Whether exemption available for sports also admissible for playing cards?

Case:-PARKSONS CARTAMUNDI PVT. LTD. VERSUSCOMMISSIONER OF C. EX., DAMAN

Citation:-2014 (309) E.L.T. 124 (Tri. - Ahmd.)

Issue:- Whether exemption available for sports also admissible for playing cards?

Brief facts:- The relevant facts that arise for consideration are that both the appellants herein are manufacturer of Playing Cards, Puzzle Games etc. falling under Chapter No. 95 of the Schedule 2 of Central Excise Tariff Act, 1905. The appellants, herein had from April 2011 claiming benefit of payment of duty to the extent of 5% as provided under Notification No. 02/2011-C.E., dated 1-3-2011 vide Entry No. 75. During the course of Audit in year 2011, the audit officers were of the view that the said benefit of Notification No. 02/2011-C.E., dated 1-3-2011 is not applicable to the appellant’s product “Playing Cards”. A show cause notice was issued directing the appellant to show cause as to why the benefit as claimed by the appellant be not denied to them and differential duty be not demanded along with interest and penalties be not imposed. The appellant contested the issue on merit before the lower authorities. The adjudicating authority, after following the due process of law, confirmed the demand raised along with interest and imposed penalties.

Appellant’s contention:- Ld. Counsel appearing on behalf of the appellantwould give overall view of the issue and submit that the adjudicating authority has erred in coming to conclusion that the sports and games are different and the benefit of exemption Notification No. 02/2011-C.E., dated 1-3-2011 is only for Sports, which has to be an activity related to physical activity. He would then take us through the order of the Commissioner and submit that the adjudicating authority has wrongly relied on the dictionary meaning of the Games and Sports. He would submit that the meaning of the word ‘Games’ & ‘Sports’ are inter-changeable and playing card is also a game as has been upheld by this Tribunal in the case of Esbee Playing Card Co. v. CCE - 1997 (90)E.L.T.357 (T). He would also submit that the Apex Court in the case of Pleasantime Products - 2009 (243)E.L.T.641 (S.C.)has given a gainful meaning to the word ‘Games’, wherein their Lordship have held that Game is a form of play or sport especially a competitive one, played according to rules and decided by skill and chance. It is his submission that the playing cards which are manufactured by the appellant are used for playing a game called ‘Bridge’ which is definitely a sport since various sports associations engaged and organize the Bridge as a sport event and playing Bridge does not involve any bodily exercise. It is his submission that the sport Bridge can be classified under heading of Chapter 95 and the benefit of Entry No. 75 of Notification No. 02/2011-C.E., dated 1-3-2011 cannot be denied. It is his submission that the Apex Court in the case of Mewar Bartan Nirman Udyog - 2008 (231)E.L.T.27 (S.C.) has held that the interpretation of tariff is different from the interpretation of exemption notification. It is also his submission that the C.B.E. & C. Circular No. B.35/9l/75-TRU, dated 21-8-1976 has given a clarification that the sports goods have too wide a scope and it is difficult to define it comprehensively. It is his submission that the Commissioner of Sales Tax Maharashtra, Gujarat Value Added Tax Tribunal, Commissionerate of Value Added Tax, Goa, and Advance Ruling Karnataka Value Added Tax have laid down that the playing cards are sports goods. It is submission that the impugned order be set aside and appeal be allowed.

Shri Anand Nainawati, ld. Counsel appearing for one of the appellant would submit that the information obtained under RTI Act in respect of the appellant’s factory at Bombay i.e. Parksons Graphics Pvt. Ltd. on TM Printers clearly substantiate that the Mumbai Commissionerate has accepted the Playing Cards as sports goods.

Respondent’s contention:- Ld.Departmental Representative, on the other hand, would draw their attention to the description of Sr. No. 75 to Notification No. 02/2011-CE, dated 1-3-2011. It is his submission that the sports goods as mentioned in the description should have always a relation to the physical activity. It is his submission that the playing cards do not get classified under sports goods as there is no physical activity engaged in playing cards. He would then draw our attention to the decision of the Tribunal in the case of Funskool (I) Ltd. - 2002 (150)E.L.T.1134 (Tri.-Del.)and more specifically Para No. 5 and submit that the Bench has held that Chess Boards, Pieces and Chinese Checkers are sports goods as they do not require any bodily exercise in their use and therefore will be classifiable under Chapter Heading No. 95.04. It is his submission that the exemption was denied in respect of such goods by the Tribunal. He would submit that the ratio laid down by the said decision would indicate that to claim the benefit as a sports goods, the activity should be identifiable with physical exercise and it is the necessity.

