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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, DELHI
G. Sankaran, JYOTI BALASUNDARAM, JJ.
Bengal Chemicals and Pharmaceuticals (P.) Ltd. -Appellant
Versus
Collector -Respondent
Order Nos. 59 and 60/91-C Appeal Nos. E/3598-3599/89-C, 59 of 1991, 60 of 1991, E/3598 of 1989, E/3599 of 1989
Decided On : 16-01-1991
Jyoti Balasundaram, Member (J)
1. Both appeals involve common issues and are hence disposed of by a common order. The classification of "Phenols" manufactured by the appellants is to be determined herein - whether it falls under heading No. 3003.20 of the CET1985 as a medicament (as claimed by the appellants) or under heading No. 3801.90 as a disinfectant (as held by the lower authorities). The appellants state that the product is manufactured under a drug licence issued by the Directorate of Drug Control, Govt. of West Bengal and has been certified as a "drug" within the meaning of Section 3(b) of the Drugs & Cosmetics Act, 1940 - It is manufactured by mixing more than 2 constituents, namely, coal tar oil, resin, castor oil etc. & has prophylactic use and therefore has the essential characteristic of medicament within the meaning assigned to it under Note 2 to Chapter 30 of the CET 1985.
2. We have heard Shri K.K. Banerjee, learned advocate and Shri L.N. Murthy, learned DR.
3. Section 3(b) of the Drugs & Cosmetics Act, 1940 defines drug as :-
"(b) "drug" includes -
(i) all medicines for internal or external use of human beings or animals and all substances intended to be used for or in the diagnosis, treatment, mitigation or prevention of any disease or disorder in human beings or animals, including preparations applied on human body for the purpose of repelling insects like mosquitoes;
(ii) such substances (other than food) intended to affect the structure or any function of the human body or intended to be used for the destruction of vermin or insects which cause disease in human beings or animals, as may be specified from time to time by the Central Government by notification in the Official Gazette;"
The contention of the learned counsel is that phenol is a substance used for destruction of vermin or insects which cause disease in human beings or animals and therefore falls within the definition in Clause (ii), wherein there is no requirement that the substance should be used internally of externally on human beings or animals. The next submission is that the product, although a disinfectant, is a medicament within the meaning of Note 2(i)(a) of Chapter 30 which reads as follows :-
"2. For the purpose of heading No. 30.03.
(i) 'Medicaments' means goods (other than foods or beverages such as dietetic, diabetic or fortified foods, tonic beverages) not falling within heading No. 30.02 or 30.04 which are either -
(a) products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic uses; or
(b) ..."
as it is made up of more than 2 constituents and has prophylactic uses i.e. for prevention of disease by destruction of vermin. He refers to the Encyclopaedia Britannica Vol. 1 at page 995 where prophylactics are mentioned as agents used to prevent infections and diseases.
4. There is no dispute that phenol is a disinfectant. We have held earlier in the appellant's own case reported in MANU/CE/0197/1990 : 1990 (48) ELT 436 that phenol does not fulfil the function of prevention of disease in human beings or animals and serves only a sanitation purpose. Disinfection has been defined as the killing of disease causing (pathogenic) agents by direct application of chemical or physical methods and disinfectants are agents such as creosote or alcohol, applied to inanimate objects to kill micro-organisms. It does not have prophylactic uses of prevention of disease so to come within the meaning of prophylactic contained in Stedman's Medical Dictionary. It is therefore not a "medicament" under Note 2(i)(a) of Chapter 30.
5. Apart from this, Chapter 38 is attracted by virtue of Note (h) which covers :-
"Insecticides, rodenticides, fungicides, herbicides, anti-sprouting products and plant-growth regulators, disinfectants and similar products."
Heading 3801.20 is a specific entry for insecticides, fungicides, herbicides, rodenticides and pesticides. The residuary entry 3801.90 would cover d
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