9911796707
TMI Blog2011 (2) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of penalty is not warranted. decided in favour of Assessee. - E/3163/05, E/3416/06, 3441/06, E/1017 & 1018/07 - - - Dated:- 13-5-2011 - S/Shri Ashok Jindal, P.R. Chandrasekharan, JJ. REPRESENTED BY : Shri Yogesh Patki, Advocate, for the Appellant. Shri P.K. Agarwal, Jt. CDR, for the Respondent. [Order per : P.R. Chandrasekharan, Member (T)]. Briefly stated the facts of the case are as follows :- 2. There are five appeals under consideration of this case. Of the five appeals, three appeals namely, appeal No. E/3163/05, E/3416/06 E/3441/06 are consequent upon the Hon ble Supreme Court s remand order dated 22-11-2007 [2008 (221) E.L.T. 6 (S.C.)] whereby the Hon ble Apex Court had set aside the following two orders passed by this Tribunal and remanded the same back to the Tribunal, (i) Order No. A/158/2007/C-II(EB), dated 23-1-2007 [2007 (213) E.L.T. 33 (Tri.-Mum.)] and (ii) Order No. A/422 423/07/C-I/E.B., dated 23-5-2007. In the above orders, this Tribunal had upheld the classification of the product Vipul Booster as a Plant Growth Regulator under tariff heading 3808.20 as contended by the appellant as against the department s contention that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department had not discharged, the appeal of M/s. Bahar was allowed by the Tribunal with consequential relief. 2.2 Against this order, the department went in appeal before the Hon ble Supreme Court and the Hon ble Apex Court s order dated 22-11-2007 [2008 (221) E.L.T. 6 (S.C.)] held as follows : We have gone through the judgment of the Tribunal. It has been pointed out on behalf of the department, rightly, that the assessee has registered the above mentioned product as insecticide with the Directorate of Plant Protection, Ministry of Agriculture, Faridabad and that they have been regularly following all procedures and formalities stipulated under the Insecticide Act, 1968 (see page 87 of the paper book). The Tribunal has also failed to consider the effect of the issuance of such a certificate under the Insecticide Act, 1968. It is argued on behalf of the assessee that one of the ingredients of the above product is insecticide and the certificate issued under the Insecticide Act is only with reference to that ingredient only. All these questions will require fresh consideration in accordance with law by the Tribunal. Accordingly, the impugned judgment is set aside and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning given under the Drugs Cosmetics Act, 1940 cannot be considered since the object of the two Acts are different. 3.3 The advocate for the appellant further submitted that they had produced voluminous evidence by way of affidavits filed by farmers and dealers and scientists from where it may be seen that the product Vipul Booster manufactured and marketed by them are known as Plant Growth Regulator and is not known as an insecticide in the commercial parlance. The affidavits of the scientists are supported by voluminous research papers, which shows that Triacontanol is used worldwide as a Plant Growth Regulator. None of the evidences produced by them have been rebutted by the department and hence their contention has to be accepted and they rely on the following judgments : (i) UOI v. Garware Nylons - 1996 (87) E.L.T. 12 (ii) Puma Ayurvedic v. C.C.E., 2006 (196) E.L.T. 3 (iii) Colgate Palmolive v. UOI, 1980 (6) E.L.T. 268 3.4 It is their contention that since the department has not discharged the onus placed on them for change in classification, the classification as claimed by Bahar cannot be disturbed. They further submit that in matters of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held in the following cases : (i) UOI v. Rajasthan Spinning Weaving Mills, 2009 (238) E.L.T. 3 (S.C.) (ii) C.C.E., Nasik v. Jyoti Structures Ltd., 2009 (247) E.L.T. 555 (Tri.-Mumbai) (iii) Gujarat Raffia Industries Ltd. v. C.C.E., Ahmedabad-II, 2004 (165) E.L.T. 331 (Tri.-Del) (iv) S. Narendra Kumar Co. v. C.C.E., Mumbai-I, 2003 (156) E.T.L. 1001 (Tri.-Mumbai) (v) Methodex System Ltd. v. C.C.E., Indore, 2004 (173) E.L.T. 299 (Tri.-Del). 4. The ld. Jt. CDR on the other hand would submit as follows : (1) In the remand order of the Supreme Court, it has been directed that the effect of issuance of certificate under the Insecticides Act, 1968 and all the procedures and formalities stipulated under the Insecticide Act, 1968 being regularly followed by the assessee are relevant and these issues which were not examined earlier by the Tribunal were required to be examined afresh. The assessee had not challenged the order of the Tribunal before the Hon ble Apex Court and, therefore, they are bound by the above law laid by the Hon ble Apex Court. According to the ld. Jt. CDR, the appellant Bahar are prevented from taking a plea that registration of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be done in accordance with the manner prescribed. Since the assessee has sold the impugned products as an insecticide , they cannot now claim that the product is not being sold as an insecticide but sold as Plant Growth Regulator as legally the assessee is bound by the dictum of the Insecticides Act, 1968. (5) The various affidavits filed by the assessee are contrary to their own admissions. The classification of a product has to be determined in terms of the description under chapter heading read with relevant chapter notes/section notes and the impugned product satisfied the criteria for classification as an insecticide. Therefore, no extraneous materials/affidavits can be relied upon when the impugned product is marketed as an insecticide only. (6) In view of the above, the ld. Jt. C.D.R. submits that the product