2. Appellants filed Revision Application before the Government of India which under Sub-section (2) of Section 35P of the Central Excises & Salt Act, 1944 (hereinafter called the Act) as amended by the Finance Act, 1980 (No. 2 of 1980) stands transferred to the Tribunal for disposal, as if it were an appeal presented before it.
3. Appellants are manufacturers of the goods called "Jockey Pulley" and are holding Central Excise Licence for manufacturing the same. The Appellants submitted the Classification Lists from time to time and whenever required under Rule 173-B of the Central Excise Rules, 1944 (hereinafter called Rules) which were approved by the competent authority and the goods were classified under Tariff Item No. 68. The goods were also assessed accord-ingly on their monthly Return in Form RT-12 from time to time. It appears that as per Tariff Advice No. 14 of 1981, dated 6-2-81 issued by the Central Board of Excise & Customs, a clarification was made regarding the applicability of Tariff Item No.49 ("Rolling Bearings") to "Top Rollers, centering sleeve inserts and bearing with extrued shape".
The Superintendent of Central Excise, Surendra Nagar, then for the period Feburary 81 to 27-7-81 issued a Show Cause Notice dated 28-7-1981 to the Appellants to show cause to Asstt. Collector, Central Excise as to why the goods be not classified under Tariff Item No. 49 and duty and additional duty at the prescribed rates amounting to Rs. 2,51,908.97 be recovered from them. The appellants submitted reply to the Show Cause Notice and also made oral submissions before the Assistant Collector. The Assistant Collector, by his orders dated 12-1-1982, accepted the Appellants' explanation and dropped the Show Cause Notice.
4. Later, Shri B.V. Kumar, Collector of Central Excise, Ahmedabad purporting to act under Section 35A ot the Act, proposed to review the orders of the Assistant Collector dated 12-1-1982 and issued a Show Cause Notice dated 24-3-1982 to the appellants. The Collector was prima facie of the view that Jockey Pulleys are known as bearings in Textile Trade Commercial Parlance." They are essentially Bearings as contemplated under Tariff Item No. 49 of the Central Excise Tariff.
They are generally used in textile machinery as basic components and are generally replaced when they are disqualified for anti-friction as is done in the case of Ball or roller bearing. They serve the purpose of supporting an antifriction due to inbuilt provision of inner race and outer race in them. The appellants were required to show cause as to why the demand proposed by the Superintendent of Central Excise be not restored and confirmed. The appellants replied to the show cause notice and representatives of the appellants were heard by the Collector on 2-7-1982. The Collector passed order dated 3-7-1982 holding that the Jockey Pulleys are correctly classifiable under T.I.No. 49 of the Central Excise Tariff. Consequently, he confirmed the demand made by the Superintendent of Central Excise in the earlier Show Cause Notice. It appears that after the Collectors' order above mentioned the Supdt. of Central Excise besides the earlier demand of Rs. 2,51,908.97 also made demand for sums which as a result of the order became due subsequently. The appellants had received certain refunds; in respect of such refunds also Show Cause Notice for recovery of the refunds had been issued. The appellant, moved the High Court at Ahmedabad challenging the order passed by the Collector. It appears that the Hon'ble High Court by order in writ petition 6301/82 dated 23-9-1982 suggested to the Appellants to approach the then revisionary authority instead of approaching the High Court directly. The High Court while granting stay in respect of the past dues recorded 'that during the pendency of the revision the Department will not recover the past dues and the appellants will make the payment for the future dues under protest. The appellants were allowed to withdraw the petition made in the High Court and the Revisionary authority i.e. Government of India was directed to dispose of the revision as early as possible preferably within 6 months. The appellants then filed revision application before the Govt. of India. In the meanwhile, this Tribunal was set up on 11-10-1982 ; the revision then stood transferred to the Tribunal for disposal as if it were an appeal presented before it.
