the assessee for classifying these subject goods under 9503 on the following reason:

"The main question requiring answer, thus, is -- whether or not these items can be called "toys". In an endeavor to find a lawful answer to this question, I find that one of the submissions of the assessee is that a "rocker" is meant for rocking only, and a slide for sliding, and similar is the case with other items. I, thus, discover that the relevant facts emerging from this submission of the assessee, as well as those emanating from the "Utility and Usages" of these items given by the assessee in products catalogue (as adduced hereinabove under brief facts), are that the goods in question are known, and meant to be used by the children, as "Rockers, Slides and Swings" only, and not as "toys". In this sequence, I further notice that the invoices, issued by the "dealer/retailer" of these products, clearly show that these products are traded by their respective names, and as such, are known in trade parlance as "Rockers, Slides, Swings/Fun Flier" only; and even the price list of these articles, prepared and issued by the assessee, describes these articles as such. It is a settled law that the diverse products under a taxing statute are required to be classified according to the meaning assigned to those products by the trade for the common man. Since the impugned products are traded by their respective names, i.e. as "Rockers, Slides, Swings (Toddler Swings/Fun Flier), and are also used as such; I find that the facts, and the evidence contained in invoices issued by the dealer, imbibe no ambiguity to reveal that impugned products are known to the trade, as well as the users (common man), by their respective names, and not as "Toys"......I find that Note (B) under heading 95.03 in Harmonized notes clarifies as to what can be treated as reduced size model. On going through that Note (B), I find that for being called a reduced size model, an item should be replica of real article or thing, created for creation only and not for performing the functions of real (genuine) article or thing. In this case, the facts and evidence clearly show that impugned goods are meant to perform their respective functions. I thus, find that to describe the same as "reduced size model" was legally incorrect and hence a mis-description."

Thereafter the Commissioner proceeds to classify the subject goods under 9506 for the following reason:-

"The contention of the assessee, in this regard, is that these items cannot be placed under Heading No. 95.06 as none of these items can be used for playing games or out door games as these are meant to be used only within the house. On an examination of invoices issued by the "dealer/retailer", i.e. M/s. Pankaj Stores (Gurgaon), I find that these items have been purchased by schools. Thus, the part of the contention, relating to the use of items only within the house, is not supported by truth. With regard to the other part of the contention, I discover that the Heading No. 95.06 covers the articles and equipment, not only for outdoor games but also for general physical exercise and other sports; and on a careful deliberation of usages of these articles, I discover that when two children use "Rocker", they use their stamina and physique to remain in rocking, and such activity is also accompanied and supplemented by a desire to defeat the partner in rocking. Similarly, the child uses his/her stamina and physique when using the slide or swing; and the activity in that course is supplemented by a desire to perform better than others. I, thus, find that impugned products do possess the essentials to lay a claim for a berth within the fence drawn by heading No. 95.06 of the CETA`85."

14. We find merit in the contention raised by the assessee/appellant that the reasoning of the Commissioner to reject the classification under 9503 and bring it under 9506 cannot be accepted. The subject products were placed before us at the time of hearing. We were also taken through the product catalogues of the assessee as well as other manufacturers in respect of such goods. We find that these items can be of use only for very small children under the supervision of an adult. They are play things. They are objects with which the small children can play. Therefore, they satisfy the meaning of the word "toy" relied on by the Revenue itself. Its use is principally indoor. Its larger versions are being used in play grounds. Merely because the schools are purchasing these subject goods, it cannot be assumed that they are meant for outdoor use. The Commissioner has gone wrong in observing that since the subject goods are traded by its name, namely, rockers, slides and swings and not as toys, it cannot be classified under 9503. The reasoning of the Commissioner that the subject goods are meant not only for outdoor games but also meant for general physical exercise and other sports for the children is totally unacceptable. The appellant-assessee had pointed out that the products of M/s.Arihant are of much larger size and used in playgrounds and therefore, they are classified under 9506. It cannot be compared to the subject goods produced by the appellant. On the other hand, they have made out a point in their favour referring to the Bill of Entry dated 11.3.2004.

