TMI Blog1990 (9) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... is 20% ad valorem. The Central Government, in exercise of powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 (hereinafter referred to as the "Rules"), published Notification dated May 29, 1971 exempting motor vehicles parts and accessories, falling under Item No. 34A of the First Schedule to the Act other than those specified in the Schedule annexed to the Notification from the whole of the duty of excise leviable thereon. The Schedule sets out 11 items which are. accessories or parts of motor vehicles and Item No. 9 is "Thin walled bearings". 2. Till September 22, 1978, the Company manufactured and cleared various bimetal bearings produced in the factory and paid excise duty on thin walled bearings heaving total thickness of 3/16" or below which, according to the opinion of the Central Board of Excise and Customs based on Circular dated August 3, 1971, were thin walled bearings. The Company did not pay any amount of duty on the manufacture of thrust washers, thrust half washers and wrapped bushes in accordance with Exemption Notification dated May 29, 1971. On September 23, 1978, the Superintendent of Central Excise, Kirloskar Oil Engines Range, Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bearings. The only contention raised was that though thrust washers and wrapped bushes are bearings, they are not thin walled bearings. The Company also claimed that Indian Standard Specifications describes thin walled bearings and thrust half washers and wrapped bushes as different articles and having different dimensions for the purpose of specifications and, therefore, thrust washers and wrapped bushes cannot be treated as thin walled bearings. The Asstt. Collector, Central Excise, Pune by adjudication order dated June 22, 1979 came to the conclusion that the thrust washers and wrapped bushes are thin walled bearings falling under Item No. 34A of First Schedule and are liable to payment of excise duty. The Assistant Collector did not accept the claim of the Company that only bearings which are manufactured according to the dimensions mentioned in Tables Nos. 2 to 5 of IS: 4774-1968 are "Thin walled bearings" and not those which are shown in Table No. 8 in the said IS: 4774-1968. The Assistant Collector further held that the liability to pay excise duty arises from August 7, 1978 though communication was sent on September 23, 1978 because the decision was taken on February 9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was directed to verify the same and grant the benefit of the Exemption Notification dated May 29, 1971. The order passed by the Appellate Authority is under challenge in this petition filed under Article 226 of the Constitution of India on March 11, 1982. Before date of passing of the order by the Appellate Authority, the Company was served with demand notice dated November 24, 1981 by Superintendent of Central Excise under Section 11A of the Act demanding duty of Rs. 40,18,899.50 for the period commencing from July 1980 to August 1981. The petitioners are challenging the legality of this demand notice also on the identical grounds which are raised for challenging the order of the Appellate Authority. 5. Shri Nankani, learned counsel appearing on behalf of the petitioners, raised two contentions to challenge the legality of the order passed by the Appellate Authority. The first submission of the learned counsel is that the thrust washers, thrust half washers and wrapped bushes manufactured by the Company, though are bearings, cannot be treated as thin walled bearings. The second contention urged by the learned counsel is that even if the contention of the Company is not correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel urged that the view taken by the authorities is neither perverse, nor unreasonable and even assuming that another view is possible, it is not permissible to disturb the conclusion of the authorities in exercise of writ jurisdiction under Article 226 of the Constitution of India. Shri Desai did not dispute that the demand made by demand notice dated October 16, 1978 for payment of excise duty on the goods cleared from August 7, 1978 is not accurate and the demand must be restricted only in respect of duty for clearance effected from September 23, 1978. 6. In view of the rival submissions, the short question which falls for determination is whether thrust washers, thrust half washers and wrapped bushes manufactured by the Company, though admittedly are bearings, can also be treated as thin walled bearings. It cannot be disputed for a moment that the Assistant Collector and the Appellate Authority while exercising quasi-judicial powers cannot fetter the discretion with the direction contained in the trade notice or by trade advice and the discretion must vest only upon the material available with the Department to determine how the goods should be classified. It is now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een the bearings and the bushes but required to answer the question as to whether the bearings in the present case can be treated as thin walled bearings. 7. As mentioned hereinabove, the authorities below have relied upon Indian Standard Specifications which was produced by the Company to hold that the bearings are thin walled bearings. Turning to the IS : 4774-1968, paragraph 0.2 sets out that the this walled bearings were originally developed for use in the automobile engine due to their advantages, such as facility of replacement, smaller weight and space required. Paragraph 1.1 sets out that the standard specifies requirements for : (a) steel-backed, thin-walled, grooved bearing in the nominal diameter range 16 to 150 mm; (b) steel-backed, thin-walled, ungrooved bearing in the nominal diameter, range 16 to 150 mm; and (c) thin-walled, thrust half-washers in the nominal diameter range 16 to 150 mm. Paragaraph 2 gives definitions of various words and the expression "Bearing" means an element of mechanism which allows a force to be transmitted between two relatively moving parts. The expression "Journal bearing" means a plain bearing in which the relatively sliding surf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bore surface of the housing and, therefore, can well be treated as thin walled bearings. In our judgment, the view taken by the Assistant Collector and confirmed by the Appellate Authority cannot be described as perverse, unreasonable or entirely unsustainable. In the decision reported in A.I.R. 1963, Supreme Court 1319 (Collector of Customs, Madras v. K. Ganga Setty) observed: "It is primarily for the Import Control authorities to determine the head or entry in tariff schedule under which any particular commodity fell; but if in doing so, these authorities adopted a construction which no reasonable person could adopt i.e., if the construction is perverse, then it is a case in which the Court is competent to interfere. In other words, if there were two constructions which an entry could reasonably bear, and one of them which was in favour of Revenue was adopted, the Court has no jurisdiction to interfere merely because the other interpretation favourable to the subject appeals to the Court as the better one to adopt." It is, therefore, clear that even assuming that the view, other than one, taken by the Assistant Collector and confirmed by the Appellate Authority is possible, s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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