1991 (1) TMI 264 - AT - Central Excise

Summary

Issues: Classification of "Phenols" as a medicament or disinfectant under CET 1985

In the judgment delivered by the Appellate Tribunal CEGAT, New Delhi, the issue at hand involved the classification of "Phenols" manufactured by the appellants under the Central Excise Tariff (CET) 1985. The key question was whether the product should be categorized as a medicament, as claimed by the appellants, falling under heading No. 3003.20, or as a disinfectant, as determined by the lower authorities under heading No. 3801.90.

The appellants argued that the "Phenols" were manufactured under a drug license issued by the Directorate of Drug Control, Govt. of West Bengal, and certified as a "drug" within the meaning of Section 3(b) of the Drugs & Cosmetics Act, 1940. They contended that the product, made up of multiple constituents like coal tar oil, resin, and castor oil, had prophylactic uses and hence qualified as a medicament under Note 2 to Chapter 30 of the CET 1985.

The Tribunal considered the definition of 'drug' under Section 3(b) of the Drugs & Cosmetics Act, 1940, which includes substances intended for the destruction of vermin or insects causing disease in humans or animals. The appellants argued that even though Phenol was a disinfectant, it fell under the definition of 'medicament' as it comprised multiple constituents mixed for therapeutic or prophylactic uses, citing Note 2(i)(a) of Chapter 30.

However, the Tribunal noted that in a previous case involving the same appellant, it was established that Phenol primarily served a sanitation purpose by killing disease-causing agents, rather than preventing diseases in humans or animals. As per Stedman's Medical Dictionary, prophylactic substances are used to prevent infections and diseases, which Phenol did not achieve. Therefore, the Tribunal concluded that Phenol did not qualify as a 'medicament' under Note 2(i)(a) of Chapter 30.

Additionally, the Tribunal considered Chapter 38 of the CET 1985, which covers disinfectants among other products. Heading 3801.90 specifically pertains to disinfectants, including those with prophylactic uses. The Tribunal emphasized that there was no exclusion of disinfectants with prophylactic properties from this entry. Furthermore, the notes to Chapter 30 did not incorporate entries from Chapter 38, negating the argument that preparations of Chapter 38 should be included in Chapter 30 due to the exclusion of therapeutic or prophylactic preparations from Chapter 33.

Consequently, the Tribunal upheld the lower authorities' classification of Phenol as a disinfectant under heading No. 3801.90 of the CET 1985. The appeals were dismissed, and the impugned order was confirmed.