TMI Blog2013 (11) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... animal feed. Following CCE, Guntur vs. Surendra Cotton Oils Mills & Fert. Co. [2000 (12) TMI 103 - SUPREME COURT OF INDIA] - The appellant only manufactured a mixture of chemicals in its factory which is called as Niacin Feed Premix but did not manufacture animal feed in the same factory using niacin - thus it was not eligible to the duty exemption under the notification - Legislature consciously granted duty exemption to the intermediate product if such product is used in the same factory to manufacture the notified finished goods under Notification No. 10/96-CE - Such exemption being granted at public cost that cannot be liberally construed to grant undue benefit to the appellant – Thus the benefit of duty exemption on niacin was rightly rejected. Duty shall be levied on niacin in accordance with law and the goods in question shall be valued in accordance with CAS -4 - No cenvat credit is available on niacin being used in the goods subjected to nil rate of duty - Interest on duty demand would be leviable - No penalty shall be levied on the appellant for the confusion of the legal position – Decided against Revenue. - Appeal No. E/2484/ 2011 and Apeal No. E/23/2011 - FINAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rise to the aforesaid consequences in adjudication. 4.3 Appellant admitted in its letters dated 17.6.2010 and 29.7.2010 addressed to jurisdictional Central Excise Authority that Niacin Feed Premix was not animal feed but was an ingredient to manufacture or prepare such feed. Relevant extracts from the said letters which finds place in adjudication order is re-produced below for appreciation:- Letter dated 17.06.2010 3. It is further submitted that starch is added in the product to impart better mixing characteristics to the product when it is added to the animal feed. Letter dated 29.07.2010 5. In the case of Niacin Feed Premix, goods are either sold as such from depots or used for further processing in the manufacture of Animal Feed which is exempted from excise duty. [emphasis supplies] 4.4 According to Revenue, information available on the website of the appellant disclosed that Brolay N95 was the brand name of the niacin feed premix for marketing which is added to the animal feed . Such premix was not animal feed which remained undisputed by the appellant. Condition of the Notification No. 10/96-Ce dated 23/07/1996 was that the goods manufactured by an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Emphasis added) 4.7 According to learned adjudicating authority, the appellant was also not entitled to the duty exemption under the above said notification following the ratio laid down in CCE VS Mahaan diaries, reported as (2004) 166 ELT 23(SC). Iin Para 8, Hon ble Supreme Court held as under: 8. It is settled law that in order to claim benefit of a Notification a party must strictly comply with the terms of the Notification. If on wordings of the Notification the benefit is not available then by stretching the words of the Notification or by adding words to the Notification benefit cannot be conferred. The Tribunal has based its decision on a deciosion delivered by it in Rukmani Pakkwell Traders v, CCE, Trichy [1999 (109) E.L.T. 204]. We have already overruled the decision in that case. In this case also we hold the decision of the Tribunal is unsustainable. It is accordingly set aside. (Emphasis added) 4.8 He further relied on the judgment in the case of Union of India Versus Dharamendra Textile Processors reported as 2008 (231) ELT 0003 (SC) to deny duty exemption claimed by the appellant under the aforesaid notification. Hon ble Supreme Court in Para 13 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant was captively used in the manufacture of animal feed supplement and such supplement is animal feed. Accordingly benefit of notification aforesaid is not deniable to the appellant. To support this contention, reliance was placed by appellant on the three Judges bench decision of Apex court in the case of Sun Export Corporation vs. CC, Bombay-1997 (93) ELT 641 (SC). This decision was made on 7.7.1997. According to the appellant, in para 13 of the judgement, the principle laid down by Hon ble Bombay High Court was approved by the apex court holding that animal feed supplement shall enjoy the benefit of exemption. So, also in the case of CCE, Bangalore vs. Tetragon Chemie Pvt.Ltd.-2001 (132) ELT 525 (SC) rejecting appeal of Revenue, three Judges Bench allowed stand of assessee and order of Tribunal reported in 2001 (138) ELT (Tri-LB) was approved. The decision was made on 24.7.2001. On the basis of these two judgements, it was submitted that animal feed supplement used in animal feed is covered by heading 2302 of Central Excise Tariff Act, 1985 and appellant was eligible to the notification benefit. 5.2 It was alternate argument on behalf of the appellant that in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Breeders : 35-40 g/MT of feed Thus, it shows that the impugned products is added to animal feed is not animal feed by itself. It was further submitted on behalf of Revenue that as per the explanatory notes under Heading 23.09 HSN (pp. 177-178), the preparations for a kind used in animal feeding have been explained as under: 2309-Preparations of a kind used in anima feeding 2309.10- Dog or Cat food, put up for retail sale 2309.90 -Other This heading covers sweetened forage and prepared animal feeding stuffs consisting of a mixture of several nutrients designed: (1) To provide the animal with a rational and balanced daily diet (complete feed) (2) To achieve a suitable daily diet by supplementing the basic farm produced feed with organic or inorganic substances (supplementary feed): or (3) For use in making complete or supplementary feeds. (I) Sweetened Forage (II) Other Preparations (A) Preparations designed to provide the animal with all the nutrient elements required to ensure a rational balanced daily diet (Compete Feeds) (B) Preparations for supplementing (balancing) Farm- Produced Feed) (Feed Supplements) (C) Preparations for use in making the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... selves cannot be termed to be animal feed. It may be a component or ingredient or a basic stuff, but it cannot be termed to be animal feed. A very common example on this scope remains that of oil cakes -whereas oil cakes are used as protein supplement in livestock food stuffs and mixed with the animal feed, oil cakes by themselves cannot be termed to be an animal feed, since animal feed not only consists of its ingredients but the total bulk in form, shape and size which would feed an animal. Animal feed thus cannot be an ingredient or part of the feed but in its entirety and as a whole taken together with even vitamins as calcium mix. [Emphasis supplied] 7 Heard both sides and perused the record. Noticing that both appeals having common fact and cause of action, those were heard analogous and disposed by this common order. 