IMPORTANT POINT
Circular dated 28.10.1997 by Central Board of Excise and Customs amending classification of technical grade of presticides, insecticides etc. from Heading No. 38.08 of Schedule to Central Excise Tariff Act, 1985 to Headings 28 and 29 of the Schedule was rightly cancelled by High Court.

Headnote:Central Excise Tariff Act, 1985-Schedule-Headings-Chapters 28, 29 and 38-Circular dated 28.10.97 by Central Board of Excise and Customs amending tariff heading for TGP etc. from 38.08 to 28 and 29 on which higher excise duty was leviable-Challenged in writ before Delhi High Court-Allowed-Circular cancelled-Appeal to Supreme Court-Did the 1996 and 1997 amendments to chapter 38 serve to remove bulk TGP, insecticides etc. from that chapter and place them in chapters 28 and 29? (No)-Result-TGP or insecticides etc. are includible in Tariff Heading under chapter 38.08-Appeal dismissed-Case law referred.
       Held : We see no ambiguity in the heading. Even if there were, the doubt must be resolved with reference to the Chapter Note which clearly covered insecticides, pesticides etc. before further formulation by way of additives or treatment. This would include the respondent s product. There is also substance in the submission of learned counsel for the respondent that classification of TGP, insecticides etc. in bulk form under Tariff Heading 38.08 would be in keeping with the Rules for interpretation of the schedule to the 1985 Act. (Paras 15 and 16)
       That the Tariff Heading as amended in 1996 continues to cover insecticides, pesticides etc. (Para 25)
       Hence preparations with insecticidal, fungicidal properties are classifiable under Heading 38.08 (Para 26)
       For all these reasons, we are unable to accept the appellants submission that the amendments to Chapter 38 in 1996 and 1997 served to exclude TGP or insecticides etc. in bulk forms from Chapter 38. We, accordingly dismiss the appeal without any order as to costs. (Paras 28 and 29)

JUDGMENT

Ruma Pal, J.-This appeal has been preferred from the decision of the Delhi High Court striking down a Circular dated 28th October, 1997 issued by the Central Board of Excise and Customs (briefly CBEC). The circular directed the classification of technical grade of pesticides, insecticides etc. under Chapters 28 and 29 of the Schedule to the Central Excise Tariff Act, 1985 (referred to as the 1985 Act ) and not under the Heading No. 38.08 of the Schedule. Technical grade pesticides are chemical compounds in a concentrated form. The respondent before us is an association of manufacturers of Technical grade pesticides (TGP) and insecticides and formulations thereof. It claimed before the Delhi High Court that TGP, insecticides etc. are classifiable under Tariff Heading 38.08 and not under Chapter 28 and 29 and prayed inter-alia for cancellation of the circular and for a direction on the appellants before us, to classify TGP etc. and bulk formulations under sub-heading 3808.10 and for a refund of the enhanced duty paid for the past under protest or any excess amount received by the Department. The Delhi High Court accepted the respondent s contention and allowed the writ petition. On the application of the appellants, leave was granted by this Court to appeal against the High Court s judgment.

2. While impugning the decision of the High Court, the appellants have conceded that prior to 1996 TGP and insecticides etc. in bulk were classified under the Tariff Heading No. 38.08 of the Act. According to the appellants, because this tariff heading was amended in July 1996, after 1996 TGP etc. in bulk concentrated forms were excluded from Heading No. 38.08 and were covered under Chapter 28 or 29 of the Act depending upon the composition. This position, according to the appellants, was further clarified when Chapter 38 Note 1 (a) (2) was amended in 1997.

3. According to the respondent the amendments in 1996 and 1997 have made no difference to the classification of bulk pesticides and insecticides etc. It is submitted that the amendments were intended to and in fact serve the purpose of extending the liability to excise to insecticides, pesticides etc. in retailable forms. The issue, therefore, is - did the 1996 and 1997 amendments to Chapter 38 serve to remove bulk TGP, insecticides etc. from that Chapter and place them in Chapter 28 or 29?

4. In approaching the problem, the first step is to look at the background in which the amendments were effected to the relevant portions of the 1985 Act and its Schedule. There was no relevant amendment to the Act between 1987 and 1996. In 1987, Chapter 28 of the Schedule to the Act related to inorganic chemicals, organic or inorganic compounds of precious metals of rare earth metals of radioactive elements or isotopes. Note 1(a) of that Chapter provided that except where the context otherwise required, the headings of the Chapter applied only to: "Separate chemical elements and separate chemically defined compounds, whether or not containing impurities". Chapter 29 related to organic chemicals and also provided in Note 1(a) thereof that the headings of the Chapter would apply only to: "Separate chemically defined organic compounds, whether or not containing impurities". The Chapter headings, the Notes and the Tariff Headings within Chapter 28 and 29 have not been changed or amended in their application to separate chemically defined compounds by the 1996 or 1997 amendments for the period in question. Therefore, generally speaking all separate chemically defined compounds are classifiable under Chapter 28 and 29 depending on their composition.

5. Chapter 38 of the Schedule relates to Miscellaneous Chemical Products and carves out an exception to this general classification of separate chemical compounds under Chapter 28 and 29. Between 1987 to 1996, the Notes to this Chapter in so far as they are relevant read as follows:

"1. This Chapter does not cover,

(a) Separate chemi

Click Here to Read the rest of this document

2002 Supreme(SC) 1046

Cases Referred (3)