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TMI Blog1998 (12) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... er sub-heading 3808.90 attracting duty at the appropriate rate and not under sub-heading 3808.10, attracting nil rate of duty as claimed by the appellants. The Adjudicating authority has also imposed a penalty of Rs. 7 lakhs upon the appellants for contravention of the relevant Rules. 2. The brief facts of the case are that on 30-1-1988, the Central Excise officers visited the factory premises of the assessees as a result of intelligence received to the effect that the appellants were manufacturing ANAA which is a plant growth regulator and availing exemption by mis-declaring the same as insecticides/pesticides under sub-heading 3808.10 of the Central Excise Tariff Act, 1985 although the same was classifiable and chargeable to duty under sub-heading 3808.90. The statement of Shri H.R. Patel, Plant Manager, in the assessees factory was recorded wherein he deposed that their factory was manufacturing several speciality organic chemicals among them being ANAA (Tech). He further stated that no duty was being paid on ANAA as the product was exempted from duty as pesticides/insecticides, that classification list had been filed for this product from time to time and that prior to 1- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Tariff upto 28-2-1986); (2) the eligibility of ANAA to the benefit of exemption from duty in terms of Sl. No. 18 of Notification 234/82, dated 1-11-1982; (3) applicability of the extended period of limitation. 6. There is no dispute that the product is a plant growth regulator; however, the contention of the appellants is that the expression "insecticides, pesticides, weedicides and fungicides" occurring in Notification 234/84 and the expression "Insecticides, fungicides, weedicides and pesticides" contained in sub-heading 3808.10 of the CETA 1985 is wide enough to include plant growth regulator within its scope. Plant growth regulator is defined in the Condensed Chemical Dictionary by G.G. Hawley (10th Edition) at page 280 as under : "Plant growth regulator : An organic compound, either natural or synthetic, that modifies or controls one or more specific physiological processes within the plant. If the compound is produced by the plant, it is called hormone, e.g. auxin, which regulates the growth of longitudinal cells involved in bending of the stem one way or another. Substances applied externally also bring about modifications such as improved rooting of cuttings, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plant growth substances are frequently designed by other names. Some of the more common terms are `plant hormones', phytohormanes and growth regulators. The term hormone is after reserved for the naturally occurring substances but usage is sometimes extended to include all chemical which are physiologically active when applied to plants." 9. Now let us see how insecticides, pesticides have been defined in various standard texts. The Encyclopedia of Chemical Technology, Third Edition, at page 418 of Volume 13 defines Insecticides as, "chemicals that are used to control damage or annoyance from insects. Generally, control is achieved by poisoning the insects by oral ingestion of stomach poisons, by contact poisons that penetrate through the cuticle, or by fumigants that penetrate through the respiratory system. Ancillary chemicals also are employed in insect control and include attractants and repellents, which influence insect behaviour, and chemosterilants which influence reproduction. Volume 18 of the same Encyclopedia at page 302 recognises that `pesticide, is a widely used synonym for chemical poisons which is a chemical intended for control, suppression or destruction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75 as amended is that the goods must have the property of killing germs and bacteria, insects or pests and it should be understood in the common parlance as well as being covered in one of the broad categories mentioned in the Notification and since the goods produced by the appellants are capable of killing bacteria and fungi which too, is covered in the expressions `pesticide' and `fungicide', there appears no reason to exclude the goods from the aforesaid Notification." The product in dispute in the present case namely ANAA being undisputedly a Plant growth regulator and not established by the appellants to be capable of killing insecticides or pests, the criterion laid down by the Supreme Court is not satisfied. The learned Counsel's reliance on para 6 of the judgment is mis-placed as this paragraph of the Supreme Court judgment only sets out the definition of pesticide as contained in Butterworth's Chemical Dictionary and the US Federal Pesticides Control Act in which pesticides has been defined to include (1) any substance or mixture of substances intended for preventing, distributing, repelling or mixing any pest, insect, rodent..... and (2) any substance or mixture of subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1 and 2 are answered accordingly. 