Full Judgment Text
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PETITIONER:
M\S. BOMBAY CHEMICAL PRIVATE LIMITED
Vs.
RESPONDENT:
THE COLLECTOR OF CENTRAL EXCISE, BOMBAY I, BOMBAY.
DATE OF JUDGMENT18/04/1995
BENCH:
SAHAI, R.M. (J)
BENCH:
SAHAI, R.M. (J)
JEEVAN REDDY, B.P. (J)
SEN, S.C. (J)
CITATION:
1995 SCC Supl. (3) 475 JT 1995 (3) 581
1995 SCALE (2)772
ACT:
HEADNOTE:
JUDGMENT:
R.M. SAHAI, J. :
1. This appeal under Section 35-L of the Central Excises
and Salt Act, 1944 raises the question whether disinfectant
fluids manufactured by the appellant were entitled to
exemption under Notification No. 55/75-CE dated 1.3.1975, as
amended by Notification No. 62/78 dated 1.3.1978.
2. Notification No. 55/75-CE reads as under:-
"In exercise of the powers conferred by sub-rule (1) of rule
8 of the Central Excise Rules, 1944, the Central Government
hereby exempts goods of the description specified in the
Schedule annexed hereto, and failing under Item No. 68 of
the First Schedule to the Central Excises and Salt Act, 1944
(1 of 1944), from the whole of the duty of excise leviable
thereon.
THE SCHEDULE
1. All kinds of food products and food preparations,
including-
(i) meat, and meat products,
(ii) dairy products;
(iii) fruit and vegetable products;
(iv) fish and sea foods;
(v) bakery products, and
(vi) grain mill products.
2. Electric light and power."
In 1978 Item 18 was added to it which reads as under:-
"18. Insecticides, Pesticides, Weedicides and Fungicides".
3. The appellant claimed that the disinfectant fluids
manufactured by it were entitled to exemption after addition
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
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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 clas-
sifiable 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, but it refused to extend
the benefit of the exemption notification as the
notification being confined to specified categories, the
appellant was not entitled to claim exemption by extension
of the principle that since the goods produced by the
appellant satisfied the broad test of killing insecticides
it should be held to be pesticides or fungicides. According
to the Tribunal, the exemption notification being meant to
cove particular formulation with well-define uses and
especially for killing insects, the cannot be equated or
interpreted to include disinfectants which are preparations
for general disinfection purposes and which are used in the
bathrooms, gutters, floor cleaning, etc. The Tribunal
considered various text books and literature produced by the
appellant and the Department and observed that various
authors have explained the terms used in the notification
and the ’disinfectant’ in different senses, some giving
wider meaning to it and others narrower, therefore, it was
not possible to draw any conclusion as to exact demarcation
between various terms. The Tribunal held that it would be
unsafe to classify any product as covered in the no-
tification merely because it has the property to kill
without reference to its normal use. It then found that
some of the disinfectants produced by the appellant are re-
ferred to as ’deodorant fluid’. Others contain perfumery
materials, i.e., Bioflor Lavender Type and Bioflor Jasmine
Type. The Tribunal held that the substances used for
killing insects, pests, etc. are by their nature noxious and
one is used to their having an unpleasant or irritating
smell. On the other hand, the disinfectants are used either
to neutralise existing unpleasant smell or even to add a
pleasant smell. Consequently, even though the disinfectant
fluids produced by the appellant from phenolic compounds
(tar acids) could destroy bacteria and fungi, but this being
a part of function as disinfectant fluids, it cannot be
classified as fungicide or pesticide.
5.’Disinfectant’ is defined in Webster Comprehensive
Dictionary ’as a substance used to disinfect or to destroy
the germs of infectious and contagious diseases’. In the
Concise Oxford Dictionary of Current English, ’disinfectant’
is defined as ’a commercially produced chemical liquid that
destroys germs’, In Encyclopedia Britannica, Volume 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
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to living tissue. The ideal disinfectant would rapidly
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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 clear whether the formulations
containing tar acids, as in the case of the goods produced
by the appellant which were used as disinfectants, will be
covered broadly by the term ’pesticides’.
6.’Pesticide’ has been defined in Butterworths Medical
Dictionary, Second Edition, as ’a comprehensive word to in-
clude substances that will kill any form of pest, e.g.,
insects, rodents and bacteria’. The term ’pesticide’
includes a large variety of compounds of diverse chemical
nature and biological activity grouped together usually on
the basis of what pests they are used to destroy or
eliminate, Under the US Federal Environment Pesticide
Control Act, the term ’Pesticide’ has, been defined to
include ’(1) any substance or mixture of substances intended
for preventing, destroying, repelling, or mitigating any
pest, insect, roderit, nematode, fungus, weed, other forms
of terrestrial or aquatic plants or other forms of animal
life e.g., viruses, bacteria, or other microorganisms, which
the administrator declares to be a pest and (2) any
substance or mixture of substances intended for use as a
plant regulator, defoliant or desiccant’ [Pesticides in the
Indian Environment, by P.K. Gupta p.2].
7.’Fungicide’ inhibits growth or destroys fungi pathogenic
to man or other animals or inanimate surfaces. The appel-
lant had imported tar acid to manufacture insecticide
pesticide and fungicide. The Director General had permitted
import for this purpose. In the letter written by the
appellant claiming exemption, it was stated that
disinfectant fluids manufactured by it were capable of being
used for the purpose of destroying fungi of medical im-
portance.
8.A disinfectant which, therefore, is used for killing may
broadly be covered in the word ’pesticide’. Disinfectants,
may be of two types; one to disinfect and other to destroy
the germs. The former, i.e., those products which are used
as disinfectant for instance lavender etc. may not be
covered in the expression ’pesticide’. But those products
which are used for killing insects by use of substances such
as high boiling tar acid have the same characteristic as
’pesticide’.
9.Item No. 18 which was added in 1978 St-ants exemption to
the categories of goods which can be classified as insec-
ticides, pesticides, weedicides or fungicides. They have to
be understood 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 lat-
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ter 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
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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. As stated earlier, it mentions broad
categories of goods which are entitled to exemption. Once a
good is found to fall even narrowly in any of these
categories, there appears no justification to exclude it.
The test of strict construction of exemption notification
applies at the entry, that is, whether a particular good is
capable of falling in one or the other category but once it
falls then the exemption notification has to be construed
broadly and widely. Each of the words insecticides, pes-
ticides, fungicides or weedicides are understood both in the
technical and common parlance as having broad meaning.
Therefore, if any goods or items satisfy the test of being
covered in either of the expression, then it is entitled to
exemption. The broad and basic characteristic for exemption
under the notification is that the goods must have the
property of killing germs and bacteria insects or pest and
it should be understood in the common parlance as well as
being covered in one of the broad categories mentioned in
the notification. Since the goods produced by the appellant
are capable of killing bacteria and fungi which too, is
covered in the expressions ’pesticide’ and ’fungicide’ there
appears no reason to exclude the goods from the aforesaid
notification.
10.In the result, this appeal succeeds and is allowed. The
order passed by the Tribunal is set aside and it is held
that the goods produced by the appellant from phinolic
compounds and high boiling tar acid being disinfectant
fluids which have the capability of killing bacteria which
are nothing but pests, the appellant was entitled to
exemption under Item 18 of the notification issued in 1978.
The appellant shall be entitled to its costs.
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