R.M. Sahai, J. - (1.) Two questions arise for consideration in this appeal directed against the order of the Customs, Excise and Gold (Control) Appellate Tribunal Special Bench B. One, whether cylinder liner manufactured by the appellant out of iron casting identifiable as machine part was exigible to duty under tariff item No. 68 or it continued to be iron casting and thus exempt under Notification issued under sub-rule (1) of Rule 8 of Central Excise Rules. Second, whether the authorities were precluded from issuing notice and adjudicating if the cylinder liner was a machine part, even though for an earlier period the classification list claiming it as iron casting, thus exempt, had been approved.
(2.) Cylinder liner was manufactured by the appellant by casting molten iron in specific shape. By itself it was of no use. This could be said to be first stage. Its rough surface was thereafter removed. And after machining and honing it was delivered to the Railways. According to department it became identifiable as machine part. This was second stage. The Railways further treated it with honing and chrome plating before putting it to use. There is no dispute that on the first stage it is an iron casting which is exempt under Item No. 25. Nor there is any dispute that at the third stage it is an excisable commodity. The only dispute is if at the second stage when it was supplied by the appellant to the Railways it could be subjected to duty. According to the appellant till its final processing by the Railways it did not become a machine part. It continued to be iron casting. It is claimed that merely because it was supplied to Railways or that it became identifiable as a machine pan no duty was attracted as no excisable commodity came into being. Reliance was placed on Tata Iron and Steel Co. Ltd. vs. Union of India, (1988) 3 SCR 1025. It was urged that this Court having held that rough machining before supplying after removing the excess layer of steel commonly referred to as excess skin did not convert the iron steel into wheels, tyre and axle. According to learned counsel the principle of this case squarely applied to facts of the case. Reliance was also placed on Union of India vs. Delhi Cloth and General Mills Ltd., 1963 (1) SCR587. The main plank of the argument was that till cylinder liner was finally processed by the Railways it was incapable of being used as a machine part.
(3.) To appreciate the submission it is necessary to extract tariff item 25 which reads as under: "25. IRON IN ANY CRUDE FORM - including pig iron, scrap iron, molten iron or iron cast in any other shape or size". ;