TaxTMI 
TaxTMI 
2021 (10) TMI 1116
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....ed 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 Rs. 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 between 3-5 years old in which the toddler....
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.... 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 2017 Wherein the ....
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.... 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 cou....
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....y. 4.4 On receipt of the verification 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/electric....
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....5-2005 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; Music Button On The Handle; Broad And Comfortable Seat For Safety; Helps Develop Gross Motor Skills And Balance For The Child; Stylish And Novel Design IN-389 dated 12.12.2018; EZ' Playmates Smart Tricycle Red/ Grey; HSN:9503; GST is raised @12....
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....se 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 --- Of plastics 95030090 --- Other From the above, it is evident that the Tricycles, Scooters, pedal cars, like the products in hand are to be classified under CTH 9503 only and the 8 digit classification in the Tariff is based on the material it is made of and classification is not provided based on whether it is operated manually or otherwise. The rate Notification provides two different rates for the goods falling under cri-i 9503 which are as follows: Schedule II - 6% S.No. Chapter / Heading / Sub-....
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.... 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: "But while construing a word which occurs in a statute or a statutory instrument in the absence of any definition in that very document it must be given the same meaning which it receives in ordinary parlance or understood in the sense in which people conversant with the subject matter of the statute or statutory instrument understand it. It is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with any cognate subject." ...emphasis supplied In the case at hand, as already stated, '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 and applying the same generally as observed by the Apex Court in the case of M/s. Msco mentioned above. 7.5 The applicant claims that these pro....
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....g 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 children. Thus, product designed for amusement of children are toys. The safety standards prescribed for the toys requires safety standards prescribed for 'Electric Toys' to be complied with by the products even if the electricity is used for the secondary function of the 'Toy'. This shows that a toy which is designed for the amusement of children may incorporate more than one functionality. 7.7 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'. The toys are advertised as Musical Ride-on; having music button on the hand bar; Helps develop gross motor skills; Develops motor skills; has Multi- colored LED Flashing Ligh....
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...., 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 are 'Electronic Toys' and the applicable GST Rate is as per Sl.No. 440 of Schedule-III of the Rate Notification. 8. In view of the above, we rule as under: Ruling The products Children Scooter, Activity Ride-on, Smart Tri-cycle and Kick Scooter, in which physical force is the primary action and contains an in built electronic circuit, are 'Electronic Toys' and the applicable GST Rate is CGST @ 9% as per Sl.No. 440 of Schedule-III of Notification No. 01/2017 C.T.(Rate) dated 28.06.2017 and SGST @ 9% as per S1.No. 440 of Schedule III to Notification No. II(2)/CTR/532(d-4)/2017 vide G.O. (Ms) No. 62 dated 29.06.2017. ============= Document 1 metal processing Production process Flow Chart INCOMING MATERIAL 1ac 10 inspection produce plastic articles by injection moulding 1ac Mic Inspection h Metal Surface treatment NAVBHARAT IMPORTS Deli metal processing T11 We Electric part Assembling tac QC Inspection Assembl....