has to be classified as an insecticide under sub-heading 3808.10 and not as a Plant Growth Regulator. Since the product is rightly classifiable under 3808.10 its valuation has to be done as per the provisions of Section 4A of Central Excise Act, 1944. (7) The ld. Jt. C.D.R. further relies on the following judgments in support of his contention : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. Jt. CDR also refers to Section 38 of the Insecticides Act, 1968, which provides for exemption from the provisions of the Insecticide Act in respect of goods, if such goods are intended for the purposes other than preventing, destroying, repelling or mitigating any insects, rodents, fungi, weeds and other forms of plant or animal life not useful to human beings. In the instant case, if the appellant was of the view that their product is not being used as an insecticide or is not capable of being used as an insecticide, they could have sought exemption under Section 38 of the Insecticides Act, which they have failed to do. Therefore, he submits that the product Vipul Booster with Triacontanol which is notified as an insecticide as the active ingredient is classifiable as an insecticide under the central excise tariff, and not as a Plant Growth Regulator and, therefore, the said product is liable to excise duty under the provisions of Section 4A of the Act. Accordingly, he submits that the duty demand confirmed by the ld. Commissioner of Central Excise in his order dated 17-6-2005 is correct in law and therefore, needs to be upheld. 5. We have carefully considered the subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticide as per the provisions cited supra for the purpose of Insecticides Act, 1968. Prior to 1996 the Triacontanol was not notified as an insecticide and only vide Notification GSR No. 1(E) dated 3-1-1996, Triacontanol was brought under the purview of the Insecticides Act and included as an insecticide vide Sl. No. 24 of the table annexed to the said notification. As per the product composition (as seen from the records) Vipul Booster contains the following : 1. Triacontanol 0.1% w/w (min) 2. Emulsifier (ethoxylated esters of fatty acids) 0.5% w/w/ (max) 3. Preservatives 0.1% w/w (max) 4. Demineralised aqua Q.S. 5. Total 100% w/w Thus going by the composition, the active ingredient of the product is Triacontanol, which gives the product its essential character. The other substances such as emulsifiers, preservatives and demineralized aqua contained in the product do not give the product its essential character Triacontanol by itself is an insecticide specified in the Schedule to the Insecticides Act, 1968. That being so, the product which contains the active ingredient wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the labels and leaflets is approved in English and Hindi shall also be printed in regional languages of the area where the product is likely to be marketed and the same shall accompany the insecticide package as required under rule 19(7) of the Insecticides Rules, 1975. The labels and leaflets shall be printed by using letters that are bold enough for a man of ordinary/normal vision to read them without any external help. 6.5 In the approved leaflet, which is available in the records, it is written as follows : Recommendation for use : Triacontanol E.W. 0.1% a Plant Growth Promoter to increase the yield of crops like cotton, chilies, tomato, rice and groundnut. Storage : The package containing the formulated grade insecticide should be stored in original containers in separate room or almirah under lock and key, away from the reach of children, food stuffs, animal feeds and other articles and keep in cool and dry place. The premises for storage should be well built, well lit, sufficient in dimension and well ventilated. Disposal of empty containers : The empty containers should never be reused and should be destroyed and buried in a safe place. Dispose off pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with other materials and this is the product as sold, but it may be further diluted in use. Formulation improves the properties of a chemical for handling, storage, application and may influence effectiveness and safety. 7.2 Thus it is the active ingredient which imparts the properties to the product. Therefore, any preparation wherein Triacontanol is the active ingredient has to necessarily have the characteristic of Triacontanol, which is an insecticide. That is the reason why under the Insecticides Act not only Triacontanol is included but also the preparations containing Triacontanol. Thus the composition of the product matters a lot in determining the classification, especially with respect to the active ingredient in the product. From that perspective it would appear that the product Vipul Booster which contains Triacontanol has to be a insecticidal preparation and not something else. 7.3 In the case of UOI v. Vicco Laboratories, 2007 (218) E.L.T. 647 (S.C.) while considering the classification of Vicco Turmeric cream under the central excise tariff, the Hon ble apex Court came to the conclusion that the essential character of medicine and the primary function of the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r toilet preparations but merely because they have usage as cosmetics or toilet preparations, can it be held that they are liable to classification under cosmetics and toilet preparation and not as medicines? This was the issue in the case of Sujanil Chemo Industries heavily relied upon by the appellants. The question which arose for consideration in that case was whether a product by name Licel , which is used for the purpose of killing lice on the human head/hair should be classified as insecticide falling in heading No. 3808.10 or as a medicine falling under heading No. 3003.10. The Hon ble Apex Court in that case held that the product has to be classified under heading Nos. 3003 or 3004 as medicaments, in view of the fact that the product has prophylactic and therapeutic properties. The Apex Court also took into the consideration the fact that Chapter note 1(c) of Chapter 38 specifically provided that Chapter 38 would not cover medicaments under heading No. 3003 or 3004 and Chapter 30 defined medicaments , inter alia, as a product comprising of two or more constituents which have been mixed or compounded together for therapeutic or prophylactic use. Thus, even though, in norm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion notes or Chapter Notes, which is not the case in the case under consideration. 