15. Taking into consideration the entire materials produced before us by the assessee appellant including certificates issued by Toys Association of India, Sports Goods Export Promotion Council and other documents referring to the trade understanding of the goods as toys, we are inclined to take the view that the above subject goods are to be classified under 9503 and not under 9506. In order dated 6.2.2004 passed by the Commissioner (Appeals) in relation to a different period of demand relating to identical goods classification of the above subject items was made under 9503. We agree with the above view taken by the Commissioner (Appeals).

Classification of Play Table, Tables, Chairs and Activity Desk

16. The assessee has classified the above goods under 9503 whereas the Revenue has classified the same under 9401 and 9403 which reads as follows:

9401

SEATS (OTHER THAN THOSE OF HEADING 9402), WHETHER OR NOT CONVERTIBLE INTO BEDS, AND PARTS THEREOF

9403

OTHER FURNITURE AND PARTS THEREOF

It is contended on by the assessee that Activity Desk is specifically designed for the amusement of very small children. It has a slate, which is removable desk top, twin wells for crayons, storage for toys, books, etc. The children can draw or even learn the basics of writing on this table. Similarly, they play table is designed for group play. These items are aids for the play of small children and are bought and sold in the market as toys. They are exclusively available in toy shops and not in furniture shops. The usage and the commercial parlance show that the items are toys classifiable under 9503. In this case also certificate from Toys Association of India, Certificate from Sports Goods Export Promotion Council, letters from various distributors and catalogues of various international manufacturers and rotational moulding association were relied on by the assessee. It is further submitted that the Revenue has not adduced any evidence to show that in commercial parlance these products are not known as toys. Reference is also made to Note 1 under Chapter 94 which states that this chapter does not cover the toy furniture. According to the appellant, toy furniture has not to be understood as furniture which may merit classification under Chapter 94 but should be excluded therefrom as it is specially designed for play and amusement of children. It cannot be interpreted as synonymous with doll furniture. These items are aids of play and learning for children and therefore merit classification under 9503.

17. The learned DR submits that the mere fact that an article is meant for exclusive use of children would not place that article in the category of toys. Baby chairs, desks, tables and play tables are used by children to sit on/write on. They are smaller versions of the big tables and chairs used by adults and therefore to be classified as furniture under Chapter 94. What is excluded from Chapter 94 is toy furniture i.e. furniture of a kind which children play with like doll's furniture etc. She pointed out that Note (A)(12) under Heading 95.03 HSN reference is made to Dolls' houses and furniture, including bedding. According to her it is such type of furniture that can be treated as toy furniture which is excluded from Chapter 94. Reliance was also placed on meaning of the term `furniture' given in HSN under Chapter 94 as follows:

"(A) Any `movable' articles (not included under other specific headings of the Nomenclature), which have the essential characteristic that they are constructed for placing on the floor or ground, and which are used, mainly with utilitarian purpose, to equip private dwellings, hotels, theatres, cinemas, offices, churches, schools, cafes, restaurants, laboratories, hospitals, dentists' surgeries, etc., or ships, aircraft, railway coaches, motor vehicles, caravan-trailers or similar means of transport. (It should be noted that, for the purposes of this Chapter, articles are considered to be `movable' furniture even if they are designed for bolting, etc., to the floor, e.g. chairs for use on ships). Similar articles (seats, chairs, etc.) for use in gardens, squares, promenades, etc., are included in this category."

18. She also pointed out that notes to sub-heading 9401 of HSN also refers to the different types of chairs falling under sub-heading like infant's chairs, children's seats etc. Therefore, according to the Revenue, the aforesaid items are to be classified under 9401/9403. Reliance was also placed on the decision of this Tribunal in Supreme Industries Ltd. v. CCE, Mumbai, 1999 (108) ELT 460. In the above case, the Tribunal took the view that Rocking chairs and Baby chairs are specifically intended for infants and are to be classified as furniture under Heading 9401. They are not meant for providing amusement and therefore, will not come under 9503.

