Customs, Excise and Gold Tribunal - Delhi
Hindustan Motors Ltd. vs Collector Of Central Excise on 15 November, 1991
Equivalent citations: 1993ECR306(TRI.-DELHI), 1992(59)ELT448(TRI-DEL)
ORDER N.K. Bajpai, Member (T)
1. This appeal is directed against the orders of the lower authorities by which they have revised the classification of two items manufactured by the appellants. These are:
(a) Part No. 9190675 - Nut bearing lock
(b) Part No. 9110046 - Nut King Pin Thrust Bearing
2. While the first part is used in loaders, the second is used in dumpers. Their classification was initially approved under Item 68 of the erstwhile Central Excise Tariff but the authorities sought to classify them under Item 52 as Bolts, Nuts and Screws by issuing a show cause notice on 26-7-1980 under erstwhile Rule 10A read with Rule 173PP of the Central Excise-Rules and demanding duty of Rs. 32,049.70 for the period 1-4-1979 to 30-6-1980 on the ground that the classification of the two products under Item 68 was wrongly made. The show cause notice was issued by the Inspector of Central Excise for showing cause to the Assistant Collector why the duty short levied "due to wrong classification of Nuts - (i) Nut Bearing Lock S1. No. 9190675 and (ii) Nut King Pin Thrust Bearing S1. No. 9110046 falling under Tariff Item 52 - rate of duty 15% ad valorem - as Tariff Item 68 goods and adoption of central excise duty @ 8% ad valorem". The appellants submitted in the reply that as per Bombay Trade Notice No. 127/71 dated 5-7-1971, mere existence of threads would not render an article as a bolt, nut or screw if it is recognisable as component part of an instrument, apparatus, appliance or machine. It was also submitted in the reply that although the parts were called as Nut Bearing Lock and Nut King Pin Thrust Bearing, they are not classifiable as nuts and bolts because they are not known in the market as nuts and bolts. They arc known as only parts of their respective products i.e. Nut Bearing Lock is known as Part No. 9190675 of Spindles of Front End Loaders and Nut King Pin Thrust Bearing is known as Part No. 9110046 of spindles used in R25 off-the-Highway Rear Dumper. The Assistant Collector held that the function of the two parts was primarily as Fasteners and therefore they were correctly classifiable under Item 52. When the matter went up in appeal, Collector (Appeals) recorded the following order in para 3, the relevant portion of which is reproduced below:-
"3. Regarding reclassification of nut bearing locks and nut king pin thrust bearing, it is seen from the impugned order that both those items perform the function of the fastening only and appellants have not been able to introduce any acceptable evidence to show that these nuts perform dual function and that fastening is the secondary function and that they are identifiable and essential components of motor vehicles, to warrant classification under T.I. 68. The description of excisable goods against Entry No. 52 of the Central Excise Tariff coupled with the explanation against the said Entry is so comprehensive, as to bring within its ambit all kinds of bolts, nuts and screws, irrespective of their use subsequent to manufacture or their placement in any machine or instrument by the buyer. Consequently, I see no merit in their appeal in respect of this issue."
In the appeal before us, the points taken mainly are that the two parts are known by their respective product numbers and are manufactured particularly with regard to a specific specification and can be utilised only in the manufacture of spindles of the Front End Loaders and R-25 Highway Dumpers; that the parts arc not ordinarily sold in the market nor are they capable of being sold as such. It is also stated that the parts are not Nuts within the meaning of Item 52. Merely because a portion of the parts has resemblance to a 'Nut', the same cannot be said to be known or referred to as a nut.
2. Another ground taken in the appeal is that the demand issued under Rule 10A is wholly without jurisdiction inasmuch as the show cause notice was issued after the deletion of Rule 10A vide Notification No. 267/77 dated 6-8-1977. Since the show cause notice was issued after deletion of the said Rule, the entire proceedings were wholly without jurisdiction. In any event, the demand which relates to the period 1-4-1979 to 30-6-1980 is substantially barred by time.
3. Although the appeal also related to the classification of pistons etc. this matter was not pressed during the hearing.
4. Shri Krishna Kumar, the learned counsel for the appellants, submitted that in order to classify a part as a 'Nut', its primary function should be for fastening. In the present case, the Nut King Pin Thrust Bearing prevents the nut from falling down; its function is not to fasten but to prevent the other item from falling. Similarly, in the case of Nut Bearing Lock, the part performs the function of locking and aligning - not fastening. He placed reliance on the decision of the Tribunal in the case of Central India Machinery Company v. Collector of Central Excise [1989 (39) E.L.T. 306] in which it was held that bogie centre pivot bolt ('pin') known as pivot bolt was classifiable under Item 68 and not under 52 since there was no rigid fastening of the wheel assembly/bogie with the under-frame or chassis of the wagon by the pivot bolt.
