TMI Blog1998 (9) TMI 390X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Tribunal in the case of M/s. Roche Products Limited; in the case of M/s. Glaxo Labs (I) Limited; in the case of M/s. Punjab Bone Mills and in the case of M/s. Protin Kem had held that the goods were classifiable under Heading 23.02 of Central Excise Tariff Act, 1985 (CETA 1985) and that in the case of M/s. Ranbaxy Laboratories Ltd., the Tribunal had held that the goods were classifiable under Heading 29.36 of CETA 1985. Therefore, a reference was made to the third Member who held that the matter may be referred to the Larger Bench. Accordingly, the issue was formulated as Whether preparations of a kind used in animal feeding consisting of one or more vitamins mixed with diluents etc. are classifiable under Heading 29.36 as held in the case of M/s. Ranbaxy Laboratories Limited or under Heading 23.02 as held in the case of M/s. Glaxo Labs (I) Limited and M/s. Roche Products Limited. 2. At the outset, the Joint Chief Departmental Representative, Shri B.K.Gupta pointed out that the issue involved in all these matters was decided by the Tribunal in favour of the Revenue in the case of M/s. Ranbaxy Laboratories Limited v. C.C.E. [1994 (72) E.L.T. 197 (T)]; that against the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impurities; (b) Mixtures of two or more isomers of the same organic compounds (whether or not containing impurities), except mixtures of acylic hydrocarbon isomers (other than stereoisomers), whether or not saturated (Chapter 27); (c) The products of heading Nos. 29.36 to 29.39 or the sugar ethers and sugar esters and their salts of heading No. 29.40, or the products of heading No. 29.41, whether or not chemically defined; (d) The products mentioned in (a), (b) or (c) above dissolved in water; (e) The products mentioned in (a), (b) or (c) above dissolved in other solvents, provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use; (f) The products mentioned in (a), (b), (c), (d) or (e) above with an added stabiliser necessary for their preservation or transport; (g) The products mentioned in (a), (b), (c), (d), (e) or (f) above with an added anti-dusting agent or a colouring or odoriferous substance added to facilitate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EDIENTS (1) M/s. Tetragon Chemie (P) Ltd. Synocare-100 VIT B12 Calcium Carbonate (Mineral) Sodium Benzone Kaysol Forte VIT K3 Dextrose, Lactose (Carbohydrate) B-Care-Plus VIT B1 Yeast (Protein) VIT B3 Calcium Carbonate (Mineral) Sod. Benzoate VIT B5 Santoquin VIT B6 Soyaflour (Protein) VIT B12 VIT E Folic Acid Solvit Adbec VIT A Dextrose (carbohydrate) VIT D3 Lactose ( ) VIT B12 Sod. Laoryl Sulphat VIT E Tween - 80 VIT C Sod. Benzoate BHT C-Care 500 VIT C Lactose (Carbohydrate) Sod. Benzoate E Cae Se VIT E Selenium (Mineral) Lactose (Carbohydrate) Dextrose ( ) SLs Sod. Benzoate Tween - 80 B-Care Spl. VIT B1 D. L. Methionine (Aminoacid) VIT B2 Cal Gluconate (Mineral) VITB3 Dextrose (Carbohydrate) VIT B5 Lactose ( ) VIT B6 Tricalcium Phos Sod. Metabisulfite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Folic Acid, Niacinainide, Vit. B12, Vit. B6, HCl, Vit. BI, HCl. Ventrimix Forte D. O. Soya, Vit. A, Vit. B2, Vit. D3, Vit. K. Ventrimin-17 Choline, Chloride, Cobalt Sulphate, Copper Sulphate, Pot, Iodide, Ferrous Sulphate, Manganese Sulphate, Zinc Oxide, DCP, Cal. Carbonate (L), Cal. Carbonate(H), Lactose Cal. Pantethenate, Hiacinamide, Vit. E, Vit. K3, Vit. B2, Vit. B12, Vit. D3, Vit. A. Biosafe Calcium Carbonate (I), Calcium Carbonate (H), Lactose, Lactobaccilus Spores, Vit. B12. Stresvel DM Water, Sorbitol, Propyoene-Glycol, Sod. Hydroxide, Propyl Gallate, Tween-80, Vit. C, Vit. E., Vit. D3, Vit. A. Ventriplex - M DN Water, Amarnath Red, Saccarin, Sod. Citric Acid, Ferrous Glycine Sulphate, Prophyl Parabene, Methyl Paraben, Sod. EDTA DL methionine, D-Panthenol, Vit. B6, Vit. B12, Vit. B2, Niacinamide, Mixed fruit flavour, Sod. Hydroxide. Ventriforte-A DM Water, Citric Acid, Pepyo Gallate, Sorbitol, 70% Glycerine, Tween-80, Vit. A. Cholinefeed Choline Chloride, D17, DM Water, Sipernat-22 Selvit-E Cal. Carbonate (H), Cal. Carbonate (L) Sipernet-22, Sodium Selen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntain energy, to perform the vital processes of life and provide the material to replace the essential tissues breakdown which occurs in the body continuously. Food also provides the constituents and the energy required for body growth. All feeding stuffs are composed of water and organic and mineral matter. Organic matter is composed of proteins, fats, crude fibre and soluble carbo-hydrates. Besides the above, there are substances known as vitamins which are considered to be essential for the proper nutrition of farm-stock. Of these, the more important ones from the point of view of cattle nutrition, are Vitamins A D because they have to be supplied to the animals through their feeds; but Vitamins B and C can be synthesized in the ruminant body. The learned Author seems to point out that the ration of an animal may be divided for convenience into two parts : one for maintenance ration which is that portion of the diet which just enables the animal at rest to carry on the essential processes of life such as breathing and circulation of blood without either gain or loss of body weight. As, however, no animal is kept in a farm in a state of non-production, the requirements for main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents in satisfying its hunger for energy. The book also illustrates that Amino Acids and Vitamins are essential nutrients. 12. Animal Feed has been commented upon in the Encyclopedia Brittanica, Volume 9, Page No. 144 as Feeds Animal are material on which animals are fed differ widely in chemical composition and nutritive value. For convenience they are divided into two general classes : Concentrates and Roughages. Concentrates include a large variety of feeds that have a high value because they are rich in easily digested nutrients, such as starch, fat and protein and are low in fibre or woody material which is not well digested. Roughages have a much lower value because they are relatively high in fibre and contain less of the more digestible nutrients. Good nutrition is necessary if animals are to be able to maintain health and produce satisfactory amounts of milk, eggs, meat, wool or work. Animals require each day food furnishing sufficient amount of protein, energy, vitamins. Plenty of water and air are also needed. Dealing in detail with the role of vitamins in animal feed, the learned authors have pointed out that the numerous scientific discoveries concerning vitamins h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having either direct action or metabolism and growth or indirect action through control of bacterial growth and infection. Although an ample supply of all vitamin requirements of livestock usually can be made up through the use of common feeds, vitamins are becoming more general as feed additives in commercial feeds. Various kinds of vitamins are added to commercially mixed feeds for poultry, swine and, to a limited extent, for calves. Increasing amounts of fat soluble vitamin A are being produced for all types of livestock. This vitamin, which formerly was supplied as a fish liver oil to be fed separately because of the rapid destruction of the vitamin on oxidation, is available in a stabilised form with small particles of the covering of a synthetic wax, gelatin, or other material. 15. This study of animal feed composition and feed supplements brings into clear limelight the fact that in the manufacture of commercially mixed feeds, several feed additives are used and that amongst them are included vitamins A and D. These two vitamins are added as supplements in mixed feeds for cattle, poultry, swine and young calves. 16. The above description shows that a true and correct int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere is no appeal filed by the Department on the issue of limitation, arguments are being adduced only on classification of the products manufactured by the Appellants. 22. It was contended by the ld. Counsels for the Assessees that animal feed has not been defined in the Tariff or the rules made thereunder. Therefore, reliance has to be placed on the technical literature on the subject and general understanding of the trade who deal in the goods or who purchase the goods, in addition to the case law on the subject. It was contended that affidavits from experts and their opinions were produced before the lower authorities indicating that the product manufactured by them was known in common-parlance as concentrates, premix, feed additives and feed supplement. A reference was made to the decision of the Hon ble Gujarat High Court in the case of M/s. Glaxo Laboratories (India) Limited [1979 (43) STC 386] wherein the Hon ble High Court held that feed consists not only of that constituent which is essential for maintenance of life, but also other constituents which provide energy required for production, be it the production of calf or milk or output of work and that vitamins are con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above the maintenance requirements for growth or fattening and for production purposes. 24. The ld. Jt. CDR, countering the arguments based on the Hon ble Gujarat High Court and Hon ble Bombay High Court judgments submitted that these two judgments pertain to Sales Tax matters. It was contended by him that the Sales Tax Act is not the same as the Central Excise Act. The two Acts serve two different purposes and hence the finding under one Act cannot be taken directly as covering the matter precisely under a different Act. He submitted, therefore, that the ratio of the decision of these two judgments does not squarely cover the present cases. It was also contended that judgments in Sales Tax Laws do not apply to an interpretation of Central Excise Laws with which we are concerned. It was also contended that the cases decided by the Hon ble Gujarat/Bombay High Courts pertained to the period before introduction of the new Central Excise Tariff based on H.S.N.; that in the erstwhile C.E.T., there was no heading (Tariff item) corresponding to 23.09 of H.S.N. or 23.02 of CETA 1985; that composition of the product is of material importance for deciding the classification under Heading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of vitamins does not by itself render the mixture of vitamin so as to bring it under Heading 29.36; that Experts/Specialists and Users/Dealers have certified that the goods in question are not vitamins, but only essential supplements required for animal feed; that these experts/specialists/ users/dealers categorically stated that if animal feed supplements contain vitamins in a small quantity, even then the product is known and used as animal feed supplements; that for the manufacture of animal feed supplements, no drug licence is necessary. It was contended that the Tribunal in its Final Order No. 751/98-C, dated 8-9-1998, on the question of classification of Ossidos based on protein and carbohydrates and to which minerals such as calcium is added, held that the product is classifiable under Tariff Item 1B of the erstwhile Central Excise Tariff. It was argued for M/s. Tetragon Chemie (P) Ltd. that the ld. Commissioner held that animal feed supplements are not necessary for the bare maintenance of the animals, but only necessary when the daily animal feed is considered insufficient from the nutritional angle. Therefore, any final product to be classifiable under Heading 23.02, mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identifies it in the mind. In the case of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the article lies in its being a mirror. It was observed by this Court in Delhi Cloth and General Mills. Co. Ltd. v. State of Rajasthan Ors. [1980 E.L.T. 383 (S.C.) = 1980 (3) SCR 1109] which was a case under the Sales Tax Law : In determining the meaning or connotation of words and expression describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30. In reply, it was argued for the Revenue that the Chapter Note under Heading 23 clearly brings out that the products for classification under this Chapter should be obtained by processing vegetable or animal material other than vegetable waste, vegetable residues and bye-products of such processing. It was contended that the products in question are not obtained by processing vegetable or animal material and, therefore, they cannot be classified under this Chapter. It was contended that synthetic products have no place under Chapter 23 and hence they cannot be classified under this Chapter. In support of this argument, Revenue relied on the judgments of this Tribunal in the case of M/s. Ranbaxy Laboratories Limited [1994 (72) E.L.T. 197]. In this case, this Tribunal held that hence Pentaforte and famitone being admittedly preparations containing a number of vitamins as active ingredients are covered by the entry 29.36 and the fact that some minerals and materials are also present does not make any difference. A reference was made to the case of Aries Agro-Vet Industries Private Limited [1984 (16) E.L.T. 467]. In this case, this Tribunal had held that We agree that the mineral ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts also contained synthetic products, they cannot be excluded from the Chapter 23. It was argued that similar issue came up before the Apex Court in the case of M/s. Sun Export Corporation [1997 (93) E.L.T. 641] and the Apex Court held : We are in agreement with the above view expressed by the Bombay High Court. The Hon ble Bombay High Court had relied on the judgment of the Hon ble Gujarat High Court who had held : It was submitted by the Respondents that the subsequent amendment expressly refers to animal feed supplements. This suggests that animal feed supplements were not previously included in the exemption notification. This reasoning must be rejected. The amendment appears to be clarificatory in nature. For example, the amendment now expressly refers to animal feed concentrates which were not expressly referred to earlier. It cannot be said that animal feed concentrates are not animal feed. In the same manner products which supplement animal feed and are generally added to animal feed are also covered by the generic term animal feed. On the findings of the Apex Court in the case of Eskayef Ltd., the ld. Counsels argued that Central Excise Tariff as it then was did not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of M/s. Ranbaxy Laboratories Ltd., this Tribunal held that the fact that some minerals and materials are also present does not make any difference. It was argued that why it should not be said about the products before us if they contain some vitamins, provitamins and mixtures thereof. 35. On the question of use of the word include in Note to Chapter 23, Revenue contended that the Apex Court in the case of South Gujarat Roof Tiles Manufacturers Assn. another v. State of Gujrat and another [AIR 1977 (S.C.) 90], ruled : We do not think there could be any inflexible rule that the word include should be read always as a word of extension without reference to the context. Take for instance entry 19 in the Schedule which also has an Explanation containing the word includes . The Apex Court further held that the use of the word includes in the restrictive sense is not uncommon to the observation of Lord Watson in Dilworth v. Commissioner of Stamps (1899) AC 99 which is usually referred to on the use of the word include as a word of extension is followed by these lines : But the word includes is susceptible of another construction which may become imperative, if the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve substances in the compound feeds to which the preparations referred to above are added. 39. In this view of the matter, it would appear that preparations containing the active substances (Vitamins or provitamins, aminoacids, antibiotics, coccidiostats etc.) along with the said carrier would fall under Heading 23.02 of the CETA provided such preparations are of a kind used for animal feeding. It may however be noted that Heading 23.09 of HSN excludes products of Chapter 29 and medicaments of Heading 30.03 or 30.04. Hence while deciding the classification of the products claimed to be animal feed supplements, it may be necessary to ensure that the said animal feed supplements are ordinarily or commonly known in the trade as products for specific use in animal feeding. 40. The Counsels for the assessees submitted that the above clarification sets all the doubts at rest and the only test for classifying the product under Heading 23.02 is that the said feed supplements are ordinarily or commonly known in the trade as products for animal feeding. The ld. Counsels submitted that the labels attached to the products, the expert opinions, dealer/user certificates clearly indicate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (7) 1. Ventrimix - DS 29.36 2 18 0.0008868% 57 2. Ventribee - Plus 29.36 3 19 0.00415125% 59 3. Ventrimi - Forte 29.36 4 20 0.0008878% 4. Toxi- Chek 3003.10 (Ambala) 2942.00 (Pune) 5 21 No Vitamins (Mold Inhibitor) 0.0125% to 0.075% 5. Ventrimin- 17 29.36 (No dispute at Pune) 6 22 0.0168% 61 6. Biosafe 29.36 7 23 0.000005% 63 7. Veldot 3003.10 (Ambala Pune) 8 24 Coccidiositat (Dinitolmide) 0.0083 to 0.0125% 65 8. Albac 3003.10 (Ambala) (No dispute at Pune) 9 25 Antibiotic (Zinc Bacitracin) 0.001 to 0.004% 67 9. V-Fur 200 3003.10 (Ambala Pune) 10 26 Anti-Biotic (Furazolid one) 0.01 to 0.04% 69 10. Stresvel 29.36 11 27 0.00788125 gms/bird 11. Ventriplex - M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng produced, 2. A substance obtained from another by chemical change. In the case of M/s. Aries Agro-Vet Industries Private Ltd. [1984 (16) E.L.T. 467], this Tribunal held: We agree that the mineral supplements are indeed part of the animal feed, but these supplements are not by themselves animal feed as one would understand Animal Feed . We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements, substances that an animal needs in a balanced food. It was argued for the assessees that the above decision clearly supports their case that the preparations under consideration are animal feed supplements or that animal feed is a genre and these preparations are species; that description of goods under Heading 29.36 refers to goods used primarily as vitamins; that this makes the end use important for classification; that end use of the goods in dispute as animal feed supplement is not contested nor rebutted by the Department by any evidence or expert opinion and hence Chapter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained substances like minerals, carbo-hydrates etc. It was also submitted that Chapter Note 1 of Chapter 29 stipulates that the Chapter applies only to separate chemically defined organic compounds, whether or not containing impurities whereas Chapter Note 1(d), 1(e), 1(f) and 1(g) constitute exceptions to this Chapter; that Chapter Note 1(d), 1(e), 1(f) and 1(g) specify the permissible other ingredients in the goods covered in this Chapter. The permissible ingredients are not minerals, carbo-hydrates, proteins etc. It was, therefore, contended by the Assessees that the description of the Heading 29.36 read with that Chapter Note does not permit the addition of minerals, carbo-hydrates, proteins etc. Therefore, the products in question cannot be classified under Heading 29.36. 45. It was further contended that if certain goods cannot be classified, reading the description along with Section Notes and Chapter Notes or two Headings appear to be suitable for classification, then the classification can be decided in terms of interpretative rules. For the Assessees, it was contended that the description of the goods was clear, end use of the goods was not disputed and, therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct is also treated as vitamins, then there is no emergence of a new product with a distinct name, character or use. Hence, the process of preparation of the products in question does not amount to manufacture. 