2017 (8) TMI 1211 - AT - Central Excise

Court classifies miniature toy cars as 'articles of gold' under Chapter 71 of CETA'85, granting duty exemption.

Titan Industries Ltd. (Jewellery Division) Versus CCE Chennai-III And (Vice-Versa)

The court ruled in favor of the assessee, classifying the miniature toy cars as 'articles of gold' under Chapter 71 of CETA'85. The court found that the ... Classification of the miniature cars (Electro plated with Gold over FRP mould) - Assessees have classified the same under Chapter 71 and claimed the exemption benefit under N/N. 6/2002 dt. 1.3.2002. Department is of the view that these items are classifiable under Chapter Heading 95.03 and therefore the assessees not being eligible for exemption as per the notification - Held that: - The miniature cars are made out of FRP (Fibreglass Reinforced Plastics) mould coated with gold constituent of 200 gms and FRP mould weighing 300 gms. Taking into consideration the proportion of the gold content in the miniature car with regard to plastic content, it can be said that gold content is minor constituent. For the same reason, the said items would not fall under Chapter Heading 95.03 - It is very evident from the notification as well as the chapter heading that subject goods are classifiable under Chapter 71 and the N/N. 6/2002-CE dt. 1.3.2002 is applicable to such goods - demand unsustainable - appeal allowed - decided in favor of assessee. Issues: Classification of goods under Chapter 71 or Chapter 95.Detailed Analysis:1. Background: The case involves appeals arising from an Order-in-Appeal passed by the Commissioner (Appeals), Chennai, regarding the classification of miniature toy cars manufactured by the assessees.2. Assessee's Argument: The assessees contended that the miniature cars should be classified as 'articles of gold' under Chapter 71 of CETA'85, qualifying for duty exemption under a specific notification. They argued that the high value of the cars, sold for Rs. 1,50,000 each due to the gold content, justified the classification as 'articles of gold.'3. Department's Argument: The department maintained that the miniature cars fell under Chapter heading 95.03 as toys, citing Chapter Note (2) which considers goods with precious metal as minor constituents to be included in this category. They argued that the gold content in the cars was minor compared to the plastic, justifying classification under Chapter 95.03.4. Key Considerations: The crucial point for consideration was the classification of the miniature cars, with the assessees claiming Chapter 71 and the department asserting Chapter 95.03. The relevant chapter headings and definitions were analyzed to determine the appropriate classification.5. Legal Interpretation: The court examined the definitions and rates of duty under Chapter 71, specifically focusing on 'articles of jewellery' and 'articles of gold.' They also reviewed the description and rate of duty under Chapter 95.03 for 'other toys,' emphasizing the importance of the proportion of precious metal content in the goods.6. Decision: After evaluating the arguments and relevant provisions, the court found that the miniature cars met the criteria for classification under Chapter 71 as 'articles of gold,' as per the specific notification. Consequently, the demand for duty was deemed unsustainable, and the appeal of the assessee was allowed, setting aside the impugned order. The department's appeal was dismissed accordingly.7. Conclusion: The judgment clarified the classification of the miniature cars, highlighting the distinction between 'articles of gold' under Chapter 71 and 'toys' under Chapter 95.03. The decision provided clarity on the applicable duty exemption and upheld the assessee's position based on the specific provisions and definitions outlined in the relevant notifications and chapter headings.