| SooperKanoon Citation | sooperkanoon.com/5578 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Mar-19-1990 |
| Reported in | (1990)(27)ECC174 |
| Appellant | Bombay Chemicals Pvt. Ltd. |
| Respondent | Collector of Central Excise |
2. The issue for determination in the present appeal is whether the product called "Tortoise Mosquito Coils" manufactured by the appellants was eligible for exemption from excise duty in terms of Notification No.55/75-C.E., dated 1-3-1975, as amended from time to time, as an "insecticide".
3. The facts of the case may be briefly stated. On the basis of the chemical examiner's test report that the product was not a pesticide or insecticide, the jurisdictional Superintendent of Central Excise issued a show cause notice dated 11-12-1979 to the appellants demanding duty amounting to Rs. 11,49,236.57 on account of the clearances of the product effected during the period from 1-3-1978 to 26-9-1979. In due course, the Assistant Collector who adjudicated the case held that as the mosquito coils contained pyrethrin, an insecticide, it was eligible for duty exemption and withdrew the notice. The Collector of Central Excise, on consideration of the record, felt that since the product was used for repelling rather than killing mosquitoes and since it contained pyrethrin only to the extent of 0.10%, he directed the Assistant Collector to file an appeal to the Collector of Central Excise (Appeals) for determining the legality, propriety and correctness of the Assistant Collector's order. The Collector (Appeals) allowed the Department's appeal. Thereupon, the manufacturer went in appeal to this Tribunal against the Collector (Appeals)'s order. The Tribunal, vide Order No. 428/88-C dated 2-5-1988, directed the Collector (Appeals) to redetermine the classification of the product in the light of the manufacturers' evidence and evidence, if any, of the Revenue. However, it directed that the demand for duty, if any, as a result of such re-determination should not cover a period exceeding six months preceding the date of the show cause notice. After hearing both sides, the Collector (Appeals) held that in terms of trade parlance as well as in terms of the definition in the Insecticides Act, Tortoise coils could not be considered as an insecticide. Hence, the benefit of Notification No. 55/75 was not admissible. Consequently, he upheld the demand for duty limited to a period of six months as directed by the Tribunal. It is against this order that the present appeal has been filed.
4. It may thus be seen that in the present proceedings, the aspect of limitation is not in issue. The entry in Notification No. 55/75 which falls for interpretation is : 5. We have heard Shri F.H J. Talayarkhan, Advocate and Shri J.D.Masani, Advocate, for the appellants, and Shri S. Chakraborty, DR, for the respondent-Collector, and perused the record.
6. It is common ground that the product Tortoise Mosquito Coil does not kill mosquitoes; it only repels them. The question is whether a mosquito repellent is an "insecticide" within the meaning of the term in the notification.
7. It is also common ground that the product is not an insecticide for the purposes of the Insecticides Act for the reason that Pyrethrin is not present in the required quantity in the product.
8. The learned Counsel for the appellants has drawn our attention to the Tribunal's Order No. 603/87-C dated 18-8-1987 in Appeal No.ED/SB/1715/83-C - Collector of Central Excise, Calcutta v. Essen Synthetics (P) Ltd. - 1987 (32) ELT 759 (Tri.). The question therein was whether the products Dibutyl Phthalate (DBP), a mite repellent and Dimethyl Phthalate (DMP), an insect repellent, were eligible for duty exemption as insecticides under Central Excise Notification No.62/78 dated 1-3-1978. The Tribunal, relying on the Supreme Court's judgment in MSCO Pvt. Ltd. v. Union of India and Ors. reported in 1985 (19) ELT 15 (SC), held that the Insecticides Act, 1968 or the Schedule thereto would not govern the meaning of the expression in Serial No. 18 of the Notification No.55/75 (supra). In fact, in the present instance also, the Tribunal, by its order No.428/88-C dated 2-5-1988, had set aside the Collector's decision placing reliance on the Insecticides Act and the Schedule thereto and the Drugs & Cosmetic Act for interpreting the terms used in Notification No.55/75. Even so, the Collector has strangely and unwarrantedly, to put it very mildly, placed reliance inter alia on the provisions of the Insecticides Act in support of his finding in the impugned order. Since, however, he has also discussed certain other evidence, we do not propose to set aside the impugned order on the above ground alone.
9. In the Essen Synthetics case (supra), the Tribunal discussed the evidence placed before it and found that repellents, though they might not actually kill insects or pests, would still be treated as insecticides or pesticides.
10. We may now consider the evidence adduced by the Revenue in support of its stand.
(a) The Assistant Collector, Central Excise, Thane-II Division, has filed an affidavit before the Collector (Appeals), (page 359 of the appellants' paper book). It states that during market enquiry by his officers, he came to understand that mosquito coil was known in the market as Tortoise Brand Mosquito coil. Illiterates call it "Machar Agarbatti'. It is not considered as insecticide/pesticide by traders or purchasers. It is not known or traded in the market as insecticide/pesticide.
