http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4

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

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 4

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