9911796707
TMI Blog1998 (11) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof. 3. The respondent No. 2, the Central Board of Excise and Customs has been given powers to issue orders under Section 37 of the Central Excise Act, 1944 for the purpose of uniformity of classifications. All such orders are binding on all the subordinate quasi-judicial authorities. 4. The respondent No. 2 issued a circular dated 28th October, 1997 directing the Excise Authorities to reclassify Technical Grade pesticides and recover the short levied duty resulting from the alleged misclassification of these products. The circular purported to allege that Technical Grade insecticides and pesticides etc. were distinct from formulations or preparations. It was further alleged that the tariff description 38.08, as amended in July, 1996 to cover only insecticides put in the form or packing for the retail sale and as a result the pesticides in bulk form were excluded from the heading 38.08. The bulk pesticides would be covered under Chapter 28 or 29 as if they are separate chemically defined compounds and if not then under the heading 38.23. 5. Briefly stated the facts are that in the budget of 1986-87 all items of pesticides/insecticides etc. were classified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gents, deodorant, masking agent, attractants and feeding stimulants to pesticidal chemicals in concentrated form, labelling or relabelling of containers intended for consumers and repacking from bulk pack to retail packs or the adoption of any other treatment to render the product marketable to the consumer shall amount to 'manufacture'." The Tariff Entry as amended in 1996 reads as under : 38.08 Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, sulphur-treated bands, wicks and candles, and fly-papers) 3808.10 - Insecticides, fungicides, herbicides, weedicides and pestiides 10% 3808.20 - Plant growth regulators 10% 3808.90 - Other 20% 11. The amendment in Chapter Note (2) brought within its scope certain activities like packing from bulk packs to retail packs. The effect of the Chapter Note was to artificially define what amounted to manufacture by stating that in relation to products of Heading No. 38.08, the addition of chemicals, and other ingredients as set out therein, to pesticidal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an article and that they were also not in the nature of preparations; (vi) that the Insecticides Act and Rules distinguish Technical Grade pesticides from intermediate preparations and formulations. In other words, intermediate preparations were equated with formulations and for that purpose reference was made to Form XV and XVI of the Insecticides Rules, 1971, and (vii) that the changes made in the 1996 and 1997 budgets had not been fully appreciated and that the practice in some commissionerates of charging bulk pesticides etc. under heading 38.08 was not correct. The Excise Authorities were therefore directed by the 2nd Respondent to reclassify the Technical Grade pesticides and immediately recover the short duty levied resulting from the alleged misclassification of these products. 15. In effect what is contended is that after the amendment all separate chemically defined pesticides other than those in the retail packings would fall outside the scope of Chapter 38 and would be assessed on merits under Chapter 28 or 29. It is in these circumstances that the circular was issued directing the Commissioners to recover duty allegedly short levied resulting in misclassifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o distinction between the bulk packings i.e. Technical Grade pesticides/insecticides and retail packing i.e. pesticides or insecticides and all pesticides fall under heading 38.08. The amendments changed the tariff description of heading 30.08 to cover only pesticides/insecticides put in forms or packings for retail sale. As a result pesticides in bulk form were excluded from the heading 38.08. Bulk pesticides can be classified under Chapter 28 or 29 depending on the composition. There being a distinction between the Technical Grade pesticides/insecticides and pesticides or insecticides manufactured to be sold in the retail market they have been classified under two separate headings and therefore the circular to this fact which was issued on 28-10-1997 is justified. 18. We have heard the counsel for the parties and also examined the relevant provisions of the Central Excise Act, 1944 and Central Excise Tariff Act, 1985. 