S. Duggal, Member (J)

1. The goods which are the subject-matter of controversy in the present appeal, are described by the appellant, who is the manufacturer thereof, as "Hub-Bolts and Nuts". Prior to 1-3-1979, Tariff Item 34A of the Central Excise Tariff, as then prevailing, covered "all parts and accessories of motor vehicles not otherwise specified". However, by virtue of Notification No. 99/71-C.E., dated 29-5-1971, as amended from time to time, that enumerated 12 items, as specified motor vehicle parts, excepting the items covered by the said Notification, all others were exempt from duty. The appellant went on clearing the subject goods accordingly, availing benefit of the said Notification.

2. However, by means of the Finance Bill covering 1979 Budget, a change was brought in the T.I. 34A inasmuch as it was made to relate to specific items (15 in number), which change became effective with effect from 10-5-1979. The genesis of the dispute giving rise to the present appeal can be traced to this change in the Tariff.

3. The Department appears to have taken the view that T.I. 34A having become restrictive, covering 15 specified parts, the entry which would now be attracted to these goods manufactured by the appellant; namely, "hub-bolts and nuts", required re-classification which would be T.I. 52, which applied, to all 'bolts and nuts', which entry, in their view, was more specific as compared to the general entry of T.I. 68 which was a residuary item, and could be considered only when the specific entry positively excluded the goods in question.

4. Consequently, a Show Cause Notice dated 3-6-1981 was issued to the appellants requiring them to show cause as to why these goods which they were classifying under T.I. 68 be not re-classified with reference to T.I. 52 and as to why differential duty amounting to Rs. 1,75,404.86 covering the period 1-11-1980 to 30-4-1981 be not recovered. The Department invoked Section 11A of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) while issuing the said notice. Another notice dated 5-9-1981 covering the earlier period 1-6-1979 to 31-10-1980 was issued on the same assertions and a demand on account of differential duty for clearances effected during this period amounting to Rs. 4,14,363,24 was made, again by reference to Section 11 A. The appellants contested both these notices, vide their reply filed on 4-6-1981 and 7-9-1981 respectively. While resisting the view of the Department on merits by urging that T.I. 52 applied to bolts and nuts of general use and character, and could not be attracted to their special items which were built specifically for motor vehicles with given specifications and a positive functional use to be fitted only with hubs of motor vehicles, it was contended that T.I. 52 was not applicable, and since T.I. 34A covered only specified items, that too would not apply and consequently, these hub-bolts and nuts which they characterised as motor vehicle, parts, would go under the residuary Item 68 only. They placed reliance on Budget instructions issued immediately after the change in the Tariff Heading while introducing amendment to Item 34A of the Tariff in the Finance Bill of 1979 and the subsequent notification issued by the Government of India, being Notification No. 76/79, dated 1-3-1979, exempting all motor vehicle parts which were not covered by Item 34A, as proposed to be amended, were to be charged to duty @ 8 per cent only, and it was pleaded that the intention was thus made clear that all other auto parts other than those specified under Item 34A would go under T.I. 68.

5. It was further asserted that the motor vehicle parts under reference had essential functional utility other than that of mere fastening; so much so, that this fastening was only incidental. Reliance was placed in this connection on the advice issued by the Central Board of Excise Customs (hereinafter referred to as the Board) vide Tariff Advice No. 5/77, date