ORDER
S.K. Bhatnagar, Vice President
1. This is an appeal against the order of Collector of Central Excise (Appeals), New Delhi.
2. The learned Counsel has stated that the main issue involved in this case is classification of Suspension Axle Bearings manufactured and cleared from 1-3-1986 onwards. The Assistant Collector has classified the goods under 8503.00 whereas the appellants have claimed their classification under 8485.90 or 8607.90.
3. The learned Collector (Appeals) has held that these are parts of traction motors which are meant for railway locomotives. The traction motors are classified as electric motors under Heading 8501.00 and parts thereof are classified under 8503.00. She has accordingly rejected the appeal.
4. The appellants’ contention was that the orders of the lower authorities classifying ‘Suspension Axle Bearings’ under Heading 85.03/sub-heading 8503.00, are not sustainable in view of the following :
(a) Depending upon its diameter and size or diameter of the rotating shaft, such bearings are used in different machines and it is incorrect that the same are solely or principally used in traction motors and/or are its integral parts so as to merit classification under Heading 85.03.
(b) These bearings are basically in the nature of an attachment and not
an integral part of traction motor inasmuch as the latter can function even without suspension axle bearings.
(c) As illustrated before the authorities below with the aid of technical catalogues, suspension axle bearing is used only for supporting the Traction Motor, which is hung on the axle to drive the axle wheel of Railway Locomotives and it works only as a coupling to connect the traction motor with the locomotive axle and in view of its independent function cannot be termed as an integral part of traction motor.
(d) These bearings have no electrical connectors and are thus outside the purview of Chapter 85.
(e) As per CCCN Explanatory Notes Vol. 3 at page 1157, parts common to a number of machines falling in different Headings, are classified in Heading 84.85 (if not electrical) or in Heading 85.28 (if electrical).
(f) Heading No. 84.65 of C.C.C.N. reads word to word as Heading No. 84.85 of the Central Excise Tariff and it clearly says that this Heading covers all non-electrical parts of machinery. As such suspension axle bearings which are non-electrical parts would fall under 8485.90 and not 8503.00 as held.
(g) It is an admitted fact that these bearings are used with traction motors which in turn are specially designed as parts of Railway/Tramway, Diesel Locomotives and therefore, as per Interpretative Rules [Rule 3(a)], these would alternatively merit classification under 8607.90.
4A. It was their contention that the basic character, function and use of a product are important determining features for their correct classification as held by the Tribunal’s Order reported in 1984 ECR 683. However, in the absence of any show cause notice, the appellant has all along been severely handicapped.
5. Furthermore, during the remand proceedings, the Assistant Collector has gone beyond the terms of the Order-in-Appeal, dated 28-1-1988, in which it was clearly ruled that the demand beyond six months was time-barred.
6. That the Collector (Appeals) has also not dealt with all their submissions.
7. The learned D.R. drew attention to the Order-in-Appeal and reiterated the Department’s viewpoint. He emphasized in the main that the Collector (Appeals) on perusal of the catalogue found that the parts of traction motors which are meant for Railway Locomotives and Traction Motors are Electric Motors falling under Heading 8501. As such, it was not proper to treat them directly as parts of Railway Locomotives. Hence 8607 was out of question. Similarly, 8485.90 is meant for other machine parts is not acceptable as admittedly the Axle Bearings in question are integral part of traction motors.
8. We have considered the submissions of both the sides. We observe that apparently no show cause notice was issued in this case and that is why the Collector (Appeals) had initially remanded the matter back to the Assistant Collector without going into the merits of the case. The learned Collector (Appeals) had also mentioned in the operative portion of his order, dated 28-1-1988 that demand for the period exceeding six months under Section HA was not apparently sustainable. He had directed that the case may be re-adjudicated by the competent authority in the light of his observations after necessary verification of facts and after giving fresh and reasonable opportunity to the appellants.
9. In spite of it, no show cause notice appears to have been issued as there is no reference to it in the impugned order-in-original, dated 20-5-1988.
10. On the contrary, the Assistant Collector has recorded in a couple of pages as to why in the instant case, there was no need for issuing of a show cause notice in view of the discussions that he had with the appellants in administrative capacity with reference to their Classification Lists.
11. I think it was incorrect on the part of the Assistant Collector to do so in the face of clear and specific observations and directions of the Collector (Appeals). However, since subsequently the appellants themselves have waived the issue of a fresh show cause notice they could not make a grievance of it at the appeal stage.
12. Furthermore as Collector (Appeals) had already held that the demand of duty for the period exceeding six months was not apparently sustainable it was no longer open to the Assistant Collector to simply reiterate the previous order, as it was and it was wrong on his part to say that the findings and the orders recorded under his earlier order-in-original, dated 11-8-1977 are relied as per Central Excise Law, for the simple reason that this order had been set aside by the Collector (Appeals).
13. The learned Collector (Appeals) who passed the impugned order had also erred in not taking cognizance of the submissions made before her and not making any observation whatsoever regarding the aforesaid mistakes of the Assistant Collector which are apparent from the face of the record.
14. We also observe that once the appellants had filed a Classification List No. 15/85/86 (effective from 28-2-1986) and No. 41/85/86 (effective from 1-3-1986) and subsequently on 1-3-1986, it was necessary on the part of the proper officer to conduct enquiry and call for catalogue etc. and pass proper orders. The matter could not simply be kept pending indefinitely. Similarly, the authorities should have taken appropriate action once a revised Classification List No. 1/86/87, dated 1-3-1987 had been filed.
15. Since the impugned-order-in-original has been passed without due regard to the order of Collector (Appeals) and his observations and directions as contained in Order-in-Appeal, dated 28-1-1988 and the Assistant Collector has merely reiterated the order already set aside, the impugned order is liable to be set aside on this ground alone.
16. Similarly since the Collector (Appeals) while passing the impugned order had neither noticed these gross irregularities on the part of the Assistant Collector nor taken all the submissions of the appellant into account and has not recorded any finding on the aspect of time bar and other relevant aspects, the impugned order-in-appeal, dated 31-1-1989 is also liable to be set aside on this ground alone.
17. The Assistant Collector’s order does not refer to any catalogue or technical literature. The Order of Collector (Appeals) does refer to some catalogue produced at the time of hearing but has not quoted anything therefrom. The appellants have also not produced the manufacturers’ catalogue or any technical literature before us to enable us to record any specific finding on the merits of the case. As both the impugned orders suffer from serious infirmities, hence they are set aside as already announced in the open court.