13. Regarding limitation, we find that throughout, the appellants had been filing classification lists for ANAA right from 1977 when they first began manufacturing this item. In this classification list, no exemption under any Notification was claimed. In the classification list filed on 2-3-1978, exemption in terms of Sl. No. 18 to Notification 55/75 which covers `insecticides, pesticides, weedicides and fungicides' was claimed and the classification list was initially approved provisionally. Vide letter dated 17-3-1978 (page 43 of the paper book), the appellants had stated that they were holding a valid insecticides licence issued by the Deputy Director of Agriculture (Pesticides), Ahmedabad for manufacture of ANAA and requested final approval of classification list. Subsequent thereto, the classification list with effect from 2-3-1978 was approved finally. In the classification list effective from 31-3-1983, the benefit of Notification 234/82, dated 1-11-1982 in terms of Sl. No. 20 which was identical to Sl. No. 18 of Notification 55/75, was claimed for ANAA. This classification list was also approved. A specific query was raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot available to the Revenue (para 10). Therefore, since the classification issue was a disputed one and since the appellants had disclosed all the material particulars about the product in question and the classification lists covering the entire period of dispute were all approved after queries raised by the department were answered satisfactorily by the appellants, we hold that the Revenue is not entitled to invoke the extended period of limitation in this case and as a result, the demand is sustainable only for the period within six months prior to the issue of the show cause notice. In this case, since the show cause notice dated 28-6-1988 was issued demanding duty for the period 1-6-1983 to 30-1-1988, the demand for the period 28-12-1987 to 30-1-1988 alone is sustainable and the rest of the demand is set aside as time barred. In the result, we hold that ANAA manufactured by the appellants falls for classification under Tariff Item 68 of the Schedule to the erstwhile Central Excise Tariff upto 28-2-1986 and under sub-heading 3808.90 of the Central Excise Tariff Act, 1985 from 1-3-1986 onwards, and that the benefit of Notification 234/82 is not available to the product during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intended for preventing, destroying, repelling, or mitigating any insects, rodents, nematodes, fungi, or weeds, or any other forms of life declared to be pests; and any substance or mixture of substances intended for use as a plant regulator, defoliant, or desiccant.' As so defined economic poisons are now known generally as pesticides." 16. I also note that this item can only be manufactured under a licence under the Insecticides Act and the appellants were holders of such a licence. 17. In this connection the arguments of the appellants that in the absence of any definition of pesticide or insecticide in the Central Excise Act we could safely seek guidance from its definition as given in Section 3E of the Insecticides Act, 1968. Since the appellants have produced Certificates of Registration of Insecticides covering ANAA 4.5% solution issued to them under Section (3) of the Insecticides Act and they were manufacturing it under licence to manufacture insecticides covering this item of technical grade granted under Rule 9(2) of the Insecticides Rules and were registered with the Government of India, Ministry of Agriculture, Dte. of Plant Protection, Quarantine and Stora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact of its being high plant growth regulator is not by itself sufficient to exclude from the above categories and what is more important to see is whether it can in addition to its use as plant growth regulator be also utilised as a pesticide or insecticide, weedicide or fungicide. In this respect the Supreme Court has referred to both technical aspect as well as the common man's understanding; and once there is already an Act of Parliament covering insectide and pesticides I believe the provisions thereof could also be taken into consideration simultaneously. Therefore, we have to take note of the provisions of the Insecticides Act on one hand and the circular of the Pesticide Formulators Association of India on the other. The former would show whether the legislature and Government recognised it as an insecticide or pesticide and the latter would go to show whether the people who deal with this item in the normal course of trade consider it as an insecticide or pesticide. The Hawley's Dictionary as well as Pesticide Dictionary do indicate it as a plant growth regulator but it is not without significance that the Pesticide Dictionary indicates that "economic poisons are now known ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arent that not only scientifically and technically but also in the parlance employed in the trade and commerce some of the plant growth regulators which can act as insecticide, pesticide or weedicide are treated as such. 24. The department's side has relied on the Tribunal's order in the Agmore case 1987 (28) E.L.T. 409 which has been followed in the Paushak case 1991 (52) E.L.T. 420. However, a reading of the Agmore case shows that in that particular case the Tribunal held that the plant growth hormone regulators in question were not insecticide or pesticide. That by itself does not mean that no plant growth regulator could act as or be used as insecticide, pesticide, weedicide or fungicide. In other words that judgment would be applicable to the facts of that case only and a ratio cannot be drawn in a generalised way; Of course one of the items in that case was a preparation including ANAA also. But then it is noteworthy that plant growth regulators or hormones may act as promoter of growth in one concentration, inhibitors of growth in another concentration and the proportion and combination also matter. Secondly both in Agromore case and the Paushak case the fact that Hawley's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m as plant growth regulators as well as pesticides. Since full facts had been declared and nothing was suppressed or mis-stated and they had repeatedly claimed that they were covered by the Certificate of Registration of Insecticide ANAA 4.5% solution issued to them under Section 9(3) of Insecticides Act, the extended period of limitation was not available to the