ivil Appeal No 223 of 1989
From the Judgment and Order dated 311088 of the Cus toms Excise and Gold Control Appellate Tribunal New Delhi in Appeal No E 1206884 BI Order No 43288 BI
Soli J Sorabjee AN Haksar Ravinder Narain PK Ram and D N Misra for the Appellant
The judgment of the Court was delivered by SABYASACHI MUKHARJI J
This is an appeal under section 35 L of the Central Excises  Salt Act 1944 hereinafter referred to as the Act 
against the order dated 31101988 passed by the Customs ExciSe  Gold Control Appellate Tribunal hereinafter referred to as the Tribu nal 
The issue involved in this appeal mainly relates to the classification of the goods namely whether the products of the appellant in this case were end fittings or nuts The question was whether the goods were classifiable under Tariff Item 52 or Tariff Item 68 of the erstwhile First Schedule to the Act
The appellant applied for requisite central excise licence for manufacture of goods falling under Tariff Item 68 and for the purpose of such goods L 4 licence was also furnished and also the requisite ground plans of the facto ry showing the requisite sanction of the factory in which the various goods were manufactured
The excise authorities granted L 4 licence
The appellant contends that the same was done after verifying the ground plans
Necessary classi fication list was supplied on 22nd March 1979 for approval by the excise authorities and the appellant claimed benefit of exemption of notification No 8979 Central Excise dated 1379
The said classification list submitted by the appel lant was approved by the Assistant Collector of Central Excise by his letter dated 25th May 1979
For the period from 1479 to 30679 the appellant filed his RT 12 for the assessment which was also finally assessed without any protest or objection
Inasmuch as the appellant claimed that its goods were wholly exempted by virtue of the notifi cation No 8979CE dated 1379 the appellant wrote to the Superintendent of Central Excise asking for dispensation from filing RT 12 every month
The Superintendent by his order informed the appellant that it need not file RT 12 but should inform 874 the Excise Department monthly by means of a simple letter the total clearance effected in the month in question
Thereafter the appellant submitted classification lists in 1980 1981 and 1982 in respect of the said goods and claimed the benefit of the exemption under notification No 10580 Central Excise dated 19680 which was a subsequent noti fication
The Assistant Collector of Central Excise duly approved the said classification lists
It is stated that the Central Excise Officers attached to the Preventive Branch visited on or around 13782 the factory of the appellant and examined the products manufactured by the appellant
The excise authorities once again it is stated visited the factory of the appellant on 20th July 1982
However on 17th January 1983 a show cause notice was issued to the appellant asking it to show cause as to why excise duty should not be demanded under Tariff Item 52 in respect of 1488838 pieces of nuts manufactured and removed by the appellant during the period 1st April 1981 to 19th July 1982 without payment of appropriate excise duty there on
It was further stated in the show cause notice to show cause why penalty should not be imposed on the appellant for failing to obtain the requisite L 4 licence under Tariff Item 52 in respect of the said goods and for failing to file price lists and classification lists in respect thereof and further to show cause why the material seized on 26th Au gust 1982 should not be confiscated
The appellant showed cause and drew attention to the Indian Standard Institution publication for specification of High Pressure Connection meant for lubricating arrangement of oil in Fuel Injection Equipment for Diesel Engines which according to the appel lant showed that the goods in question were not nuts but end products or connectors for lubricating purposes and as such were integral parts of the Diesel Engine Pipes falling under Tariff Item 68
On 16th July 1984 the Collector of Central Excise passed orders holding that fittings were nuts classifiable under Tariff Item 52 and that appropriate duty on the clear ances effected by the appellant during the period 1st April 1981 to 19th July 1982 should be paid and that the seized goods were liable to confiscation but in lieu thereof a redemption fine of Rs4000 could be paid within three months the exports effected indirectly by the appellant were not entitled to benefit of Notification No 8979 CE and therefore the differential duty in respect of those clearances was payable under Tariff Item 68 and that the show cause notice was not barred by time
The Collector accordingly imposed a penalty of Rs 1 lac
Aggrieved thereby the appellant went up in appeal before the Tribunal
The Tribunal partly allowed the appeal of the appellant and 875 partly upheld the order of the Collector
So far as the question of classification of the different fittings was concerned the Tribunal held that the classification should have been as nuts under Tariff item 52 of the Central Excise Tariff
The Tribunal also held that the appellant was guilty of suppression and therefore rejected the submission of the appellant that the show cause notice was barred by time
The contention of the appellant in respect of the benefit of exemption being available to the extent of export effected indirectly on the basis of the earlier decision of the Tribunal was accepted by the Tribunal and the order of the Collector was modified to that extent
The Tribunal also reduced the amount of penalty imposed by the Collector from Rs 1 lac to Rs50000
Aggrieved thereby the appellant is in appeal before this Court
The first contention that was agitated before us and which was decided against the appellant in the order of Tribunal is whether the goods in question involved in this appeal were classifiable under Tariff Item 52 of the Central Excise Tariff or whether these goods were classifiable under Tariff Item 68
The Tribunal noted that these goods were described as nuts  by the Consultant on behalf of the appellant in the arguments submitted before the Tribunal
