2000(08)LCX0037

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri V.K. Agrawal, Member (T) and P.G. Chacko, Member (J)

M.M. SINTERED PRODUCTS

Versus

COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Final Order Nos. 1247-1248/2000-B, dated 14-8-2000 in Appeals No. E/200/89-B, E/2698/99-B

Cases Quoted

A. Nagaraju Bros v. State of Andhra Pradesh — 1994(07)LCX0091 Eq 1994 (072) ELT 0801 (S.C.) — Referred... [Para 4]

Commissioner v. Kumudam Publications (P) Ltd. — 1995(12)LCX0085 Eq 1997 (096) ELT 0226 (S.C.) — Referred [Para 4]

Commissioner v. U.P. Twiga Fibre Glass Ltd. — 1998 (079) ECR 0428 (Tribunal) — Referred [Para 4]

Gupta Manufacturing Co. v. Collector — 1995(04)LCX0125 Eq 1995 (079) ELT 0172 (Tribunal) — Referred....... [Para 3]

Jain Engineering Co. v. Collector — 1987(09)LCX0020 Eq 1987 (032) ELT 0003 (S.C.) — Followed ..................... [Paras 3, 6]

Plasmac Mfg. Co. v. Collector — 1990(11)LCX0033 Eq 1991 (051) ELT 0161 (S.C.) — Referred............................ [Para 4]

Porrits & Spencer (Asia) Ltd. v. State of Haryana — 1978(09)LCX0018 Eq 1983 (013) ELT 1607 (S.C.) — Referred [Para 4]

Trading Engineers (International) Pvt. Ltd. v. Commissioner
 — 1996(10)LCX0087 Eq 1997 (091) ELT 0074 (Tribunal) — Followed....................................................... [Paras 3, 6]

Advocated By :   Shri Jitendra Singh, Advocate, for the Appellant.

Shri M.P. Singh, JDR, for the Respondent.

[Order per V.K. Agrawal, Member (T)]. - In these two appeals, arising out of a Common Order dated 31-10-1988 passed by the Collector, Central Excise (Appeals), the issue involved is whether the Iron and copper sintered bushes, manufactured by the Appellants, M/s. M.M. Sintered Products, are classifiable under Sub-heading 7308.90 and 7413.90, as claimed by them or under sub-heading 84.83 of the schedule to the Central Excise Tariff Act, as decided by the Collector (Appeals).

2. Shri Jitendra Singh, Ld Advocate, submitted that the classification list No. 18/86 effective from 1-3-86, C.L. No. 26/86, effective from 1-4-86 and C.L. No. 42/86, effective from 2-4-86 were approved on 20-8-86 and 20-4-87; that Collector reviewed these classification lists right from 20-8-86; that the Review Order passed by the Collector under Section 35 E (2) of the Central Excise Act does not bear any Number and date or the date of Communication of the Order to the Assistant Collector which is the requirement of the law to ascertain the limitation of one year specified in the Act; that the Review Order had been attested on 23-10-87 which is clearly barred by limitation as both C. Ls. No. 18/86 and 26/86 were approved by the Assistant Collector on 20-8-86; that Collector (Appeals) has accepted this fact in the impugned Order; that therefore, the impugned Order passed pursuant to time barred Review Order, is void. The ld. Advocate also mentioned that a show cause notice dated 20-3-87 was issued to them in respect of C.L. No. 42/86 and 48/86 for classifying the impugned products under Heading 84.83; that their C.L. No. 42/86 was approved classifying the products under Sub-heading 7308.90 and 7413.90 on 20-4-87 and C.L. No. 48/86 was modified as they had classified their products under Heading 84.83 under protest; that in these circumstances, there was no justification for issuing show cause notice dated 20-7-87 for classifying the products in question under Heading 84.83.

3.On merit, the Ld. Advocate mentioned that the Assistant Collector classified sintered Bushes under Heading 84.83 of Excise Tariff on the basis of end use saying that these Bushes were used as plain shaft bearings having self lubricating properties and the products were nothing but Plain Shaft Bearings. He referred to the Explanatory Notes (B) of HSN below Heading 84.83 according to which plan shaft bearings ‘consist of rings of anitfriction metal or other material (e.g. sintered metal or plastics)’; that the products do not consist of rings and as such these products cannot be treated as plain shaft bearings. He further submitted that classification of a product cannot be made on the basis of function or use; that common function of the commodities does not make them same or identical articles. Reliance was placed on the judgment in the case of Jain Engineering Co. v. C.C.Bombay 1987(09)LCX0020 Eq 1987 (032) ELT 0003 (S.C.) wherein it was held that “It may be that two articles (Bushings and bearing) have the same functions but, nonetheless, they are distinct and separate. As the functions of bushings are the same as that of bearings, sometimes bushings are also called bearings, as pointed out by the Appellate Tribunal. But when these two articles are known in the market by two different names, it is difficult to uphold the contention that they are same and identical even though they perform the same functions.” He also relied upon the decision in Gupta Manufacturing Co. v. CCE, Chandigarh, 1995(04)LCX0125 Eq 1995 (079) ELT 0172 (T). The Ld. Advocate also mentioned that the Revenue has made their catalogue as the basis for classifying their product; that catalogue contains Various Virtues of the product and it cannot be the deciding factor; that it has been held by the Tribunal in Trading Engineers (International) Pvt. Ltd. v. CCE, New Delhi, 1996(10)LCX0087 Eq 1997 (091) ELT 0074(T) that the Commercial pamphlets are of little evidentiary value because a particular firm may choose to project its own equipment in a variety of ways and use a term or phrase loosely and is not bound to keep any particular criterion in view except the requirement of the salesmanship.