19. After hearing both sides, we are inclined to agree with the Revenue and the finding of the learned Commissioner that the children/baby chairs, desks and play tables are to be classified under 94.01/94.03. Notes Heading 95.03 and 94.01 of HSN would also support the above view. Even if they are traded through toy shops, we are not able to accept the contention of the appellant they would come within the definition of `toy' These are not play things. They are not objects with which the children can play. Children can use them for sitting or writing. But they do not play with them. We follow the ratio of Supreme Industries Ltd. 1999 (108) ELT 460 (Tri). Therefore, we reject the contention of the assessee in respect of the subject goods both in Appeal No. E/1221/2004 and also in E/1210/2004.

Classification of Play Pool

20. The assessee seeks to classify the above item under 9503. Play pool is an article made of plastic in round shape. It was a diameter of 5 ft. and depth of 2.5 ft. It has steps to go down, a seat and a slide. The above item was also produced before us at the time of hearing . According to the assessee, the play pool is to be filled with water to the desired level. During summer time children can take a cool dip in it. During winter it is used as play pen where children can be confined while they play. From the photographs shown in the catalogue it is seen that alongwith the children adults can also sit in it. In the order dated 28.11.2003 the Commissioner has accepted the classification made by the Revenue under 3922.10 as `bath tub'. The Commissioner has relied on a product catalogue where the assessee under the utility of play pool has publicized that `it is a pool where you can enjoy a cool dip within the privacy of your house and it is just right for your family'. It is contended on behalf of the assessee-appellant that the play pool is essentially for the purpose of play by the children. The affidavits of users and certificates from persons in the trade are produced to show that the item is not used as a bath tub and is known in the trade as a toy. An international catalogue called Rotational moulding was also relied on where the play pool has been described as a toy. Therefore, according to the appellant in commercial parlance, this item is known as a toy. It is further contended that Note 1 to Chapter 39 excludes products of Chapter 95 from the scope of Chapter 39. Therefore, play pool cannot be classified under 3922. The learned counsel for the assessee-appellant would further submit that if this Tribunal comes to a conclusion that the play pool cannot be brought under 3922, as claimed by the Revenue in the show cause notice, the adjudication order passed on the basis of the classification proposed in the show cause notice has to be set aside. Revenue cannot be permitted to sustain the demand by proposing alternate headings other than 3922 and 9503. In support of the above contention, the learned counsel for the assessee relied on the following decisions of the Supreme Court:

(a)  Hindustan Polymers Co.Ltd. v. CCE, Guntur, 1999 (106) ELT 12 (SC)

(b)  Warner Hindustan Ltd. v. CCE, Hyderabad, 1999 (66) ECC 592 (SC) : 1999 (113) ELT 24 (SC)

(c)  Metal Extruders (India) Pvt. Ltd. v. CEGAT, 1998 (97) ELT 32 (SC)

(d)  Prince Khadi Woollen Handloom Prod.Coop.Indl.Society v. CCE, 1996 (88) ELT 637 (SC)

(e)  Gujarat State Fertilizers Co.Ltd. v. CCE, 1997 (58) ECC 1 (SC) : 1997 (91) ELT 3

(f)   Reckitt & Coleman of India Ltd. v. CCE, 1996 (88) ELT 641 (SC)

The learned counsel points that even if the claim for classification under 9506 was accepted, no duty liability would arise as the goods were fully exempted as sports goods.

21. The learned DR, on the other hand, would contend that the play pool which is an item that can hold about 1000 to 1500 ltrs. of water cannot be treated as a toy coming under 9503. She points out that the catalogue itself would show that the play pool is being used as a safe play pen. Any other bath tub of a comparable size can also be used for such an alternate purpose. The catalogue showing application of rotational moulding has also referred to the same item as wading pool. It is contended that play pool is akin to swimming pool or paddling pool. Therefore, it would merit classification under 95.06 even though the Central Excise Tariff does not specifically include swimming pool and paddling pool. It is a residuary heading including items not specified or included elsewhere in this Chapter. Relying on the decision of the Supreme Court in Collector of Central Excise, Hyderabad v. Bakelite Hylam Ltd., 2002 (82) ECC 3 (SC) : 1997 (91) ELT 13 (SC) it was contended on behalf of the Revenue that for resolving any dispute relating to tariff classification, the internationally excepted nomenclature emerging from the HSN is a safe guide.

