1. Appeals taken up for disposal with consent of both sides, after waiving deposits.
2. The primary question for consideration common in both these appeals, is whether ball and roller bearings manufactured by the appellants cleared to manufacturers of internal combustion engine were cleared without payment of duty under Notification 217/85.
3. We have heard both sides. The departmental representative adopts the reasoning in the impugned order.
4. The notification, as it stood after its amendment on 2-8-1986 provides exemption to "component parts of diesel oil operated internal combustion engine, other than engine valves, gaskets, nozzles and nozzle folder, piston rings, gudgeon pins, circlips and filter elements on inserts or cartridges" and falling under Chapter 84 or 85 of the tariff and intended for use in the manufacture of diesel oil operated internal combustion engine from the whole of the duty. The Commissioner (Appeals), in his order, has stated that roller bearings are not component parts or accessories or parts of such internal combustion engines. Such parts, he says, are classifiable under Heading 8409.00 of the Tariff. Therefore, since these bearings are not so classifiable, they are not entitled to the benefit of the notification.
5. This reasoning is patently erroneous. If the intention of the notification was to provide exemption only to those parts of the engine classifiable under Heading 8499.00, there would be no need for it to refer to the goods falling under Chapter 84 or 85. Further, many of the parts which are excluded from the exemption in the notification are not classifiable under Heading 8409. Gaskets, circlips and filter elements are not classifiable under Heading 8409. The fact that it was reasonable to exclude them from the scope of the certificate shown that they are component part of the engines. A reading of the notification in the manner in which the Commissioner (Appeals) had read therefore would render these words redundant. A plain reading of it shows that all component parts of such engine falling under Chapter 84 or 85 other than those which are specified and are intended for use in the manufacture of the engines are entitled to the exemption. Each of these requirements is satisfied in this case. Therefore, they are entitled for the exemption.
6. The appeal would also succeed on the other ground raised by the Advocate for the appellant. The order of the Assistant Collector holding that the goods were covered by notification was over turned on appeal by the department by the Commissioner (Appeals) resulting in this appeal. The Assistant Collector's order is dated 20-7-1994 and issued on 18-8-1994. The Commissioner's order under Section 35E (2) of the Act referring the correctness or legality of the order to the Commissioner (Appeals) was passed on 17-8-1995 i.e. more than a year after the date of the order but within its issue. The Commissioner has held that that order to be within time on the ground that it was passed within a year of the adjudication order. This method of reckoning is incorrect. The date of passing of order under Section 35E(2) must be within a year from the date of the order. This is made clear in the Supreme Court's judgement in C.C.E. v M.M. Rubber Company Ltd. - 1990 (52) E.L.T. 20. The proceedings before the Commissioner (Appeals) were therefore clearly barred by limitation.