1998 (12) TMI 230 - AT - Central Excise

Issues Involved:
1. Classification of Alpha Napthyl Acetic Acid (ANAA) under the Central Excise Tariff Act, 1985.
2. Eligibility of ANAA for exemption from duty under Notification 234/82.
3. Applicability of the extended period of limitation.

Detailed Analysis:

1. Classification of ANAA under the Central Excise Tariff Act, 1985:

The primary issue was whether ANAA, a plant growth regulator, should be classified under sub-heading 3808.90 or 3808.10 of the Central Excise Tariff Act, 1985. The Tribunal noted that plant growth regulators are distinct from insecticides, pesticides, herbicides, and fungicides. The product ANAA, being a plant growth regulator, was classified under sub-heading 3808.90, which attracts duty at the appropriate rate, rather than 3808.10, which attracts a nil rate of duty. The Tribunal referred to various technical definitions and literature, including the Condensed Chemical Dictionary and HSN Explanatory Notes, to establish that plant growth regulators are separate from insecticides and pesticides.

2. Eligibility of ANAA for Exemption from Duty under Notification 234/82:

The Tribunal examined whether ANAA was eligible for exemption under Sl. No. 18 of Notification 234/82, which covers insecticides, pesticides, weedicides, and fungicides. The Tribunal concluded that ANAA, being a plant growth regulator, does not fall under these categories. The decision was supported by previous Tribunal rulings, such as in the cases of Agromore Ltd. and Paushak Ltd., which held that plant growth regulators are not insecticides or pesticides. The Tribunal also considered the Supreme Court judgment in the Bombay Chemicals case but found that the criteria laid down by the Supreme Court for considering something as a pesticide or insecticide were not met by ANAA.

3. Applicability of the Extended Period of Limitation:

The Tribunal addressed whether the extended period of limitation could be invoked. It was found that the appellants had been filing classification lists for ANAA since 1977, and these lists were approved by the department after queries were satisfactorily answered. Given that the classification issue was contentious and the appellants had disclosed all material particulars, the Tribunal held that there was no wilful suppression or concealment of facts. Consequently, the extended period of limitation was not applicable. The demand was sustainable only for the period within six months prior to the issue of the show cause notice, i.e., from 28-12-1987 to 30-1-1988.

Separate Judgment by Vice President:

The Vice President provided a dissenting opinion, arguing that ANAA could be considered as an insecticide or pesticide under certain conditions and concentrations. He referred to various technical and legislative definitions, including the Insecticides Act, 1968, and argued that ANAA could be eligible for exemption under Notification 234/82. He proposed a remand for de novo consideration to verify the intended use and concentration of ANAA during the normal period of limitation.

Final Order:

In view of the majority opinion, the appeal was disposed of in terms of the observations and findings of the Member (Judicial). The penalty imposed was reduced from Rs. 7 lakhs to Rs. 2 lakhs, and the demand was upheld only for the six-month period within the normal limitation period.

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