Pleasantime Products Etc. Vs. Commr. of Central Excise, Mumbai-1 Etc.  INSC
1726 (12 November 2009)
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NOs.4309-4311
of 2008 M/s. Pleasantime Products and Anr. ... Appellant (s) Versus
Commissioner of Central Excise, Mumbai-I ... Respondent(s)
This batch of civil appeals filed by the assessee involves common
issue of classification of branded word game "Scrabble" - whether the
product "Scrabble" is classifiable under sub-heading 9503.00 or
sub-heading 9504.90 of the First Schedule to the Central Excise and Tariff Act,
1985 ("CETA", for short).
Assessee is a proprietary firm engaged inter alia in the business
of manufacture and trade of toys, games and puzzles of various kinds falling
under Chapter 95 of the First Schedule to the CETA. The goods are manufactured
by the assessee either under their own brand name of "United Toys" or
under different brand names. One of the items manufactured by 2 the assessee is
"Scrabble" which is a registered brand name owned by M/s. J.W. Spears
& Sons Ltd., U.K. According to the assessee, "Scrabble" is a
puzzle or in the alternative it is an educational toy falling under sub-heading
9503.00 of the CETA. Assessee holds a licence from M/s. J.W. Spears & Sons
Ltd., U.K., to use the brand name(s) "Scrabble" and to manufacture
the product in India. Assessee pays royalty to M/s. J.W. Spears & Sons
Ltd., U.K., on sale of "Scrabble" in India. In these civil appeals we
are concerned with the period March 1996 to June 2001.
On 12.4.96, the assessee filed a declaration under Notification
No.13/92-CE (NT) dated 14.5.92 informing the Department that the assessee
manufactured toys and puzzles falling under sub-heading 9503.00 of the CETA
which were fully exempt from payment of excise duty as per Notification
No.81/90-CE amended by Notification No.56/94-CE. In the declarations for the
relevant years in question, according to assessee, the Department was informed
that they were manufacturing items classifiable under sub-heading 9503.00 as
well as under Heading 95.04 either on their own account or by using the brand
name of others. According to the assessee, along with the declaration(s), a
list of toys manufactured by it, classifiable under sub-heading 9503.00, was
also furnished. In the list the assessee stated that "Scrabble" was classifiable
under sub-heading 9503.00.
According to the assessee, subsequent to the filing of annual declarations,
visits were made by the jurisdictional Central Excise Authorities and samples
were collected by the Department.
It may be mentioned that in this batch of civil appeals we are
concerned with the period March 1996 to June 2001 covered by two show cause
notices dated 23.3.2001 and 18.1.2002. On 23rd March, 2001, assessee was served
with a show cause notice (SCN) issued by the Commissioner alleging that
"Scrabble" was not a puzzle, it was not a toy but a game and,
therefore, it could not be classified under sub-heading 9503.00; that, all
games which contain boards and pieces were classifiable under sub-heading
9504.90 and since "Scrabble" has board(s) and pieces it was
classifiable under sub-heading 9504.90 of the CETA. The SCN also invoked longer
period of limitation under Section 11A(1) of the Central Excise Act, 1944
("1944 Act", for short) alleging that the declarations filed by the
assessee failed to mention that the assessee was manufacturing board games and
that they had deliberately suppressed the process of manufacturing
allegations, the Commissioner made the demand of Rs.22,72,233 (by first SCN)
and Rs.71,690 (by second SCN) on the clearances of "Scrabble" made by
the assessee during the period March 1996 to June 2001 charging excise duty for
a longer period of limitation. In reply to SCN, 4 assessee submitted that the
longer period of limitation could not be invoked under Section 11A(1) of the
1944 Act as the assessee had stated in their declarations that they were
manufacturing toys and puzzles classifiable under sub-heading 9503.00 as well
as under sub-heading 9504.90 and they had specifically stated in the
declarations that they were manufacturing toys and puzzles which also bear the
brand name of M/s. J.W. Spears & Sons Ltd., U.K., and since
"Scrabble" was a product of M/s. J.W. Spears & Sons Ltd., U.K.,
it could not be said that they had deliberately suppressed the fact that they
manufactured "Scrabble". On merits, the assessee replied to the SCN
that even if "Scrabble" would be treated as a table game still it
would be covered by the genus "puzzles of all kinds" in sub-heading
9503.00. On the basis of definitions under various dictionaries, internet
search on the subject etc., the assessee submitted that in any event
"Scrabble" was an educational toy. Assessee also relied upon various
dictionary meanings to show that "Scrabble" was a puzzle and, therefore,
classifiable under sub- heading 9503.00 of the CETA. Assessee also furnished
affidavits of purchasers of "Scrabble" who deposed that
"Scrabble" was an educational toy used for imparting education to
children and is treated as a puzzle by adults.
