TaxTMI 
TaxTMI 
2015 (12) TMI 1297
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....imidaclorid, pretilachlor, paraquat, dichloride, Carbendazim, sold by the appellant firm being intermediate products and not the final product marketable for use on plants only fall under entry No.38B of Schedule B of HVAT Act 2003? ii) Whether the Hon"ble Haryana Tax Tribunal was justified in holding that the above mentioned intermediate chemicals (which cannot be used in as such form on the plants) are covered by Entry No.38B of HVAT Act 2003? iii) Whether the process is involved in obtaining the final product to be used for plants only from the above mentioned chemical in manufacturing process and if yes whether the raw material and the final product are alike so as to be covered under Entry No.38B of Schedule B of HVAT Act, 2003?" 3. A few facts relevant for the decision of the controversy involved as narrated in VATAP No.93 of 2014 may be noticed. Application under Section 56(3) of the HVAT Act dated 31.1.2012 was filed by the respondent assessee to seek clarification on the issue whether the items/goods, namely, methyl parathion, cartap hydrochloride, acephate, acetamiprid, imidacloprid, pretilachlor, paraquat dichloride and carbendazim which are insecticides/pesticides ....
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....ot selling pesticides, weedicides and insecticides but were manufacturing the said items therefore, they were not entitled to claim benefit under Entry 38B of Schedule B of the Act. It was urged that the activity of the assessee is manufacture and not sale of the pesticides, weedicides and insecticides. 6. Opposing the contentions of the learned counsel for the State, learned counsel for the respondent assessees submitted that the items of the assessees were covered under the HVAT Act and they had been duly registered under it. Reliance was placed on judgments in M/s Bombay Chemical Private Limited vs. The Collector of Central Excise, Bombay I, Bombay, AIR 1995 SC 1469 (SC), Union of India and another vs. southern Distributors, (1996) 102 STC 509 (Mad.), Kissan Chemicals vs. Union of India and others, 1996(64) DLT 73 (Del.), B.H.Vasudeva Pai and Sons vs. State of Karnataka, (2006) 146 STC 232 (Karnataka).Union of India (UOI) and others vs. Pesticides Manufacturing and Formulators Association of India, AIR 2003 SC 1, National Organic Chemical Ind. Limited vs. Commissioner of Sales Tax, (1992) 87 STC 471 (Del.) and Amalendu Kumar Bera and others vs.The State of West Bengal, 2013(2) ....
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..... Collector of Central Excise, Bombay reported as 99 STC 339. Thus, the first condition of the Entry 38B is duly met. 11. The next question arises whether these products are used for plants only or not? It has been held in the impugned order that since the products in question are not final products in the marketable state, therefore, the same cannot be used for plants. It has been stated therein that these products are raw material or intermediate goods intended to be used for formulation of final products which are used for plants and hence second condition is not met and on this ground the goods in question were held to be not falling under Entry 38B of Schedule B of the Act. 12. A perusal of the documents produced by the appellants would however reveal that the products in question are technical grade in concentrated form imported in or manufactured in the State of Haryana and are further diluted by the formulators by adding inerts or some emulsifying agents for the end use by the farmers. It is also revealed that by process of dilution these items do not cease to be insecticides/pesticides or weedicides as the dilution process does not amount to any manufacture in view of ....
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.... the items are not used for the specified purpose for claiming exemption. In the instant case it is amply proved that the items are used for the purpose specified in the entry. 15. In view of the above, we find that the goods in question are insecticides/pesticides and weedicides in concentrated form known as technical grade and after dilution by adding inerts and emulsifying agents etc. are used for plant protection for control/elimination of various diseases in the different crops as per recommendations. We hold accordingly. Resultantly, the appeal succeeds and the impugned order stands set aside." 10. Now we proceed to examine the various judicial pronouncements related with the subject. The Madras High Court delving into identical situation in Southern Distributor's case (supra) held as under:- "2.2. We have considered the arguments of Mr. K. S. Ahmed, Senior Government Pleader, Pondicherry, for the Revenue and Mr. C. Venkataraman, learned counsel for the assessee. The notification relied upon by the assessee-respondent is to the following effect : "In exercise of the powers conferred by sub-section (1) of section 19 of the Pondicherry General Sales Tax Act, 1967 (Ac....
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....ition of item No. 18 in 1978. The Assistant Collector did not find any merit in the claim as insecticides, pesticides, weedicides and fungicides are necessarily required to possess the property and capability of killing insects, pests, fungi and weeds. It was held that the disinfectant fluids produced by the appellant did not have the property of killing any insect or pest, therefore, the goods produced by the appellant could not be held to be covered in the exemption notification. The appellate authority did not agree with this reasoning as in common parlance the products of the appellant were nothing but fungicides. In further appeal by the Department the two members out of the three who constituted the Bench did not agree with the reasoning of the Collector and reversed the order passed by him. It is the correctness of this order which is assailed in this appeal. 4.The Tribunal found that there was no dispute that the disinfectants were exciseable goods and that they were classifiable under Tariff Item 68. It was further found that these were being referred to and marketed as disinfectants and that the preparations in question were capable of killing various bacteria and fungi....
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.... 4, it is explained to mean, 'any substance, such as creosote or alcohol, applied to inanimate objects to kill microorganisms. Disinfectants and antiseptics are alike in that both are germicidal, but antiseptics are applied primarily to living tissue. The ideal disinfectant would rapidly destroy bacteria, fungi, viruses, and protozoans, would not be corrosive to surgical instruments, and would not destroy or discolour materials on which it is used'. It thus cannot be disputed that a disinfectant is also a killing agent. Even the Tribunal found that the goods produced by the appellant which contained high boiling tar acid kill the bacteria in the gutters and the bathrooms. In the Report of the Deputy Chief Chemist it, was mentioned that all above products numbering 14 were formulations containing high boiling tar acid as the principal active ingredient. It then noticed definition of pesticide and disinfectant and observed that, 'it appears from the above definition that disinfectants are used for killing or inactivating micro- organisms, in some literature for oils (containing high boiling tar acid) are mentioned in pesticide manual', But he opined that it was not cl....
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....stood in broad sense. The reasoning of the Tribunal that if an expression is capable of a broader and a narrower meaning then it is the latter which could be preferred does not appear to be correct. Where entries are descriptive of category of goods they have certain characteristics. Therefore, when a question arises whether a particular good is covered in any category or not, it has to be examined if it satisfies the characteristic which go to make it a good of that category. And whether in trade circle it is understood as such and if it is a good of technical nature then whether technically it falls in the one or the other category. Once it is found that a particular good satisfies the test then issue which arises for consideration is whether it should be construed broadly or narrowly. One of the settled principles of construction of an exemption notification is that it should be construed strictly, but once a good is found to satisfy the test by which it falls in the exemption notification then it cannot be excluded from it by resorting to applying or construing such notification narrowly. Item 18 is an exemption notification." 12. In National Organic Chemical India Limited'....