7.6 In all the literature and labels relating to the product, the appellant has declared the product to be a Plant Growth Promoter and not as a Plant Growth Regulator. There is a substantial difference between a Plant Growth Promoter on the one hand and Plant Growth Regulator on the other. In the case of Northern Minerals Ltd. v. C.C.E., New Delhi - 2001 (131) E.L.T. 355 (Tri.-Del), this Tribunal had occasion to examine the difference between a Plant Growth Promoter and a Plant Growth Regulator. The Tribunal observed in the said case that Plant Growth Regulator is a natural or synthetic compound, other than nutrients, which can inhibit, promote or otherwise alter physiological processes in plants, whereas a plant growth promoter only promotes plant growth and would not inhibit it. Accordingly, they held that a plant growth promoter cannot be considered as a plant growth regulator. The said conclusion was derived by this Tribunal based on the HSN explanatory notes and also based on the technical literature on the subject, namely, Kirk-Othmer Encyclopedia of Chemical Technology , Plant Physiology b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repelling or mitigating any insects, rodents, fungi, weeds and other forms of plant or animal life not useful to human beings. If the appellant s contention is that Vipul Booster is not used or capable of being used as an insecticide, they could have claimed exemption under Section 38 of the Insecticides Act and they need not have followed any of the procedures prescribed under the said Act or the Rules made there under. However, they have not exercised this option available under the law. This clearly shows that the appellants, by their very conduct, have agreed that their product is an insecticide coming within the purview of the Insecticides Act. If they did not want to market their product as an insecticide at all they should have sought exemption under Section 38 of the said Act rather than following the procedures, such as, registration, labeling, packing, providing statutory warning, etc. applicable to insecticides and preparations thereof in respect of said product. So from this angle also, it is clear that the product under consideration merits classification as an insecticide and not as a plant growth regulator. 7.9 The appellants have also contended that a number of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on obtained under the Insecticides Act. In view of these omissions, they have suppressed the facts and willfully mis-stated the facts with an intent to evade duty. 8.1 The composition of product was known to the department right from 1989 onwards. The product Triacontanol, which is the active ingredient was brought under the Insecticide Act, 1968 vide gazette notification dated 3-1-1996. Thereafter, the appellants took registration under the said Act and started complying with the procedures specified thereunder. Merely because they did not inform the department of their product registration under the Insecticides Act, 1968, it cannot be held that they have suppressed the facts with an intent to evade payment of duty. So long as the constitution of product was known to the department and the notification of Triacontanol under the purview of the Insecticides Act was made under a Gazette notification, which is a public document, it was the responsibility of the department to take note of the changes in the law and reclassify the product accordingly. As has been held in a number of judicial pronouncements which have been relied upon by the appellant as mentioned in paras 3.6 to 3.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department subject to the modification as mentioned above. 11. In sum, we hold that the product Vipul Booster manufactured by the appellant, which has Triacontanol 0.1% w/w as its active ingredient is classifiable under heading No. 3808.10 as an insecticide under the Central Excise tariff. Accordingly, the valuation of the product has to be done in accordance with the provisions of Section 4A of the Central Excise Act, 1944. However, as the department has failed to prove any suppression or wilful mis-statement of facts with an intent to evade duty on the part of the appellant, the demand of duty has to be restricted to the normal period of one year from the relevant date as per the provisions of Section 11A of the Central Excise Act, 1944. In the instant case the show cause notice has been issued on 28th December, 2004 demanding differential excise duty for the period from March, 2003 to September, 2004. Therefore, the duty demand for the period from March, 2003 to November, 2003 will be beyond the normal period of one year and is liable to be set aside and we do so. Consequential interest liability under Section 11AB of the said Act will also accrue. As the matter essentially ..... X X X X Extracts X X X X X X X X Extracts X X X X
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