2004 (9) TMI 497

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....13 of the Schedule to the Central Excise Tariff Act, 1985. They clear the said P.D. Pumps at a NIL rate of duty. They also manufacture Electric Motors and Parts, which are fitted at the base of the said P.D. Pumps. These electric motors fall under Chapter sub-heading 8501.00 of the CET and the Appellants clear the same for captive consumption without payment of duty vide Notification Nos. 6/2000 & 3/2001. Chapter sub-heading 8501.00 reads as follows : "8501.00 Electric motors and generators (excluding generating sets)" They also manufacture certain entities termed as Thrust Support Plate, Thrust Support Segment, Support Segment Carrier and Ball Retainer Ring (Lower and Upper) and use them captively, classifying them separately, und....

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...."bearings" from the benefit of the exemption. The department issued a show cause notice dated 28-3-2002 on the ground that the Appellants had misdeclared goods as parts of electric motors and classified same under Chapter sub-heading No. 8503.00 with an intention to evade the payment of Excise duty of Rs. 50,04,734/-. The said show cause notice was confirmed by the impugned Order-in-Original No. 4/2003, relying heavily on the CBEC Circular No. 678/69/2002-CX.CBE, dated 4-12-2002. Hence this appeal. 6. After hearing both sides and considering the material it is found - (a)     The Circular No. 678/69/2002-CX.CBE, dated 4-12-2002 begins by admitting, that doubts were raised regarding the classification and dutia....

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....e effective date for raising, the demand by the Revenue cannot be any date prior to 5-11-1992". The date 5-11-1992 being the date of publication of the trade notice."           We find force in these submission and hold that since the entire demand was for a period prior to the issue of the said Circular the same cannot be recovered. (c)     The notice nor the order gives reasons for classification as bearings. It is found, the entities for the electric motor, manufactured by the Appellants, do may reduce friction, but the same do not form an identifiable bearing. Mere reduction of friction cannot ipso facto amount to that object being a "bearing" as understood by the pe....

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....2001 was applicable. The case of the Appellants is in fact even better footing, inasmuch as there is no evidence that a bearing at all comes into existence independently. Capability of being brought and marketed as a "thrust bearing" and material findings thereto are since qua non to bring in the intermediate goods to be "bearings" excluded from the benefit of the said notifications. It is well settled law that such capability of being removed and marketed and evidence thereto is a must to bring eligibility Manufacture and Existence of "bearings" excluded by the notification is therefore not established. (e)     Denial of exemption and Demands made are therefore not upheld hence there is no case to call for import of ....