5. Shri Kumar also submitted that the proceedings in this case under Rule 10A could not have been continued after the repeal of the Rule itself.
6. Shri J.N. Nair, the learned JDR, contested the claim of the appellants that the parts in question were not nuts and submitted that the write-up as well as the photograph of the parts showed that they were essentially nuts. In common parlance they are known as locking nut/bearing locking nut. He also submitted that the threading in the two parts was not provided without any purpose and the purpose is to keep the parts which are fastened with it in position. They therefore, perform the function of fastening. He placed reliance on the decision of the Supreme Court in the case of Jaishri Engineering Co. (P) Ltd. v. Collector of Central Excise [1989 (40) E.L.T. 214] in which it was held that if the goods were commercially known and bought and sold as nuts, they were classifiable as nuts under Item 52. He also referred to the decision of the Bombay High Court in the case of Simmonds Marshal Ltd. v. M.R. Baralikar, Assistant Collector of Central Excise, Pune and Others [1985 (22) E.L.T. 378] in which it was held that Nyloc Self-Locking Nut is a 'nut' used where fabrication is a major problem and was classifiable under Item 52 and the commodity as a whole has to be taken into consideration while deciding the classification of an article. Shri Nair read out certain sentences from paragraph 7 and 8 of this judgment which are relevant and are quoted below:-
"7 ... if the evidence produced by the petitioners and the department is read as a whole, without laying undue stress on an individual quality of that product, it is quite clear to us that nyloc nut is nothing but a selflocking nut. It is also so described in the literature issued by the petitioners... . The nyloc ring at the top of the nut only serves to improve the fastening quality. It is meant for universal application. It is merely an improved variety of nut, which is basically a fastener having special property of holding fast."
8 ... On a comprehensive consideration of the material before us, there is no escape from the conclusion that Nyloc Nut is a nut, though it could be described as an improvised or a special type of nut. It will make no difference whether it is readily available in the ordinary hardware market or is available in automobile shops, or is costlier than an ordinary iron nut. It is quite clear that if this nut could not be used basically as a fastener, then all other additional advantages will have no meaning."
7. Shri Nair also referred to the decision of the Supreme Court in the case of Plasmac Machine Mfg. Company Private Ltd. v. Collector of Central Excise [1991 (51) E.L.T. 161] in which the Hon'ble Court had decided that Tie Bar Nuts used for fixing the platens at appropriate distances were classifiable under Item 52 as nuts and, after carefully analysing the scope of Item 52 and meaning of the word 'fasten' as given in various dictionaries of the English languages, came to the conclusion that the Tie Bar Nuts were classifiable under Item 52.
8. Shri Nair also submitted a copy of an unreported decision of the Tribunal in the case of Virnani Fasteners and Bolts Pvt. Ltd. vide Order No. E/245/91-D dated 17-5-1991 in which the classification of various types of nuts was decided to be under Item 52. He submitted that in view of the large number of case laws cited by him, there was no doubt that the Nut bearing lock and Nut King Pin Thrust Bearing primarily perform the function of fastening and therefore they were correctly classifiable under Item 52. In reply, Shri Krishna Kumar submitted that in all the cases cited by the learned JDR, the parts in question perform the function of fastening besides performing certain other functions whereas the goods under dispute do not discharge the function of fastening.
9. We have carefully considered the appeal and the submissions of both the sides and observe that not only are the two parts called Nut king pin thrust bearing and Nut bearing lock, but they also perform the function of fastening which would essentially take them to Item 52. Moreover, the appellants themselves have called the goods 'Nut Bearing Lock' and 'Nut King Pin Thrust Bearing'. This being so and, in view of the ratio of the various decisions cited by the learned JDR before us, we are of the considered view that the classification of these parts should correctly be made under Item 52.
10. As regards the plea that demand under Rule 10A was not sustainable because Rule 10A was deleted on 6-8-1977 by Notification 267/77-C.E., we observe that when Rule 10A was deleted, its provisions were incorporated in a modified form in amended Rule 10 which simultaneously came into force. We also note that Collector (Appeals) has, by accepting this to be a demand under Rule 10, restricted it to a period of six months. The Tribunal, while relying on the decision of the Supreme Court in the case of M/s. J.K. Steel Ltd. held in the case of Verma Industrials Ltd. v. Collector of Central Excise, Bangalore [1984 (18) E.L.T. 403] that, if a mistake is made in mentioning Rule 10A instead of Rule 10, the demand is not vitiated. Since Collector (Appeals) has already decided to limit the demand for a period of six months prior to the service of the show cause notice, there is no justification for interfering with the orders of the lower authorities which have been validly made.
11. The appeal is therefore rejected.