Customs, Excise and Gold Tribunal - Delhi
Kilpest (India) Ltd. vs Commissioner Of C. Ex. on 29 April, 1999
Equivalent citations: 2000ECR201(TRI.-DELHI), 1999(110)ELT866(TRI-DEL)
ORDER
1. The common issue involved in these three appeals filed by M/s. Kilpest India Ltd. against the common order dated 24-7-1998 is whether the process of diluting the technical grade pesticides and mixing the same with inert material amounts to manufacture.
2. Shri M.P. Debnath, ld. Advocate, submitted that the Appellants are engaged in the process of formulating and diluting the duty paid bought out concentrated technical grade pesticides by adding inert materials, stabilisers, solvents, emulsifier, etc. and dilute the concentrated pesticides. He further submitted that the characteristics of the technical grade pesticides and the use thereof remain the same even after the addition of stabilisers, solvents etc. that as no new product with distinct name, character or use emerges, the process carried out by them does not amount to manufacture. He relied upon the decision of the Appellate Tribunal in the case of C.C.E. v. Markfed Agro Chemicals Ltd. -1993 (68) E.L.T. 848 wherein it was held that the process of dilution of concentrated pesticides by adding stabilisers, inert materials, etc. does not amount to manufacture and no duty is payable on the formulated pesticides. He also mentioned that Central Board of Excise and Custom's order No. 40/2/95-CX dated 27-7-1995 issued under Section 37B of the Central Excise Act to the effect that the addition of chemicals and other ingredients like inert carriers or solvent and surfact active dispersing and stabilising agents to pes-ticideal chemicals in highly concentrated form results in emergence of a new and distinct product having different properties, has been quashed by the Delhi High Court in the case of Kissan Chemicals v. Union of India and Ors.- 1996 (14) RLT 629 (Del). The Delhi High Court held that the decision of the Tribunal in Markfed Agro Chemicals, supra, was rendered on cogent grounds. The decision of the Tribunal having become final, the only option lets with the Department was to take the matter in appeal and impgune that decision. The issuance of circular by the Board in the present facts cannot be held to be an appropriate remedy. Similar view were expressed by the Gujarat High Court in the case of Indi Chem v. U.O.I. -1996 (88) E.L.T. 35 (Guj.). The Gujarat High Court has held that "This Section 37B empowers the Board to issue circulars, for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods. Certainly this section does not authorise the board to issue directions which is contrary to the decision rendered by the Tribunal.... It may be that the Board may not be in agreement with the view taken by the Tribunal. Then in that case, the board may carry the matter in appeal, but once the decision has become final by issuing circulars, the decision rendered by the Tribunal cannot be made to be nugatory." The Gujarat High Court, therefore, quashed the order No. 40/2/95-CX. The ld. Counsel also submitted that in their own case in LPA No. 211/95, the Madhya Pradesh High Court, vide order dated 6-1-1994, ordered that the Authorities shall not take into consideration the order under Section 37-B of the Act while exercising their quasi judicial functions and this will not be treated to be binding on the authorities. The ld. Advocate contended that though the commissioner observed that he had not relied upon the said order, he had, in extenso quoted the Chemical Examiner's report referred to in the order issued by the Board and thereafter observed that as per the Technical opinion sought from the Chief Chemist, the process amounted to manufacture; that the Commissioner failed to decide the issue objectively as directed by the Madhya Pradesh High Court.
3. Countering the arguments, Shri H.K. Jain ld. SDR, submitted that the process involved in Markefed Agro case was different from the process carried out by the Appellants; that in Markfed Agro case the process carried out was only dilution of concentrated technical grade pesticides whereas the Appellants, besides diluting the pesticides, were adding inert material, stabilisers, surfact active dispersing agents which results in emergence of a new product which is chargeable to Central Excise duty.
4. We have considered the submissions of both the sides. The ld. SDR, has tried to distinguish the facts of the present matter from the facts in Markfed Agro Chemical's case but in vain. The process involved in Markfed Agro Chemical case the Appellants' present matters are not different which is apparent from the following paragraph extracted from the decision :-
"It is seen that the processing of concentrated basic pesticidal chemicals in question carried out by the respondents through addition of inert carriers/solvents and dispersing and stabilising agents resulted only in their dilution rendering them suitable for use either directly or after addition of water and formulation retained the name of the basic chemicals. Evidently no new product having distinctive name, character and use appeared as a result of such processing. Under these circumstances on the ratio of the decisions quoted above, we hold that the processes carried out by the Respondents did not constitute "manufacture" within the meaning of Section 2(f) of the Central Excise and Salt Act, 1944."
5. Accordingly the ratio of the decision in the case of Markfed Agro Chemical is squarely applicable in the present matter. Following the said ratio we set aside the impugned order and allow the appeal.