D.C. Mandal, Member (T)

1. This was a Revision Application originally filed before the Central Government, which, on transfer to this Tribunal, was treated as an appeal.

2. The facts of the case, in brief, are that on 7-12-1976 Central Excise Officers of Range-III, Ludhiana visited the factory of the appellants and found that they were manufacturing "Axle Studs" without obtaining Central Excise Licence in contravention of Rule 174 of the Central Excise Rules, 1944. The Officers seized 59-1/2 gross axle studs valued at Rs. 3,411/- found in the factory. A notice was issued to the appellants on 9-2-1977 to show cause to the Assistant Collector of Central Excise, Ludhiana as to why penalty should not be imposed on them and why Central Excise duty should not be charged on the seized goods under Rule 210 of the Central Excise Rules for contravention of Rule 174 ibid. Following the guidelines laid down in the Instruction No. 64/CE/77 (I-Nut Bolts) dated 2-3-1977 issued by the Collectorate of Central Excise, Chandigarh, the Assistant Collector of Central Excise held that the goods manufactured by the appellants were covered under Item 52 of the Central Excise Tariff. He confiscated the seized goods with a redemption fine of Rs. 1,500/- and also imposed penalty of Rs. 100/- on the appellants under Rule 210 of the Central Excise Rules, 1944 in addition to demanding Central Excise duty on the goods under Rule 9(2).

3. Being aggrieved by the decision of the Assistant Collector, the appellants filed appeal before the Appellate Collector of Central Excise, New Delhi. After examining the case records and a sample of axle stud supplied by the appellants and also considering the submissions of the appellants, the Appellate Collector observed that the axle stud had a screw arrangement on both the sides and the same is used for fastening in the automobile vehicles. He also observed that according to the Explanation to Central Excise Tariff Item No. 52, the expression, "Bolt and Nuts, threaded or tapped and screws" includes "Bolt ends, screws and screw studding". The subject axle studs, which are used for fastening purposes in automobile vehicles, thus qualify to be included within the meaning of item No. 52 of the Central Excise Tariff. Accordingly, he upheld the decision of the Assistant Collector and rejected the appeal. The appellants filed Revision Application against the said order of the Appellate Collector and the same is now under consideration before us.

4. The appellants have contended that:

(i) the order-in-original passed by the Assistant Collector is illegal as he did not apply his independent mind to the case while functioning as quasi-judicial authority, but based his order entirely on the trade notice issued by the Collectorate of Central Excise, Chandigarh. This legal flaw has vitiated the entire proceedings, and the order-in-original passed by the Assistant Collector and the order-in-appeal upholding that order deserve to be set aside on this legal ground alone ;

(ii) the axle studs manufactured by the appellants are specially designed for exclusive use in different motor vehicles and have functional utility only in motor vehicles. These are made in accordance with special specification of a particular model of motor vehicle as its spare parts and have no other functional utility. The axle studs are also sold as parts of motor vehicles as would appear from the catalogue and would not be available at shops where other nuts, bolts and screws are sold. These axle studs, therefore, fall outside the general run of bolts, nuts and screws covered by Tariff Item 52 and are correctly classifiable as motor vehicle parts under Tariff Item 34A. As the axle studs are not included in the list of excisable parts of motor vehicles, the subject goods are exempt from payment of Central Excise duty and, therefore, no Central Excise licence is required to be obtained by the appellants. It has already been held by the Government of India in their