The Assistant Collector was cross-examined by the appellants' counsel when the Assistant Collector deposed that he did not personally make the enquiries referred to in his affidavit. He, however, agreed that mosquito coil was a repellent, (page 362 of the paper book).
We consider that the Assistant Collector was free to cause enquiries to be made * through his officers but, then, the affidavit testifying to the results of the enquiry should have been of the officers who conducted the enquiry. The Assistant Collector, not having conducted the enquiry himself, and the evidence of the officers who made the enquiry not having been led, the Assistant Collector's affidavit loses its significance as a piece of evidence.
(b) Smt. Kanta Shashikant Pradhan, a resident of Thane, in her affidavit, deposed that she was a consumer of Tortoise Brand Mosquito Coils. She was using these coils to drive away mosquitoes i.e., as repellent, and not as an insecticide (page 360 of the Paper Book).
This, as well as the Assistant Collector's affidavit, bring out that the subject product is a repellent. On this, there is no dispute. Smt.
Kanta has said she uses the A product not as an insecticide.
(c) Shri. Sunderji Bhanji Gala, a trader/dealer, in his affidavit has deposed that he sells these mosquito coils as repellent, not as insecticide/pesticide. These are not considered as the latter as they do not having any killing effect on mosquitoes. Nor are they known or traded in the market as insecticide/pesticide (page 361 of the Paper Book).
These pieces of evidence will have to be weighed against the evidence adduced by the appellants.
11. We now discuss the evidence produced by the appellants before the Collector.
(a) Letter dated 18-4-1974 from the Chief Commercial Superintendent, Bombay V.T. says that Tortoise Brand Mosquito Coils are considered as "Insecticides NOC" (Not otherwise classifiable?) We do not propose to take this into account since this classification is apparently for the purpose of the Railway Tariff Schedule which must be considered on its own terms.
(b) Letter dated 14-8-1979 from the Insecticide Officer of the Municipal Corporation of Greater Bombay to the following effect.
"Technically speaking and even for general trade purposes, substance or mixture of substances which interfere with the insect behaviour and which help in preventing their occurrence or in killing and repelling them are broadly classified as "Pesticides". Moreover, in the scientific literature the world over, repellents have found place and have been treated in all publications under the category of "Pesticides".
In view of above and of the intended use of your product, namely, "Tortoise Brand Mosquito Repellent Coils", can be decisively classified under the general category of "Pesticides" for all practical purposes." [page 310 of the Paper Book] (c) Registration-cum-Membership Certificate dated 29-3-1978 issued by the Basic Chemicals Pharmaceuticals and Cosmetics Export Promotion Council, Bombay certifying inter alia that mosquito coils has been registered as a pesticides formulations under the Import Policy for Registered Exporters. [Page 311 of the Paper Book] (d) Certificates from dealers in pharmaceuticals, drugs, chemicals, cosmetics, insecticides, pesticides and fungicides and general merchants to the effect that in the trade and market mosquito coils are considered and regarded by dealers as insecticides/pesticides.
[Page 312-316 of the Paper Book] (The Counsel for the appellants points out that the aforesaid dealers were not cross-examined by the Department).
(e) Letter dated 20-7-1968 from the Ministry of Industrial Development & Company Affairs, Government of India, to the appellants amending their registration certificate for manufacture of pesticidal formulations so as to include mosquito coils. [Page 290 - Paper Book] (f) "Tropical Pest Management Pesticide Index" - 1981 Edition - published by the Publications Office, Centre for Overseas Pest Research, London. This is an index of chemicals, common and trade names of pesticides. In the classification of pesticide uses, apart from fungicide, bactericide, insecticide, herbicide etc. is shown also repellent. [Page 292, Paper Book] (g) "A critical review of the Techniques for Testing Insecticides" by James R. Busvine, issued by the Commonwealth Institute of Entomology, London covers inter alia insect repellents and attractants. Specifically it includes mosquito repellents. [Page 293-294 Paper Book] "Insecticide ..., an agent that destroys insects; broadly: an agent hostile or repellent to insects".
(i) "Commercial and Experimental Organic Insecticides" (1974 Revision) published by the Entomological Society of America, lists many insecticide groups of which one is repellents. [Page 297-298 Paper Book] (j) Explanatory notes relating to heading No. 38.08 of the harmonised Commodity Description & Coding System (HSN) of the Customs Co-operation Council, Brussels (page 527-528 of the HSN) to the effect that "insecticides" include not only products for killing insects, but also those having a repellent or attractant effect. The products may be in a variety of forms such as sprays or blocks (against moths), oils or sticks (against mosquitoes) etc.
"Repellents : substances which prevent insect attack by making their food or living conditions unattractive or offensive".
