Custom, Excise & Service Tax Tribunal
M/S Ellora Services vs Commissioner Of Central Excise, ... on 12 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. I Appeal No. E/2393/04 (Arising out of Order-in-Appeal No. PD/70/Th-II/2004 dated 28.4.2004 passed by the Commissioner of Central Excise (Appeals), Mumbai-IV). For approval and signature: Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair copy : Seen of the order? 4. Whether order is to be circulated to the Departmental : Yes authorities? ====================================================== M/s Ellora Services Appellant Vs. Commissioner of Central Excise, Mumbai-IV Respondent Appearance: Shri Neerav Mainkar, Advocate for Appellant Shri Navneet, Addl. Commissioner (AR) for Respondent CORAM: SHRI P.R. CHANDRASEKHARAN, MEMBER (TECHNICAL) SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Date of Hearing: 12.09.2013 Date of Decision: .2013 ORDER NO. Per: P.R. Chandrasekharan
The appeal is directed against Order-in-Appeal No. PD/70/Th-II/2004/992 dated 28-4-2004 passed the Commissioner of Central Excise (Appeals), Mumbai-IV commissionerate.
2. The appellant, M/s Ellora Services, Thane, is a manufacturer of a product branded as WUDCURE which is used as a preventive against termite infestation and powder falling. The appellant classified the product under CETH 3808.10 applicable to insecticides, fungicides, herbicides, weedicides and pesticides and discharged duty liability thereon accordingly under the provisions of section 4 of the Central Excise Act, 1944. However, the department was of the view that the product merits classification under CETH 3808.90 as disinfectants and similar products and is liable to excise duty under the provisions of section 4A of the Central Excise Act as the said heading is notified under the said section. The period of dispute is 2001-02. Accordingly a show cause notice dated 20-5-2002 was issued to the appellant proposing to classify the product manufactured by the appellant under CETH 3808.90 and to charge duty on the same under the provisions of section 4A of the Act. A sample of the product was drawn and sent to the Dy. Chief Chemist, Central Excise Laboratory, Mumbai, so as to ascertain the correct nature of the product and whether it is an insecticide or a disinfectant. The Chemical Examiner after testing the product vide report dated 27-7-2002 opined that the sample is in the form of pale yellow coloured liquid. It is composed of cashew nut shell liquid and mineral solvent and may be considered as an insecticidal preparation. Based on the said test report, the jurisdictional Asst. Collector classified the product under CETH 3808.10 and ordered for payment of duty accordingly.
2.1 Revenue was aggrieved of the said decision and filed an appeal before the lower appellate authority on the following grounds:-
1) To classify the product as an insecticide, it should fall within the scope of the definition specified in the Insecticides Act, 1968.
2) As per the cost data dated 24-7-2001 submitted by the appellant, the product contained other ingredients such as Phenol, Terpentine, Hiflo Super Celite, Mineral Turpentine/SKO (Solvent), CSNL, etc.
3) The ingredients mentioned above do not find mention in the Schedule showing list of insecticides in the Insecticides Act, 1968 and therefore, the product does not merit classification under CETH 3808.10.
4) As per the label affixed on the product, the product is not used to kill termites but works as a disinfectant and in a larger sense, insecticide means to kill insects.
5) As per HSN Explanatory Notes, CETH 3808.90 also includes products used to control termites.
2.2 The lower appellate authority, after considering the submissions made by the Revenue, agreed with the same and held that the product is classifiable under CETH 3808.90. Aggrieved of the same, the appellant is before us.
3. The ld. Counsel for the appellant made the following submissions:-
a) Classification under Insecticides Act, 1968 is not relevant for the purposes of classification under the Central Excise Tariff as the purpose and object of both the Acts are different. Insecticides Act has been enacted for regulating the production and sale of such insecticides as are covered under that Act. The said Act does not seek to cover all insecticides, fungicides and weedicides. In support of this contention, he relies on the decision of this Tribunal in the case of Industrial Organic Corporation Ltd. [2000 (124) ELT 559 (Tri.)].
b) As per the test report of the Dept.s own Dy. Chief Chemist, the product is an insecticidal preparation. The appellate authority cannot ignore or reject the test report without giving any cogent reasons and relies on the decision of the honble Apex Court in Polyglass Acrylic Mfg. Co. Ltd. [2003 (153) ELT 276 (SC)].
c) As per HSN Explanatory Notes pertaining to Heading 38.08, insecticides include not only products for killing insects but also those having a repellant or attractant effect. Since the product is used for preventing termite attacks on wood, it merits classification under 3808.10 as an insecticide. He also relies on the decision of this Tribunal in the case Rayer Indian Syntans Ltd. 2011 (271) ELT 272 (Tri.-Chennai)] in support of this contention.