Reasoning of judgement:- They have considered the submissions made at length by both sides and perused the records.

The issueinvolved in this case is whether the appellant who is manufacturing playing cards and classifying the same under Chapter sub-heading No. 95.04 of the First Schedule to Central Excise Tariff Act, 1985 is eligible to avail exemption from payment of Central Excise duty to the extent of 5% / 6% under Notification No. 02/2011-C.E., dated 1-3-2011 as amended and as per the description at Entry No. 75 of the said notification.

Theadjudicating authority, in the impugned order, has relied upon various definitions of the ‘Sports goods’ given in various dictionaries to come to conclusion that the playing cards did not fall under the category of sports goods.

In order toappreciate the findings of the adjudicating authority, it is necessary to reproduce the notification as related to the issue in hand.

“Effective rate of duty of 5% for specified goods. –

In exercise of the powers conferred by sub-section (1) of Section 5A of the Central Excise Act, 1944 (1 of 1944), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below and falling under Chapter, heading, sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), specified in corresponding entry in Column (2) of the said Table, from so much of the duty of excise leviable thereon under the said Central Excise Act, as is in excess of the amount calculated at the rate of 5% ad valorem :

*S. No.*	*Chapter of heading or sub-heading or tariff item of the First Schedule*	*Description of the excisable goods*
1 to 74	……………	…………..
75	95	Sports goods other than articles and equipments for general physical exercise.”

It can be seen from the above reproduced relevantentry no. 75 in the Notification No. 02/2011-CE, dated 1-3-2011 that the exemption is granted to all the products falling under Chapter 95. The said entry does not indicate any further sub-heading number and would mean that all products falling under Chapter 95 which are considered as sports goods are eligible for exemption other than articles and equipments for general physical exercise. The plain interpretation of said notification would indicate that the appellant is eligible to avail the said benefit of notification if his product falls under Chapter 95. In the case in hand, there is no dispute that the appellant’s product Playing Cards is classifiable under Chapter 95 and more specifically under Chapter sub-heading No. 95.04. If that be the case, they are of the view that the benefit of notification cannot be denied to the appellant.

Besides the above findings, they find that identicalissue in respect of playing cards was under the consideration of the Tribunal in the case of Esbee Playing Card Co. (supra). The Bench was considering identical entries in predecessor Notification No. 73/86-CE, dated 10-2-1986. They would gainfully reproduce entire order of the Tribunal.

“The appellants manufactured “Playing cards” classifiable under Heading 9504.00. In their two classification lists respectively dated 1-3-1986 and 1-4-1986, they claimed the benefit of Notification No. 73/86, dated 10-2-1986 which prescribed nil rate of duty on “sports goods” falling under Heading 95. They also filed a refund claim of the duty earlier paid by them when they had not availed of this notification. The Assistant Collector rejected the benefit of the subject notification in classification and also rejected the refund claim. The Collector (Appeals) having upheld this order in toto, the present appeal is before us.

