V. Rajamanickam, Member (T)

1. The appeal is against the Order-in-Original No. 70/86 (C No. V(68) 15/44/CE/86/120, dated 14th January 1987 of the Collector of Central Excise, Delhi. The appellants are manufacturing elastic rail clips. The manufacturing process is, the duty paid rods are cut into pieces of required length and subjected to bending/forming process with the aid of Horizontal Power Press which gives U-shape to the steel rod pieces. The U-shaped Steel rod pieces are thereafter again put to Horizontal Power Press to give them another U-bend at different angles. The said pieces are then put into a vertical power press, which gives them the desired bending. In order to harden them and give them greater elasticity the said shaped steel rod pieces are subject to heat treatment in an electric furnace at a pre-determined temperature. These are tested and supplied to the railway department for use as elastic rail clips. The appellants claim the entire process as a forging process, falling under Item 25(11) of the erstwhile Central Excise Tariff and claim exemption under Notification 208/83, dated 1-8-1983. The Collector of Central Excise has not accepted the classification under T.1.25(11) and has reasoned as follows:

"The Party's argument is based on their claim that these rail clips are manufactured by forging. The party themselves have given the details of the process of manufacture. The manufacture of rail clips start with iron/steel rods. These are first cut into specific required sizes of particular length. The cut pieces are then heated in a furnace to high temperature. The red hot iron rods are then bent on bending machines to give the required specific shape. The red hot pieces are forged in power press in the dies fitted in the press and are directly dipped in oil for quenching. Then the pieces are taken out of the oil and are tempered in an electrically heated tempering furnace to give strength. It is obvious from the foregoing that forging forms only one intermediate process in a chain of various processes.

While interpreting TI-25(11), it has to be examined whether the product in question is an iron and steel product of the nature specified in that sub-item, namely, an intermediate iron and steel product which is not a specific finished article with a specific function and known in the trade as a distinct article on account of its function, and not merely as angles, shapes and sections of iron and steel. This sub-item obviously cannot include an article distinctly known in the trade as such and not known in the trade as merely a semi-finished product of iron and steel. Neither in the Tariff sub-item nor in the definition, article of a finished character made of iron & steel are included. The classification of finished articles will have to be decided taking into consideration the nature of the material, the process of manufacture and the function to be performed as is commonly known in the trade. The rail clips are admittedly articles which are required for fitting in the railway tracks. They have their own distinct name and are not merely "angles, shapes and sections" as is known in the trade. Their function and use are limited to the Railways. The Railways admittedly have laid down their strict specifications as to the raw materials to be used, chemical composition, dimensional precision, hardness etc. Rail clips have to be manufactured with great precision according to the specifications and they have to have the minimum strength required. The conditions of hardness etc. are vital, considering the ultimate use to which they are to be put. Any slackness in conforming to the specifications could lead to disaster. Therefore, these goods are of a specific nature commonly known in the trade and have given a specific shape and quality which is not required for use except in Railway tracks. I do not see what other criterion is required to distinguish these goods from other items of hardware. Even giving a literal