department in any case. Even for the normal period of limitation, the authorities were required to verify in the light of above observations and findings and then consider the matter. I am required to make this observation because a copy of registration referred by them has been incorporated in the paper book and the show cause notice covers a long period; therefore during the normal period of limitation held to be applicable in their case it is required to be seen whether the concentration or permutation combination were such as would enable them to be utilised as insecticide, rodenticide or herbicide and it was being sold as such i.e. for being utilised or the purpose of killing pests (including bacteria, fungus, virus, birds, insects etc. normally recognised as pest) if so, the benefit of exemption notification would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Dated : 20-2-1998 In view of difference of opinion between Hon. Member (J) and the Vice President, the matter is referred to the Hon. President for reference to a third Member on the following point :- 1. Whether in view of the observations of Hon. Member (J) the item is required to be considered as not eligible to Notification 234/82 and the demand within a normal period was required to be upheld and only penalty was required to be reduced or the item was covered by the Notification and the impugned orders are required to be set aside but remanded for de novo consideration in respect of the normal period of limitation in the light of the observations of the Vice President? Sd/- Sd/- (Jyoti Balasundaram) (S.K. Bhatnagar) Member (J) Vice President Dated : 24-2-1998 Dated : 20-2-1998 DIFFERENCE OF OPINION Appeal No. E/3172/89-C [Order per : Lajja Ram, Member (T)]. - The difference of opinion referred to me in this appeal filed by M/s. Bakul Chemicals Pvt. Ltd. is (1) Whether in view of the observations of the Member (J) the item - Alpha Napthyl Acetic Acid (ANAA) was required to be considered as not eligible to Notification No. 234/82-C.E. and the dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Tariff Act, 1985. According to him, prior to 28-2-1986 the product, ANAA was eligible for exemption under Notification No. 55/75-C.E., dated 1-3-1975 as amended. For the period under the new Central Excise Tariff, effective from 28-2-1986, he observed that Heading No. 38.08 of the Central Excise Tariff included plant growth regulators, while under the sub-headings under Heading No. 38.08, the plant growth regulators did not figure in the sub-heading No. 3808.10, and as such the plant growth regulators under the new Central Excise Tariff were classifiable under sub-heading No. 3808.90 which covered the other goods classifiable under Heading No. 38.08, (other than insecticides, fungicides, herbicides, weedicides, and pesticides). Even under the new Central Excise Tariff, in force from 28-2-1986 he referred that the plant growth regulators, which could act as insecticides, fungicides, herbicides, weedicides or pesticides would be eligible for exemption and added that if they could not so act as insecticides, fungicides, herbicides, weedicides or pesticides, then they would not be eligible for benefit accorded to such insecticides, etc. He had proposed remand of the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n with regard to the external factors effecting the growth of the plant as they control or eliminate the factors effecting the growth of the plant by destroying pests, weeds, insects, etc. The plant growth regulators boost, tone, or accelerate the growth of the plant. They are like tonic to the plant. According to Mcgraw Hill Dictionary of Scientific and Technical Terms IInd Edition, pesticide is a chemical agent that destroys pests also known as biocide (page-1193). According to the Concise Chemical and Technical Dictionary III enlarged Edition by H. Bennett, pesticide is a product that is used as an insecticide, fungicide, acaricide (Miticide), herbicide, rodenticide, bacteriacide, parasiteicide, nematicide and others used against pests. (page 797). (77 E.L.T. 3) Insecticide is a substance or mixture for destroying insects (page 579 of Concise Chemical and Technical Dictionary 3rd enlarged edition - H. Bennett referred to above). At page 821 of the Mcgraw Hill Dictionary of Scientific and Technical terms 2nd Edition, it had been defined as chemical agent that destroys insects. Herbicide has been defined as a chemical agent that destroys or inhibits plant growth. 35. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Plant hormones (Phyto Hormones) are one type of plant growth regulators. Synthetic organic chemicals are also used as plant growth regulators. At page 528 - 529, insecticides are explained as under :- (I) Insecticides Insecticides include not only products for killing insects, but also those having a repellent or attractant effect. The products may be in a variety of forms such as sprays or blocks (against moths), oils or sticks (against mosquitoes), powder (against ants), strips (against flies), cyanogen gas absorbed in diatomite or paperboard (against fleas and lice). Many insecticides are characterised by their mode of action or method of use. Among these are : Insect growth regulators: chemicals which interfere with biochemical and physiological processes in insects. fumigants: chemicals which are distributed in the air as gases. - chemosterilants: chemicals used to sterilise segments of an inset population. - repellents : substances which prevent insect attack by making their food or living conditions unattractive or offensive. - attractants: used to attract to trap or poison baits. 39. It is thus, seen that the plant growth regulators were a sepa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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