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PETITIONER: M\S.  BOMBAY CHEMICAL PRIVATE LIMITED

       Vs.

RESPONDENT: THE COLLECTOR OF CENTRAL EXCISE, BOMBAY I, BOMBAY.

DATE OF JUDGMENT18/04/1995

BENCH: SAHAI, R.M. (J) BENCH: SAHAI, R.M. (J) JEEVAN REDDY, B.P. (J) SEN, S.C. (J)

CITATION:  1995 SCC  Supl.  (3) 475 JT 1995 (3)   581  1995 SCALE  (2)772

ACT:

HEADNOTE:

JUDGMENT: R.M. SAHAI, J. : 1.   This  appeal under Section 35-L of the Central  Excises and Salt Act, 1944 raises 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. 2.   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 failing 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". 3.   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 555

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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. 4.The  Tribunal  found that there was no  dispute  that  the disinfectants were exciseable goods and that they were clas- sifiable  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 cove  particular  formulation  with  well-define  uses   and especially  for  killing insects, the 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 others narrower, therefore, it  was not possible to draw any conclusion as to exact  demarcation between  various terms.  The Tribunal held that it would  be unsafe  to  classify  any  product as  covered  in  the  no- tification  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  re- ferred  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. 5.’Disinfectant’   is  defined  in   Webster   Comprehensive Dictionary  ’as a substance used to disinfect or to  destroy the  germs of infectious and contagious diseases’.   In  the Concise Oxford Dictionary of Current English, ’disinfectant’ is defined as ’a commercially produced chemical liquid  that destroys germs’, In Encyclopedia Britannica, Volume 4, it is explained  to  mean,  ’any substance, such  as  creosote  or alcohol,    applied   to   inanimate   objects    to    kill microorganisms.  Disinfectants and antiseptics are alike  in that  both  are  germicidal,  but  antiseptics  are  applied primarily 556 to  living  tissue.  The ideal  disinfectant  would  rapidly

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destroy bacteria, fungi, viruses, and protozoans, would  not be corrosive to surgical instruments, and would not  destroy or discolour materials on which it is used’.  It thus cannot be  disputed  that a disinfectant is also a  killing  agent. Even  the  Tribunal  found that the goods  produced  by  the appellant  which  contained high boiling tar acid  kill  the bacteria in the gutters and the bathrooms.  In the Report of the  Deputy Chief Chemist it, was mentioned that  all  above products  numbering  14 were  formulations  containing  high boiling  tar  acid as the principal active  ingredient.   It then  noticed definition of pesticide and  disinfectant  and observed  that, ’it appears from the above  definition  that disinfectants  are used for killing or  inactivating  micro- organisms,  in  some literature for  oils  (containing  high boiling tar acid) are mentioned in pesticide manual’, But he opined  that  it  was not  clear  whether  the  formulations containing  tar acids, as in the case of the goods  produced by  the appellant which were used as disinfectants, will  be covered broadly by the term ’pesticides’. 6.’Pesticide’  has  been  defined  in  Butterworths  Medical Dictionary, Second Edition, as ’a comprehensive word to  in- clude  substances  that will kill any form  of  pest,  e.g., insects,  rodents  and  bacteria’.   The  term   ’pesticide’ includes  a large variety of compounds of  diverse  chemical nature  and biological activity grouped together usually  on the  basis  of  what  pests they  are  used  to  destroy  or eliminate,  Under  the  US  Federal  Environment   Pesticide Control  Act,  the  term ’Pesticide’ has,  been  defined  to include ’(1) any substance or mixture of substances intended for  preventing,  destroying, repelling, or  mitigating  any pest,  insect, roderit, nematode, fungus, weed, other  forms of  terrestrial or aquatic plants or other forms  of  animal life e.g., viruses, bacteria, or other microorganisms, which the  administrator  declares  to  be  a  pest  and  (2)  any substance  or  mixture of substances intended for use  as  a plant regulator, defoliant or desiccant’ [Pesticides in  the Indian Environment, by P.K. Gupta p.2]. 7.’Fungicide’  inhibits growth or destroys fungi  pathogenic to  man or other animals or inanimate surfaces.  The  appel- lant  had  imported  tar  acid  to  manufacture  insecticide pesticide and fungicide.  The Director General had permitted import  for  this  purpose.  In the letter  written  by  the appellant   claiming   exemption,   it   was   stated   that disinfectant fluids manufactured by it were capable of being used  for  the purpose of destroying fungi  of  medical  im- portance. 8.A  disinfectant which, therefore, is used for killing  may broadly be covered in the word ’pesticide’.   Disinfectants, may  be of two types; one to disinfect and other to  destroy the germs.  The former, i.e., those products which are  used as  disinfectant  for  instance lavender  etc.  may  not  be covered  in the expression ’pesticide’.  But those  products which are used for killing insects by use of substances such as  high  boiling tar acid have the same  characteristic  as ’pesticide’. 9.Item  No. 18 which was added in 1978 St-ants exemption  to the  categories of goods which can be classified  as  insec- ticides, pesticides, weedicides or fungicides.  They have to be understood in broad sense.  The reasoning of the Tribunal that if an expression is capable of a broader and a narrower meaning then it is the lat- 557 ter which could be preferred does not appear to be  correct. Where entries are descriptive of category of goods they have certain characteristics.  Therefore, when a question  arises

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whether a particular good is covered in any category or not, it  has  to be examined if it satisfies  the  characteristic which  go to make it a good of that category.   And  whether in  trade   circle it is understood as such and if it  is  a good  of technical nature then whether technically it  falls in  the one or the other category.  Once it is found that  a particular  good satisfies the test then issue which  arises for consideration is whether it should be construed  broadly or narrowly.  One of the settled principles of  construction of an exemption notification is that it should be  construed strictly,  but once a good is found to satisfy the  test  by which it falls in the exemption notification then it  cannot be  excluded from it by resorting to applying or  construing such  notification  narrowly.   Item  18  is  an   exemption notification.    As  stated  earlier,  it   mentions   broad categories of goods which are entitled to exemption.  Once a good  is  found  to  fall even  narrowly  in  any  of  these categories,  there appears no justification to  exclude  it. The  test of strict construction of  exemption  notification applies at the entry, that is, whether a particular good  is capable of falling in one or the other category but once  it falls  then the exemption notification has to  be  construed broadly  and widely.  Each of the words  insecticides,  pes- ticides, fungicides or weedicides are understood both in the technical  and  common  parlance as  having  broad  meaning. Therefore,  if any goods or items satisfy the test of  being covered in either of the expression, then it is entitled  to exemption.  The broad and basic characteristic for exemption under  the  notification  is that the goods  must  have  the property  of killing germs and bacteria insects or pest  and it  should be understood in the common parlance as  well  as being  covered in one of the broad categories  mentioned  in the notification.  Since the goods produced by the appellant are  capable  of killing bacteria and fungi  which  too,  is covered in the expressions ’pesticide’ and ’fungicide’ there appears  no reason to exclude the goods from  the  aforesaid notification. 10.In the result, this appeal succeeds and is allowed.   The order  passed  by the Tribunal is set aside and it  is  held that  the  goods  produced by the  appellant  from  phinolic compounds  and  high  boiling tar  acid  being  disinfectant fluids  which have the capability of killing bacteria  which are  nothing  but  pests,  the  appellant  was  entitled  to exemption under Item 18 of the notification issued in  1978. The appellant shall be entitled to its costs. 558