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TMI Blog2011 (2) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... er" as a Plant Growth Regulator under tariff heading 3808.20 as contended by the appellant as against the department's contention that the product is classifiable as an insecticide under heading 3808.10 of the Central Excise Tariff. The other two appeals, namely appeal No. E/1017 & 1018/08 are the appeals filed by the department against the orders of the Commissioner (Appeals) wherein the Commissioner (Appeals) had allowed the parties appeal following the Tribunal's order dated 6-3-2007, which has now been set aside by the Hon'ble Supreme Court. 2.1 The issue involved in all these five appeals is the same, namely, the classification of the product "Vipul Booster" whether as a "Plant Growth Regulator" under tariff heading 3808.20 as claimed by the appellant M/s. Bahar Agrochem & Feeds Pvt Ltd., (Bahar in short) or as an insecticide under tariff heading 3808.10 as claimed by the department. When the matter was heard by the Tribunal earlier, the issue before the Tribunal was whether the product was classifiable under heading 3808.20 of the Central Excise Tariff as claimed by the appellant manufacturer or classifiable under heading 3808.10 as claimed by the department and consequ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e questions will require fresh consideration in accordance with law by the Tribunal. Accordingly, the impugned judgment is set aside and the matter is remitted to the Tribunal for fresh consideration in accordance with law". 3. The appellant's contentions are that the registration under the Insecticide Act is not determinative of its classification under Central Excise Tariff and the law on this point is well settled as has been held in Sujanil Chemo Industries v. CCE - 2000 (115) E.L.T. 546, which was upheld by the Hon'ble Apex Court in the same case vide judgment dated 10-2-2005 reported in 2005 (181) E.L.T. 206. It is their contention that mere registration of a product as an insecticide under the Insecticide Act, 1968 will not give a classification as an insecticide under the Central Excise Tariff Act. It was further argued that the Central Excise Tariff itself classified various products, which are registered under the Insecticides Act, 1968 not as insecticides under the Excise Tariff but under various other headings. For example, boric acid though classified as insecticide under the Insecticide Act, would be classifiable under heading 2810 00 20 as an inorganic chemica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OI, 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 classification, commercial parlance test has to be followed and cited the following case laws : (i) Naturalle Health Products v. C.C.E., 2003 (158) E.L.T. 257 (ii) Ramavatar Budhaiprasad, AIR 1961 SC 1325 (iii) C.C.E. v. Vicco Laboratories, 2005 (179) E.L.T. 17 (S.C.) (iv) Shree Baidhyanath Ayurved Bhavan Ltd. v. C.C.E., Nagpur - 1996 (83) E.L.T. 492 (S.C.) (v) G.S. Auto International Ltd. v. C.C.E., Chandigarh - 2003 (152) E.L.T. 3 (S.C.) 3.5 The appellant further argues that the findings of the Commissioner that end use of the product is not relevant for classification is incorrect because the tariff heading under consideration "insecticides" and "Plant Growth Regulator" by itself incorporate end use and, therefore, end use is a relevant factor for determination of classification. 3.6 It was further submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 product under Insecticides Act as an insecticide cannot be relevant for deciding the classification under Central Excise. (2) He further contends that the product "Vipul Booster" has been manufactured by using Triacontanol 0.1% w/w (which is registered as insecticide with Directorate of Plant Protection Quarantine and Storage and having Registration No. CIR-136/2002 (210)-Triacontanol (EW-135). Triacontanol is the active ingredient in Vipul Booster and other raw constituent materials are emulsifiers and preservatives. Therefore, the product has been considered as an insecticide because of the nature of the active ingredient. (3) The ld. Jt. CDR would further submit th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; 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 : (i) Travancore Chemicals - 1997 (89) E.L.T. 136 (ii) Aero Industries - 2006 (204) E.L.T. 61 (Tri.) (iii) Essen Synthetics Pvt. Ltd. - 1987 (32) E.L.T. 759 (Tri.) (8) The ld. Jt. CDR further argues that though the appellant has claimed the classification of their product as a Plant Growth Regulator, the product has been described and marketed as "Plant Growth Promoter" as can be seen clearly from the copy of the leaflet and also from the label affixed/printed on the package. The product only promotes and does not regulate. Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld 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 submissions made by both the sides and our findings are discussed below. 