The appellants were purchasing nuts both threaded and unthreaded and the latter being threaded this was to be taken for captive consumption
Therefore it was contended on behalf of the appellant that the function of such nuts was not merely fastening but also facilitating the flow of oil under high pressure without leakage
It was emphasised that these nuts were leak proof
The Tribunal on appraise ment of all the materials held that these were nuts manu factured by the appellant
It was evident from the Tribu nal s judgment that the appellant was itself purchasing both threaded and unthreaded nuts as such and the unthreaded nuts were threaded by the appellant
Apart from captive consumption some of these nuts were also sold as nuts to outside parties
These facts were found by the Tribunal and recorded in its order
The Tribunal in those circumstances was of the view that it was difficult to accept the appel lant s contention
The impugned goods were commercially known and bought and sold as nuts
It is true that specifi cation of the Indian Standard Institution was drawn atten tion to
But there was evidence as noted by the Tribunal about the commercial indentify of these goods
If these goods not being defined as such and are commercially known as nuts as found by the Tribunal then in our opinion such finding cannot be said to be wrong or perverse
Such finding was arrived at after giving opportunity to both the parties and considering all relevant materials
Such finding cannot be assailed in this appeal
876 The functional approach to the identify of the goods as canvassed by the appellant was also duly considered by the Tribunal
It was contended that the function of the nuts was not only to fasten but also to enable the flow of oil under high pressure without leakage
But the Tribunal noted that the flow of oil is possible only after nuts are fastened
To that extent according to the Tribunal it can be stated that nuts permit the flow of oil without leakage
The ques tion is however not as to what is the process facilitated as a result of the nuts but the question which the Tribunal itself posed is whether the nuts are fasteners or do they have any other independent function The Tribunal found that it had not been shown before them that they had any such independent function
To say that these nuts are leak proof was only to reiterate the fact of their essential character and quality as fasteners and not to substantiate any argument as regards their independent function
In that view of the matter the Tribunal even taking the functional approach to the identity of the goods came to the conclu sion that the goods in question were properly classifiable as nuts
That conclusion of the Tribunal cannot be assailed in appeal in view of the evidence on record as noted before
Certain decisions were referred to before the Tribunal by the appellant in support of its contention that in certain cases goods of these types had not been considered to be nuts
These goods as the Tribunal noted were in the nature of bolts nuts and rods of special type manufactured by a particular party
Therefore these were not classifiable as merely bolts and nuts under Tariff Item 52 of the Central Excise Tariff but as integral parts of the machine for which they were specifically designed with a distinct and specific function in the operation of the motor cycle of which these were components parts
It was held in those cases that the components manufactured solely on the orders of the buyers as per their drawings and specifications were components of mining and project machinery and there fore not classifiable under Tariff Item 52 CET But the facts involved in these items of goods in the instant case dealt with by the appellant are different
These goods were not manufactured according to any special specifications as integral parts of machinery
Some of these nuts required were also purchased from market  while those being manufac tured were also sold to outside buyers as nuts
Attention of the Tribunal was also drawn to the case of Ms Precision Fasteners Ltd vs Collector of Central Ex cise Bombay II
In that case however the Tribunal did not take any final view on the product
In view of the type of goods involved in that case the Tribunal had remanded the matter for re adjudication
In that view of 877 the matter the Tribunal was of the view that the commercial identify of the goods in the instant case was different from the goods involved in the Precision Fasteners Ltd s case supra
In the light of these submissions the Tribu nal came to the conclusion that the goods were classifiable under Tariff Item 52 of the Central Excise Tariff
It was this finding which is assailed before us in appeal
We find however as noted hereinbefore no cogent ground to sustain any challenge to the aforesaid finding of the Tribunal
The Tribunal has considered all the relevant evidence
The Tribunal has not ignored any relevant piece of evidence
It had applied the correct principle of law ap plicable to the determination of this question
It had also applied the test of commercial identity of the goods and examined the matter from the angle of the conduct of the appellant
In that view of the matter we are of the opinion that these findings of the Tribunal cannot be assailed
The next question that has to be determined is whether the claim for duty is only to be confined to the period of six months because it was contended in view of the facts and the circumstances narrated hereinbefore that there was no suppression of any fact
It may be relevant in this connection to refer to Section 11 A of the Act which pro vides as follows When any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded a Central Excise Officer may within six months from the rele vant date serve notice on the person charge able with the duty which has not been levied or paid or which has been short levied or short paid or to whom the refund has errone ously been made requiring him to show cause why he should not pay the amount speci fied in the notice Provided that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud collusion or any wilful misstatement or suppression of facts or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty by such person or his agent the provisions of this sub section shall have effect as if for the words Central Excise Officer the words Collector of Central Excise and for the words six months the words five years were substituted