Vide orders dated 30.1.02 and 30.9.03, the Commissioner (A) held
that "Scrabble" was a board game classifiable under sub-heading
9504.90 of the CETA and liable for levy of central excise duty thereunder. The
Commissioner further held that the assessee had deliberately suppressed the
fact of manufacturing and clearance of dutiable brand goods
"Scrabble" under sub-heading 9504.90 and, therefore, the longer
period of limitation was invocable.
Aggrieved by the Orders of the Commissioner (A), Assessee went in
appeal to CESTAT bearing Nos.E/1554/02, E/1553/02 and E/32/04. All three
appeals filed by the assessee were collectively heard by CESTAT and disposed of
by a common Final Order No. A/346-348/08/C-I/EB dated 21.3.08. By the said
order it has been held that "Scrabble" was neither an educational toy
nor a puzzle. In other words, CESTAT has confirmed the order of the lower
authorities, hence these civil appeals filed by the Assessee.
As stated above, in this batch of civil appeals we are concerned
with the classification of an item called as "Scrabble". Before
entering into dictionary meaning of the word "puzzle" we need to
analyse relevant entries in Chapter 95 of the CETA which are reproduced here in
"CHAPTER 95 TOYS, GAMES AND SPORTS REQUISITES;
ACCESSORIES THEREOF Heading Sub-heading No. Description of goods Rate of duty
No. (1) (2) (3) (4) 95.01 9501.00 Wheeled toys designed to be NIL ridden by
children (for example, tricycles, scooters, pedal cars); dolls' carriages 95.02
9502.00 Dolls representing only human NIL beings 95.03 9503.00 Other toys;
reduced-size NIL ("scale") models and similar recreational models,
working or not; puzzles of all kinds 95.04 Articles for funfair, table or
parlour games, including pintables, billiards, special tables for casino games
and automatic bowling alley equipment 9504.10 Playing cards NIL 9504.90 Other
16% (emphasis supplied by us)
The said chapter refers to "Toys, Games and Sports
Requisites; Parts and Accessories thereof". Heading Nos.95.01, 95.02 and
95.03 deal with a subject-matter, namely, "Toys" whereas Chapter
Heading 95.04 deals with "Articles for funfair, table or parlour games,
including pintables, billiards, special tables for casino games and automatic
bowling alley equipment".
therefore, we have two subject-matters, namely, Toys on one hand and Articles
meant for funfair, table or parlour games on the other hand.
conclusion is arrived at by applying a rule of interpretation called as
"companion test". Within the subject-matter "toys", we find
that Heading 9501 covers `wheeled toys', Heading 9502 covers `dolls' whereas
Heading 9503 covers `other toys; reduced-size models; puzzles of all kinds'. In
sub- heading 9503.00, the expression "other toys" indicates that all
toys other than wheeled toys and dolls would come under sub-heading 9503.00. In
a way sub-heading 9503.00 is a residuary to sub-headings 9501.00 and 9502.00.
According to the assessee, sub-heading 9503.00 in turn covers three separate
and distinct items, namely, other toys; models; puzzles of all kinds.