6. The direction of the Hon'ble Apex Court is that as the assessee has registered the above mentioned product as an insecticide with 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, the effect of issuance of such a certificate has to be considered by the Tribunal which has not been done in the order passed earlier by this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atty 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 will also have the characteristics of Triacontanol. Therefore, the essential nature of product is derived from the nature of the active ingredients, which is Triacontanol, an insecticide and this position is not in dispute at all. 6.3 In the certificate of registration for the said product issued by the Directorate of Plant protection, quarantine and storage. Ministry of Agriculture, Government of India, vide Registration No. C.I.R.-136/2002(219) - Triacontanol (E.W.)-135, it has been stated as follows : "Certified that the insecticide/herbicide/ fungicide/rodenticide - Triacontanol 0.1% E.W for indigenous manufacture - h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ield 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 packages or surplus material and washings in safe manner so as to prevent environmental and water pollution. Precaution : Avoid contact with skin, eyes and mouth. Wash the affected areas before eating, drinking or smoking. Avoid contamination of environment and water. Symptoms of poisoning : Eyes and skin irritation, nausea, headache may occur. Fist aid: In case of accidental ingestion give 1-2 glass of water. Do not induce vomiting. Contact a doctor. In case of skin contact toxicity is not likely but wash skin thoroughly with soap and water. Remove contaminated clothing and shoes. In case of splashes in the eyes, hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 medicine is derived from the active ingredients contained therein and it has certainly a bearing on the determination of the classification under the Act". The same principle was applied by the Hon'ble Apex Court in the case of Amrutanjan Ltd. v. C.C.E. - 1995 (77) E.L.T. 500 (S.C.). Even in the case of Naturalle Health Products (P) Ltd., 2003 (158) E.L.T. 257 (S.C.), while considering the classification of Vicks medicated cough drops and Vicks vaporub throat drops, the Apex Court held that since the active ingredients contained in these products are pudhina arka, which has medical properties as per the Ayurve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 normal parlance, a product may be considered to be an insecticide, if that product has any therapeutic and prophylactic property, then for purposes of classification that product cannot fall under chapter 38. In the instant case, there are no such issues as far as Triacontanol is concerned. There is no specific exclusion of Triacontanol or its preparation from the category of insecticides falling under heading No. 3008.10 and for its classification under heading No. 3008.20 as a Plant Growth Regulator. 7.5 In the preamble to the Insecticides Act, 1968 (46 of 1968), it is stated as follows : "An Act to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 by Robert M Devlin & Francis H. Witham and J.C. Johnson's Plant Growth Regulators and Herbicide Antagonists - Recent Advances". Based on the technical literature and the HSN explanatory notes, this Tribunal held that plant growth promoter and plant growth regulator are distinct and different and they cannot be classified under the same heading in the Central Excise tariff. The said decision of the Tribunal was also upheld by the Apex Court in the same case reported in 2003 (156) E.L.T. A161 (S.C.). In the labels affixed on the product and the various affidavits submitted by the appellant, it is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecticide 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 products such as boric acid, copper sulphate, sodium chlorate, gibberellic acid etc. (which are insecticides) are classified not under heading No. 3808.10 but under various other headings in Chapter 28 or 38 of the excise tariff. However, it has to be borne in mind that in those cases there was a specific heading covering those products and, therefore, the classification of the product was made under those heads, as per the rules of interpretation of the tariff. In the case of Triacontanol or preparations thereof there is no such specific heading covering the product and, therefore, taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 (supra), mere omission to inform the department of the registration of the product under the Insecticides Act, 1968 can not be held as suppression or willful mis-statement of facts with an intent to evade duty. The department has not adduced any evidence to prove the charge of suppression on the part of the appellant. Therefore, no suppression of facts can be alleged in the instant case and hence the demand of duty invoking the extended period of time has to be necessarily set aside. 9. As regards the imposition of penalty equal to the duty demanded, once there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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