2. Shri V.Laxmikumaran, Advocate argued the case for the appellants. Shri G.D. Sharma, JDK represented the Revenue.

3. Shri Laxmikumaran referred to the HSN which shows Playing cards as classifiable under 9504.40 as articles of table or parlour games. He stated that Bridge tournaments were sponsored by the Sports Authority of India and the Government had financed holding of such competitions. Trophies were also awarded to the winners of Bridge tournaments out of Government funds. In this connection, he referred to a number of letters issued by the Ministry of Sports and Youth Affairs (sic). Referring to the definitions of “Games” and “Sports” in several dictionaries, Shri Laxmikumaran claimed that” these terms were inter-changeable and did not limit themselves to sports or games involving strenuous physical activity but also covered parlour games and games requiring, exercise of intellect. He referred to the affidavit filed by the proprietor of Pioneer Sports, Bombay who arc dealers in sports goods, as also by the Manager, Bombay Sports in which the averment was made that they were selling playing cards used in the sport of Bridge. He stated that the Ministry in their Circular F. No. B-35/91/75-TRU, dated 21-8-1976 had quoted the Ministry of Education and Social Welfare as to the meaning of the term “sports goods”. He claimed that this circular had been examined by the Tribunal in their judgment In the case of Sayee Industries v. Collector reported in 1983 (14)E.L.T.2450 CEGAT in holding that rubber playing balls could not be excluded from the description ‘sports goods’. Shri G.D. Sharma, citing from the Collector’s order maintained that the term ‘sports goods’ should cover only those articles which involved physical activity and would not cover articles of amusement such as playing cards.

4. We have carefully considered the submissions made before us by both sides.

5. The Assistant Collector had accepted the classification of ‘playing cards’ under the Heading 95.04 thereby acknowledging that playing cards were ‘games and sports requisites’. The issue here is whether the description occurring in the notification namely ‘sports goods’ would cover playing cards or not. The chapter heading does not make any distinction between ‘sports’ and ‘games’. Chapter notes also do not provide any insight into such distinction. The dictionary definition produced by the ld. Advocate would indicate that these terms are used inter-changeably. Therefore going by the plain description it would appear that all the goods falling under Heading 95.04 would qualify under this description. The Collector has relied upon trade parlance in observing that ‘playing cards’ are not ‘sports goods’. The Assistant Collector has not made such observation. It is not known as to what source has the Collector relied upon. The appellants have placed on record two affidavits indicating that such goods are sold in sports goods shops. As regards the Collector’s observation that making classification regard should be had to the popular meaning, we observe that where the guidance can be had from the wording of the tariff itself, there is no need to go to the trade parlance. As we have observed above playing cards are specifically listed in the HSN under this tariff heading. Where the tariffs are aligned in view of the judgment of the Supreme Court in the case of CCE v. Woodcraft reported in - 1995 (77)E.L.T.23 (S.C.), the value of HSN as directing authority has to be acknowledged. In the cited circular of the Ministry also the concerned Administrative Ministry has opined that the term ‘sports goods’ has a very wide scope, rendering it difficult to define it comprehensively.

6. From the analysis above, we are satisfied that the term ‘sports goods’ used in the notification is of wide purport and does cover ‘playing cards’. We therefore allow this appeal, set aside the lower orders and direct consequential relief subject to the applicable provisions of law.”

It can be noticed from the above reproduced orderof the Tribunal, the issue of the benefit of exemption claimed under notification in respect of playing cards as sports goods has been settled by the Tribunal. They have been informed by both sides that Revenue has not preferred any appeal against the said order. They also find that this view of the Tribunal has been followed in the case of Shiv Packaging Corporation - 1998 (103)E.L.T.93 (Tribunal), Bathija Enterprises - 2000 (115)E.L.T.720 (Tribunal).

This takes them to address a concern raised by the ld. Departmental Representative by relying upon the decision of the Tribunal in the case of Funskool (India) Ltd. (supra). In their considered view the issue in the case of Funskool (India) Ltd. was different and not related to the issue of playing cards. In their view, it is settled law that direct judgment on the issue in hand has to be considered for arriving at a conclusion. Since the judgment of the Esbee Playing Card Co. is directly on the issue in hand, they hold that this judgment has more precedential force than the order of the Tribunal in the case of Funskool (India) Ltd.

In view of the foregoing, they set aside the impugnedorder and allow the appeals.

Decision:-Appeals allowed.

Comment:- Relying on case of Esbee Playing Card Co. it was held that playing cards is covered by sports and is eligible for the benefit of notification no. 2/2011. The interpretation of tariff is different from the interpretation of exemption notification. Manufacturer of playing cards is eligible for benefits of exemption Notification No. 2/2011-C.E. because the entry no. 75 of Notification grants exemption to all products falling under Chapter 95 which are considered as sports goods. When it is clear that playing cards are sports goods, the benefit of exemption cannot be denied on the ground that sports necessarily involve bodily exercise.

Prepared by:- Monika Tak

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