According to the assessee, a "Scrabble" is very similar
to a crossword or jigsaw puzzle and, therefore, "Scrabble" falls
under sub-heading 9503.00 which refers to "puzzles of all kinds".
According to the assessee, since the expression "other toys" in
sub-heading 9503.00 is followed by a semi-colon, the said expression
"other toys" constitutes one separate and distinct class from
"puzzles of all kinds" which itself constitutes a different and distinct
class from "reduced-sized models" because, according to the assessee,
each of the three classes are followed by a semi-colon.
The key question which we have to answer is : whether
"Scrabble" is a puzzle. In our opinion "Scrabble" is not a
puzzle. Let us first see how "Scrabble" was invented and how it
evolved. When the Great Depression left architect Alfred Mosher Butts out-of-work,
he decided to invent a board game. He did his market research and produced a
document entitled "Study of Games". He concluded that there are three
kinds of parlour games:
games", such as dice and bingo; "move games", such as chess and
checkers; and "word games", such as anagrams. He stated that "it
is curious that while two of the three kinds of table games has yielded such
interesting developments, the third has produced nothing better than
anagrams". Thus Butts wanted to create a game that combined the vocabulary
skills of crossword puzzles and anagrams, with the additional element of
was originally named Lexico, but Butts eventually decided to call the game
"Criss-Cross Words". "Scrabble" which means "to grope
frantically", was trademarked in 1948. [See: Success at 60, letter by
letter by Oliver Burkeman at http://www.gulf-times.com].
The difference between a "game" and a "puzzle"
is brought out by three distinct features, viz., outcome, clue-chance and
skill. In a puzzle outcome is pre-determined and fixed. It is not so in
"Scrabble". For example, in crossword, outcome is pre-determined or
fixed. In a crossword 9 puzzle, there is a grid of squares and blanks into
which words crossing vertically or horizontally are written according to clues.
[See: Encyclopaedia Britannica]. Similarly, a jigsaw puzzle is a contrivance
for testing ingenuity.
puzzle there is a set of varied, irregularly shaped pieces, which when properly
assembled form a map or picture. These are examples to demonstrate that in a
puzzle the outcome is fixed or pre-determined which is not there in
"Scrabble". A person solving a puzzle, unlike games, does not aim at
wining by scoring more points but aims at arriving at the solution by finding
the correct answer or by putting it together properly, and winning or losing
can only come by way of time taken in solving the puzzle.
The other important difference is that in a "Scrabble"
there are no clues whereas in crossword puzzle, as stated above, words are
written according to clues.
One more distinguishing feature to be kept in mind is, in
"Scrabble" there is an element of chance and skill. The player in
"Scrabble" gets lettered tiles to create words by chance. According
to The Concise Oxford English Dictionary, Tenth Edition, Revised,
"Scrabble" is defined as a board game in which players use lettered
tiles to create words in crossword fashion. These tiles are initially kept in a
pouch from which every player 10 picks up the tiles. This is pure matter of
chance. Further, apart from the element of chance there is also an element of
skill involved in "Scrabble".
lettered tile has an assigned value and the player has to create words.
to create words which attain maximum value; tries to gain maximum value from
the lettered tiles which come by chance to him. This is where skill comes in.
Each player uses his skill to achieve the highest value. In other words, if a
player has command over language, he can coin or create words with highest
maximum value. Thus, these two elements of chance and skill are the key
elements of a "Scrabble". In "Scrabble" no clues are given
as in the case of crossword or jigsaw puzzles. In "Scrabble", outcome
is not fixed or pre-determined as in the case of puzzle. The game is
essentially in the nature of anagrams played on a board (of 15 X 15 squares)
which uses the concept of a crossword only to the extent of arrangement of
words formed either vertically or horizontally. The essential characteristic of
crossword to lay down clues and having a solution is absent from
"Scrabble". Thus, "Scrabble" is an ingenious mix of
anagrams, crosswords, chance and skill. It involves a lot of luck. One of the
crucial ingredients is that you cannot know what tiles are on your opponent's
rack or which you will draw next. So, aided by artful strategy there is a good
chance of beating someone with a better vocabulary. [See: Spell Bound, by
Oliver Burkeman, 11 The Guardian, June 28, 2008 at http://www.guardian.co.uk].
