2004 (1) TMI 466 - AT - Central Excise

Tribunal Confirms Toy Classification under Chapter Heading 9503.00, Rejects Revenue Appeal

The Tribunal allowed the appeals for 10 items, confirming their classification under Chapter Heading 9503.00 as toys for children. The Tribunal rejected ... Classification - Demand - Limitation - Toys Issues Involved:1. Classification of products manufactured by the assessee.2. Invocation of the larger period for re-classification.3. Applicability of penalties under Rule 173Q.4. Time-barred demands.Detailed Analysis:1. Classification of Products:The core issue revolves around the classification of 12 games manufactured by the assessee. The assessee contends that their products, being toys and games for children, should be classified under Chapter Heading 9503.00. The Central Excise Department, however, reclassified these items under sub-heading 9504.90, alleging misdeclaration.The Tribunal evaluated the nature of the games, noting that items like Monopoly and Snakes and Ladders were not contested by the assessee and thus confirmed their classification under 9504.90. For the remaining items, the Tribunal considered the descriptions and intended use, concluding that they are toys meant for children and should be classified under 9503.00. The Tribunal emphasized that these items are small, educational, and recreational, distinguishing them from games played in parlours or casinos, which fall under 9504.90.2. Invocation of the Larger Period:The show cause notice dated 20-11-2001 invoked a larger period for re-classification under Section 11A, alleging misdeclaration. The Tribunal found that the assessee had been filing classification lists and corresponding with the department, providing all necessary details. The Tribunal cited the judgment in CCE v. Muzzafarnagar Steels, highlighting that the assessing officer should have called for further details if necessary. Therefore, the Tribunal concluded that there was no misdeclaration or suppression, making the invocation of the larger period unsustainable.3. Applicability of Penalties under Rule 173Q:The Tribunal addressed the issue of penalties, noting that penalties are not imposable in cases of genuine classification disputes. The Tribunal referenced previous orders and judgments, concluding that the difference of opinion on classification does not attract penalties under Rule 173Q.4. Time-Barred Demands:The Tribunal accepted the appellant's plea that the demands were time-barred. It was noted that the classification lists had been approved by the department, and the case was reopened only for 12 items, with the assessee not challenging the classification of two items. The Tribunal found that all details had been furnished, and the department had not appealed against previous orders classifying similar items under 9503.00. Thus, the demands were deemed time-barred.Conclusion:The Tribunal allowed the appeals for 10 items, confirming their classification under 9503.00, and rejected the Revenue's appeal. The Tribunal upheld the findings of the Commissioner (Appeals), emphasizing that the items in question were toys for children and not games used in parlours or casinos. The Tribunal also found that the demands were time-barred and that penalties were not applicable in this case.