In view of the above, he pleads for allowing the appeal by setting aside the impugned order.
4. The ld. Addl. Commissioner (AR) appearing for the Revenue re-iterated the grounds urged in the appeal memorandum filed before the lower appellate authority and submitted that the impugned order is sustainable in law.
5. We have carefully considered the rival submissions.
5.1 From the records, it is seen that the printed label on the product reads as follows:-
WUDCURE With CSNL A TOTAL PROTECTION TO WOOD Power Antifungal Herbal Base Preventive Against Termite Infestation & Powder falling The product literature describes the product as follows:
Wudcure Wood Preservative is a CNSL based colourless wood preservative is made from 4G formulation. The first 4G technology product in the world. Used for all types of wood and wood panel products. Features & Benefits:
* Protects and prevents wood from termite attack.
* Immediately stops powder falling from any wood and thereby increase the life of wood. * Ready to use.
* Brush, spray and injection methods can be used.
* Eco-friendly with no hazardous chemicals.
* Can be mixed with oil based paints and primers.
* Colourless leaves no stains.
Packing:
* 150ml, 250ml, 500ml, 1 liter, 3 liters, 5 liters 5.2 The Dy. Chief Chemists test report states that the sample is in the form of pale yellow coloured liquid. It is composed of cashew nut shell liquid and mineral solvent. In my opinion, it may be considered as insecticidal preparation. As per Wikipedia, cashew nutshell liquid (CNSL) or cashew shell oil is a natural resin found in the honeycomb structure of the cashew nutshell and is a byproduct of processing cashew nuts. It is a raw material of multiple uses in developing drugs, antioxidants, fungicides, etc. It is used in tropical folk medicine and for anti-termite treatment of timber.
5.3 The description of tariff entry 38.08 as it stood at the relevant time reads as follows:-
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 pesticides 3808.20 - Plant growth regulators 3808.90 - Other 5.4 As per HSN Explanatory Notes,-
(I) Insecticides: Insecticides include not only products for killing insects but also those having a repellant or attractant effect. .. Many insecticides are characterized by their mode of action or method of use. Among these are:
- insect growth regulators
- fumigants
- chemosterilants
- repellants : substances which prevent insect attack by making their food or living conditions Unattractive or offensive
- attractants (II) Fungicides: Fungicides are products which protect against the growth of fungi or which are designed to eradicate the fungi already present.
(IV) Disinfectants: Disinfectants are agents which destroy or irreversibly inactivate undesirable bacteria, viruses or other micro-organisms, generally on inanimate objects. Disinfectants are used, for example, in hospitals for cleaning walls, etc., or sterilizing instruments. They are also used in agriculture for disinfecting seeds.
5.5 As per technical literature, termites, also known as white ants, are a group of eusocial insects .
5.6 Therefore, if one examines carefully the product literature, the use of the product, the chemical examiners report, the technical literature on the subject and the HSN Explanatory Notes in respect CETH 38.08, what emerges is that the product wudcure manufactured by the appellant is more appropriately classifiable under heading 3808.10 as an insecticide and not under the residual category of 3808.90 which covers products such as disinfectants and the like. Revenue has also not adduced any evidence to prove the contrary.
5.7 As held by this Tribunal in the case of Industrial Organic Corporation Ltd.(supra), classification under Insecticides Act, 1968 is not determinative of a products classification under the Central Excise Tariff Act. Thus even if a product does not conform to the definition of insecticide in the Insecticides Act, 1968, it can still be classified as an insecticide for the purposes of Central Excise Tariff if the product is marketed as an insecticide and is used as such. In the present case, the test of marketability and use as an insecticide is satisfied. Further, it is not necessary that to merit classification as an insecticide, the product should kill the insect. Even if the product repels the insects, it would suffice as can be seen from the HSN Explanatory Notes and as held by this Tribunal in the case of Bayer Indian Syntans Ltd. case (supra).
6. In the light of the above discussion, we uphold the classification of the product manufactured by the appellant under CETH 3808.10 as it stood at the relevant time. Thus the appeal succeeds and is allowed accordingly.
(Order pronounced in the Court on / /2013)
(Anil Choudhary) (P.R. Chandrasekharan)
Member (Judicial) Member (Technical)
Sinha
7