Hence, it is seen that luck lacks in a puzzle unlike in the game of
"Scrabble" as an essential constituent.
Hence, in our view, "Scrabble" will not fall in the
category or class mentioned in sub-heading 9503.00, namely, "puzzles of
Applying the dictionary meaning, "Scrabble" is a board
game in which players use lettered tiles to create words in a crossword
fashion. [See: The Concise Oxford English Dictionary, Tenth Edition, Revised].
Apart from the analysis of the entries in Chapter 95 and apart
from the dictionary meaning, discussed above, we may now refer to trade meaning
of the word "Scrabble" in India.
In the case of The Dy. Commissioner of Sales Tax (Law) Board of
Revenue (Taxes), Ernakulam v. M/s. G.S. Pai and Company - AIR 1980 SC page 611,
this Court held that while interpreting the entries in Sales-tax Legislation,
it should borne in mind that the words used in the entries must be construed
not in any technical sense but as understood in common parlance. Courts must
give the words, used by the legislature, their popular- sense meaning
"that sense which people conversant with the subject-matter 12 with which
the statute is dealing, would attribute to it". The word in the entry
must, therefore, be interpreted according to ordinary parlance and must be
given a meaning which people conversant with the commodity would ascribe to it.
Applying the said test of "common parlance" or trade meaning and
commercial nomenclatures, we are of the view that "Scrabble" is a board
game. If one attends any departmental store in Mumbai like Oxford or Crossword,
"Scrabble" is put in the board game section and not in the section
for puzzles. Therefore, even by the test of common parlance
"Scrabble" is not the puzzle. It is a game.
The word "game" in commercial sense means an article or
apparatus used in playing games. According to Words and Phrases, Permanent
Edition, the word "game" also defines, in certain context,
instrumentalities used in playing them. According to Stroud's Judicial Dictionary,
a "game" is a form of a play or sport especially a competitive one,
played according to rules and decided by skill and chance. According to Words
and Phrases, Permanent Edition, the instruments by which chance may be
developed and upon which skill may be exercised are also games - such as cards,
dice, balls, figures, letters, checks etc. Therefore in a game there is a trial
of skill or chance between two or more contesting parties according to some
rule(s) by which one may succeed or fail. It is a contest for success, for a
trial of 13 chance or skill and it embraces every contrivance which has for its
object sport, recreation or amusement. These are the various dictionary
meanings of the word "game". Applying the dictionary meaning, we are
of the view that "Scrabble" is a board game. It is not a puzzle. In
the circumstances, it falls under Heading 95.04 and not under sub-heading
9503.00 of the CETA.
In the alternative, it is the case of the assessee that they are
also selling what is called as "Junior Scrabble" which is an
educational toy which falls in sub-heading 9503.00 of the CETA under the
expression "Other Toys". It is submitted that "Junior
Scrabble" has an element of playfulness and recreation. It is submitted
that it is not a process but an article a child can play and develop his word
power with the scrabble. It is submitted that "Junior Scrabble" is a
pictorial dictionary and in it every child has to put the character and arch
after identifying it. We find no merit in this contention.
At the outset,
it may be stated that according to the pleadings "Scrabble" is a toy
in the nature of a puzzle. This plea indicates that even according to the
appellant it is a "toy puzzle" and consequently it can only fall in
the category of "puzzles of all kinds". However, as stated above,
"Scrabble" (a branded word game) is not a puzzle as in
"Scrabble" there is no fixed outcome, there is no clue as in the case
of a puzzle and there is an element of skill and chance.
