Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Paushak Ltd. on 12 September, 1990
Equivalent citations: 1991ECR803(TRI.-DELHI), 1991(52)ELT420(TRI-DEL)
ORDER G. Sankaran, President 1. This appeal is against the Order-in-Appeal No. M-822-824/BD-618-620/85 dated 23-9-1985 passed by the Collector of Central Excise (Appeals), Bombay. 2. At the commencement of the hearing, Shri Poonekar, learned counsel, for the respondents, raised a preliminary issue, that is, the Collector (Appeals) had disposed of 3 appeals by a common order and therefore, the Revenue should have filed 3 appeals. The point raised by the counsel being well-founded and in confirmity with the practice of this Tribunal, Shri Chakravorty, learned DR, was asked by the Bench to name the particular matter out of the 3 matters which should be deemed to be the subject matter of the instant appeal. After perusing the record, Shri Chakravorty stated that the instant appeal might be deemed to have arisen out of that part of the Order-in-Appeal which was against the Order-in-Original F. No.V-68(4)12/MP/84 dated 15-11-1984 passed by the Assistant Collector of Central Excise, Baroda (pages 23 to 27) of the respondents' paper book). Therefore, the present order covers only the above matter. Shri Chakravorty requested that leave may be granted for filing supplementary appeals, together with applications for condonation of delay, in respect of the other two matters covered by the impugned order. The appellant-Collector is at liberty to do so and if and when supplementary appeals are filed with COD applications, they will be taken up for hearing. 3. The issue arising for determination in the present appeal is whether the product called 'Vardhak' containing the chemical Alpha Naphthyl Acetic Acid manufactured by the respondents was eligible for excise duty exemption under Notification No. 234/82 dated 1-11-1982, as amended, or under the relevant notifications for the time being in force during the period March 1979 - August 1984. The relevant entry which had not undergone any verbal changes read during the period as:- "Insecticides, Pesticides, Weedicides and Fungicides." The contention of the respondents that the product is covered by the expression 'pesticides' was not accepted by the Assistant Collector but upheld by the Collector (Appeals). Hence the present appeal. 4. The construction of the aforesaid entry came up for detailed consideration in the case of Agrotnore Ltd., Bangalore v. Collector of Central Excise, Bangalore, reported in 1987 (28) ELT 409. It was held by the Tribunal that the 4 products in question in that appeal which were plant growth regulators were not covered by the notification. 5. There is no dispute that the product in the instant case is a plant growth regulator. In fact, that is how it is described in the manufacturer's literature. The product is said to be useful for higher yields by reducing immature dropping of buds, flowers, fruits and cotton bolls. It is described as a plant hormone spray. It is, however, the respondents' contention that, despite the said position, the product, being a plant growth regulator, is a pesticide. For this contention, they have relied upon a number of pieces of evidence. The appellant's contention is that the product is sold and known as a plant growth regulator. It is not known and marketed as an insecticide or pesticide and that even if it has some insecticidal or pesticidal properties, it is still a plant growth regulator and following the Tribunal's decision in the Agromore case, it would fall outside the scope of the notification. In the Agromore case also, one of the products contained alpha naphthyl acetic acid, the same ingredient as contained in the present product. It is also contended for the appellant that, even if the product is recognised as an insecticide under the Insecticides Act, 1968, it would not be an insecticide or pesticide for the purpose of the excise notification where the meaning ascribed to the terms used therein should be that as is ordinarily understood and not with reference to definitions given in other enactments. 6. The following circumstances would tend to show that there is force in the respondents' contention:- (a) While it is true that definitions in other enactments should not normally be used to ascertain the meaning of words and expressions used, but not defined in the Central Excises and Salt Act, it is not an inflexible and inevitable rule. In the present instance, the terms used in the notification have not been defined. Insecticides are subject to rigorous control exercised by the Central Government through the Central Insecticides Board and State Governments in terms of the provisions contained in the Insecticides Act, 1968. No one may manufacture any insecticide without obtaining, and save in terms of, a licence issued by the licencing officer. Any person deciding to manufacture any insecticide is also required to register such insecticide with the Registration Committee constituted for the purpose. There is a schedule attached to the Act which lists substances recognised as insecticides for the purpose of the Act. At serial number 128 of the Schedule, is specified naphthyl acetic acid and its derivations. There is no doubt that the instant product is registered and recognised under Section 9(3) of the Insecticides Act. As seen from the Asstt. Collector's order, the Ministry of Agriculture and Irrigation have issued a certificate dated 12-2-1976 of registration of the product 'vardhak' under the Insecticides Act. When the manufacture of certain goods is governed by, and subject to, the stipulations under a specific enactment relating to those goods, it cannot, in our opinion, be said that the definition of a term used in that enactment cannot be looked at all for the purpose of ascertaining the meaning of the same term found in the Central Excises and Salt Act in the absence of any definition of that term in the latter Act. We are fortified in this view by the Delhi High Court's judgment in the case of Delhi Cloth and General Mills Co. Ltd. & Another v. Joint Secretary to the Govt. of India & Another [1978 (2) ELT (J 121)]. In that case, the question was whether calcium carbide in naked form manufactured by the company and used in the generation of acetylene gas within the same factory was "goods" and chargeable to excise duty as Calcium Carbide under Item 14AA of the Central Excise Tariff Schedule. The Court observed that the goods in question had not attained the material form and composition which make it saleable as calcium carbide. Secondly, Calcium Carbide which did not attain the form and composition required by the Carbide of Calcium Rules for marketability was not marketable at all in view of the prohibition imposed by the Carbide of Calcium Rules. In the result, the Court held that the subject calcium carbide was not economic goods and was not, therefore, capable of being sold. No doubt, the question of adopting or using the definition of an expression in another enactment for ascertaining the meaning of the same expression in the Central Excise Tariff Schedule was not in issue in that case. The point, however, is that since the manufacture and sale of calcium carbide were subject to the requirements of the Carbide of Calcium Rules, the High Court relied on the requirements laid down in the said rules to determine the question whether the calcium carbide manufactured by the company was calcium carbide in marketable form. In the instant case, manufacture, sale, stock or exhibition for sale and distribution of insecticides are subject to the requirements laid down in the Insecticides Act, 1968. It would, therefore, be only proper and relevant to find out whether the subject product is recognised as an insecticide for the purpose of the Insecticides Act, 1968, in order to determine whether it is an insecticide for the purpose of the Central Excise Notification. Having said this, we are conscious of the fact that the Tribunal in the case of Bombay Chemicals v. Collector of Central Excise, Bombay-III [Appeal No. E/1972/87-C - Order No. 428/88-C dated 2-5-1988] has taken the view that the Insecticides Act, 1968, or the Schedule thereto would not govern the meaning of the terms 'insecticides', 'pesticides', etc., used in the Central Excise notification. We are, therefore, coming to our conclusion in the present case not on the basis of the discussion in this sub-paragraph. (b) The Import and Export Policy of the Government of India April 1985 - March 1988 Volume I ("Imports and Exports Promotion") has an Appendix 3 which is a list of raw materials, components, consumables, tools and spares - a list of limited permissible items. In Part-A of the said Appendix which is entitled "Raw materials, Components, Consumables, Tools and Spares (Other than Iron and Steel and Ferro Alloys)", serial number 219 lists certain insecticides, pesticides and weedicides. Alpha Naphthyl Acetic Acid is one of them. The groupings and nomenclature used in the Import and Export Trade Control Policy which governs the external trade of the country may, we feel, be taken to be a fair index of how goods are known in Trade and Commerce. (c) In a publication of the Central Board for the Prevention and Control of Water Pollution, New Delhi (Comprehensive Industry Document Series COINDs/15/1985-86) titled "Minimal National Standards-Pesticide Manufacturing and Formulation Industry" (extract at page 79-82 of the respondents' Paper Book), it has been stated: "A pest may be insect, fungus, weed, rodent, bacteria, virus, nematode, acarid/mite, parasite and even animal or bird." Appendix II is a statement showing the name of the registered technical grade pesticides. At serial number 63 is Alpha Naphthyl Acetic Acid. (d) In the Book "The New Pesticide User's Guide" by Bert. L. Bohmont, under the head "Pesticides as classified by their target species" are shown fungicide, herbicide, insecticide etc. and growth regulator. (p. 50-55 of the respondents' Paper Book) (e) In the Book "Pesticides and Human Welfare" edited by D. L. Gunn & J. G. R. Stevens (extracts at page 56-60 of the respondents' paper book), it is stated: "The idea that all materials used to control pests do so by killing them is too facile to encompass the full array of sophisticated products that have been developed over the years with the aim of improving the productivity of agriculture and of protecting man, animals, and the environment from pest attack." It is further stated that the definition of 'pesticide' is not easy. Further: "In modern usage it is no longer confined to the killing of pests, as is implied by the derivation of the term. 'Pesticides' may include bacteria and viruses for the control of insect pests, chemicals which inhibit the normal growth and reproduction of pests, or which so affect their normal behaviour patterns (e.g., mating, feeding or swarming) that they no longer pose a threat as pests." It is also stated: "Even this definition is not sufficiently broad to include an emerging group of chemicals derived from research in pesticides and usually classed with them. These are the plant growth regulators (PGRs), which are a logical extension of work on weed control aimed at disrupting the normal growth of plants. They are chemicals which are not normal plant nutrients in the sense of fertilizers and trace elements but which affect the growth of plants in a beneficial way, for example, by improving the yield, quality, or climatic tolerance of crops or assisting their harvesting." At page 272 of the book is appended a table showing classification of pest-control agents which comes in the appendix titled "Pesticides: a guide to terminology". Plant Growth Regulators are shown as a main group under which are listed Growth Promotants, Growth Inhibitors etc. Naphthaleneacetic acid is shown as a fruit setting, ripening, flowering agent. (f) Volume 12 of Kirk-Othmer's "Encyclopaedia of Chemical Technology" (extracts at page 61-65 of the respondents' paper book) shows at page 301, 1naphthaleneacetic acid in the list of common and chemical names of Herbicides. Herbicide itself comes under the broad description of pesticide (see the "New Pesticide User's Guide", referred to earlier - page 52 of the respondents' paper book). 7. It may thus be seen that not only technically and scientifically but also in the parlance employed in trade and commerce, plant growth regulators are considered as falling in the group 'insecticides, pesticides' however much such a position may appear prima facie repugnant to commonsense. 8. In our considered opinion, therefore, there is a good case for holding that plant growth regulators are covered by the term "insecticides or pesticides" in the Central Excise notification. However, the issue having been considered at great length by the Tribunal in the Agromore case (supra) we would respectfully follow the said decision. Applying the ratio of that decision, it must be held that plant growth regulators fall outside the scope of the Central Excise notification. 9. There are two show cause notices in this matter. One is dated 5-4-1984 and covers the period from March 1979 to February 1984. The other is dated 11-9-1984 and covers the period from March 1984 to August 1984. The learned Departmental Representative reiterates the reasoning adopted in the Asstt. Collector's order in support of his contention that the demands are not hit by limitation for the period beyond the normal limitation of six months. The order itself does not set out the basis on which the Asstt. Collector has held that the extended period of limitation applies to the facts of the case. The show cause notices state that the respondents cleared the product as an insecticide by availing exemption under Notification No. 234/82, as amended, and under the relevant notifications for the time being in force. They further say that it had been noticed from the published literature of the said product and on chemical analysis that the product was a plant growth regulating agent and not an insecticide. Thereafter, it proceeds to charge the respondents with misdeclaration of the product as an insecticide with a view to avail themselves of the exemption under the notifications. The learned counsel for the respondents, however, submits that there is no misdeclaration. It is a question of interpretation of the notification. The show cause notices do not say how there was a misdeclaration. Nor does the Order-in-Original spell out how the ingredients of Section 11A of the Central Excises and Salt Act are satisfied so as to entitle the Revenue to invoke the extended period of limitation. 10. We have carefully considered the submissions in respect of the aspect of limitation. On the facts and in the circumstances of the case as narrated earlier, we do not think that there is any misdeclaration or wilful suppression with intent to evade duty. The Revenue has not produced all the classification lists but the respondents have produced one of the classification lists which, as per the Superintendent's letter dated 24-3-1976 (page 3C of the respondents' paper book) was approved by the proper officer. The product has been described therein as Vardhak in 100 ml and 500 ml packings. Under column 5, the rate of duty has been shown as 1% and under column 6 for showing the number and date of the relevant notification, no notification has been cited. It is not clear how, in the circumstances, the goods were cleared free of duty. In so far as the disputed period is concerned, the allegation in the show cause notice is that the product was cleared as an insecticide. If that be so, we do not see how there has been any misdeclaration keeping in view the discussion on the merits of the issue in the earlier paragraphs and the disputatious nature of the issue. We hold that the Revenue in this case was not entitled to invoke the extended period of limitation and is entitled to recover duty only in respect of the period of six months preceding the dates of receipt by the respondents of the respective demand show cause notices. 11. The appeal is partly allowed in the above terms and, for the rest, the impugned order is upheld. Since the Collector (Appeals) had given complete relief to the respondents, there was no cause for filing a cross objection. During the hearing, when this was pointed out to the Counsel, he appreciated the position and requested that the so called cross objection might be treated as written submissions. S.L. Peeran, Member (J)
11A. I have gone through the order of the President. 1 am unable to persuade myself to accept the final conclusion in so far as applying the ratio of Agromore's case (supra) to the facts of this case is concerned.
12. In the main order, the learned President after discussing at length the evidence on record, has concluded at para 8 of his order that "In our considered opinion, therefore, there is a good case for holding that plant growth regulators are covered by the term 'insecticides or pesticides' in the Central Excise notification. However, the issue having been considered at great length by the Tribunal in the Agromore case (supra), we would respectfully follow the said decision. Applying the ratio of that decision, it must be held that plant growth regulators fall outside the scope of the Central Excise notification".
13. I fully agree with the findings of the learned President, that the 'plant growth regulators' are covered by the term 'insecticide or pesticide' in the Central Excise notification but I am unable to apply and follow the ratio of the Agromore's case. The question that came up for consideration in Agromore's case was four products, namely 1) Ethrel Plant Growth Regulator 2) Ethrel Latex Stimulant 3) Fruitone and 4) Transplantons. The active element in the base formula for all the four products was 1) 2-Chloro-ethyl phosphonic acid (also known as ethrel) 2) Alpha Naphthyl Acetic Acid and 3) Alpha Naphthyl Acemmide. Detailed arguments were advanced in that case and several citations were brought by the respondents in support of the case including the technical literature. However, the Tribunal has followed two citations 1) pertaining to the Collector of Central Excise, Bombay v. Bombay Chemicals Pvt. Ltd. Bombay and Standard Chemical & Pharmaceutical Company, Bombay reported in [1986 (24) ELT 373] and another was pertaining to MSCO Pvt. Ltd. v. Union of India & Others reported in 1985 (19) ELT 15 (SC). Both the citations are not at all relevant for deciding the tariff entry in question. In the Agromore's case, extracts from both the judgments have been noted but on going through the extracts, one could get a feeling that the Bombay Chemicals Pvt. Ltd. case (supra) was clarifying with regard to certain terms and meanings of the notification while the MSCO Pvt. Ltd. case (supra) dealt with the expression of 'industry' and its varied meaning and that too under the Industrial Disputes Act. I find that the Tribunal has not gone through all the products in question with regard to tariff entry nor has considered the various arguments put forth by the respondents to come to the conclusion on merits. As such, Agromore's case will not be a bindings precedent for this case. In this connection, I draw my strength from the observations made in AIR 1987 SC 1140 para 7 wherein it is observed that "if a decision of this Court is gjvcn per incuriam, that is, without taking note of the appropriate legal provisions can that decision be treated as a binding precedent? Is it not a circumstance in jurisprudence which entitles a Court to disregard an earlier judicial precedent?"
14. In the Seven Member Bench of the Hon'ble Supreme Court, in the case of A.R. Antulay v. R.S. Nayak and Another - AIR 1988 SC 1531, the Supreme Court has clearly laid down the circumstances under which the judgments will be per incuriam and will have no binding effect if the merits of the case has not been gone into. The Supreme Court has further clarified in these rulings (supra) that if an order does not give a finding on merits and applies wrong citations to come to a conclusion, then the subsequent Bench can ignore that citation and come to its own independent conclusion. I am of the opinion that the President's finding on merit has to be upheld without relying on Agromore's case. The Agromore's case should not be an obstacle for the respondents to get substantial relief. Therefore, I dismiss the appeal without applyipg the ratio of Agromore's case which has no binding effect on the findings on merits arrived at by learned President in this case in the main order.
15. The following point of difference having arisen between us, the matter is now required to be resolved in terms of Section 129C(5) of the Customs Act, as applied to proceedings under the Central Excises and Salt Act:
"Whether the product 'Vardhak', a plant growth regulator, falls outside the scope of Central Excise Notification No. 234/82 dated 1-11-82 following the Tribunal's order in Agromore Ltd., Bangalore v. Collector of Central Excise, Bangalore, 1987 (28) ELT 409 and if so, whether the appeal should be allowed, however, by holding that the Revenue is entitled to recover duty only in respect of the period of 6 months preceding the dates of receipt by the respondents of the respective show cause notices;
OR the appeal should be dismissed on the basis that the Tribunal's decision in the Agromore case is not applicable to the present case."
16. The Registry should now take further action in this case in accordance with Section 129C(5) of the Customs Act as applied to proceedings under the Central Excises and Salt Act.
I.J. Rao, Member (T)
17. In pursuance of the President's order dated 12th June 90 under Section 129C(5) of the Customs Act as applied to the procedure under the Central Excises and Salt Act, I heard both sides on the point of difference which was as follows:
"Whether the product 'Vardhak', a plant growth regulator, falls outside the scope of Central Excise Notification No. 234/82 dated 1-11-1982 following the Tribunal's order in Agromore Ltd., Bangalore v. Collector of Central Excise, Bangalore - 1987 (28) ELT 409 and if so, whether the appeal should be allowed, however, by holding that the Revenue is entitled to recover duty only in respect of the period of 6 months preceding the dates of receipt by the respondents of the respective show cause notices;
OR the appeal should be dismissed on the basis that the Tribunal's decision in the Agromore case is not applicable to the present case".
18. Shri Chakraborty, the learned DR submitted that in the present appeal Revenue relied on the judgment of the Tribunal in Agromore Ltd. v. Collector of Central Excise, Bangalore (supra) (hereinafter referred to as Agromore). The learned DR's main thrust was the argument that distinction from other enactments is not applicable to a Notification under the Central Excise Law and such notifications should be interpreted strictly and in the light of their own language. In this context the learned representative cited 4 judgments delivered by the Privy Council (1982 AIR 9 PC, 181), the Supreme Court, Union of India and Others v. R.C. Jain and others - 1981 SC 951 and MSCO Pvt. Ltd. v. Union of India, a judgment relied on in Agromore reported in 1985 (19) ELT 15 S.C and 1986 (26) ELT 201 (Mad.) Venkateswara Stainless Steel and Wire Industries v.Union of India. Shri Chakraborty submitted that the President's reference to the/judgment of the Supreme Court in DCM was not correct as this judgment merely said that calcium carbide should not be considered as such till it is packed. Shri Chakraborty argued that when Central Excise Tariff was interpreted, the Tribunal took a contrary decision in Mineral Industries v. Collector of Central Excise reported in 1987 (32) ELT 234. For these reasons the learned representative argued that reliance on another Act to interpret a Notification under the Central Excise Act was wrong and, therefore, the President's conclusion in this regard may not be supported.
19. Shri Chakraborty cited 4 judgments in support of a proposition that the definition of the goods under the Drugs Act should not be applied to construe the Notification under the Central Excise Law. These were:
a) Agromore Ltd. v. CCE, Bangalore - 1987 (28) ELT 409
b) Sunny Industries Pvt. Ltd. v. CCE -1988 (39) 468 (Tribunal)
c) Richardson Hindustan Ltd. v. CCE, Hyderabad - 1988 (35) ELT 424
d) Baidyanath Ayurved Bhavan v. CCE -1985 (22) 844 (Tribunal) Finally the learned representative submitted that an earlier judgment bind the Tribunal and cited a judgment of the Delhi High Court in Paras Laminates v. CEGAT reported in 1990 (45) ELT 521 (Delhi). He pleaded that for these reasons the conclusion reached by the learned President should be agreed with.
20. Shri Poonekar, the learned Advocate submitted that the order proposed by the Member (Judicial) should find favour with me, cited 1987 (27) 746 (Tribunal) and pleaded that if some judgments are not brought to notice, while passing an order subsequent Benches may ignore the order. He also cited the following judgments to support his case; pleading that statutes must be read as a whole:
1. 1980 (6) ELT 598 M.P. - Ramesh Chemical Industries v. Union of India and Others
2. 1985 (21) ELT 252 (Tribunal) - National Organic Chemical Industries Ltd. v. Collector of Central Excise, Bombay
3. 1985 (21) ELT 607 (Tribunal) - B. Rajendra Oil Mills & Refinery v. Collector of Central Excise, Madras.
