SONIC ELECTROCHEM LTD. Vs. CCE

JUDGEMENT

(1.) During the period August, 1997 to March, 1998, the appellants had manufactured a product and cleared the same under the brand -name "Jem Fresh". They had claimed classification of the product under Sub -heading 3808.10 of the CETA Schedule (vide Rule 173B declaration Nos. 2/97 -98 dated 1.8.11997 and 6/97 -98 dated 27.1.1998) and paid duty accordingly @ 8% ad valorem. The department did not accept their classification and proposed to classify the product under SH 3307.49 of the CETA Schedule (attracting Central Excise duty @ 18% ad valorem) and to recover the differential duty on the clearances for the aforesaid period. The department also proposed to penalize the party for the alleged evasion of duty. The show cause notices issued in this behalf were contested by the party. The adjudicating authority confirmed the classification of the product as Air Purifier under SH 3307.49, and accordingly, confirmed the demands of duty totalling to Rs. 4,81,904/ - against the assessee. It also imposed a penalty of Rs. 45,000/ - on them. The appeal preferred by the assessee to the Commissioner (Appeals) against the decision of the lower authority did not succeed. Hence the present appeal.

(2.) Heard both sides. Ld. Counsel for the appellants submitted that the product in question was composed of 99% para -dichlorobenzene [PDCB, for short] and 1% perfume and was used as a repellent against moths. By virtue of its moth -repellent property, the product was an insecticide classifiable under SH 3808.10. Ld. Counsel relied on HSN Notes on Heading 38.08 and submitted that chemically defined products falling in Chapter 29, like PDCB, could be classified as disinfectants, insecticides etc. when put up in packing for retail sale. He also relied on Classification Decision No. 193 of the Harmonized System Committee of the World Customs Organisation and claimed that the said decision supported classification of the appellants' product under Heading 38.08. In this connection, counsel claimed that PDCB had an unpleasant odour and that the perfume was added to mask that odour. Reference was also made to Hawley's Condensed Chemical Dictionary (13th Edition) which mentioned odour and other physical properties of PDCB. Ld. Counsel also relied on the Chemical Examiner's Test Report on the product in question, which inter alia, stated that PDCB could be used as a general insecticide. Counsel further submitted that the Tribunal's decision in the case of Shri Satya Sai Industries v. CCE, Indore , relied on by the lower appellate authority, was distinguishable on facts. On the other hand, ld. SDR submitted that the classification issue was squarely covered in favour of the Revenue by the Tribunal's decision in Shri Satya Sai Industries (supra) wherein it had been held that the products viz., "Jet Fresh" and "Jem Fresh" of the said assessee were classifiable under SH 3307.49 and not under SH 3808.10. Referring to the description of the product as given on the product label, ld. SDR submitted that the appellants themselves had considered the goods as air purifier and introduced it in that way to their customers, the product was known as Air Purifier in the common parlance. Common parlance was also decisive in the classification of the goods, DR argued. According to ld. SDR, Classification Decision No. 193 of the Harmonized System Committee was of no aid to the appellants' case inasmuch as PDCB was not shown to have any unpleasant odour. In his rejoinder, ld. Counsel contended that the product in question was of a technical nature and, therefore, common parlance was irrelevant. In this connection, he relied on the Supreme Court's decision in Bombay Chemical P. Ltd. v. CCE, Bombay . Further, drawing support from the Tribunal's decision in Peshawar Soap and Chem. Works v. CCE 2001 (138) ELT 855 : 2001 (98) ECR 240 (T), ld. Counsel contended that the product was known to be an insecticide in common parlance and, therefore, its classification under SH 3808.10 should be preferred.

(3.) The appellants have claimed the subject product to be classifiable under SH 3808.10 as an insecticide, the Heading and the Sub -heading read as under: