Full Judgment
2. The appellants contest the order of the Collector (Appeals) in respect of the shackle pin to Part No. KK-511, KK-205, and KK-250. They have given a write-up on each of the parts and their functions as under: "The component (Part No. KK 511) forms a part of the rear suspension of the engine in Leyland Comet Vehicle. The engine is mounted at the rear on cross member which in turn is connected to the long members of the chassis. The engine being a diesel engine with very high frequency of vibration will have to have a vibration dampening arrangement to protect the chassis from such heavy vibration. The above shackle pin (No. 8) mounted on the cross member through binocular bracket (No. 11) with 2 rubber grommets (No. 9) and 2 shackle plates (No. 6 & 7) forms the vibration dampening mechanism.
The relevant working details are given below : Though the shackle plates are assembled on the shackle pin, there is a relative motion between the plates and the pin whenever the engine rolls in dynamic imbalance. To facilitate free relative motion between the shackle pin and shackle plates without any friction both sides of the shackle plates are specially ground. The point to note here is that if the shackle pin were meant to be a fastener, there cannot be a relative motion between the shackle pin and the mating components (shackle plates) which the pin is supposed to fasten.
Also such elaborate arrangement as a ground surface is not provided normally for a conventional fastener.
The shackle pin is passed through rubber grommets and under the above said working condition of the engine it rotates inside the grommets, the torque being taken by the grommets. Again, it should be noted that a rubber grommet is usually meant for absorbing different forces arising out of relative motions in an assembly. If the shackle pin were meant to be a fastener, all the mating components would be fastened together to act as one unit and there cannot be a relative motion amongst the fastened components, leaving no scope for a rubber grommet in the assembly.
Thus it could be seen, the above shackle pin is not used as a fastener but as a shackle pin to provide shackle action for the purpose of dampening the vibration of the engine. The provision of a threaded end in the shackle pin is to keep its mating parts in position during shackle action and not for fastening them. The fastening, if any, is only incidental.
The components (Part Nos. KK 205 & KK 250) form a part of the suspension hi Fargo vehicle. The component is assembled with the laminated spring and spring bracket to provide shackle action around its own axis. The component is case hardened with the surface hardness of 60 RC and ground to critical tolerance as mating part is a non-ferrous bush. The component has a drilled hole with provision for fixing grease nipple. This grease hole is connected with a cross hole and milled flat on the O. D. Grease pumped into the shackle pin comes through the cross hole and lubricates the surface of the O. D. of the pin and the bore of the mating non-ferrous bush.
Every time, there is a road shock the laminated spring deflects and the spring eye with non-ferrous bush slips around the axis of the pin due to the resultant shackle action. The thread on the pin is provided only to prevent the pin from falling out and not for fastening. It is obvious from the above that there is a relative motion between the pin and the mating component. To take care of the resultant friction and the wearing tendency due to constant relative motion between the nip and the mating component an elaborate lubrication circuit is provided on the pin.
The important point to note here is that the mating bush is made out of copper alloy. It is universally known that a copper alloy bush acts as bearing and it goes without saying that there will be motion between such bearing and the mating shaft. A fastener arrangement meant to act as one unit does not require a bearing material as there will be no motion between them. Thus, it is obvious that the above shackle pin is not a fastener but a pin which facilitates shackle action around its own axis. From the above it can be seen that the pin with constant relative motion with its mating part and an elaborate provision for lubrication cannot be functionally a fastener." Therefore, they plead that the shackle pins primarily perform the functions as enumerated therein, other than fastening and merit classification under T. 1.68.
3. Shri A.R. Madhava Rao, learned Advocate, raised the plea that the demand was hit by limitation. The first show-cause notice was issued on 21-5-1981 for demand of duty and classification of the items under Tariff Item 52, another show-cause notice was issued on 12-11-1981 demanding duty for the period from 22-11-1980 to 21-5-1981 and as no allegation of suppression has been made, the demand beyond a period of 6 months was hit by limitation. On merit, he explained the functions of the items with the help of the drawings and write-up and pleaded that these parts were primarily for purpose of lubricating and for providing shackle action in addition to fastening. He cited the following case laws in support: (i) CEGAT Order No. 746/1987-D, dated 12-8-1987 - New Mangalore Engineering Co. (P) Ltd. v. CCE, Bangalore - in classifying U-Bolts, Centre Bolts and Eye Bolts under T.I. 68.
(iii) 1986 (24) ELT 226 (Karnataka) - Ideal Jawa (India) Pvt. Ltd. v. The Assistant Collector of Central Excise, I.D.O., Mysore and Ors.
(iv) 1989 (19) ECR 52 - Precision Fasteners Ltd. v. CCE, Bombay-II (Para 14).
(v) 1989 (39) ELT 306 (Tribunal) - Central India Machinery Co. v. CCE.4. In reply, Shri L. C. Chakraborty, learned JDR, stated on the aspect of limitation, that the Collector (Appeals) has already dealt with this aspect and found that the notice was not time barred, as he has held that the first notice, dated 21-5-1981 was in time and the second notice was only a modification and, therefore, the order of the Collector was reiterated. Shri L. C. Chakraborty argued on merits stating that the functional aspect of the parts cannot over-ride the fastening aspect. He drew support from the following case laws: (i) 1989 (40) ELT 214 - Jaishree Engineering Co. (I) Limited v. CCE (Para 10) (ii) 1983 (14) ELT 2067 - Shri Ramdas Motor Transport Ltd., Kakinada v. CCE, Madras.
(iii) 1985 (21) ELT 717 - Fit Tight Nuts and Bolts Ltd., Bombay v. CCE, Rajkot.
(iv) 1985 (22) ELT 378 (Bom.) - Mis. Simmonds Marshal Ltd. v. M.R. Baralikar, A.C. of Central Excise, Pune and Ors.The Collector of Central Excise, Chandigarh v. Purewal & Associates Ltd. (vi) 1989 (44) ELT 271 (Tri.) : Order No. 427/1988-D, dated 17-6-1988 - Collector v. ACC Ltd. With reference to the above quoted cases, the learned JDR stated that bolts, nuts and screws of vehicles, performing the functions of fastening would be covered by TI-52.
5. The points urged have been considered. From the write-up produced and explained by the appellant, it is seen that shackle pin of Part No.KK-511 is not used as a fastener and the shackle pins were intended to keep the pins in proper position and the essential function was to provide shackling action, in the suspension system and fastening function was an incidental function. The Parts No. KK-205 and KK-250 have been described as being component parts of the suspension in Fargo vehicles and provided with lubricating arrangements through provision of a hole, to take care of resultant friction and wearing tendency, due to constant relative motion. The write-up and the explanation provided by the appellant establish the functions of the parts as being essential for the smooth functioning of the relative part, together with the function of fastening. These parts are found to be specially designed for the purpose. It is interesting to note that a Tariff Advice 5/77, dated 25-2-1977, has been issued by the Central Board of Excise & Customs, that such shackle parts/shackle bolts which merely perform a fastening function and do not have any lubricating arrangement would be classified under Item 52 GET; but those shackle pins/shackle bolts which while performing fastening function are also provided with lubricating arrangement through provision of a hole, would be covered under TI34-A, CET, and not under Item 52, CET. These Tariff Advices do have a persuasive value and are taken note of. The learned JDR has relied on the Supreme Court's decision in Jaishri Engineering Co. (P) Ltd. v. CCE, reported in 1989 (40) ELT 214 (SC).
The decision is reproduced below: "The functional approach to the identity of the goods as canvassed by the appellant was also duly considered by the Tribunal. It was contended that the function of the nuts was not only to fasten but also to enable the flow of oil under high pressure without leakage.
But the Tribunal noted that the flow of oil is possible only after nuts are fastened. To that extent, according to the Tribunal, it can be stated that nuts permit the flow of oil without leakage. The question is, however, not as to what is the process facilitated as a result of the nuts, but the question is, which the Tribunal itself posed is - whether the nuts are fasteners or do they have any other independent function. The Tribunal found that it had not been shown before them that they had any such independent function. To say that these nuts are leakproof, was only to reiterate the fact of their essential character and quality as fasteners and not to substantiate any argument as regards their independent function. In that view of the matter, the Tribunal even taking the functional approach to the identity of the goods, came to the conclusion that the goods in question were properly classifiable as nuts. That conclusion of the Tribunal cannot be assailed in appeal in view of the evidence on record as noted before. Certain decisions were referred to before the Tribunal by the appellant in support of its contention that in certain cases goods of these types had not been considered to be nuts. These goods, as the Tribunal noted, were in the nature of bolts, nuts and rods of special type manufactured by a particular party. Therefore, these were not classifiable as merely bolts and nuts under Tariff Item 52 of the Central Excise Tariff, but as integral parts of the machine for which they were specifically designed with a distinct and specific function in the operation of the motor-cycle of which these were component parts. It was held in those cases that the components manufactured solely on the orders of the buyers, as per their drawings and specifications, were components of mining and project machinery and, therefore, not classifiable under Tariff Item 52 Central Excise Tariff. But the facts involved in these items of goods in the instant case, dealt with by the appellant, are different. These goods were not manufactured according to any special specifications as integral parts of machinery. Some of these nuts required were also purchased from market while those being manufactured were also sold to outside buyers as nuts." The relevancy of this decision is that these goods were not manufactured according to any special specifications as integral parts of machinery and were also purchased from the market. The case of the appellant is distinguishable that certain process as providing a hole for flow of grease and threading was there, specially provided to meet the required function. Therefore, these cannot be mere fasteners.
6. The other decision relied upon by the departmental representative was in the case of Sri Ramdas Motor Transport Ltd., Kakinada v. CCE, Madras, reported in 1983 (14) ELT 2067, which says as under: "Hub-bolts and nuts assessable to duty under Tariff Item 52 and not as parts of motor vehicles under Item 68. In the absence of any evidence or technical literature showing the hub-bolts and nuts to have functions other than fasteners such as transmitting or lending motion to the wheels, these cannot be held to be motor-vehicle parts, not otherwise specified under Tariff Item 68. On the other hand, even taking guidance from the Explanatory Notes to CCCN, these are classifiable as bolts and nuts under Tariff Item 52 which is specific to such goods. The fact that hub-bolts and nuts are only available with automobile-part dealers and not with hardware merchants is not very relevant as all such parts as are required for assembly of a machine would only be kept by machinery dealers but that would not make all such parts as parts of that machine." 7. From these decisions, as also those cited by the learned Advocate, it is apparent that the Item 52 covers such type of fasteners whose function is only fastening, but if such fasteners do perform the functions other than fastening and have been specially designed for the purpose, they will go under the residuary Item 68, GET.8. The limitation aspect raised by the appellant, has no relevance now as the appeal has been allowed, although the order of the Collector on this aspect is maintainable.