1. This is an appeal against the order of the Additional Collector of Central Excise, Faridabad dated 21-2-1990. The questions involved relate to classification of the goods manufactured by the appellants having the trade name 'Dhanumon'. The appellants contend that the goods are classifiable under Item No. 3810.90 whereas the department contends that they are classifiable under Item No. 3810.10.
2. By show cause notice dated 7-12-1988, the Additional Collector alleged that appellants had been manufacturing and clearing 'Dhanumon', a plant Herbicides falling under Sub-heading 3808.90 of the Central Excise Tariff Act, 1985 without Central Excise licence, without payment of duty, without maintaining central excise records and without observing other formalities. The appellants' factory was earlier visitied by Central Excise staff on 22-2-1988 when they found that the appellants' unit was engaged in the manufacture of Insecticides, Herbicides, Fungicides and plant harmones, all falling under Heading No. 38.00. The show cause notice called upon the appellants to show cause as to why penalty should not be imposed for non-disclosure of the fact that of manufacturing and clearance of excisable goods with wilful/intention to evade payment of duty and for demanding duty of Rs. 28,848.65 for goods cleared during 1986-87 and 1987-88. In the adjudication which followed the Additional Collector by his order dated 21-2-1990 held that the appellants had misdedared their product 'Dhanumon' as Insecticides and extended period of 5 years, (4 show cause notices) were applicable in their case. The present appellants had contended before the Additional Collector that their product was Insecticides and therefore, did not attract any Central Excise duty; that they were registered with the Central Insecticides Board under the Insecticides Act for the manufacture of the Insecticides "ANA 4.5% Solution w/w" which was totally based on Naphthyl Acetic Acid; that the words "Plant Harmone" used in describing their product on their label had misled the authorities to believe that the product was a plant regulator; that their product 'Dhanumon' was a very suitable Pesticides for those plants which were subject to decay on account of different insects/pests and it was for this reason that the product was rated as plant harmone; but this, in no way,amounted to deviation from insecticides and, therefore, it was classifiable under Sub-heading No.3808.10 instead of Sub-heading No. 3808.90. In his finding, the Additional Collector found that the product 'Dhanumon' was a plant harmone, the composition of which was totally different from the composition of the insecticides. Whereas the composition of the insecticides was "ANA 4.5% Solution w/w", the composition of 'Dhanumon' was Alpha Naphthyl Acetic Acid 4.5%" and "Adjuvants 95.5%". The Additional Collector also referred to technical literature on the product supplied by the appellants which reads as under :- Dhanumon, is a plant harmone spray based on Naphthyl Acetic Acid (4.5% w/w). It has been confirmed in various experiments on different crops that use of planitex has helped in inducing flowering and checking buds drop, flower drop and fruit drop, therefore, increasing the yield".
In view of the difference in the composition and as per the details given in the technical literature, the Additional Collector found that it had been proved beyond doubt that the product 'Dhanumon' is a plant harmone and not an insecticide.
3. The case of the appellants in the present appeal is that the Additional Collector in the impugned order had failed to appreciate that 'Dhanumon' at a certain level of concentration would act as plant growth regulator inducing flowering of the plant by checking or dropping of buds etc. and also would act as a Herbicides, Fungicides at higher concentration. In the appeal, the appellants has placed reliance on the extract of a book called "Phal Vigyan" by Dr. Ramnath Singh in which the author had at page 115 stated that the application of 'Dhanumon' was a must for effective eradication of fungus disease affecting mango crop. Appellants had also relied on another book called "Chemistry of Pesticides" by Mr. K.H. Buchel in which the author has stated that NAA would promote the growth at lower doses and that it does not act as herbicies (page 403).
4. Counsel for the appellants, Shri G. Shiv Dass appearing before the Tribunal, contended that the Tribunal had in Agromore Ltd. v. Collector of Central Excise, Bangalore, 1987 (28) E.L.T. 409 had held that plant growth regulators were not insecticides. He, however, conceded that the Supreme Court in Chemicals v. Collector of Central Excise reversed this decision of the Tribunal. Senior Departmental Representative, Shri Sanjeev Sachdeva, on the other hand, contends that plant growth regulator is also classifiable as an insecticide under the Insecticides Act.
5. As regards the question of limitation, learned Counsel for the appellants contended that there was no intention on the part of the appellants to evade payment of excise duty as they were under the bona fide impression that the product was squarely covered under Heading 3810.90 and hence no duty was payable. Counsel also contended that when identical products manufactured by competitors were not charged to excise duty, the question of entertaining any mala fide intention on the part of the appellants not to pay excise duty did not arise.
Therefore, the longer period cannot be invoked and the demand of duty was time barred. Senior Departmental Representative, on the other hand, contended* that the Additional Collector had issued a show cause notice classifying the goods as plant growth regulator on 26-4-1988 and, therefore, the question of time bar did not arise even for the period 1984-85.
6. Heard arguments on both sides and perused the records. The appellants' contention that they have obtained certificate/licence from the Central Insecticides Board set up under the Insecticides Act, 1968 for purposes of manufacturing insecticides is not by itself conclusive of the fact that all the products they are manufacturing are insecticides, fungicides, pesticides. In fact, the authority relied on by the appellants, namely, Mr. K.H. Buchal in his book "Chemistry of Pesticides" at page 403 himself admits that NAA would promote growth at lower doses but also will have the effect of being an herbicide at higher concentrations. It is not in dispute that 'Dhanumon' manufactured by the appellants contains only 4.5% ANA with 95.5% water.
We, therefore, hold that the product 'Dhanumon' manufactured by the appellants cannot be classified as a herbicide or fungicide under Item 3810.90. It can, therefore, be considered only as a plant growth regulator falling under Heading 3808.90. In view thereof, hold that the impugned order has decided the question of classification correctly.
7. As regards the question of limitation, it is on record that the Additional Collector had issued a show cause notice on 26-4-1988 classifying 'Dhanumon' as a plant growth regulator and, therefore, well within the limits of 5 years period under the proviso to Section 11 of Central Excises and Salt Act, 1944. Accordingly, we uphold the order of the Additional Collector dated 21-2-1990 and reject the present appeal.
8. We also take into account the Tribunal's order dated 11-12-1995 in E/Misc./1342/95-C vide Misc. Order No.l94/95-C in which the question of imposing penalty was considered. In that order, the Tribunal had referred to the case of Padmini Products wherein it was held that the imposition of penalty cannot be sustained in view of the findings that the demand of duty was hit by limitation. Since in the instant case, there is no finding that there is suppression of fact or wilful misstatement, we do not interefere with the order of penalty imposed by the lower authorities.