47. In reply to the above contentions, it was argued for the Revenue that only products obtained by processing of animal or vegetable products can be classified under Chapter 23. Therefore, classification of the products in dispute under Chapter 23 is ruled out as no evidence has been brought on record by the Assessees that the ingredients used in the manufacture of the animal feed supplement were obtained by processing vegetable or animal material. It was submitted, therefore, that the only heading available for classification of the ingredients was Heading 29.36; that if it was contended that the goods cannot straightaway be classified under Chapter 29 under Heading 29.36, then assistance shall have to be taken from Interpretative Rules; that by applying the rules of Interpretation, the goods merit classification under Heading 29.36. It was, therefore, contended that the Rules of Interpretation were applicable in the present case and by applying the interpretative rules, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Chapter Heading 23.02 as preparations of a kind used in animal feeding. It was contended for the Assessees that this clarification helps their case in as much as the preparations in dispute contain minerals, protiens, carbohydrates etc. 51. It was argued by the ld. Counsels that the position has been clarified under Notes on Pages 403 to 404 of HSN Explanatory Notes. It was argued that this clarification issued by the Bolpur Collectorate makes it very clear that mixtures of vitamins consisting other minerals or synthetic materials will not be classified under Heading 29.36. 52. It was argued for the assessees that in the case of C.C.E. Shillong v. M/s. Wood Craft Products Limited [1995 (77) E.L.T. 23 (S.C.)], it was held by the Apex Court: The structure of Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and, therefore, any dispute relating to tariff classification must, as far as possible, be resolved with reference to the nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself . It was contended by the ld. Counsels that this decision of the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the other Rules, Notes. In the instant case, the terms of the relevant Heading do not, by themselves, yield an answer to the question whether copper waste and scrap includes brass scrap. But, the particular Heading does not require or provide that the other rules should be excluded while determining the classification of articles under that Heading. That is how, Rules 2 to 4 become relevant for deciding the question whether copper waste and scrap includes brass scrap. What is meant by the clause in Rule 1 : and, provided such Headings or Notes do not otherwise require is not that a Heading must require that the provisions contained in the rules following Rule 1 should be applied. What it means is exactly the opposite, namely, that if a Heading does not require the exclusion of the other rules, those other rules must also be applied for determining the classification of an article. Therefore, all the relevant rules of interpretation in the Import Tariff come into play in the classificatory process. Rules 2 to 4 of the Import Tariff are not a mere adornment. Nothing ever is an adornment in an Import Tariff. Therefore, classification has to be determined both according to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot directly be classified under Chapter 29.36, they being akin to mixtures classifiable under 29.36 shall be classified under Heading 29.36 as active ingredients in the products is vitamins or provitamins. 57. It was submitted by the ld. Counsels that the Larger Bench of this Tribunal in the case of M/s. Hindustan Packaging Co. Limited [1995 (75) E.L.T. 313] held that rules of interpretation are invokable only if classification cannot be determined according to the terms of Headings and relative Section or Chapter5 Notes provided such Headings or Notes did not require otherwise. 58. The ld. Jt. CDR submitted that the Apex Court in the case of M/s. Khandelwal Metal Engg. Works v. Union of India cited above, held that Rules of Interpretation can be invoked to determine correct classification of composite goods and that in the instant case, the products in dispute are claimed to be composite goods and hence the decision of the Apex Court is fully applicable to the facts of the present case. 59. A reference was made to the Compendium of Classification opinions of the Customs Cooperation Council, holding that products used for making animal feeds containing di-sodium, calcium, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey submitted 8 refund claims. The Asst. Collector rejected the claim. In appeal also, the Exporter did not succeed. Hence the Appeal was filed before the Tribunal. The Member who wrote the order after examining the submissions set aside the impugned order and allowed the Appeal. However, the second Member did not agree with the findings of the other Member. The matter was referred to the third Member and hence the case has come before the Larger Bench. 64. The ld. Counsel submitted that the judgment of the Bombay High Court in the case of M/s. Glindia Limited v. Union of India [1988 (36) E.L.T. 479] is distinguishable in as much as the nature of entries involved are different because in the Notification interpreted by the Hon ble Bombay High Court, the entry reads : Animal Feed including compound livestock feed whereas the entry No. 21 of CTA Shedule 2 read Animal feed ; that in M/s. Glindia s case, the assessees themselves did not claim the item to be animal feed themselves, but they claimed as animal feed supplement and sought the benefit of Notification whereas in the present case, the Appellants specifically claimed the items to be only as ingredients and not as animal fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l cake or meal is only one of the raw materials and these are commercially known as cattle feed, poultry feed, etc. these should be taken as such for assessment. As there is no entry in the Export Tariff for animal feeds, these will not attract any export duty. 65. The ld. Counsel submitted that in Indian Standards IS : 9703-1980, in the Foreword Para, it had inter alia been stated In the field of animal feeds manufacturing industry, a large number of feeding stuffs (ingredients) are utilized, which may be by-products of other industries and also subjected to certain processing before utilization. It has been observed that different names are attributed to the same feeding stuff in different parts of the country resulting in confusion and misunderstanding amongst different interests. Therefore, with a view to familiarizing all interests with correct terms, this standard is being issued. It is expected that this standard when issued would help in removing any ambiguities and facilitate understanding and adoption of the correct terms. In the Foreword of IS : 3593-1979, against Para, it has been clarified : Solvent-extracted rice bran now finds extensive application as an ingred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs Act and/or Item No. 19 of the Indian Customs and Central Excise Tariff. On considering this matter, the said Court held that although the animal compound feed was made up of different ingredients, a new product had resulted and the identity of the material mixed was lost and the provisions of Section 19 of the Customs Act, 1962 or Item 19 of the Indian Customs and Central Excise Tariff would not be applicable. 