2000 (10) TMI 781 - AT - Central Excise

Issues Involved:
1. Classification of the product 'Phenol' under the Central Excise Tariff.
2. Applicability of Notification No. 14/94-C.E. dated 1-3-1994.
3. Binding nature of Supreme Court decisions and Board Circulars on classification.

Issue-wise Detailed Analysis:

1. Classification of the product 'Phenol':

The primary issue in this appeal was the correct classification of the product 'Phenol'. The appellants argued for classification under sub-heading 3808.10, which covers insecticides, fungicides, herbicides, weedicides, and pesticides, while the Department classified it under sub-heading 3808.90, which includes other products such as rodenticides and disinfectants.

The Commissioner (Appeals) upheld the classification under sub-heading 3808.90, reasoning that disinfectants are specifically mentioned separately from insecticides, fungicides, herbicides, weedicides, and pesticides in the tariff, thus should be classified under 3808.90.

The appellants cited the Supreme Court decision in Bombay Chemical Pvt. Ltd. v. C.C.Ex., Bombay, which classified 'Phenol' under sub-heading 3808.10. They also referenced the Tribunal's decision in Grand Chemical Works v. C.C.Ex., New Delhi, which followed the Supreme Court's ruling.

The Revenue referenced previous Tribunal decisions, including Bengal Chemicals & Pharmaceuticals Ltd. v. Collector and Nath Peters Pharmaceuticals (P) Ltd. v. Collector of Central Excise, which classified 'Phenol' as a disinfectant under sub-heading 3801.90 (corresponding to 3808.90).

The Tribunal reviewed these precedents and noted that the Supreme Court in Bombay Chemicals Pvt. Ltd. had held that disinfectant fluids produced from phenolic compounds and high-boiling tar acid were entitled to exemption under the erstwhile Notification No. 55/75. The Tribunal in Grand Chemical Works had also observed that the Supreme Court's decision overruled the previous Tribunal decision in Ambey Laboratories, thus classifying 'Phenol' under sub-heading 3808.10.

2. Applicability of Notification No. 14/94-C.E. dated 1-3-1994:

The appellants argued that their product should benefit from Notification No. 14/94-C.E., which provides exemptions for products classified under sub-heading 3808.10. The Revenue contended that since 'Phenol' is classified under sub-heading 3808.90, the notification does not apply.

The Tribunal, following the Supreme Court's judgment and the latest Division Bench decision in Grand Chemical Works, held that 'Phenol' is properly classified under sub-heading 3808.10, thereby eligible for the benefits under Notification No. 14/94-C.E.

3. Binding nature of Supreme Court decisions and Board Circulars:

The Tribunal emphasized the binding nature of Supreme Court decisions in classification matters. The Supreme Court's decision in Bombay Chemicals Pvt. Ltd. was considered authoritative, and its principles were applied to the current tariff structure.

The Revenue referenced a Circular issued by the Central Board of Excise & Customs (CBEC) post-Supreme Court decision, which classified 'Phenol' under sub-heading 3808.90. However, the Tribunal noted that the Supreme Court's decision takes precedence over Board Circulars.

Separate Judgments:

Member (Judicial) concluded that 'Phenol' should be classified under sub-heading 3808.10, following the Supreme Court's decision and the Tribunal's latest rulings.

Member (Technical) disagreed, maintaining that 'Phenol' is a disinfectant and should be classified under sub-heading 3808.90, referencing the product's description and previous Tribunal decisions.

Third Member's Opinion:

The Third Member agreed with the Member (Judicial), emphasizing the binding nature of the Supreme Court's decision in Ambey Laboratories, which overruled the Tribunal's previous classification. Thus, 'Phenol' was held to be classifiable under sub-heading 3808.10, eligible for the benefits under Notification No. 14/94-C.E.

Final Order:

In view of the majority decision, the appellants' product 'Phenol' is classified under sub-heading 3808.10 with the benefit of Notification No. 14/94 dated 1-3-1994.

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