12. For the sake of completion of the record, we may merely note that the Paper Book contains extracts from the laws of the United States of America. Quite rightly, the Counsel for the appellants did not rely on these extracts for the reason that even the definitions in the Insecticides Act of India have been held to be not relevant for the purpose of the Excise Tariff.
13. The Learned Counsel for the appellants submits that the Collector (Appeals) has not considered these pieces of evidence, though he has noted many of them which, we find from the order, is true. As we have noted, the Collector has relied on the evidence placed before him by the Department, his own personal experience and the provisions of the Insecticides Act but has not discussed the mass of evidence produced by the appellants.
14. The Learned Departmental Representative, on the other hand, submits that the active ingredient, Pyrethrin, is present to the extent of only 0.10%. He also points out that it has come out during the proceedings that only Pyrethrin marc, and not Pyrethrin, is present. (This, however, does not appear to be correct or, at any rate, significant).
The Chemical Examiner's test report on a sample of Tortoise Brand Mosquito Coil, as communicated by the Superintendent to the appellants in his letter dated 9-5-1985 (page 114 of the paper book) shows the presence of Pyrethrin to the extent of 0.1%. The earlier report of the Deputy Chief Chemist, as conveyed by the Superintendent on 17-9-1979 to the appellants (Page 41-42, paper book) shows that mosquito coil is manufactured out of pyrethrum marc which is a residue left after the extraction of pyrethrin, though it may contain pyrethrin in traces only).
15. He next submits that mosquito repellent coil come under the purview of the Drugs & Cosmetics Act and not the Insecticides Act as evidenced by letter dated 7-7-1976 from the Secretary, Central Insecticides Board to the appellants. In our opinion, nothing turns on this because we are not concerned in these proceedings with either of the two Acts. What we have to see is whether insect repellent, which mosquito coil admittedly is, is "insecticide" for the purpose of the excise notification, not whether it is an insecticide subject to the provisions of the Insecticides Act or a product subject to the provisions of the Drugs & Cosmetics Act.
16. The learned Departmental Representative relies on the Tribunal's decision in Collector of Central Excise, Bombay v. Bombay Chemicals Pvt. Ltd. 1986 (24) ELT 373. In that case, the question was whether a disinfectant was an insecticide or pesticide. In its Order No.603/87-C dated 18-8-1987 in Collector of Central Excise v. Essen Synthetics (P) Ltd. (supra), the Tribunal has noted that the aforesaid decision is not helpful in resolving the controversy regarding repellents.Guest Keen Williams Ltd. v. Collector of Customs, Calcutta 1987 (29) ELT 68 to contend that the explanatory notes to the Brussels Nomenclature and the statutory chapter and section notes of the Tariff, are not relevant for interpretation of exemption notification. We have, in the present case, to ascertain the scope of the term "insecticide". We have noted several pieces of evidence, one of them being the H.S.N. explanatory notes.
These notes certainly are not binding but they are of persuasive value, being reflective of international wisdom and expertise in tariff matters which govern international trade and commerce.
18. The Departmental Representative also seeks to make out that the suffix "cide" means to kill. Therefore, an insecticide must kill insects. Etymologically, this view may be correct. But, as the Supreme Court has noted in Porritts & Spencer (Asia) Ltd. v. State of Haryana 1983 (14) E.L.T. 1607 (S.C.), quoting Holmes, J., - "A word is not a crystal, transparent and unchanged; it is the skin of a living thought and may vary greatly in colour and content according to the circumstances and the time in which it is used". In that case, the question was whether "dryer felts" (used in paper making machinery) could be considered as 'textiles'. The Court noted that the word 'textiles', in ordinary parlance, has only one meaning, namely, woven fabrics. The Court then observed: "It is true that our minds are conditioned by old and antiquated notions of what are textiles and, therefore, it may sound a little strange to regard 'dryer felts' as 'textiles'. But it must be remembered that the concept of 'textiles' is not a static concept. It has, having regard to newly developing materials, methods, techniques and processes, a continually expending content and new kinds of fabric may be invented which may legitimately, without doing any violence to the language, be regarded as 'textiles'".
In the present case, it may be that the conventional meaning of the term 'Insecticide' or 'Pesticide' is a substance or agent which kills insects or pests. But as the evidence on record shows, the reference books and authorities concerned with pesticides and entomology consider insect repellents and attractants as 'Insecticides'. It is clear, therefore, that the present-day meaning of the term is wider than the conventional meaning. In modern usage, as we have seen, 'insecticides' cover repellents and attractants.
19. On a cumulative consideration of the evidence on record, we are of the opinion - and this is the same as in the Essen Synthetics case (supra) - that insect repellents are insecticides.
20. In the result, we hold that the subject mosquito repellent coils are insecticides within the coverage of Notification No.55/75, as amended.