Holding

The product’s classification requires fresh consideration by the Commissioner as the Tribunal failed to apply proper interpretative rules, and the extended limitation period does not apply.

Summary

The assessee, Nirmala Dyachem, manufactures a product called Domex Power Cleaner/Domex All round Home Cleaner and classified it under heading 38.08 of the Central Excise Tariff Act, 1985 as a disinfectant. The Revenue argued that the product should be placed under heading 34.02, which covers organic surface‑active agents and cleaning preparations. The Customs, Excise & Service Tax Appellate Tribunal upheld the assessee's classification, holding the product to be a disinfectant. On appeal, the Supreme Court observed that the Tribunal and the Commissioner had not applied the proper rules of interpretation of the tariff schedule, including explanatory notes and harmonised commodity descriptions, and had not examined whether the product's principal function is cleaning or disinfection. The Court also held that the extended limitation period under section 11‑A of the Central Excise Act, 1944, does not apply in the present facts. Consequently, the Court set aside the Tribunal's order and remitted the matter to the Commissioner for fresh consideration. The appeals were allowed.

Issues considered

Whether the product Domex Power Cleaner/Domex All round Home Cleaner should be classified under heading 34.02 or heading 38.08 of the Central Excise Tariff Act, 1985.
Whether the extended limitation period under section 11‑A of the Central Excise Act, 1944, is applicable.

Legislation cited

Subjects

central excisetariff classificationheading 34.02heading 38.08disinfectantcleaning preparationstatutory interpretationlimitation periodremand

Judgment

COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, SURAT-11 A
v.
MIS. NIRMALA DYECHEM AND ANR.

NOVEMBER 29, 2006

[S.B. SINHA AND MARKANDEY KATJU, JJ.] B

Central Excise Tariff Act, 1985:

Tariff Headings 34. 02 and 38. 02-Domex Power Cleaner!Domex All
round Home Cleaner-Classification of-Matter remitted to Commissioner C
for considering whether product is having active agents, having surface active
fimction or that is only subsidiary to its main.function as a cleaning preparation
-Tribunal as also Commissioner have not considered rules of interpretation
of schedule as also explanatory notes, harmonized commodity description and
coating system which may possibly provide aids for determination ofdispute- D
However, it is made clear that in facts and circumstances of the case, extended
period of limitation as provided for in s. I 1-A of Central Excise Act, I 944,
shall not apply-Interpretation of Statute-Tariff Schedule-Interpretation of

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 7145-7146
of 2004. E
From the final Judgment and Order No. A/604 & 605/WZB/04/C- l
dated 22.3.2004 of the Customs, Excise & Service Tax Appellate Tribunal,
West Regional Bench at Mumbai in Appeal No. E/373 & 374/03.

R.G. Padia, Tufail A. Khan and B. Krishna Prasad for the Appellant. F
Ravinder Narain, Sonu Bhatnagar, Ajay Aggarwal, Sanjeev Dahiya,
Monish Panda and Rajan Narain for the Respondents.

The Order of the Court was delivered :
G
ORDER

The fact of the case are that the repondent assessee is engaged in a
manufacture of various products including a product called "Domex Power
Cleaner/Domex All round Home Cleaner." The assessee had been classifying

... 837 H
•.
838 SUPREME COURT REPORTS [2006] SUPP. 9 S.C.R.

A this product under heading 38.08 of the Central Excise Tariff Act as a
disinfectant. The claim of the Rev~nue, however, is that the aforesaid product
is liable to be classified under the Central Excise Tariff heading 34.02. The
question, therefore, involves in this case is whether the product "Domex
Power Cleaner/Domex All Around Home Cleaner" is liable to be classified
B under heading 34.02 as claimed by the Revenue or heading 38.02 as claimed
by the assessee.

- Heading 34.02 reads as follows:

"34.02. Org:.mic surface-active agents (other than soap); surface-active
preparations, washing preparation (including auxiliary washing
c preparations) and cleaning preparations whether or not containing
soap."

Heading 38.08 reads as follows: ...,
"38.08. Insecticides, rodenticides, fungicides, herbicides anti-sprouting
D products and plant growth regulators, disinfectants and similar
products, put up in fonns or packings for retail sale or as preparations
or articles (for example, sulphur-treated bands, wicks and candles,
and fly-papers.)."

The Tribunal in the impugned order dated 22.3.2004 has held that the
E aforesaid product is liable to be classified as a disinfectant under heading
38.08 and not under heading 34.02.

Before us Dr. R.G. Padia, learned senior counsel appearing on behalf
of the Revenue and Mr. Ravinder Narayan, learned counsel appearing on
F behalf of the assessee, have advanced various arguments.

We need not go into those arguments in great details in view of the
order proposed to be passed by us. The question which falls for our
consideration, in our opinion, should be considered having regard to the rival
contentions of the parties, namely, whether the product is principally used as
G disinfectant or as a cleaning preparation.

We may also place on record the submission of Mr. Ravindra Narayan
that it is sold in undiluted fonn also and, therefore, may be put in an appropriate
heading for the purpose of classification as it is manufactured on the said
basis, and hence it should be classified as such and not on the condition in
H
... COMMNR. OF CENTRAL EXCISE & CUSTOMS, SURAT-ll v. NIRMALA DYECHEM 839

which it is used, which may be in diluted form. On the other hand, we may A
also mention the submission of Dr. R.G. Padia, learned senior counsel for the
Revenue that the word 'disinfectant' in heading 38.08 has to be interpreted
noscitur a sociis, which means that it has to take colour from the preceding
words like insecticides, rodenticides, fungicides, herbicides, etc. Dr. Padia's
submission is that the expression 'cide' means to kill, and hence the things
mentioned in heading 38.08 are .all things meant for killing (genns, animals, B
etc.) and they do not reiate to products which are basically meant for cleaning.
He further submitted that some cleaning materials may have some antiseptic
or disinfectant qualities, but that would not by itself bring the product under
heading 38.08, instead it has to be classified under heading 34.02. We regret
that the matter has not been examined from this angle. C
The question, in our opinion, would therefore, requre deeper
consideration at the hands of the Commissioner. The matter has also to be
considered from the angle whether the product is having active agents, having
surface active functions or that is only subsidiary to its main function as a
cleaming preparation. D
We may also notice that the Tribunal as also the Commissioner h!lve
not considered the rules of the interpretation of the schedule as also the
explanatory notes, harmonized commodity description and coating system
which may possibly provides aids for determinatin of the dispute. We are,
however, not expressing any definite view on the matter, as we are remitting E
it to the Commissioner. We, however, make it clear that in the facts and
circumstances of this cases, the extended period of limitation as provided for
in Section l lA of the Central Excise Act, 1944, shall not apply.

We, therefore, set aside the impugned judgment and remit the matter to F
the Commissioner for consideration afresh in the light of the aforesaid
observations. The appeals are allowed.

The parties shall be entitled to adduce fresh evidence before the
Commissioner, if they so desire.

R.P. Appeals allowed.