industrial Minerals and Vs. Commissioner of Central Excise - Court Judgment

Excerpt:
1. the question for consideration in this appeal is the classification of the copper sulphate that the appellant manufactures and clears. in the order impugned in the appeal, the commissioner (appeals) has confirmed the view of the asst. commissioner that the product is classifiable in heading 2833.00 of the tariff as an inorganic chemical not as claimed by the appellant as an insecticide in heading 3808.10.2. we have heard mr. a.k. saraf, the partner of the appellant and the departmental representative.3. heading 3808.10 covers goods which are genetically pesticides specifying the various categories such as, insecticide, rondenticide, fungicides etc. "put up in forms or packing for retail sale or as preparations or articles (for example, sulphur-treated bands, wicks and candles and fly.....

Judgment:
1. The question for consideration in this appeal is the classification of the copper sulphate that the appellant manufactures and clears. In the order impugned in the appeal, the Commissioner (Appeals) has confirmed the view of the Asst. Commissioner that the product is classifiable in heading 2833.00 of the tariff as an inorganic chemical not as claimed by the appellant as an insecticide in heading 3808.10.

2. We have heard Mr. A.K. Saraf, the partner of the appellant and the departmental representative.

3. Heading 3808.10 covers goods which are genetically pesticides specifying the various categories such as, insecticide, rondenticide, fungicides etc. "put up in forms or packing for retail sale or as preparations or articles (for example, sulphur-treated bands, wicks and candles and fly papers." This heading and heading 2833 are both reproduction of heading in the Harmonised System of Nomenclature.

Explanatory notes to 3808 explains that the products are to be classified in heading 38.08 only "When they are put up in packing (such as metal containers or paperboard cartons) for retail sale as disinfectant, insecticides, etc. or in such forms (e.g. in balls, strings of balls, tablets or plates) that there can be no doubt that they will normally sold by retail." "Products put up in this ways may or may not be mixtures. The unmixed products are mainly chemically defined products which would otherwise fall in Chapter 29, e.g. naphthalene, or 1,4-di chlorobenzene." It is not disputed that copper sulphate has insecticidal properties. Both Hawley's Condensed Chemical Dictionary and Mc Graw Hill's Dictionary of Scientific and Chemical Terms indicate among its use mat of insecticide.

4. The reason that the Commissioner (Appeals) advanced for dismissing the appellant's claim is that the copper sulphate manufactured and sold by the appellant is an inorganic chemical and that it is primarily sold as technical grade, which may have incidental fungicidal or insecticide properties. However, it is precisely on account of its "incidental" use of pesticidal or insecticidal properties that copper sulphate is so used. What is therefore to be seen, by applying the terms of the heading and the explanatory notes, is whether the product is sold put up for packing for retail sale as an insecticide.

5. The appellant has produced before us various pieces of evidence justifying the claim that the product is in fact sold as an insecticide. It is packed in high density polyethylene woven sacks containing 5 kg. and 50 kg. of the material. The printed matter on the bags contains, in addition to the name and address of me manufacturer and the name of the product "copper sulphate technical," information mat it is a fungicide, in English, Hindi and Marathi. It also bears a statement in these languages that a leaflet is enclosed. The leaflet that has been produced before us describes the uses of copper sulphate in its application in the form of Bordeaux mixture sprayed on coffee, rubber tea etc., contains directions for preparation of the mixture and a warning about its toxicity, and directions for administration of antidotes. Copper sulphate figures as an insecticide in the schedule to the Insecticide Act, 1968. The appellant is registered with the Insecticide Board as a manufacturer of insecticide and it is stated that he is permitted to sell the goods only to dealers who are registered under the Board. The labelling and the leaflet have been approved by the Board as seen from the correspondence products by the appellant.

6. There can be no doubt that 5 kg. is in retail sale. The explanation tendered for the 50 kg. packing, that it is sold to such buyers as coffee estates who use large quantities of this product, is not unreasonable. The appellant has in fact produced copy of a letter from a buyer, Emerald Valley Estates Ltd., Chamarajnagar, Mysore showing purchase of 10 tons of copper sulphate in a single consignment.

7. The departmental representative emphasises that copper sulphate is specifically mentioned in chapter 29 and cites board circular of the Ministry of the Finance 348/64/97 dated 28.10.1997. This circular provides that after the 1996 budget pesticides in bulk form will not fall in heading 38.08 and will fall either in the chapter applicable to chemicals or in heading 38.23 depending upon whether they are separately chemically defined elements or compounds or not This circular has been stuck down by the Delhi High Court as being contrary to law in the judgment in Pesticides Manufacture and Formulators Association of India v. UOI 2000 (115) ELT 234 and such striking down as confirmed on appeal by the Supreme Court in its judgment reported in 2002 (146) ELT 19.

8. We are therefore satisfied that the copper sulphate manufactured and cleared by the appellant specifies the requirement in the tariff of being sold in the retail and intended to be used as an insecticide, it would therefore qualify for classification as a pesticide in heading 38.08.