- (1.) This appeal under Section 35-L of the Central Excises and Salt Act, 1944 arises the question whether disinfectant fluids manufactured by the appellant were entitled to exemption under Notification No.55/75-CE dated 1-3-1975, as amended by Notification No.62/78 dated 1-3-1978. Notification No. 55/75-CE reads as under :- "In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in the Schedule annexed hereto, and falling under Item No.68 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from the whole of the duty of excise leviable thereon. THE SCHEDULE 1. All kinds of food products and food preparations, including - (i) meat, and meat products; (ii) dairy products; (iii) fruit and vegetable products; (iv) fish and sea foods; (v) bakery products, and (vi) grain mill products. 2. Electric light and power." In 1978 Item 18 was added to it which reads as under :- "18, Insecticides, Pesticides, Weedicides and Fungicides".
(2.) The appellant claimed that the disinfectant fluids manufactured by it were entitled to exemption after addition of item No.18 in 1978. The Assistant Collector did not find any merit in the claim as insecticides, pesticides,weedicides and fungicides are necessarily required to possess the property and capability of killing insects, pests, fungi and weeds. It was held that the disinfectant fluids produced by the appellant did not have the property of killing any insect or pest, therefore, the goods produced by the appellant could not be held to be covered in the exemption notification. The appellate authority did not agree with this reasoning as in common parlance the products of the appellant were nothing but fungicides. In further appeal by the Department the two members out of the three who constituted the Bench did not agree with the reasoning of the Collector and reversed the order passed by him. It is the correctness of this order which is assailed in this appeal.
(3.) The Tribunal found that there was no dispute that the disinfectants were excisable goods and that they were classifiable under Tariff Item 68. It was further found that these were being referred to and marketed as disinfectants and that the preparations in question were capable of killing various bacteria and fungi, but it refused to extend the benefit of the exemption notification as the notification being confined to specified categories, the appellant was not entitled to claim exemption by extension of the principle that since the goods produced by the appellant satisfied the broad test of killing insecticides, it should be held to be pesticides or fungicides. According to the Tribunal, the exemption notification being meant to cover particular formulation with well-defined uses and especially for killing insects, they cannot be equated or interpreted to include disinfectants which are preparations for general disinfection purposes and which are used in the bathrooms, gutters, floor cleaning, etc. The Tribunal considered various text books and literature produced by the appellant and the Department and observed that various authors have explained the terms used in the notification and the 'disinfectant' in different senses, some giving wider meaning to it and other narrower, therefore, it was not possible to draw any conclusion to exact demarcation between various terms. The Tribunal held that it would be unsafe to classify any product as covered in the notification merely because it has the property to kill without reference to its normal use. It then found that some of the disinfectants produced by the appellant are referred to as 'deodorant fluid'. Others contain perfumery materials, i.e., Bioflor Lavender Type and Bioflor Jasmine Type. The Tribunal held that the substances used for killing insects, pests, etc. are by their nature noxious and one is used to their having an unpleasant or irritating smell. On the other hand, the disinfectants are used either to neutralise existing unpleasant smell or even to add a pleasant smell. Consequently, even though the disinfectant fluids produced by the appellant from phenolic compounds (tar acids) could destroy bacteria and fungi, but this being a part of function as disinfectant fluids, it cannot be classified as fungicide or pesticide.;