21. I have considered the arguments of both sides. The first question to be decided is whether as argued by Shir Chakraborty reliance on the Insecticides Act 1968, found in the President's order is according to law or not. In MSCO Pvt. Ltd. (supra) the Supreme Court held that the interpretation of a word in the Industrial Disputes Act, 1947 will not apply to the Notification according to exemption under the Customs Act. In paragraph 4 of the judgment the Supreme Court observed that "it is hazardous to interpret a word in accordance with its definition in another statute or statutory instrument and more so when such statute or statutory instrument is not dealing with any cognate subject." (quoted from Craies on Statute Law, 6th edition, page 164). In UOI v. R.C. Jain, the Supreme Court held that if a particular expression is not defined in an Act, its definition in another Act cannot be imported into the former Act. There are other judgments cited by the learned DR. Therefore, while this proposition, that the definition given in one Act cannot be used to interpret the same term appearing in another Act, is well supported by case law, I observe that the President did not base his finding solely on the definition given in the Insecticides Act.
22. The next question would be whether as opined by the learned Member (Judicial), the judgment in Agromore should be considered as having been per incuriam. These findings would also dispose of the learned Advocate's argument that if some judgments are not brought to notice, subsequent Benches need not follow. He cited the judgment of the Tribunal in Associated Cement Company Ltd. v. Collector [1987 (27) ELT 746 (Tribunal)]. On perusal I note that this judgment was of a Larger Bench which held that when some High Court's judgments were not brought to the attention of the Tribunal's Benches, any conclusion reached by such Benches contrary to the judgments of the High Courts cannot come in the way of following the ratio of the said High Courts' judgments by the Tribunal in subsequent cases. I entirely agree that this is the correct legal position. But in my opinion this is not a case in which any judgment of the High Court was ignored. It was the view of the learned Member (Judicial) that both the citations (Collector of Central Excise v. Bombay Chemicals Pvt. Ltd. and MSCO Pvt. Ltd. v. Union of India and others) were not at all relevant for deciding the tariff entry. The learned Member (Judicial) further recorded that in Agromore case, extracts from both the judgments were noted. Therefore, it is a question of different conclusion which arose in the mind of the learned Member (Judicial) and not a question of ignoring any High Court's judgment. For this reason, I hold that the earlier order cannot be ignored as being per incuriam. I am not aware if any appeal was filed against the judgment in Agromore. But it appears to me that only in appeal can the judgment be set aside and ignoring it now would not be the correct thing to do.
23. The submissions made by the learned Advocate for the respondents are, therefore, not acceptable. Besides, the judgment in Agromore was delivered by a three Member Bench. The decisions of a Co-ordinate Bench should normally be followed in the interests of judicial discipline. In my opinion, the present matter is one in which the earlier order should be followed, as there is no good reason to ignore it.
24. In these circumstances, there is no need for me to examine in detail the other case law cited by both sides. I am in agreement with the President's order that Agromore should be followed a precedent in this matter. That I do not see any infirmity in the order is only stated as an incidental observation.
25. For these reasons I agree with the order proposed by the President.
26. The point of difference having been answered accordingly, the file is now returned to the Bench for further orders.
FINAL ORDER
27. In the light of the majority opinion, we hold that the product 'Vardhak', a plant growth regulator, falls outside the scope of Central Excise Notification No. 234/82 dated 1-11-1982 following the Tribunal's order in Agromore Ltd., Bangalore v. Collector of Central Excise, Bangalore - 1987 (28) ELT 409. However, the Revenue is entitled to recover duty only in respect of the period of six months preceding the dates of receipt by the respondents of the respective show cause notices.
28. The appeal is allowed in the above terms.
29. Since the Collector (Appeals) had given complete relief to the respondents, there was no cause for filing a cross-objection. During the hearing, when this was pointed out to the counsel, he appreciated the position and requested that the so called crossobjection might be treated as written submissions.
30. The appeal and the so called cross-objection are disposed of in the above terms.