68. The ld. Counsel also referred to the judgment of the Hon ble Madras High Court [1984 (15) E.L.T. 379]. In para (11), the Hon ble High Court held : At this stage itself, I may say that where the Asst. Collector, Customs, went wrong is that the exemption under the last of the notifications viz. Notification No. 16 does not specifically mention tapioca chips and therefore by a process of deduction, which I consider as illogical, held the tapioca chips were subject to customs duty. This is not the correct way of interpreting the notification at all. 69. The ld. Counsel also referred to the certificates of experts and their opinions as also to the affidavits filed by the users of the goods. It was, therefore, argued that no duty was chargeable on the goods expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted by the Tribunal in its judgment in the case of Aries Agro-Vet Industries (P) Limited and observed that We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements, substances that an animal needs in a balanced feed. 73. We further note that these preparations known in the trade as premixes are generally speaking compound compositions consisting of a number of substances (sometimes called additives) the nature and proportions of which vary according to the animal production required. Then further details are furnished. This clearly shows that in so far as preparations mentioned under Heading 23.09 of HSN are concerned, they include synthetic materials also and are not confined to products obtained by processing animal or vegetable materials. This also supports the view that the use of the word includes has been definite to extend the scope of the heading. Further the preparations described under Heading 23.09 of HSN cannot be ignored in view of the note. On the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much as the Central Excise Tariff is now based generally on the HSN nomenclature. This was so held by the Apex Court in the case of C.C.E., Shillong v. M/s. Woodcraft Products Limited cited above. There is no indication in Chapter 23 in CETA 1985 that HSN note under corresponding Heading 23.09 shall be excluded. This becomes all the more relevant in as much as Chapter Note under Chapter 23 of CETA 1985 speaks of products and does not speak of preparations whereas the description against Heading 23.02 of CETA 1985 reads preparation of a kind used in animal feeding including dog and cat food . This description corresponds to description given in HSN Heading 23.09. Therefore, for understanding the implications and the scope and importance of the term preparation , a reference to HSN becomes all the more essential and relevant. 76. For understanding the implications of the use of the word products in note under Chapter 23 of CETA 1985 and the use of the word preparations under Heading 23.02, let us examine these two words, and then find out the implication of the word includes . 77. We note that the issue as to what is meant by the word product came up before the Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess to the original commodity in order to derive a new commodity. In that sense mere grinding of barley grain to prepare barley flour or barley powder (as in the case of Purity Barley) would not appear to us to amount to a preparation. 79. Having examined the meanings of the words product and preparation , we find that these two items are different, therefore, the word includes used in Note under Chapter 23 of CETA which generated a lot of heat in the arguments of both sides not only becomes relevant but assumes significance also. 80. Decisions of the Apex Court in the case of M/s. Highland Coffee Works etc., C.I.T. v. Tajmahal Hotel and South Gujrat Roofing Tiles Manufacturers Association and another were cited and it was argued for Revenue that the Apex Court observed : We do not think that there could be any inflexible rule that the word include should be read always as a word of extension, without reference to context. Further, The use of the word includes in the restrictive sense is not unknown. The observation of Lord Watson in Dilworth v. Commissioner of Stamps 1899 AC 99 which is usually referred to on the use of include as a word of extension is followed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Preparations for use in making the complete feeds or supplementary feeds described in (A) and (B) above. - These preparations, known in trade as premixes , are, generally speaking, compound compositions consisting of a number of substances (sometimes called additives) the nature and proportions of which vary according to the animal production required. These substances are of three types : (1) Those which improve digestion and, more generally, ensure that the animal makes good use of the feeds and safeguard its health; vitamins or provitamins, amino-acids, antibiotics, coccidiostats, trace elements, emulsifiers, flavourings and appetisers, etc. (2) Those designed to preserve the feeding stuffs (particularly the fatty components) until consumption by the animal; stabilisers, anti-oxidants, etc. and (3) Those which serve as carriers and which may consist either of one or more organic nutritive substances (manioc or soya flour or meal, middings, yeast, various residues of the food industries etc.) or of inorganic substances (e.v. magnesite, chalk, kaolin, salt, phosphates). 84. The concentration of the substances described in (1) above and the nature of the carrier are determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initive index of legislative intention. 88. In para 13 of its judgment, the Apex Court in the case of Union of India v. Garware Nylons Ltd., [1996 (87) E.L.T. 12] held : Stated briefly, we should understand the expression occurring in Item 18 of the Act in the sense, in which the persons who deal in such goods understand it normally. 