KILPEST INDIA LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE present applications have been filed for waiver of pro -deposit of Central Excise duty amounting to Rs. 49,38,141.80 and penalty amounting to Rs. 28 lakhs imposed on the applicants by the Commissioner of Central Excise, Indore.

(2.) SHRI V. Lakshmi Kumaran, learned Advocate submitted that the issue involved is whether the formulation of pesticides by mixing the same with inert material and surface active dispersing and stabilising agents amounts to manufacture so as to bring a new and distinct product into existence. He submitted that Madhya Pradesh High Court in order dated 4 -1 -1996 in LPA No. 211/95 directed that the authorities shall not take into consideration the Board Circular No. 40/2/95, dated 27 -7 -1995 issued under Section 37B of the Central Excise Act while exercising quasi -judicial functions. The Learned Advocate further submitted that in spite of this order of the High Court, the Commissioner while adjudicating the matter has relied upon the opinion of the Chief Chemists mentioned in the circular, in his adjudication order. He further submitted that the facts in the present matter are similar to the facts in the case of CCE v. Markfed Agro Chemicals - 1993 (68) E.L.T. 848 (Tribunal) in which it was held that processing of the concentrated basic pesticidal chemicals carried out through addition of inert carriers/solvent and dispersing and stabilising agents resulting only in their dilution rendering them suitable for use either directly or after addition of water and formulations retained the name of the basic chemicals, evidently no new product having distinctive name, character and use appeared as a result of such processing. The Tribunal, therefore, held that processing carried out did not constitute 'manufacture' within the meaning of Section 2(f) of the Central Excise Act. The learned Counsel, therefore, prayed that in the light of this decision, the applicants are entitled for unconditional waiver of pre -deposit and the stay of recovery of the duty amount and penalty.

(3.) SHRI H.K. Jain, learned SDR submitted that the decision in the case of Markfed Agro Chemicals was under the old Central Excise Tariff which has no application in respect of the Central Excise Tariff Act, 1985. Further, the Chief Chemist has clearly opined that pesticides or insecticides formulation result in emergence of new and distinct product having different property, physical form fit for direct use and are sold after value addition mostly under a brand name and therefore, the process can be described as manufacture.