878 Explanation Where the service of the notice is stayed by an order of a Court the period of such stay shall be excluded in computing the aforesaid period of six months or five years as the case may be
 Therefore we have to find out whether there was any fraud collusion wilful misstatement or suppression of facts for the Department to be justified to claim duty beyond a period of six months
This is a question of fact
It was found by the Tribunal that it was not possible for the appellant to contend that the appellant had made a correct statement
The Tribunal noted that the appellant could hardly contend that it discharged the onus of making correct declaration if it had withheld the description which was commonly used in respect of the goods not only by it self but also by those from whom it bought or to whom it sold the products
The appellant itself was both buying and selling these nuts and as such there was no conceivable reason why these nuts were described as end fittings in the declaration to the Department
It may be noted that in the declaration it was so described
The Tribunal was of the view and it cannot be said not without justification that these goods should have been described as nuts because the appellant itself had treated these as nuts
Therefore from this conduct suppression is established
The fact that the Department visited the factory of the appellant and they should have been aware of the production of the goods in question was no reason for the appellant not to truly and properly to describe these goods
As a matter of fact not only did the appellant as found by the Tribunal not de scribed these goods properly but also gave a misleading description
In the aforesaid view of the matter we are of the opinion that the Tribunal was right in classifying the goods under Tariff Item 52 of the Central Excise Tariff and in upholding the demand of the duty for a period beyond six months as contemplated by Section 11 A of the Act
The Tribunal duly gave benefit of the exemption notification in respect of the goods which had been exported
This part of the order is not challenged and cannot be challenged
The Tribunal however reduced the penalty from Rs 1 lac to Rs50000
Mr Sorabji learned counsel for the appellant contended that this was not right
There should not have been any penalty imposed
We are however unable to accept that position
Having come to the conclusion that there was deliberate suppression of wrong statement it follows auto matically that the Tribunal was justified in upholding the imposition of penalty
The quantum of penalty however was a matter which the Tribunal was free to fix as they thought fit as the justice of the case demanded
879 Nothing has been shown to us that the conclusion of the Tribunal was bad
In that view of the matter the order of the Tribunal is upheld
The appeal must therefore fail and is accordingly dismissed
NVK Appeal dis missed


Summary:
The Respondent entered into a contract with the appel lant Food Corporation of India on or about May 1979 whereun der the appellantCorporation was to give to the Respondent Paddy for being shelled converted into rice at the rate of 70 of the Paddy
The Paddy was to be lifted from the go downs of the appellant
The shelling charge was fixed at Rs220 p per quintal
Some dispute having arisen between the parties the Respondent moved an application before the Subordinate Judge for appointment of an arbitrator and the Sub Judge appointed the arbitrator who gave his award on 22nd January 1982
In the award the arbitrator did not allow some of the claims made by the appellant in particular a claim of Rs5506029 p which was claimed as a penalty Rs2 per quintal for not lifting the balance of Paddy
The arbitrator in disallowing the claim on that count took the view that the appellant has to prove the actual losses suffered by it which the appellant failed to prove
Another claim not allowed by the arbitrator related to Rs32385608
p in respect of the cost of non delivery of 137 39548 tonnes of rice  Rs 165 per quintal
The Respondent made an application section 14 of the Arbi tration Act 1940 to make the award a rule of the Court
The appellant filed the objections us 30 and 33 of the Act
The Subordinate Judge First Class on 2nd December 1982 found that the award was liable to be set aside and accordingly modified the award and passed a decree in favour of the appellant for the amount
On 2nd March 1984 the Addl
Distt
Judge on appeal by the Respondent reversed the order passed by the Subordinate Judge
He held that the award was not liable to be correctedinterfered with in the manner done by the Sub Judge
Aggrieved by the said order the appellant went in revision to the High Court
The High Court on 111284 dismissed the revision petition
Hence this appeal by the appellant Corporation
881 Dismissing the appeal this Court HELD That the arbitrator has chosen to make a speaking award in the instant case that is he has given reasons for his conclusions
Since the arbitrator has chosen to give reasons unless it is demonstrated to this Court that such reasons are erroneous as such as propositions of law or a view which the arbitrator has taken is a view which it could not possibly be sustained in any view of the matter then the challenge to the award of the arbitrator cannot be sustained
886H 887A B Even assuming that there was some mistake such a mis take is not amenable to be corrected in respect of the award by the Court
This was a fair order passed after considering all the records
The conclusion arrived at by the arbitrator is a plausible conclusion
The Court has no jurisdiction to interfere or modify the award in the manner sought for by the appellant
887G H The Addl
Distt
Judge was justified in correcting the order of the Subordinate Judge and the High Court was also justified in not interfering with the order of the Addl
Distt
Judge
887H 888A Mukkudduns of Kimkunwady vs Inamdar Brahmins of Soorpai  Ms Sudarsan Trading Co vs The Government of Kerala  Anr 1989 1 Jt
Today SC 339 Champsey Bhara  Co vs Jivraj Balloo Spinning  Weaving Co Ltd L 1922 IA 324 followed
Puri Construction Pvt Ltd vs Union of India  referred to