V. Padmanabhan, Member (Technical).
1. The present appeals have been filed by Revenue against the Order-in-Appeal No. 33-34/2016-17 dated 03/05/2016.
2. Memorandum of cross objections have been filed on behalf of the assessee as well as their Managing Director, along with Miscellaneous Application for Condonation of Delay. For the reasons mentioned in the COD, the delay is condoned and cross objections are taken on record.
3. The respondent is engaged in the manufacture of Veterinary Feed Additives, Mineral Food Supplements, Water purifying tablets etc. The dispute is regarding the classification of their product SDIC tablets (Sodium di-chloroisocynurate). The respondent was manufacturing the above type of tablet with various product names such as 'Enzotab', 'Sanir', 'Sanipro' and 'Instachlor' claimed as sanitizers. These products were manufactured and cleared in the form of tablets packed in unit containers of 10, 20, 50 and 100 tablets. The assessee claimed classification of the product under CETH 29336910 but Revenue was of the view that such goods are to be classified as 'disinfectant' under CETH 38089400. Further, Revenue was of the view that the goods are required to be charged to excise duty on MRP based valuation. The original authority decided the issue against the assessee and upheld the demand of duty, in terms of section 4A of the Central Excise Act. However, when the issue was challenged before Commissioner (Appeals), he set aside the Original Authority's order and dropped the proceedings initiated. Aggrieved by the impugned order present appeals have been filed by Revenue.
4. Heard Shri R.K. Mishra, Ld, DR for the Revenue as well as Shri Rohit Chaudhary and Ms. Preeti Khiwani, Ld. Advocates for the appellant.
5. The Ld. DR argued that the impugned goods are in the nature of 'disinfectants' which are used for disinfecting water from bacteria etc. Such goods are packed in retail packs of 10, 20, 50 and 100 tablets. In terms of Section Note 2 to Section VI, such goods are required to be classified under 3808 since they are packed for retail sale. He contended that classification of the product under Chapter 29 will not be proper in view of the above Section Note.
6. The Ld. Advocate justified the impugned order. He argued that the disputed goods are cleared in whoesale to M/s. Pfizer Animal Health India Ltd. and are packed in wholesale packages which do not attract the provisions of Section 4A of the Act. Since there are no statutory requirements to affix MRP on such wholesale packed goods, he submitted that the goods merit classification only under Chapter 29 as claimed by the assessees.
7. We heard both sides and perused the record.
8. The goods manufactured by the assessee are cleared under several brand names. The nature of the goods has been confirmed by the Revenue during investigation. Such goods are used for disinfectanting/sanitizing of water and hence, are in the form of disinfectants. There is also no dispute on the fact that such goods are prepared in the form of tablets and are packed in unit containers with 10, 20, 50 and 100 tablets. Undoubtedly, such packaging is meant for retail sale and individual tablets are in measured doses. Section Note 2 to Section VI is relevant for classification of the impugned goods. The relevant Chapter heading 3808 (as contended by revenue) as well as the Section Note and the explanatory note in HSN are reproduced below for ready reference:-
"Insectcidies, Rodenticidies, Fugicidies, Herbicidies, Anti-Sprouting Products, Plant Growth Regulators, Disifectants And Similar Products, Put Up In The Form or Packing For Retail Sale or Preparations or Articiles (For Example Sulphur Treated Bands, Wick, Candles And Flypapers) "
The above chapter heading covers the goods mentioned therein only when the same are put up in the form or packing for retail sale. This aspect of classification of product of Section VI of the Tariff is also clarified in the Note 2 of Section VI of Tariff. The HSN which is worldwide followed for classification of the goods emphatically explains in Section Note 2 of Section VI as under:-
"Section Note 2 provides that goods (other than those described in heading 28.43 to 28.46) which are covered by heading 3004, 3005, 3006, 3212, 3303, 3304, 3305, 3306, 3307, 3506, 3507, or 3808 by reason of being put up in measured doses or for retail sale are to be classified in those headings notwithstanding that they could also fall in some other heading of the Nomenclature. For example, sulphur put up for retail sale for therapeutic dextrin put up for retail sale as glue is classified in heading 30.04 and not in heading 25.03 or 28.02, and dextrin put up for retail sale as glue is classified in heading 35.06 and not in heading 35.05 and in no other heading of this Schedule.
It has also been clarified in respect of Chapter Heading 3808 in the HSN.
"that the group of disinfectant includes sanitizers, bacteriostats and sterlisers"
And "these products are classified here only when they are put up in packing for retail sale as disinfectants in such form e.g. in balls, strings of balls, tablets or plates that there can be no doubt they will normally be sold by retail. Products put up in these ways may or may not be mixtures. The unmixed products are mainly chemically defined products which would otherwise fall in chapter 29".
9. After careful consideration of the above facts and keeping in view the fact that the goods are packed in retail packing, we order classification of the impugned goods under 3808 CETH the Central Excise Tariff.
10. It has been submitted on behalf of the respondent that the goods are being cleared in wholesale to M/s. Pfizer Animal Health India Ltd.
11. Next we turn to valuation of goods for purpose of charging Excise duty. Duty is to be charged under section 4A of the Central Excise Act only in respect of those goods which are mandatorily required to declare the MRP under the Legal Meteorology Act and rules. It has been claimed by the appellant that the clearances made to M/s. Pfizer Animal Health India Ltd. are on wholesale basis and such clearance has been made in wholesale packing to which the provisions of Legal
Please Login To View The Full Judgment!
Meteorology Act and rules will not be applicable. 12. It is seen that the goods are packed in retail packing in packages containing 10, 20, 50 or 100 tablets. These retail packages are also labeled with MRP. From this, it is evident that the goods are manufactured and packed for retail sale. Even if such goods packed in retail containers are further packed in bigger wholesale packages, we are of the view that the goods are liable to duty in terms of MRP based assessment under Section 4A. 13. In view of above discussions, we set aside the impugned orders and allow the appeals filed by Revenue. 14. In the result, the orders of the Original Authorities are restored.