22. After hearing both sides, we are of the view that the play pool cannot be classified under 9503, as contended by the appellant and under 3922.10 or 95.06, as contended by the Revenue. The article cannot be described as play thing with which the children can play so as to be treated as a toy. It is in the nature of a play pen which can be used both with or without water being filled in. It cannot be treated as bath tub coming under 3922.10 in HSN under 3922 covering baths, shower-baths etc. It is mentioned that this heading covers fittings designed to be permanently fixed in place, in houses, etc. normally by connection to the water or sewage systems. It also covers other sanitary ware of similar dimensions and uses, such as portable bidets, baby baths and camping toilets. We are not able to accept the view taken by the Commissioner that the play pool in question would come under 3922.10. We are also not in agreement with the classification under Heading 9506 of the Central Excise Tariff Act, 1985. The above Heading reads as follows:

"9506- Articles and equipment for general physical exercise, gymnastics, athletics, other sports (including table tennis) or outdoor games, not specified or included elsewhere in this Chapter.

We are of the view that the product, play pool cannot be treated as a equipment for physical exercise, gymnastics or other sports or outdoor games of any kind.

23. According to us, more appropriate Heading would be 3926 i.e. other articles of plastics. There is no merit in the contention that Chapter Note 2(u) of Chapter 39 would stand in the way of including these articles under 3926. The above Note provides that Chapter 39 does not cover articles of Chapter 95 (e.g. toys, games, sports requisites). We are of the view that the Note would exclude only those articles which are covered under specific Headings of Chapter 95. Since we have come to the conclusion that the play pool would not come under Heading 9503 or 9506, the Note will not be applicable. As mentioned earlier it was contended on behalf of the assessee that the Tribunal cannot sustain the duty liability by classifying the goods under a different Heading not covered by the show cause notice. We find no merit in this contention in the light of the ratio of the decision of the Supreme Court in Voltas Ltd. v. CC, Bombay, 2002 (83) ECC 13 (SC) : 1997 (91) ELT 261 (SC).

24. In the above case the Tribunal found that the classification of the goods imported by the Customs authorities under Tariff Item 84.18(2) was wrong. Tribunal also took the view that the imported goods would not fall under Tariff Items 84.01/02 and 84.17, as claimed by the importer. According to the Tribunal there was a specific and explicit coverage of the goods under Tariff Item 84.18(1) and this Heading would have been more specific and precise than the other two Headings. After having reached such a conclusion the Tribunal did not direct that the imported goods should be classified as electrostatic precipitators under Heading 84.18(1). The Hon'ble Supreme Court took the view that the Tribunal has erred in dismissing the appeals after having reached the conclusion as above. By dismissing the appeal of the assessee the Tribunal had upheld the classification of the imported goods under Heading 84.18(2), as contended by the Revenue. The Supreme Court took the view that after having held that this entry was inappropriate, the Tribunal should have given a direction to make the assessment under Heading 84.18(1) which, according to the Tribunal was the correct classification. It is, therefore, open to us to direct classification of play pools under Heading 3926 `as other articles of plastics'. We, therefore, hold that the classification approved by the Commissioner in Order-in-Original No. 118/03 dated 28.11.03 and Order-in-Appeal No. 81/04 dated 6.2.04 are unsustainable. Play pool is to be classified under 3926.

