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TMI Blog1998 (6) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... e Officer, visiting on 17-12-1990 drew a sample of the product and sent it to Chemical Examiner of the Department for testing. Test result indicated that it was a definite organic chemical falling under Heading 2915.50 attracting duty @ 15% ad valorem. 3. The officers, therefore, on a surprise visit, seized 2940 kgs. of the said finished goods valued at Rs. 1,25,000/- found lying in the factory premises. On scrutiny of records, it was also found that the said goods involving duty of Rs. 65,47,291.65 were removed without payment of duty during the period March, 1986 to December, 1990 without following proper Central Excise procedures. Hence a show-cause notice dated 3-4-1991 was issued to the respondents as to why the aforesaid duty be not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product, not being sold in the manner and packing, as required in that Act, cannot to be treated as fungicide. (iv) Insecticides (including fungicides) are used by application of spraying, dusting, sprinkling, casting, impregnating etc. Present product is not used in that manner. It is used as an additive in food products such as baked bread etc. (v) The product is used in baking industry as an additive according to IS-6031-1971 of Indian Standards Specification. 6. It is also urged that the respondents wilfully mis-described their product as fungicide , which it is not with a view to evade payment of duty. Therefore, larger period of limitation for issuing the show-cause notice has been rightly invoked. 7. Consequently it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Excise Tariff is not fully aligned with the same heading of HSN inasmuch as the concept of retail sale, which is crucial in HSN, had been dispensed with in regard to classification of goods under Heading 38.08 of the Central Excise Tariff. Therefore DDT whether in bulk of for retail sale would merit classification under Heading No. 38.08 of the Schedule to the Central Excise Tariff Act, 1985 if the same is meant for use as insecticides-C.B.E. C. Circular No. 17/79-CX. 3, dated 8-5-1991 - 1991 (54) E.L.T. (T21). 9. Reliance placed by the Revenue on the provisions of Insecticides Act regarding manner of sale and packing of insecticides (including fungicides) is in appropriate and totally irrelevant for the purpose of class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rope in bread, and also that propionates are useful to retard the molding of cheese. A recent study of Seiler presented quantitative data on equilibrium relative humidity as a controlling factor in mold growth on bread and caked, as well as information on propionates and sorbates as mold inhibitors. He reported that for bread,0.2% of calcium propionate by flour weight extended mold-free up to six days, as compared with four days for untreated leaves. No odor problems were found at this level. In relation to rope control by proportionate there is the early study of O Learyl and Kralovec. Their data showed 0.11% (basis of flour) of calcium propionate to be more effective than 0.25% of calcium acid phosphate in the control of rope in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2]. 13. We have carefully considered the pleas advanced from both sides. We observe that the product is used by the respondents as an antifungal agent. Even otherwise, property and function of calcium propionate, is inhibiting mold i.e. prevention of fungus in the bread and other food products and medicine. This is apparent from the substantial material produced by the respondent. When the Revenue says it is used as a food additive, it forgets why it is added in the food. It is obvious that it is added for inhibiting or preventing growth of mold in the bread or as an antifungal agent. It is not added to achieve any other purpose. It is, therefore, correct to describe the product as a fungicide. 14. Revenue s further argument is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of calcium propionate under 29.15. 17. Although, in view of the foregoing finding, it is not necessary to go into the question whether the show cause notice is barred by time or not, yet we observe that respondent did not mis-state or suppress anything in its declaration to the Revenue. It s clearly mentioned calcium propionate . Respondent s further declaration that it is `fungicide was a matter of his belief which is clearly bonafide in view of its uses as mold inhibitor in bread. Calcium propionate was and is a well-defined chemical compound. Revenue could, as it sought to do subsequently, classify it differently under Chapter 29. No new fact has emerged after the visit of Central Excise Officers leading to the impugned order. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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