According to "The Concise Oxford English Dictionary, Tenth
Edition", a "toy" is an object for a child to play with,
typically a model or miniature, replica of something. The gadget or a machine
providing amusement is a toy. In 1914 even a car was a toy for a rich man.
According to Stroud's Judicial Dictionary, Fifth Edition, construction kits for
making model are "toys and games". According to Encyclopedia
Americana originally a "toy" was made for adults rather than
children, however, by 19th century the word came to denote a child's play-thing.
According to Encyclopedia Americana toys are tools of the human child, training
him in physical skills, developing his imagination and stimulating his
it is a play-thing. Toys imitate in miniature the world familiar to children.
According to Encyclopedia Americana, "educational toys" includes kits
for building structures such as bridges and geodesic domes. Miniature railways
on tracks are educational toys. However, with the change in educational methods
in the 20th century the pattern of toys has undergone a change. Advance
thinking in child welfare has influenced the shape of toys and special
standards of safety and hygiene are enforced today.
methods have influenced the pattern of toys and introduced building blocks and
constructor sets, colour mosaics and educational jigsaws into the definition of
the expression "educational toys". However, in 20th 15 century also
soft toys remain popular like "teddy bear". In 20th century vinyl
plastic and foam rubber has revolutionized the toy industry and has communal
toys - climbing frames, splash pools and sand trays.
Thus, going by the dictionary meanings of the word
"educational toy" one finds that "educational toys" remain
even today tools of amusement.
remain an object for a child to play with. One needs to apply the predominant
test in such cases. Applying these tests, we are of the view that even a
"Junior Scrabble" will not fall in the category of "educational
earlier, the two main elements of "Scrabble" are - chance and skill.
These elements are absent in a toy. Hence even a "Junior Scrabble" is
not an educational toy. It is a game. It remains a board game and in the
context of the placement of the entries in Chapter 95 which we have discussed
above, in our view, even "Junior Scrabble" will come under Chapter
Heading 95.04 of the CETA.
Now, coming to the question of extended period of limitation, it
is the case of the assessee that they bonafidely believed that
"Scrabble" is a toy in the nature of a puzzle and, therefore, it was
classifiable under sub-heading 9503.00 of the CETA. According to the assessee,
the longer period of limitation was not invocable under the proviso to Section
11A(1) of the 1944 16 Act as the assessee had stated in all their annual
declarations that they are manufacturing toys and puzzles classifiable under
Heading 95.04 and sub- heading 9503.90 of the CETA; particularly, when in their
declarations they had declared that they were manufacturing toys and puzzles which
carried the brand name of their licensors M/s. J.W. Spears & Sons Ltd.,
U.K., and since "Scrabble" was a product of M/s. J.W. Spears &
Sons Ltd., U.K., it cannot be said that they had deliberately suppressed the
fact of manufacture of "Scrabble". We do not find merit in this
submission. Firstly, as stated above, the case of the assessee was that they
had annexed a list of items manufactured by them which included items falling
under Headings 95.03 and 95.04 of the CETA. This has not been proved. The list
is not there on record. In the circumstances, the authorities below were right
in rejecting this contention of the assessee. Secondly, we find that in the
declaration(s) even though the assessee had doubts about the excisability of
the said item and even though the assessee had sought clarification as far back
on 5th September, 1994; they did not mention the word "Scrabble" in
the body of the declaration(s) filed with the Department. They did not mention
the details of the game "Scrabble". Therefore, this conduct of the
assessee clearly indicates that the assessee herein deliberately declared
branded goods under sub-heading 9503.00 of the CETA to avoid any enquiry in the
matter 17 by the Department. For the above reasons, we are of the view that the
Department was justified in invoking the proviso to Section 11A (1) of the 1944
For the above reasons, we find no merit in the civil appeals
herein and the same are accordingly dismissed with no order as to costs.
.................................J. (S.H. KAPADIA)
................................J. (AFTAB ALAM)
November 12, 2009.