8 From the aforesaid factual matrix it is clear that stand of Revenue is niacin feed premix manufactured by the appellant was not animal feed for which it is not entitled to the duty exemption on niacin. Record also reveals that animal feed premix was branded as Proolay N95 which is distinct goods without that being an animal feed. Appellant failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23, 1996 In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government being satisfied that it is necessary in the public interest so to do, hereby exempts all goods falling within the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), from the whole of the duty of excise leviable thereon which is specified in the said Schedule, subject to the condition that the said goods are consumed within the factory of their production in the manufacture of goods specified in column (3) of the Table hereto annexed and falling under Chapter, heading No. or sub-heading No. of the said Schedule as specified in the corresponding entry in column (2) of the said Table. TABLE S. No. Chapter or heading No. or sub-heading No. Description (1) (2) (3) 4. 23 Animal feed (Notification No. 10/96-C.E., dated 23-7-1996 as amended by Notifications No. 11/2000-C.E., dated 1-3-2000, No. 18/2006-C.E., dated 1-3-2006, No. 48/2006-C.E., dated 30-12-2006, No. 39/2011-CX, dated 12-09-2011 and No. 25/2012-C.E., dated 08-05-2012.) 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly consists of its ingredients but the total bulk in form, shape and size which would feed an animal. Animal feed thus cannot be an ingredient or a part of the feed but in its entirety and as a whole taken together with even vitamins and calcium mix. 6. The whole substance thus is the mix and not any specific item as such. Reference has been made to the decision of this Court in Sun Export Corporation, Bombay v. Collector of Customs, Bombay Anr. - 1997 (93) E.L.T. 641 (S.C.) = 1997 (6) SCC 564 wherein this Court recorded with concurrence the observations of the Gujarat High Court in the case of Glaxo Laboratories (India) Ltd. v. State of Gujarat [1979 (43) STC 386 Gujarat] to the affect that it cannot be said that animal feed concentrates are not animal feed. In the same manner products which supplement animal feed and which generally added to animal feed are also covered by the generic term animal feed . 7. The situation however, is not the same in the instant matter. In the case of Sun Exports Corporation (supra), it was animal feed and animal feed supplements and by reason of the exemption notification for animal feed, this Court came to a definite conclusion that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njab Bone Mills [1988 (38) E.L.T. 389 (Tribunal) (Appeal No. 615/85-C with E/Cros/64/1988-C)] for coming to a conclusion that the goods imported by the appellants are eligible for exemption under Notification No. 234/82. However, this view was the minority view and, therefore, the exemption claimed by the appellant was denied. The majority view, it appears, was influenced by the fact that a decision of the Tribunal in Aries Agro-Vet Industries (P) Ltd. v. CCE [1984 (16) E.L.T. 467 (Tribunal)] taking a similar view, was challenged by filing Civil Appeal No. 17 of 1984 and that was dismissed at the admission stage. It must be noted that presumably the amendment to Exemption Notification No. 234/82 by a subsequent Notification No. 6/84-C.E., dated 15-2-1984 was not before the Court for consideration. The majority view also failed to take note of the subsequent amendment to the main exemption notification as well as the effect of the amendment as noticed by the Bombay High Court in Glindia Ltd. case [1988 (36) E.L.T. 479 (Bom.)]. Since we have already extracted in extenso the decision of the Bombay High Court, we do not think it necessary to repeat the same. 9. While it is true that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the live stocks beyond the normal levels. He further observed that he would have accepted the plea of the assessees that the products were animal feed had the product manufactured by them been directly used as such for animals feeding. The claim of the assessee was rejected because according to the Collector the products merely were to enhance the performance of live stocks by addition of these supplements to the animal feeds. Hon ble Court observed that the Collector regarded the products in question as animal feed supplements. On appeal to the Tribunal it came to the conclusion that animal feed supplements were rightly included in Tariff Item 2302 being preparation of a kind used in animal feeding including dogs and cats food. Apex Court agreed with the conclusion of the Tribunal that even food supplements like the products of the assessee which are used in animals feeding would fall under the Heading 2302. Thus it is abundantly clear that Apex Court judgment in the case of Tetragon was on a context different from the issue of exemption notification benefit which is involved in the present appeals. 13 The exemption from payment of central excise duty granted under notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks like Sulphate content and that is not monitored because the same is to be used for manufacture of a product which is not used for human consumption. Both products were different from the manufacturing stage itself. 17 Aforesaid factual matrix, ratio laid down by apex Court in Surendra Cotton Oil Mill case (supra), rules of interpretation relied on by learned Adjudicating Authority exhibit that the appellant only manufactured a mixture of chemicals in its factory which is called as Niacin Feed Premix but did not manufacture animal feed in the same factory using niacin. Therefore it was not eligible to the duty exemption under the notification aforesaid. Legislature consciously granted duty exemption to the intermediate product if such product is used in the same factory to manufacture the notified finished goods as tabulated under column 3 to the Table under Notification No. 10/96-CE dated 23/7/1996. Such exemption being granted at public cost that cannot be liberally construed to grant undue benefit to the appellant. Therefore learned adjudicating authority has rightly denied benefit of duty exemption on niacin following the apex Court decisions stated by him in the adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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