2004 (6) TMI 13 - AT - Central Excise

Central Excise Valuation MRP based assessment Argument that allethrin in same percentage in aerosol and coil modes No proper classification of goods according to it nature Impugned goods covered under entry 37 of Notification No. 9/2000-CE (NT) Penalties for violation of provisions to be upheld

Summary

Issues involved:
Classification of the product "Baygon Mosquito Specialist" under Central Excise Act, 1944.

Detailed Analysis:

1. Classification of the Product:
The case involved the classification of the product "Baygon Mosquito Specialist" under the Central Excise Act, 1944. The appellant manufactured and cleared this product on payment of duty, which was classified under CETA 1985, schedule 3808.10. The dispute arose when the appellant replaced the words "Repels Mosquitoes and other flying insects" with "Control Mosquitoes and other flying insects" on the product cans. The duty demands were confirmed for the period June 2000 to March 2001, leading to an appeal.

2. Ingredients and Use of Allethrin:
The product in question contained Allethrin as the active ingredient, which is an insecticide with contact, stomach, and respiratory action. The use of Allethrin in both the aerosol can and mosquito coil by the same assessee for controlling mosquitoes was highlighted. The effect of Allethrin in both products was deemed similar, leading to doubts about categorizing the aerosol as a repellent or killer.

3. Functional Operation and Literature References:
Literature references and technical explanations were provided to support the argument that the active ingredient Allethrin functioned similarly in various forms such as coils, tablets, liquids, and aerosols to control mosquitoes. The use of heat energy to vaporize Allethrin into a cloud/fog was considered essential for its effectiveness, regardless of the delivery method.

4. Principle of Ejusdem Generis:
The principle of Ejusdem Generis was invoked to argue that aerosols, coils, mats, and liquids containing Allethrin should be considered under the same category of "other mosquito repellants." The contention that aerosols did not fall under the category of repellants based on this principle was refuted.

5. Revenue Avoidance and Penalty Imposition:
The change in advertising mode from "Repels" to "Controls" was seen as an attempt at revenue avoidance. The distinction between tax avoidance and evasion was emphasized, with penalties upheld for violation of provisions. The penalty amount was reduced from the initial imposition based on the circumstances and classification interpretation.

6. Conclusion:
The judgment upheld the classification of the product under Section 4A of the Central Excise Act, 1944, based on the active ingredient and its use. The penalty imposition was justified, considering the marketing history and the change in product declaration. The detailed analysis of ingredients, functional operation, legal principles, and penalty imposition formed the basis of the judgment delivered by the Appellate Tribunal CESTAT, Mumbai on June 17, 2004.