25. As mentioned earlier the show cause notice dated 4.11.97 relevant for the proceedings under challenge in Appeal No. E/1221/2004 was issued invoking extended period of limitation. It is contended on behalf of the appellant-assessee that on 22.10.92 they filed classification list declaring the goods "baby rocker toy", "baby slide", "baby chair toy". The proper officer duly approved the classification list. Further classification lists were also filed giving the exact description of the goods. In order to invoke the extended period of limitation the ground given by the Revenue is that the appellant misdeclared the goods in the classification list by prefixing the word "baby" and suffixing the word "toy" to the actual description of the goods. The assessee submits that the goods were described by their true respective names. Apart from the above there is no dispute that these items are designed for the use of bodies and small children. They are known in the trade as toys. Therefore, there is no justification in contending that the appellant had misdeclared the description of the items in the classification list and got them approved in a deceptive manner with the intention to evade duty. After going through the records regarding the classification lists submitted by the assessee and the trade understanding of the goods, we are of the view that the allegation of suppression of the relevant facts with intention to evade payment of duty, cannot be sustained. All the relevant features of the goods manufactured were available with the department. It was for the officers of the department to conduct further examination to see whether the classification given by the assessee was correct or not. We, therefore, hold that the Revenue has wrongly invoked the larger period of limitation in this case. On that ground, the duty demand which is under challenge in Appeal No. E/1221/2004 will not survive. Since the demand is not sustainable, direction for confiscation of land, plant and machinery proposed under Rule 173-Q also is not maintainable. We also hold that in the above circumstances demand of interest under Section 11AB also fails.

26. In order dated 20.4.2004 the Commissioner has quantified that duty in respect of moulding powder as well as the final products pursuant to the show cause notices dated 1.5.97 and 4.11.97 invoking the extended period of limitation. In the above order the Commissioner observes that the Tribunal in its Final Order dated 18.7.2000 has held that the extended period under proviso to Section 11A(1) is invocable in this proceeding. On a reading of the above order it is seen that the Tribunal has not entered such a finding in respect of duty demand against the final products. On the other hand, the Tribunal has held that if the classification made by the assessee was in accordance with the trade understanding of the subject goods the allegation of misdeclaration with intent to evade duty will not stand. It was under these circumstances, we considered the contention on limitation raised by the assessee in Appeal No. E/1221/2004. In the order dated 20.4.2004 the Commissioner has quantified duty due on the moulding powder as well as on the final products. In the light of the view taken by us in E/1221/2004 that the demand of duty on final product is barred by limitation the duty demand confirmed in the order dated 20.4.2004 to the extent it relates to final products, is set aside. Imposition of penalty and demand of interest on the above products are also set aside. Confirmation of demand of duty, imposition of penalty and demand of interest relating to moulding powder in the above order is on the basis of the findings in the remand order dated 18.7.2000. In the above order Tribunal had held that invoking larger period in the case of moulding powder was justified. We, therefore, do not interfere with this part of the order dated 20.4.2004. It is relevant to note that the order dated 18.7.2000 is before the Hon'ble Supreme Court in the appeal filed by the assessee, but there is no order of stay.

27. The five show cause notices relating to Order-in-Appeal No. 81/04 dated 6.2.2004 passed by Commissioner (Appeals) which is under challenge in Appeal No. E/1210/2004 and E/2360/2004 had been issued within the normal period. Therefore, the issue of limitation does not arise in these appeals. But, we are in full agreement with the view taken by the Commissioner (Appeals) on the maintainability of the demand of interest under Section 11AB and imposition of penalty under Rule 173Q. We also affirm the view taken by the Commissioner (Appeals) on the issue of classification of rockers etc. and the play table, activity desk and chair, but we disagree with his view on the classification of play pool under 9503. We, therefore, modify the order impugned to the above extent and direct the original authority to recompute the duty liability of the assessee arising under five show cause notices by classifying rockers, slides, swings, fun fliers etc. under 9503, activity desks, chair, tables and play tables under 9401/9403 and play pool under 3926. While thus recomputing the duty the authority will examine the claim made by the assessee for deduction of cash discounts and other discounts, freight, excise duty and other taxes. Assessee's claim for modvat credit will be allowed on its producing relevant documents before the authority. The issue relating to benefit of SSI exemption will also be considered. Final order will be issued within a period of three months from the date of receipt of copy of this order. The Appeals E/1210/2004 filed by the assessee and E/2360/2004 filed by the Revenue are disposed of as above.

28. Appeal No. E/1221/2004 filed by the assessee is allowed on the ground of limitation. Appeal No. E/1944/2004 is allowed to the extent it relates to challenge against the demand of duty, penalty and the interest in respect of the final products.

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