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Needle Roller Bearing Co. Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(17)ELT469TriDel
AppellantNeedle Roller Bearing Co. Ltd.
RespondentCollector of Central Excise
Excerpt:
.....taken up together for disposal.2. the point at issue in the two appeals is whether needle roller cages manufactured by the appellants fall under item 49 or under item 68 of the central excise tariff. to facilitate the discussion, the two tariff items are reproduced below :-- "49. rolling bearings, that is to say, ball or roller bearings, all sorts." 3. during the hearing before us today, the appellants pressed for the following three arguments :- (1) needle roller cages were only a part or component of a bearing and not a complete bearing in themselves. since tariff item 49 covered only complete bearings, parts of bearings rightly fell under item 68. (2) the show cause notices and demands for duty served on the appellants for the differential higher duty under item 49 were.....
Judgment:
1. The subject two appeals relate to the same appellants, arise out of a combined Order-in-Appeal and involve a common point of dispute. These were, therefore, taken up together for disposal.

2. The point at issue in the two appeals is whether needle roller cages manufactured by the appellants fall under Item 49 or under Item 68 of the Central Excise Tariff. To facilitate the discussion, the two tariff items are reproduced below :-- "49. Rolling bearings, that is to say, ball or roller bearings, all sorts." 3. During the hearing before us today, the appellants pressed for the following three arguments :- (1) Needle roller cages were only a part or component of a bearing and not a complete bearing in themselves. Since Tariff Item 49 covered only complete bearings, parts of bearings rightly fell under Item 68.

(2) The show cause notices and demands for duty served on the appellants for the differential higher duty under Item 49 were without jurisdiction as their classification list had earlier been approved under Item 68.

(3) In case the Tribunal upheld the Department's classification of the cages under Item 49, the demands for duty would require re-calculation since after deducting the higher duty from the total price realised by the appellants the assessable value would have to be revised downwards.

4. Samples of complete needle roller bearings and needle roller cages were shown to us at the time of the hearing. Elaborating their first argument, the appellants stated that a complete needle roller bearing consisted of four parts- The product in dispute was the cage with needles fitted into it, i.e., a combination of parts at (iii) and (iv) above. The appellants were manufacturing complete needle roller bearings also. They were being assessed under Item 49 and there was no dispute about that. The dispute was only about the needle roller cage. The appellants sought to introduce certain letters of other companies in support of their case.

The Department's representative objected to this saying that these letters were all obtained during May, 1983 after the impugned Order-in-Appeal had already been issued. These letters were not before the lower authorities. They were thus fresh evidence and could not straightaway be taken on record and be relied upon by the appellants.

The appellants thereupon referred to the technical note of their expert, Shri S.S. Lele, and to the certificates dated 22-9-81 and 24-9-81 of M/s. Auto Engineering Corporation, Bombay, and M/s. Mafatlal Engineering Industries Ltd., Kalwe. All these three documents were before the Assistant Collector before he passed his Orders-in-Original.

These documents state that a needle cage is not a complete bearing in itself and requires an inner race and an outer race to become a complete bearing. The appellants produced the Indian Standards Specification : 4216-1981 which described the cages as components of rolling bearings. The Bench had also the benefit of seeing the Glossary of Terms Relating to Rolling Bearings (IS : 2399-1964, reaffirmed 1977). This Glossary gave a complete diagram of a bearing on page 25 and showed the cage incorporated in it as a part. The Glossary was shown to the Department's representative also. The appellants then referred to the BTN Heading 84.62 relating to ball, roller or needle roller bearings in which cages were listed under the title "parts".

They presented a copy of the Draft International Standard ISO/DIS 5593 which included cage and cage assembly as sub-units of the bearing. They produced their catalogue and a few invoices to show that cages were described separately and differently from complete bearings. Since there has been some controversy on certain material included in their catalogue, we reproduce the said material below to facilitate understanding of the point:- Needle Cages placed between the rotating parts provide a very economical bearing with the advantage of a better guidance of the Needle Rollers during operation. For obtaining optimum performance from the Needle Cages, the shaft and housing should conform to the requirements as shown in the table." The Connecting Rod Bearings of two stroke petrol engines are subjected to large centrifugal and inertia forces. NRB Needle Cages for such applications are specially designed to effectively cater to these forces.