5. In the grounds of appeal (revision), it is urged that the Superintendent of Central Excise erred in classifying the Jockey Pulleys as bearings under Tariff Item No. 49 of the Central Excise Tariff (CET). Tariff Advice No. 14/81, dated 6-2-1981 and Collectorate Trade Notice No. 63/81, dated 27-3-1981 were not applicable to Jockey Pulleys. Under Collectorate Trade Notice No. 118/75, which had not been superseded and was still operative and effective for ali purposes, Jockey Pulleys could not be classified for assessment under Tariff Item 49 ; Jockey Pulleys for the purposes of Central Excise Tariff should have been classified according to their popular meaning. The appellants had produced sufficient evidence like the Purchase Order, sales invoices, affidavits from dealers and users in the trade to prove that the goods are known as Jockey Pulley in the industry and not as bearings. The Collector rejected and ignored all this evidence without assigning any reason. The orders passed by him is therefore, bad in law. The Collector committed an error in relying on I.S.I. definitions, for coming to a finding that Jockey Pulleys are classifiable as bearings. The Collector was in error in holding that explanatory notes in BTN under Item 84.62 relating to Ball or Roller bearing could not be relied on for classification under Central Excise Tariff. There being no change in their process of manufacture or modification in law or tariff their classification under T.I. No. 49 would not be legally justifiable. The Collector committed an error in classifying Jockey Pulleys as rolling bearings under T.I. No. 49 without there being any new facts, change in process of manufacture or modification of law. In similar cases of top rollers, spindle inserts, the Government of India are held that T.I. No. 49 is applicable only on such bearings as are complete whole identifiable as such and known in the trade as such. The jockey pulleys did not satisfy the test laid down in the decision and bearing was only an integral component part of the Jockey Pulley, it was, therefore, classifiable under T.I. 68 only. For all these reasons, it was submitted that the order passed by the Collector should be set aside and that of the Assistant Collector restored.
6. At the hearing, Sh. D.R. Dave, Excise Consultant represented the appellants. Shri N.V. Raghavan Iyer, Sr. Departmental Representative represented the Respondent Collector. During arguments, Shri Dave demonstrated a Jockey Pulley including its components to the Tribunal and urged that it is a component part of Textile Spinning Ring frame.
It comprises of in-built bearing parts such as Steel Balls, a Cage and Bearing Housing and other components parts of the Pulley. It is essentially an assembly of several components with bearing parts integrally built in. The bearing portion is not replaced when it gets damaged. The whole assembly makes up a jockey pulley, which is an essential component part of textile spinning machine and is used for rotating the spindles. Shri Dave took the Tribunal through the entire history of classification of Textile Machinery containing bearing as an integral part for the purposes of Excise duty and, in this connection, referred to Ahmedabad Collectorate of Central Excise's Trade Notice No.85/72, dated 14-8-1972 partly modified by Trade Notice No. 118/75, dated 10-9-1975. It was submitted that the latter Trade Notice clearly stipulated that the levy of duty on the ball or roller bearing portions in textile machinery components could be resorted to only where they come into existence as a complete whole in distinct identifiable form in the manufacture of such components. In other cases, levy of duty under Tariff Item No. 49 would not be warranted. After this Trade Notice, Jockey Pulleys were classified under Tariff Item No. 68 of Central Excise Tariff and assessed to duty accordingly. The duty levied earlier on Jockey Pulleys cleared by the appellants under Tariff Item No. 49 was also refunded. It was further urged that the Collector committed an error in holding Jockey Pulleys as rolling bearings under Tariff Item 49 without there being any new facts or change in process of manufacture or modification of law, or Tariff Item. The Collector committed an error in ignoring the evidence adduced by the appellants before him. Tariff Advice No. 14/81, dated 6-2-1981 and Collector of Central Excise Ahmedabad's Trade Notice No. 63/81 did not apply to Jockey Pulleys nor on their strength, Jockey Pulleys could be classified under Tariff Item No. 49 of Central Excise Tariff. In similar cases, top roller and spindle inserts, the Government of India in their Revisionary jurisdiction had ordered classification of the goods under Tariff Item No. 68 and held that Tariff Item 49 was not applicable. It was urged that Jockey Pulleys were correctly classifiable under Tariff Item 68 and not under Tariff Item 49 of the Central Excise Tariff. The orders of the Collector should, therefore, be set aside and that of the Assistant Collector restored.
6. On behalf of the Respondent, Shri Iyer had no objection to Shri Dave's demonstrating to the Tribunal samples of Jockey Pulley and its components. Shri Iyer urged that as the Collector had not taken into consideration the evidence filed by the appellants and had recorded the finding that Jockey Pulleys are known in the Trade as bearings without indicating the evidence on the basis of which this finding was given, the matter may be remanded back to the Collector to give decision afresh in accordance with law. This prayer was opposed by Shri Dave.
