ORDER
1. The appellant, M/s. Prashant Steel Balls, had filed C.L. bearing No. 36/92 dated 28.8.1992 with the Assistant Collector in respect of Ball or Roller bearings, cycle/steel balls of M.S of sizes 6.35mm, 4.77mm, 3.97mm and 3.17mm to be fitted in various parts of the cycles for classification under sub-heading 8482.00 under protest. In terms of the trade Notice No. 56/92, dated 8.7.1992, of the Baroda Collectorate, they claimed benefit of the Notification No. 175/86 dated 1.3.1986 in the said C.L. Their protest was based on the ground that their products are used as cycle parts, and that they were correctly classifiable under the Heading 87.14 chargeable to Nil rate of duty under the Notification No. 62/86, dated 10.2.1986 as amended. They also referred to Order-in-Appeal No. M-43-44/BRD/19-20/85, dated 13.3.1986, passed by the Collector (Appeals), Bombay. The C.L. was approved by the Assistant Collector.
2. The appellant in their appeal memorandum explained that the dispute regarding the classification of M.S. Steel Balls has arisen after issue of Directive under Section 37-B of CESA, 1944 dated 25.6.1992. Subsequently, the Baroda Collectorate issued Trade Notice bearing No. 56/92 dated 8.7.1992. Accordingly, the appellants were directed by the Trade Association in the ball manufacturing unit to classify their product under Ch. Heading 84.82. Till then, their products were classified under heading 87.14 which was fully exempted. They, therefore, filed the subject C.L. under heading 84.82. However, they stated that their sister concern named M/s. Century Steel Balls Pvt. Ltd. had also similar case which was decided by Collector (Appeals), Bombay classifying the product under Heading 87.14 against which the department filed an appeal before the CEGAT, New Delhi. But the department was not granted stay by the CEGAT. Despite the above decision being in their favour, the Assistant Collector has decided their case against them. The following points were raised by the appellant in their appeal:
(i) The Assistant Collector has not passed a speaking order. He has not given any opportunity of personal hearing nor was any show cause notice issued to them. Hence, there is violation of principles of natural justice.
(ii) In the case of C.L. of M.S., Steel balls manufactured by them, the case was similar to the one concerning M/s. Century Steel Balls Pvt. Ltd. It was therefore binding on the Assistant Collector to act according to the decision given by the Higher authority in such matter.
(iii) The end use of the product is very much a relevant criterion in the matter of classification of any products. The product of the appellant, i.e. M/s. Steel Balls in various sizes and grades are solely consumed in the Cycle Industries only. Further, cycle itself is exempted from payment of duty and that is why the Government has rightly exempted the subject goods vide the Notification No. 162/86.
(iv) Technically, there is vast difference between steel balls used for cycle and steel balls used for bearing purposes. The chemistry of both these balls are quite separate. They have given the comparison chart of different chemistry of these two products.
Their products have been recognised and commercially known as cycle parts in the country as well as throughout the world and by Engineering Export Promotion Council, and Export Inspection Agency. They, therefore, requested to set aside the order and classify the products under Ch. 87.14.
3. The appellants were heard by me on 6.12.1993 when they reiterated their submission. They produced end use certificate and also copy of order-in-appeal No. 1633/CE/CHD/91, dated 3.10.1991, passed by the Collector (Appeals), Chandigarh. They also produced’order-in-appeal No. PCJ/184/BRD/93, dated 8.11.1993, passed in respect of M/s. Century Steel Balls Pvt. Ltd.
4. I have considered the submissions. The issue is regarding the classification of the appellants product, i.e. M.S. Steel Balls of certain specifications. The appellants manufacture these steel balls in the sizes of 1/4 inches to be used in hub and bottom bracket of cycle, 3/16 “Hubs (front), 5/32″ pedals and fork fittings and 1/8” Free Wheels and handle bars of cycle. The classification of these products are sought to be made under Ch. Heading 84.82 in terms of Note 6 to Ch. 84. The Note reads “Heading No. 84.82 applies, inter alia, to polished steel balls, the maximum and minimum diameter of which do not differ from the nominal diameter by more than 1% or by more than 0.05mm whichever is less. Other steel balls are to be classified in Heading 73.26”. The Chapter 84.82 covers balls and roller bearings. Therefore, this note is relevant only if these steel balls are used in the ball bearings or roller bearings. In the case of NHB Bearings Ltd., vide order-in-appeal No. PCJ/8/93/SRT/93 dated 23.3.1993, I have held that the steel balls manufactured as part of the ball or roller bearings as per the specification No. IS-6455-1972 & IS-6456-1972 and for roller bearings of specification No. IS 2289, the international specification is ISO 3290. These steel balls for ball bearings or roller bearings are invariably subjected to lapping process to make them polished steel balls. Only such polished steel balls are covered by the heading 84.82. The steel balls of Cycle are not manufactured to such precision. They are of 1000 grade, whereas, ball bearings variety have grade of 25. As the accuracy decreases the numerical value of corresponding grade increases. In the case of the appellant, they have convincingly pleaded before me that steel balls manufactured by them are used as cycle parts only just as in the case of their sister concern, M/s. Century Steel Balls Ltd. In the case of M/s. Century Steel Balls Ltd. also, I have held that their product merit consideration for classification under heading 87.14. However, the Assistant Collector was directed to examine the process carried out by the appellant on the steel balls and to see whether the appellants in that case are carrying out lapping process on the said product. If such process is not undertaken by them, they would not be covered under Ch. Heading 84.82. In that case, as per their enduse as cycle parts, they will have to be classified under Ch. Heading 87.14. In this case also, the Assistant Collector is directed to examine the processes undertaken by the appellants in the same way as discussed above and then he should decide about the classification of the steel balls manufactured by the appellants and also about admissibility of the exemption Notification No. 62/86. With this direction, I set aside the impugned order and remand the case to the Assistant Collector.