89. In Para 6 of its judgment in the case of Frick India Ltd. [1990 (48) E.L.T. 627], the Apex court held : It is well settled that the headings prefixed to sections or entries cannot control the plain words of the provisions; they cannot also be referred to for the purpose of construing the provision when the words used in the provision are clear and unambiguous; nor can they be used for cutting down the plain meaning of the words in the provision. Only in the case of ambiguity or doubt, the heading or sub-heading may be referred to as an aid in construing the provision, but even in such a case, it could not be used for cutting down the wide application of the clear words used in the provision. Examining the preparations given under Heading 23.09 of H.S.N., we find that they are clearly defined and show the contents leaving no ambiguity or dou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [1990 (49) E.L.T. 649 S.C.]. Technical Literature : Meaning of Feeding Stuffs. 92. The Book on Animal Nutrition for Tropics by Raghbir under heading Concentrates on Page 160, stipulates : It is mentioned that for the proper feeding of livestock, a certain portion of ration includes Cereals and their by-products, oil cakes and mineral supplements . In the Wealth of India (1953 Edition), Feeding Stuffs have been defined as Feeding Stuffs for dairy cattle may be broadly classified in roughages and concentrates. The roughages consist of succulent feeds (natural grazing cultivated grazes, cultivated fodders and root crops) and dry materials (Legume grains and cereal grains) and protein rich materials (oil seeds, oil seed cakes and meals). In addition to roughages and concentrates, dairy animals also require a certain amount of common salt to keep them in good condition. It becomes quite clear that technically, livestock feed are generally placed into two categories of roughages and concentrates. 93. It is evident from the analysis of animal feeds also that amongst the materials on which animals are fed are included concentrates which include a wide variety of feeds th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing are preparations which are used in the context of mixed feed of livestock and poultry both of which are reared for production purposes not only domestically but also commercially. Even in its popular sense, that is today, the sense in which people conversant with livestock farming and poultry raising and those dealing in cattle feed and poultry feed would attribute to those words, Ration for production such as feed additives or feed supplements like proteins, minerals, vitamins would truely constitute cattle feed or poultry feed as the case may be. In Aries Agro Vet I Industries Pvt. Limited case, the view of the Tribunal that the word feed meant the food specially for livestock or a mixture or preparation used for feeding livestock. According to the Tribunal, the products in question could not be said to be a cattle feed or poultry feed as the case may be. This view of the Tribunal was based on the narrow meaning which it assigned to the word feed which according to it meant, in substance, ration for maintenance. This was not the correct view. 97. Analysis of the technical literature brings out that preparations containing vitamins, proteins, carbohydrates, minerals etc. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d results from the animals. Description of Preparatory under Heading 23.09 of HSN 100. We have copiously quoted from the description of preparations provided under Heading 23.09 of HSN. These descriptions clearly bring out that there are feed supplements, feed additives and compounded feed; that these feed supplements/additives can comprise of vitamins, proteins, carbo-hydrates, minerals etc. These descriptions under Heading 23.09 of HSN are very relevant which shall have to be given due importance in view of the fact that Heading 23.02 of CETA 1985 is pari materia to Heading 23.09 of HSN and that the new C.E.T. is based on HSN. They have the maximum pursuasive value for deciding the tariff classification of a product as was held by the Apex Court in the case M/s. Woodcrafts cited above. Clarifications Contained in Board s Circulars. Circular No. 1/90, Dated 1-1-1990. 101. In Circular No. 1/90, dated 1-1-1990, it was clarified that animal feed supplements which are just inter-mixtures of vitamins only without other ingredients except solvents, stabilizers or anti-oxidents cannot be classified under Heading 23.02 of CETA 1985 even though they are used as animal feed supple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end use unequivocally shows that the preparation is known in the trade as animal feed supplement, it should be treated as animal feed supplement. Bolpur Trade Notice No. 175/C.E./Ch.29/Bol/90, Dated 18-12-1990. 102. Circular No. 175/C.E./CH.29/BOL/90, dated 18-12-1990 issued by the Bolpur Collectorate which indicated that a doubt has been raised regarding the correct classification of products which consist of only different vitamins in definite proportions and no other ingredients except the solvents or stabilizers or anti-oxidents; such products are generally used as animal feed supplements. The doubt raised is whether such products which are mixtures of vitamins are classifiable under Chapter Heading 23.02 or as medicaments under Chapter Heading 30.30 or inter-mixtures of vitamins under Chapter Heading 29.36. The Trade Notice clarified that the matter has been examined and it is observed that such animal feed supplements which are just inter-mixtures of vitamins only and that there is no other ingredients except, solvents, stabilizers or anti-oxidents are especially covered under Chapter Heading 29.36 of Central Excise Tariff as inter-mixtures of vitamins. Even though they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision, therefore, is obviously not correct in law. 104. It was argued that this decision was distinguishable in as much as the nature of entries involved was different; that the ratio of the judgment was specific to the entry and that the decision was in a Sales Tax Act and Sales Tax Act cannot be used for interpreting the Central Excise Tariff. We have perused this decision. We find that the decision is no doubt in a Sales Tax case, but the issue covered is whether feed supplements are covered by the term animal feed or not and the Hon ble High Court, after examining various technical literature and the other aspects of the issue, came to the conclusion that animal feed supplements are animal feed and, therefore, the application of the ratio is general and not specific provided the facts are similar and in the case before us the facts are similar. GLINDIA LIMITED : (Hon ble Bombay High Court.) 