4. Countering the arguments, Shri M.P. Singh, Ld D.R., submitted that the Department has the power to issue show-cause notice for the purpose of modifying the classification list. He relied upon the decision in Plasmac Machine Mfg. Co. v. CCE, 1990(11)LCX0033 Eq 1991 (051) ELT 0161 (S.C.) and CCE, Meerut v. U.P.Twiga Fibre Glass Ltd., 1998 (079) ECR 0428 (T). He also mentioned that the law provides for Review of the Order by the Collector and issue of notice for modification of C.L.; there is no bar, prohibition for initiating two proceedings under different provisions of law; that as there is no date mentioned on Review Order, it cannot be claimed by the Appellants that it was passed beyond the statutory time limit. On merit, the Ld. D.R. submitted that the classification of the product cannot be determined on the basis of absence of ring alone; that end use may not be a sole criteria for arriving at the classification of the product; that, however, end use and trade understandings are very important factors for deciding the classification. He relied upon the decision in C.C. v. Kumudam Publications (P) Ltd, 1995(12)LCX0085 Eq 1997 (096) ELT 0226 (S.C.) wherein it was held that “It may not also be entirely correct to say that in no case can the end use or function of the goods is irrelevant on the question of classification.” The ld. D.R. further mentioned that the product is being marketed as self-lubricating bearing and in commercial understanding the impugned product is nothing but plain shaft bearing; that common parlance test or Commercial usage test is treated as the more appropriate test as held by the Apex Court in A. Nagaraju Bros v. State of Andhra Pradesh, 1994(07)LCX0091 Eq 1994 (072) ELT 0801 (S.C.). Reliance was also placed on the decision in Porrits & Spencer (Asia) Ltd. v. State of Harayana, 1978(09)LCX0018 Eq 1983 (013) ELT 1607 (S.C.) = 1989 (025) ECR 0443 (S.C.). Finally the Ld D.R. mentioned that as the product in question is self-lubricating it does not need anti-friction ring.

5. In reply, the Ld. Advocate submitted that the presence of ring is essential as the word ‘may’ has not been used in the Explanatory Notes of HSN; that the Revenue has not adduced any evidence to prove that the products in question are known as plain shaft bearings in the Commercial parlance and also no evidence has been brought on record to show that these goods are used as bearings only.

6. We have considered the submissions of both the sides. Show cause notice dated 22-7-87 was issued by the Department to change the classification of Bushes on the ground that these were used as plain shaft bearings having self lubricating properties as per the Appellants’ own catalogue. Further the Review Appeal was also filed by the Department before Collector (Appeals) on the basis of end use and catalogue. Both the lower Authorities have classified the impugned goods on these basis alone. The ld. Advocate has referred to HSN Explanatory Notes which clearly provide that plain shaft bearings consist of rings of anti-friction metal. It has not been disputed by the Revenue that products in question do not consist of rings. The Revenue has, however, attempted to explain the absence of rings by saying that products being self lubricating, rings are not required. We do not agree with this argument of the ld. D.R. It is the Department’s case that the impugned products are nothing but ‘Plain shaft bearings’ and when the absence of rings is pointed out, the Revenue merely says that rings are not necessary without referring to any technical literature or I.S. Specifications. Nor the Revenue has any evidence to show that in Commercial parlance the products in question are treated as ‘plain shaft bearings’. The Supreme Court in Jain Engg. case, Supra, has held that bushing and bearings are not same and identical even though they may have the same functions. In absence of any technical literature and for want of any material regarding Commercial understanding of the impugned products as plain shaft bearing, the impugned Order cannot be sustained. The Ld. Advocate has rightly relied upon the decision in Gupta Manufacturing Co., supra, wherein it was held that description of by assessee is immaterial unless it is shown that the goods satisfy the trade understanding and are known in trade as such. Finally, the Revenue has primarily relied upon the catalogue of the Appellants for determining the classification which has been regarded by the Tribunal of little evidentiary value in the case of Trading Engineers (International) Pvt. Ltd. We are, therefore, of the view that Department has not substantiated the classification of impugned products under Heading 84.83 of Excise Tariff. As we are allowing the appeal on merit, we are not considering the other pleas raised by the Ld. Advocate for the Appellants. We, thus, set aside the impugned Order and allow both the Appeals.

Equivalent 2001 (130) ELT 0173 (Tri. - Del.)

Equivalent 2000 (040) RLT 0399