Needle Cages centred on the outer diameter are used in the big-end of the connecting rod. For the small-end Needle Cages centred on the inner diameter are used. These cages extend beyond the width of connecting rod small-end and thereby permit the maximum possible needle lengths to be used. A reduction in unit load is thus effected which, in turn, leads to higher operating lives. Lateral location of the connecting rod is brought about by controlling the clearance between the big-end and the crank webs. The crankshaft is supported in two Combined Needle Bearings (Type RAX). These bearings carry the radial loads and also serve to locate the crankshaft axially.

The use of the Needle Cages and Needle Bearings give high load carrying capacities in the small operating spaces available. Higher bearing lives are, thus, ensured." 5. The appellants stated that the Department's point was that the cage was used as such as a bearing in automotive gears and in textile machinery. The appellants maintained that in the case of both these machineries the mechanism itself provided the outer housing and the inner shaft. The cage functioned as a bearing only in conjunction with these other parts; without them it was not a bearing. This supported the appellants' case, they asserted, since it could be argued that the cages were essential components of such machinery and for that reason also they should fall under Item 68 only. They relied on- (1) 1983 E.L.T. 816 (CEGAT) (Mukund Engineering Works), in which it was held that jockey pulley was liable to duty under Item 68 and not under Item 49 because it was not known as bearing in the trade; (2) 1983 E.L.T. 410 (CEGAT) (B.H.E.L.) in which it was observed that Explanatory Notes to the BTN, though not having any legal binding effect, were of considerable persuasive value; and (3) 1981 E.L.T. 432 (Bom.)-Advani Oerlikon Ltd. and Anr. v. U.O.I.and Ors. wherein the High Court held that if the tariff item made no reference to the end use, the end use was absolutely irrelevant for classifying the product.

6. The Department's representative stated that absence of the word "bearing" in regard to the cage in the appellants' catalogue etc. was not significant; what was important was the function of the cage. He maintained that a bearing could function without an outer race or inner race. In this connection, he referred to the appellants' catalogue (extracts already reproduced above) and argued that the cage itself functioned as a bearing in the particular mechanism. Inasmuch as Tariff Item 49 read as "Rolling bearings,..., all sorts", it was wide enough to take in the cages as well. He read from pages 405, 406 and 631 of the book, "Machinery Handbook", Twenty-First Edition, published by the Industrial Press Incorporated, to say that with improved technology in-built mechanism were being provided in the machinery obviating the need for outer race and/or inner race. The International Standard relied on by the appellants was still at the draft stage and hence not final. Lastly, the Department's representative cited two orders of this Tribunal passed in the case of M/s. International Auto Suppliers (Appeal No. 763/80-B) and M/s. Autolec Industries (Appeal No. 71/82-B and others) in which water pump spindle bearings had been held to be roller bearings falling under Heading 84.62 of the Customs Tariff Act, 1975.

7. In a brief rejoinder, the appellants stated that the Tribunal's orders passed by the Special Bench 'B' and relied on by the Department's representative were on a different issue. In those cases, both sides had agreed that the imported goods were ball bearings or roller bearings and the point of dispute only was whether they should be assessed as a machinery component or under the specific heading relating to ball and roller bearings. They reiterated that there was no raceway provided in their cages.

8. We have carefully considered the matter. The appellants have made out a convincing case with the help of the Indian Standards Specifications, the draft ISO, the BTN, their own catalogue, trade opinion letters and also by demonstration of samples of a complete bearing and its parts that a needle roller cage is only a part or component of a rolling bearing and not a complete bearing in itself.

The cage can perform the function of a bearing only where the machinery mechanism already incorporates a housing and a shaft which serve as substitutes for the outer race and the inner race. But that would not make the cage itself as a complete bearing. Without the support of a housing or outer race, the cage is simply incapable of taking the required load; it would break in the process. The words "all sorts" in Tariff Item 49 referred to various types of complete rolling bearings.

They cannot have the effect of including parts and components of bearings within the scope of this item. The appellants are right in pointing out that wherever the tariff entry sought to include the parts also within its scope, it had been done by specific mention of parts in the entry, as for example in Tariff Items 29A, 30 and 31. Since Item 49 does not include parts and there is no other appropriate tariff entry for parts of rolling bearings, we hold that needle roller cages are correctly classifiable under the residuary Tariff Itarm 68. Since we find ourselves in agreement with the substantive ground taken by the appellants, we do not consider it necessary to go into their other pleas. Accordingly, we allow both the appeals with consequential relief to the appellants.


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