19. The clarification issued by the Central Board of Excise and Customs under section 37B in July, 1995 stipulated that both the Technical Grade pesticides and formulations made therefrom would fall under heading 38.08 but the process of making a form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess exercise because when a Chapter changes it automatically takes into its compass the character of the product for the purposes of excise/customs duty. 22. Chapter Note 1(a) makes an exception for separate chemically defined elements or compounds which have pesticidal properties. Technical Grade pesticides are separate chemically defined compounds. Formulations are mixtures and therefore can never be separate chemically defiined compounds. If the intention was to cover under the heading 38.08 only formulations then the Chapter Note would be rendered redundant. It is significant to note that there is no Chapter Note introduced in Chapter 28, 29 or 38 stating that Technical Grade pesticides or bulk formulations would not be covered in Chapter 38 but would be covered under Chapter 28 or 29. There was no dispute with regard to classification of Technical grade pesticides and formulations prior to the Finance Act, 1996. By way of the amendment the Technical Grade pesticides do not cease to be pesticides. The character of the product doesn't change and continues to remain in the heading 38.08. The amendment in Chapter Note by the Finance Act of 1997 also did not make any materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and the H.S.N. Explanatory Notes are set out herein below to facilitate the understanding of the controversy. Tariff Heading 1995-96 38.08 Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products. CHAPTER 38 MISCELLANEOUS CHEMICAL PRODUCTS Notes 1. This Chapter does not cover: (a) Separate chemically defined elements or compounds with the exception of the following: (1) ..... (2) Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products. (3) .... (4) .... Tariff Heading 1996-97 38.08 Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products, put up informs or packings for retail sale or as preparations or articles (for example, sulphur-treated bands, wicks and candles, and fly papers) CHAPTER 38 MISCELLANEOUS CHEMICAL PRODUCTS Notes 1. This Chapter does not cover : (a) Separate chemically defined elements or compounds with the exception of the following: (1) ...... (2) Insec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sulphur-treated bands, wicks and candles, and fly-papers) CHAPTER 38 MISCELLANEOUS CHEMICAL PRODUCTS Chapter Notes 1. This Chapter does not cover : (a) Separate chemically defined elements or compounds with the exception of the following : (1) ...... (2) Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products, (3) ...... (4) ...... 2. ...... GENERAL This Chapter covers a large number of chemical and related products. It does not cover separate chemically defined elements or compounds (usually classified in Chapter 28 or 29) with the exception of the following: (1) ........ (2) Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products, put up as described in heading 38.08. 26. It is of interest to note that the H.S.N. Explanatory Notes relating to Chapter 28 or 29 exclude certain separate chemically defined inorganic compounds from its purview even when they are pure. Certain other separate elements or separate chemically defined compounds which would otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . When there is no indication to the contrary in the Indian Tariff Act. 30. The H.S.N. Explanatory Notes to heading 38.08 make it clear that the said heading covers not only products that were put up for retail sale but also insecticides in the form of preparations and intermediate preparations, whatever be their presentation. The Supreme Court had the occasion to deal with H.S.N. Explanatory Notes in Collector of Central Excise, Shillong v. Woodcraft Products Ltd., 1995 (77) E.L.T. 23. It was held that the H.S.N. Explanatory Notes are safe guide to determine the classification of items which are patterned on the H.S.N. Explanatory Notes and in case of any conflict, unless a different intention is indicated in the tariff items, the H.S.N. Notes can safely be resorted to. The structure of the Central Excise Tariff is based on the internationally accepted nomenclature found in the H.S.N. and, therefore, any dispute relating to tariff classification could be resolved with reference to the nomenclature indicated by the H.S.N. Explanatory Notes unless there be a different intention indicated by the Central Excise Tariff Act. The expression used in the Indian Tariff Act must be co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fall under Chapter 38.08. 35. We have also examined Chapter 29 of the Central Excise Tariff Act and we make it clear that certain other separate chemically defined organic products which were otherwise classified in Chapter 29 may be excluded when put up in certain forms and if they have been subjected to certain treatment which leave their chemical composition unchanged. Insecticide is one such example. Merely because Chapter 38 of the Tariff has been amended, Technical Grade pesticides do not seize to be pesticides. The amendment does not change the character of the product and the product must continue to remain in the heading 38.08. It is well settled rule of interpretation that a specific entry must be preferred over a general entry. The tariff item 38.08 is a specific entry. It has to be preferred to any entry under Chapter 28 or 29 or 38.23 as they are general entries and in any event Chapter 29 excludes from its purview insecticides etc. as described in heading 38.08. 36. It has also been brought to our notice by the learned senior counsel for the petitioner that the Ministry of Agriculture and the Indian Institute of Chemical Technology have also clarified t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