The Tribunal felt that it could itself decide the appeal on the basis of the material available and the matter therefore need not be remanded to the Collector. The appeal is, therefore, decided on merits.
7. It appeared that the evidence produced by the appellants before the Collector like invoices, affidavits, purchase orders were not available on the Tribunal file. The appellants were, therefore, called upon to produce these papers. The appellants did so.
8. It is noticed and not disputed by the other party (respondent) that the appellants filed a number of documents showing that the goods in question in the purchase orders are described as jockey pulleys. There are also affidavits of Mukund Shantilal Mehta, Proprietor of M/s. M.Mehta & Co., Ahmedabad, Mr. M.B.Vyass, Managing Director of M/s Super Industrial Twisters Pvt. Ltd., Ahmedabad, Mr. Indravadan C. Shah, Purchase Officer of M/s. Silver Cotton Mills Co. Ltd., Ahmedabad, which would show that the Jockey Pulleys are not known as bearings or recognised as bearings in the trade. There are also Invoices showing that the goods are described as Jockey Pulleys. For determining whether Jockey Pulleys are bearings for the purpose of levy of Excise duty reference to I.S.I. definitions may not be strictly justifiable.
Besides, in the Show Cause Notice given to the Petitioners, there was no reference to I.S.I. Definitions, therefore, Collector could not base his decision on I.S.I. definitions.
9. We have gone through the Customs and Central Excise Collectorate, Ahmedabad's Trade Notice No. 63/81 (Rolling Bearing No. 1/81) and Tariff Advice No. 14/81, dated 6-2-1981. The Trade Notice refers to question of correct classification of certain types of rolling bearings for Textile Machinery with extended shaft and then raises the question whether these fall under item No. 49 or Item No. 68 of the Central Excise Tariff, then it proceeds to give a list of 14 types of bearings.
Jockey Pulleys are at No. 6 of the list. Para 2 is as follows : "It is considered that top rollers and centering sleeves inserts are essentially bearings as contemplated under entry 49 of the Central Excise Tariff. It is, therefore, clarified that not only the bearing portion but the whole unit-bearing with extended shaft etc. would fall within the ambit of the aforesaid entry." Tariff Advice No. 14/81, dated 6-2-1981 reviews the classification of Top Rollers, centering sleeve inserts and bearing with extended shaft.
The Advice is as follows : "It is considered that top rollers and centering sleeve inserts are essentially bearings as contemplated under entry 49 of the Central Excise Tariff, It is, therefore, clarified that not only the bearing portion but the whole unit bearing with extended shaft etc. would fall within the ambit of the aforesaid entry." The learned Collector said 'the contention of the assessee that Jockey Pulleys are not known in the trade as bearing is not correct. On the contrary, they are known as bearings in the trade and also, according to I.S.I. definitions, they are classifiable as ball/roller bearing'.
No reasons are given why the assessees' contention is not accepted.
There is no mention of the evidence produced by the appellants before the Collector nor is there is any discussion about the same. The Collectors findings that jockey pulleys are known as bearings in the trade is not supported by any evidence. On the other hand, the appellants had placed sufficient evidence before the Collector as mentioned above which we find no reason to disbelieve. As to I.S.I.definitions, they could not be taken into consideration for determining whether jockey pulleys are bearings or not for the reasons already stated. The Collector's findings that jockey pulleys are known in the trade as bearings in the absence of any evidence to that effect by the Department and looking to the evidence adduced by the appellants placed before the Collector must be and is hereby set aside. It is held that jockey pulleys are not known as bearings in the trade.
10. It is not necessary to enter into the question or what is the legal force of Trade Notices or Tariff Advices. It is sufficient to say that the trade notice and Tariff advices did not, in terms, specify the classification of Jockey Pulleys. Merely because there was a mention of jockey pulley as an item at serial number 6 of Trade Notice would not follow it that the trade notice and tariff advice specifically give a decision about jockey pulleys. The portion extracted above in para 9 would show that the decision was regarding top rollers and centering sleeve inserts. It is also noticed that jockey pulleys did not have extended shaft. Even if it be assumed that top rollers and centering sleeves would include jockey pulleys also, as the pulleys do not have extended shaft the decision in the notice or advice would not be applicable to them. On the strength of the notice and advice the Collector could not claim to classify jockey pulleys under Item No. 49 of the Central Excise Tariff.