105. In this case, the issue before the Hon ble Bombay High Court was that the Appellants were manufacturing certain preparations containing Vitamins A, B D and were intended to be used as supplements to either liquid or solid animal feeds. The Hon ble Bombay High Court relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imal feed. Therefore, the issue before the Apex Court was whether animal feed supplement were eligible for that benefit or not. The entry under this notification exempting the goods at Sl. 10 was animal feed including compound livestock feed and the Hon ble Supreme Court ruled that the preparations imported by the Importer were animal feed in as much as animal feed was a generic term which includes supplements which are species. 107. On an analysis of the above case law, we note that the Hon ble High Courts and the Apex Court examined the goods vis-a-vis the entry in the Sales Tax Act in the case of Glaxo Laboratories Limited, entries of the exemption notification in the case of M/s. Glindia Limited and the entries in the Import Tariff in the case of Sun Export Corporation. We note that during the material period, the present tariff both in Customs side and Central Excise side were not in existence and the description of the goods was not very elaborate on the Customs side and there was no specific tariff item on Central Excise side as these items were classifiable under the residuary Tariff Item 68. But the findings of the Apex Court are relevant to the extent that animal feed s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be ascertained accordingly. It was observed that note under Chapter 23 of CETA 1985 reads : Heading No. 2302 includes products of a kind used in animal feeding not elsewhere specified or included, obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, other than vegetable waste, vegetable residues and by-products of such processing. It was also observed that the word includes mentioned here has to be understood in the context referred to above. As such it could only be taken to refer to only those preparations used in animal feeding, which were not elsewhere specified or included; and were obtained by processing vegetable or animal material. It was observed by the Tribunal that nowhere there is even an iota of indication or slightest hint of any synthetic material or mixtures thereof or of products made mainly or wholly of or from synthetic material. It was therefore observed that in the above context, the word includes used in the Chapter note cannot be stretched or extended to cover synthetic material and that it can be taken to mean and refer to products obtained by proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Note of Chapter 23 of CETA 1985 should be interpreted to mean the extension of the Heading 23.02 of CETA 1985 to cover the items mentioned in Chapter Note of Chapter 23. 112. Once it is noted that Heading 23.02 of CETA 1985 corresponds to Heading 23.09 of HSN, we have to examine the implication thereof. We find that preparations mentioned under Heading 23.09 of HSN include sweetened forage and other preparations. Other preparations include preparations for supplementing farm-product feed and preparations for use in making the complete feeds. We also note that vitamins or provitamins, amino-acids, anti-biotics, coccidiostats, trace elements, emulsifiers, flavourings and appitizers are the ingredients of these preparations. These descriptions clearly show that the preparations may contain synthetic ingredients also and thus, the findings of the Tribunal in the Ranbaxy Laboratories case that synthetic materials are not covered by Chapter note is fallacious. In para 3 of its order, it has been observed : The Heading 23.09 of HSN corresponds to Heading 23.02 of the CETA (and the Chapter Note 23 of CET relating to Tariff Heading 23.02 clearly follows Chapter Note of Chapter 23 of HS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements and substances that an animal needs in a balanced feed. From the above decision, two things become clear : one is that animal feed termed as ration is a different thing from complete feed or feed supplement and the second thing is that mineral supplements are indeed part of animal feed. Both these things have been ignored by the Tribunal in Ranbaxy Laboratories case. 116. In the case of Eskayef Ltd., [1990 (49) E.L.T. 649], the Apex Court held : Here we find that Neftin-50 and Neftin-200 contain Furazolidone which is administered for prevention and treatment of ailments viz. coccidiosis and histomoniasis in poultry. Merely because Neftin-50 and Neftin-200 can also be used for improving egg production and increase in growth rate of broilers would not in any way detract from the fact that the said products are medicines for use in the treatment and prevention of ailments in poultry. Once it is found that Neftin-50 Neftin-200 are medicines for use for treatment and prevention of ailments in poultry, they have to be regarded as P P medicines chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equire the exclusion of other Rules those other Rules must also be applied for determining the classification of the article. Therefore, all the relevant rules of interpretation in the Tariff come into play in the classificatory process. Classification has to be determined both according to the provisions of the rules unless a particular note or heading excludes the application of the rules other than Rule 1. It was argued for the Revenue that there was no prohibition to go to Rules of Interpretation; that if the rules are applied the product qualifies for classification under Heading 29.36 of CETA 1985. It was argued that anything containing synthetic material will disqualify itself from being classified under Heading 23.02 of CETA 1985 as Chapter note cannot be violated. It was also argued for the Revenue that everything that is used in animal feeding does not necessarily become classifiable under Heading 23.02 of CETA 1985. 118. As against the above contentions, the Assessees contended that for classification under Heading 29.36, we have to refer to HSN also; that Heading 29.36 of HSN speaks of vitamins, provitamins and intermixtures of foregoing whether or not in any solvent; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Counsels for the Assessees also submitted, as alternative plea, that in case the preparations manufactured by them are considered as classifiable under Heading 29.36, then no manufacture is involved in as much as they purchase vitamins from outside and the final product shall also be vitamins. Revenue, however, submitted that the goods will be treated inter-mixtures. On careful consideration of the pleas submitted by both sides, we observe that there is force in the arguments adduced by the Counsels for the Assessees. 