Reckitt Benckiser (India) Ltd. Vs.
Commissioner, Commercial Taxes & Ors.  INSC 739 (29 April 2008)
S.H. KAPADIA & B. SUDERSHAN REDDY O R D E R CIVIL APPEAL NO. 3083 OF 2008 (Arising out of S.L.P.(C)
No.6096/2007) Leave granted.
The short question involved in this Civil Appeal is whether mosquito
repellants and other items fall under Entry 44(5) of Schedule III to Kerala VAT
The items are enlisted as follows:
Sl.N o. Trade Name Name of Active Ingredient Entry in relevant Statute Licensing
Authority Licensing Authority 1.
Mortein Coil, 8 hours, 10 hours and 12 hours D-trans Allerthrin Entry 55 in
Schedule to Insecticides Act, 1968 (at page 29 of Volume 2). License required
under Section 3(e) for manufacture. Mandatory declarations are made under Rule
19 of Insecticide Rules, 1971 Central Insecticide Board (CIB) as per
Insecticide Act, 1968.
2. Mortein Mats Prallethrin Entry 120 in Schedule to Insecticides Act, 1968 (at
page 29 of Volume 2). License required under Section 3(e) for manufacture.
Mandatory declarations are made under Rule 19 of Insecticide Rules 1971 -do- 3.
Mortein Vaporisers Prallethrin Entry 120 in Schedule to Insecticides Act,
1968 (at page 29 of Volume 2). License required under Section 3(e) for
manufacture. Mandatory declarations are made under Rule 19 of Insecticide
Rules, 1971. -do- 4.
Mortein Instant Cockroach Killer (CIK) Mortein Instant Flying Insect Killer
(FIK) Mortein Instant All Insect Killer (AIK) Deltamethrin, Allethrin,
Imiprothrin and Cyphenothrin Covered under Entry 55 in Schedule to Insecticides
Act, 1968 (at page 29 of Volume 2).
License required under Section 3(e) for manufacture. Mandatory declarations are made under Rule 19 of Insecticide Rules, 1971
Lizol Disinfectant Surface Cleaner Benzalkonium Chloride A disinfectant in
terms of Section 3(b)(ii) of Drugs and Cosmetics Act
1940 Drugs Controller 6. Harpic Toilet Cleaner Hydrochloric Acid & Sodium Hypochlorite A
disinfectant in terms of Section 3(b) (ii) of Drugs and Cosmetics Act
1940 -do- 7.
Dettol Chloroxylenol (PCMX) Falls under Schedule K read with Section
3(b)(ii) of Drugs and Cosmetics
Act 1940 -do- Under Section 6 of 2003 Act, goods specified in the Second
and Third Schedules are charged to duty at the rates specified therein whereas
goods not falling within the said two Schedules are assessable to duty under
separate Notifications to be issued by the State Government. The narrow
controversy in the present case which arose for determination before the High
Court was: Whether the above enlisted items fall under para 44(5) read with
Section 6(1)(a) of the 2003 Act? According to the appellant, the said items
fall under Para 44(5) which, at the relevant time, attracted duty at the rate
of 4%, whereas, according to the Department, the said items came under Section
6(1)(d) read with Notification No.82 of 2006 - Entry No.66 which attracted the
rate of duty of 12.5%.
We have examined the impugned judgment. In this case, we find that the High
Court in the impugned judgment has failed to notice the Rules of Interpretation
which require that in cases where HSN Code number is indicated against the
Tariff Item mentioned in the Third Schedule, then one has to go by the
provisions of the HSN as adopted by the Customs Tariff
Act, 1975. If that is the case, then, one need to interpret the Entries in
the Third Schedule not only in the light of the Entries in the Customs Tariff
Act, 1975 but also the judgments applicable to the corresponding Entries in
Tariff Act. On the other hand, it is urged on behalf of the Department that
HSN, read with Customs
Tariff Act, 1975, is not required to be read, in the present case, as the
figure "3808" against para 44(5) stood omitted by Kerala Finance Act,
2006 which came into force w.e.f. 1st July, 2006.
At this stage, we may state that the appellant-assessee had moved the Commissioner
under the relevant provisions of the Act for what is called as Advance
Clarificatory Order which is very similar to Advance Ruling under the Income
Tax Act. The Commissioner had decided the matter against the appellant vide
order dated 7th April, 2006. That decision has been confirmed by the High Court
vide impugned judgment.
The important point which we need to stress is that neither the Commissioner
nor the High Court has considered the Rules of Interpretation of the Schedules
to the Kerala VAT Act, 2003. The High Court has failed to consider the effect
of the omission of the figure "3808" by Kerala Finance Act, 2006. In
our view, a vital aspect is lost sight of. In the present case, the High Court
has held that looking to the HSN Code 3808.10.91 repellant for insects such as
flies, mosquito, has a direct relation to Heading 3808. At the same time, the
High Court has held that HSN Code 8516.79.20 of the Customs Tariff Act
which deals with electrical or electronic devices for repelling insects fall
under HSN Code 8516 and, looking at that HSN Code, the High Court has held that
Code 3808.10.91 has to be read along with Heading 3808.
The basic controversy, therefore, which arose before the High Court was
whether the above items fell within the sub-Heading 3808.10.91. In this
connection, we find that Kerala VAT Act is aligned with Customs Tariff which in
turn is aligned with HSN and consequently each product in question was required
to be seen in the context of HSN Code and judgments based thereon.
Keeping in mind the above controversy, we set aside the impugned judgment
and remit the matter to the High Court for fresh consideration in accordance
We may add that we express no opinion on the merits of the case. We keep
contentions on both sides expressly open.
We may also clarify that under the Act, the transactions which have taken
place prior to 7th April, 2006 will not be taken into account and the advance
clarification will only apply for the period 7th April, 2006 onwards. We request the High Court to expeditiously hear and dispose of the Statutory Appeal
of the appellant, preferably within six months from today.
Civil Appeal stands disposed of accordingly.