1990 (9) TMI 173 - AT - Central Excise

Product 'Vardhak' not exempt from excise duty as insecticide, Revenue can recover duty.

COLLECTOR OF CENTRAL EXCISE Versus PAUSHAK LTD.

COLLECTOR OF CENTRAL EXCISE Versus PAUSHAK LTD. - 1991 (52) E.L.T. 420 (Tribunal) Issues Involved:1. Whether the product 'Vardhak' containing Alpha Naphthyl Acetic Acid qualifies for excise duty exemption under Notification No. 234/82.2. Whether the product 'Vardhak' is considered an insecticide or pesticide under the Central Excise notification.3. Applicability of the Tribunal's decision in the Agromore case to the present case.4. Whether the extended period of limitation applies for the demand of duty.Detailed Analysis:1. Excise Duty Exemption Under Notification No. 234/82:The primary issue is whether 'Vardhak', a product containing Alpha Naphthyl Acetic Acid, is eligible for excise duty exemption under Notification No. 234/82. The relevant entry in the notification reads 'Insecticides, Pesticides, Weedicides, and Fungicides.' The Assistant Collector did not accept the respondents' contention that the product is covered by the term 'pesticides', but the Collector (Appeals) upheld this contention. The Tribunal examined whether 'Vardhak' falls under the term 'pesticides' for the purpose of excise duty exemption.2. Classification as Insecticide or Pesticide:The Tribunal considered the nature of 'Vardhak' and its classification. It was established that 'Vardhak' is a plant growth regulator, not traditionally known or marketed as an insecticide or pesticide. Despite this, the respondents argued that it should be classified as a pesticide based on various pieces of evidence, including its registration under the Insecticides Act, 1968. The Tribunal acknowledged that while definitions in other enactments should not normally be used, the specific registration and recognition of 'Vardhak' under the Insecticides Act could not be entirely disregarded.3. Applicability of the Agromore Case:The Tribunal referred to the decision in Agromore Ltd. v. Collector of Central Excise, Bangalore, where it was held that plant growth regulators do not fall under the notification for excise duty exemption. Although the Tribunal found merit in the respondents' argument that plant growth regulators could be considered insecticides or pesticides, it ultimately followed the precedent set in the Agromore case, concluding that 'Vardhak' falls outside the scope of the Central Excise notification.4. Extended Period of Limitation:Two show cause notices were issued, one covering March 1979 to February 1984 and the other covering March 1984 to August 1984. The Assistant Collector's order did not clearly establish the basis for invoking the extended period of limitation. The show cause notices alleged misdeclaration by the respondents, but the Tribunal did not find sufficient evidence of willful suppression or misdeclaration with intent to evade duty. Consequently, the Tribunal held that the Revenue could only recover duty for the period of six months preceding the dates of receipt of the respective show cause notices.Separate Judgments:- The President concluded that plant growth regulators are covered by the term 'insecticides or pesticides' but followed the Agromore decision, holding that 'Vardhak' falls outside the scope of the notification.- Member (Judicial) disagreed with applying the Agromore decision, arguing that the President's findings on merits should be upheld without relying on Agromore.- Member (Technical) agreed with the President, emphasizing judicial discipline and the need to follow the Agromore precedent.Final Order:The majority opinion held that 'Vardhak' falls outside the scope of Central Excise Notification No. 234/82, following the Agromore decision. However, the Revenue is entitled to recover duty only for the six months preceding the dates of receipt of the show cause notices. The appeal was allowed in these terms, and the so-called cross-objection was treated as written submissions.