11. Trade Notice No. 85/72, dated 14-8-1972 would show that, earlier, in textile machinery, only the bearing portion of the machinery components was being subjected to excise duty. Trade notice No. 118/72 dated 10-9-1975, however, modified trade notice No. 85/72. As a result of this notice, there was significant change in classifying the roller bearings portion of textile machinery components under Item No. 49 of Central Excise Tariff. The relevant portion of the trade notice is extracted below : "In this connection it may be pointed that the levy of duty on the ball or roller bearing portions in the textile machinery components could be resorted to only where they come into existence as a complete whole in distinctly identifiable form in the manufacture of such components. In other cases the levy of duty under item No. 49 of the Central Excise Tariff would not be warranted." It was as a result of this notice that jockey pulleys were not classified under Item No. 49 the orders under appeal of the Collector were passed.
12. Reference may be made to certain decisions of the Government of India in similar matters in their Revisionery jurisdiction. It is seen that in order Nos. 257 & 258 of 1982 passed by Shri D.N. Mehta, Additional Secretary In re. M/s. Scientific Mechanic Works and M/s.
Zenith Engineering Works, copy filed, the Government, in the case of Spindle inserts having bearings with extended shaft, held that the spindle inserts could be distinguished from bearings without extended shaft and concluded that spindle inserts could not be classified under Item No. 49 of the Central Excise Tariff. The order refers to earlier Order No. 1694/77 in the case of M/s, Shree Krishna Cast & Iron Brass Works wherein the case of top rollers, the Government had taken the same view. Reference is also made to the case of M/s. Jain Brothers, New Delhi Order-in-Review/Revision No. 213-B of 1981, dated 2-4-1981 (reported in 1981 E.L.T. 384 case relating to Customs), in the case of Water Pump Spindle Bearing, the Government had taken the same view regarding the levy of duty.
13. The above would show that jockey pulleys earlier were not classified under Item No. 49 of the Central Excise Tariff but were classified under Item No. 68 of Central Excise Tariff, both on the strength of the earlier Trade notice as also subsequent decisions of the Government in similar cases. In J.K. Synthetics Ltd. and Anr. v.Union of India and Ors.-1981 E.L.T. 328 (Delhi) it has been held as under : "If the matter is looked at from this larger perspective we think it will be clear that there can be only one answer to this question viz. that the department should not be permitted to take different stands unless there is any good or cogent reason for the change in view. For example, if the facts are different or if further and fresh facts are brought on record or if the process of manufacture has changed or if the relevant entries in the tariff have undergone a modification or if, subsequent to the earlier decision there has been the pronouncement of a High Court or the Supreme Court which necessitates reconsideration of the issue, it can hardly be doubted that the Government can take a different view and have the matter agitated right upto Supreme Court, if necessary. But when there is no change at all and when the position is exactly the same, legally and factually, as it was on the earlier occasion then we think that the department should be restrained from capriciously changing its stand and inflicting unnecessary proceedings and hardship upon assessees.
Any authority can depart from a finding arrived at in an earlier year only for cogent reasons. There should be either fresh facts or a change of law or at least a suggestion that while arriving at the conclusion of the earlier year certain material facts or provisions had not been considered and that if they had been considered a different view might have been taken. But for no reason at all there can be no departure from the view taken in an earlier year." It is not suggested that there were either fresh facts, change in law, change in process of manufacture or in the entries of the tariff.
Applying the ration of above decision, it would appear that the Collector was not justified in changing the stand and holding that jockey pulleys are classifiable under Item No. 49 of the Central Excise Tariff.
14. As a result of the aforesaid discussion, the appeal is allowed. The order passed by the Collector set-aside, and the order passed by the Assistant Collector restored. The result would be that Jockey Pulleys would be classified under Item No. 68 as done heretofore. The Department will, within two months of communication of this order make necessary adjustment or consequential refund of the excess duty amount paid by the appellants.