121. Another question that has been referred to for determination before us was whether Niger Extractions and Rice Bran Extractions are classifiable as animal feeds for purposes of levy of export duty under Entry 21 of the Second Schedule (Export Tariff). The first issue that was argued as indicated in the preceding paragraphs was whether these items are animal feeds at all. The Assessees claimed that they are not animal feeds but ingredients of animal feeds whereas the Department held that they were animal feeds. He also attempted to distinguish Glindia Glaxo Laboratories on the ground that these judgments dealt with feed supplements and not with complete a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tenance of life but also that feed which is supplied over and above the maintenance requirements for growth or fattening and for production purposes such as for reproduction, for production of milk, eggs, meat etc. or for efficient output of work. The same reasoning would apply to the present case also. These products are also fed to animals or poultry to give them better nourishment. They would, therefore, qualify as animal feeds . 122. The Apex Court in the case of M/s. Sun Exports Corporation v. C.C., Bombay, after examining the various entries, technical literature, quoted with approval the decision of the Hon ble Bombay High Court holding : 13. Now, the question whether the animal feed supplement would fall under the Exemption Notification dated 1-11-1982. As noticed earlier, similar question was considered by the Bombay High Court and the learned Judge expressed the view as follows : The preparations in question are used to supplement animal feed. Sometimes animal feed or poultry feed is already fortified with these vitamins when sold. Sometimes, however, farmers prefer to add the vitamins either to animal feed or to poultry feed separately. These products strengt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld, therefore, qualify as animal feeds . It was submitted by the respondents that the subsequent amendment expressly refers to animal feed supplements . This suggests that animal feed supplements were not previously included in the exemption notification. This reasoning must be reacted. The amendment appears to be clarificatory in nature. For example, the amendment now expressly refers also to animal feed concentrates which were not expressly referred to earlier. It cannot be said that animal feed concentrates are not animal feed. In the same manner products which supplement animal feed and are generally added to animal feed are also covered by the generic term animal feed . We are in agreement with the above view expressed by the Bombay High Court. No doubt it was contended on behalf of the Revenue that the contrary view taken by the Tribunal has been challenged in this Court which was rejected in limine at the admission stage. We do not think that dismissal at the admission stage can be relied upon as a binding precedent. Even assuming that there are two views possible, it is well settled, that one favourable to the assessees in matters of taxation has to be preferred. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are classifiable, according to this ruling of the Apex Court under Heading 23.02 of CETA 1985. The Apex Court further, in para 37, held that : When an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause. The question of competition between two rival classifications will, however, stand on a different footing. In the instant case, we find that there are certain preparations containing not only vitamins but other ingredients also. Having regard to the end use of the product, the composition thereof, the product becomes specific for classification under Heading 23.02 of CETA 1985. 126. The Apex Court in the case of M/s. Plasmac Machine Mfg. Co. Pvt. Ltd. v. C.C.E. [1991 (51) E.L.T. 161 (S.C.)] went on to hold in para 13 that : ..How is the product identified by the class or section of people, dealing with or using the product is also a test when the statute itself does not contain any definition and commercial parlance would assume importance when the goods are marketable as was hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Heading 29.36. 128. The Hon ble Bombay High Court in the case of M/s. Garware Nylons Ltd. v. Union of India Ors [1980 (6) E.L.T. 249 (Bom.)], in Para 14, held : There is, however, sufficient material on record which goes to show that nylon twine manufactured by the petitioners has been treated as a kind of nylon yarn by the people in the trade. It is commonly considered as yarn. Hence it can be classified under Item 18. In the instant case, we note that a lot of evidence has been led by the Assessees in support of their contention that the goods in question are preparations of a kind used in animal feeding and, therefore, they will be classifiable under Heading 23.02 of CETA 1985. No evidence to the contrary has been led by the Revenue to rebut or disprove this evidence. 129. In the case of M/s. Leukoplast (India) Ltd. v. State of Goa [1988 (36) E.L.T. 369A (Bom.)], the Hon ble Bombay High Court held : It is clear that while construing entries in the Schedule to determine whether they are taxable or not, resort must be had to the Items / entries as ordinarily understood by Traders and Consumers and in the absence of technical definition of the entires in the Act it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well settled in these matters how a good is known in the trade and treated in the trade literature is relevant and significant and often decisive factor. The Apex Court in this case had before it the classification of a product under Customs Tariff. This ratio squarely covers the case before us in favour of the Assessees. 133. In para 7 of their judgment in the case of C.C.E. v. Fenoplast (P) Limited [1994 (72) E.L.T. 513 (S.C.)] , the Apex Court held : ...If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment, the meaning of the term in common parlance or commercial parlance has to be adopted. This judgment of the Apex Court on all fours applies to the facts of the case of the Assessees in the case before us to support their contention that the preparations are classifiable under Heading 23.02 of CETA 1985. 134. In the case of C.C.E. v. Lekhraj Jessumal Sons [1996 (82) E.L.T. 162 (S.C.)], the Apex Court in Para 4 of its judgment held : 4. We do not think that we can put it better. Progress cannot be stiffled by an over-rigid interpretati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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