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TMI Blog2013 (11) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as 'the Act') denying benefit under the aforesaid notification and recovery thereof was ordered with interest. So also penalty of Rs. 53,46,393/- was imposed on the appellant under Rule 25(1) (a), (b) & (d) of the Central Excise Rules, 1944 read with Section 11AC of the Act. 3. In appeal no E-2484/2011 consequence of adjudication was also similar for the period August 2009 to July 2010 raising duty demand of Rs.50,70,613/- denying duty exemption under the above notification followed by other consequences of law. Interest was levied on the demand and penalty of Rs.50,70,613/- was also imposed. FACTUAL MATRIX 4.1 Admittedly averment of the appellant in para 3 of statement of facts of Appeal Memo in appeal No. E-23/2012 is that it was job worker for Jubilant Organosys Limited to manufacture Niacin, a dutiable goods liable to duty @10% and classified under the Chapter heading 2936 29 29 and such niacin captively consumed in the manufacture of 'niacin feed premix' classifiable under chapter heading 2309 90 90 of Central Excise Tariff Act, 1985 and liable to nil rate of duty. Niacin was cleared without payment of duty conceiving that the pemix was animal feed for which ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating authority held that scope of the notification cannot be expanded to cover the goods not intended to be exempted by the notification following apex court Judgment in RAJASTHAN SPG. AND WVG. MILLS LTD. Versus COLLECTOR OF C. EX., JAIPUR reported as 1995(77)ELT 474(SC). Hon'ble Court in Para 16, of the Judgement held as under:- 16. Lastly, it is for the assessee to establish that the goods manufacturted by him come within the ambit of the exemption notification. Since it is a case of exemption from duty, there is no question of any liberal construction to extend the term and the scope of the exemption notification. Such exemption notification must be strictly construed and the assessee should bring himself squarely within the ambit of the notification. No extended meaning can be given to the exempted item to enlarge the scope of exemption granted by the notification. (Emphasis added) 4.6 Learned Adjudicating Authority relied on the judgement in the case of CCE VS. Modi Rubber reported as 2001 (133) ELT 515 (SC) to support his decision of denial aforesaid. A three Judges bench in Para 7 of the Judgement held as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.10 Appellant vide its letter dated 29.08.2011 supplied cost of production data certified by its Chartered Accountant claiming that the same was in accordance with CAS-4. But ld. Authority below found that cost of production of the goods was determined by appellant based on cost of 'Beta Piocline' a different product manufactured by one M/s Jubilant Life Sciences Ltd. Gajraula, U.P. added by job charges thereto. Accordingly, he held that cost of manufacture of the intermediate goods needed to be determined on the basis of landing cost of all the raw materials in the factory of the appellant plus expenses on account of various parameters like Material Consumed, Direct Wages and Salaries, Direct Expenses, Works Overhead, Quality Control Cost, Research and Development Cost, Administrative Overhead, (related to production), Opening Work in Progress, Closing Work in Progress, input received free of cost etc. as well as profit margin of the appellant. 4.11 It was observed by the learned Adjudicating Authority that the appellant had taken the value of raw material 'Beta Piocline' as the cost of production and not the landed cost of raw materials of intermediate goods manufactured and se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l feed. Niacin was not consumed in the factory of the appellant to manufacture animal feed. This has violated condition of the exemption notification aforesaid. 'Animal feed' and 'niacin feed supplement' are distinct goods and cannot be interpreted to be one and the same goods due to their very nature and marketing of the premix under a brand name as stated herein before. Both are recognised in market distinctly as well as by law for which appellant shall not enjoy the exemption benefit in respect of niacin. Chapter 23 of the Central Excise Tariff Act, 1985 has undergone amendment and the impugned periods are governed by such amendment recognising different goods under different subheadings under chapter 23. Premix was an ingredient to animal feed along with other ingredients. Such premix was subject to nil rate of duty. No cenvat credit is admissible to the appellant. 6.2 Learned representative for Revenue emphasised that the product Brolay N95 cleared by the appellant had following features: Composition: Contains Niacin Feed Grade Not less than 95% Features: Brolay-N95 is a white crystalline odourless powder that has excellent flawability and niacin content not less than 95% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various residues of the food industries, etc. or of inorganic substances (e.g., magnesite, chalk, kaolin, salt phosphates). The concentration of the substances described in (1) above and the nature of the carrier are determined so as to ensure, in particular, homogeneous dispersion and mixing of these substances in the compound feeds to which the preparations are added. 6.3 According to ld. JCDR, a two Judges bench of Apex Court in the case of CCE, Guntur vs. Surendra Cotton Oils Mills & Fert. Co.-2001 (127) ELT 3(SC) decided on 15.12.2000 defined what is 'animal feed' in para 4 and 5 of the judgment as under which supports case Revenue. For convenience of reading the said paras are reproduced as under:- 4. Be it recorded that the term 'animal feed' has not been defined in the Tariff Act and as such we are left with no alternative excepting noting the ordinary dictionary meaning of the word or the user and understanding of the word in common parlance. In IS 9703-1980 it is found in para 0.2 as below:- In the field of animal feeds manufacturing industry a large number of feeding stuffs (ingredients) are utilised, which may be by-p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imal materials to such an extent that they have lo0st the essential characteristics of the original material, other than vegetable waste, vegetable residues and by-products of such processing: Tariff Items Description of goods Unit Rate of duty (1) (2) (3) (4) 2309 PREPARATIONS OF A KIND USED IN ANIMAL Kg. Nil FEEDING 2309 10 00 Dog or cat food, put up for retail sale Kg. Nil 2309 90 Other: 2309 90 10 Compounded animal feed Kg. Nil 2309 90 20 Concentrates for compound animal feed Kg. Nil Feeds for fish (prawn, etc.): 2309 90 31 Prawn and shrimps feed Kg. Nil 2309 90 32 Fish meal in powdered form Kg. Nil 2309 90 39 Other Kg. Nil 2309 90 90 Other Kg. Nil 9 To appreciate object and mandate of the Notification No. 10/96-CE., dated 23/07/96 as well as specific condition prescribed therein to be fulfilled to avail duty exemption in respect of the goods manufactured and consumed within the factory to manufacture animal feed, in so far as that is relevant for the purpose of decision in these appeals is extracted as under: NOTIFICATION NO 10/19996-Central Excise, DATED: July 23, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'animal feed' has not been defined in the Tariff Act and as such we are left with no alternative excepting noting the ordinary dictionary meaning of the word or the user and understanding of the word in common parlance. In IS 9703-1980 it is found in para 0.2 as below :- In the field of animal feeds manufacturing industry a large number of feeding stuffs (ingredients) are utilised, which may be by-products of other industries and also subjected to certain processing before utilisation. 5. IS 9703 thus recognises a distinction between the feeding stuffs (ingredients) and animal feed. The understanding of the Indian Standard Institution as referred in IS 9703, thus goes to suggest that ingredients by themselves 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 score 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 fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead with Item 68 of the Central Excise Tariff and therefore, the Exemption Notification dated 1-11-1982 was of no avail to the Corporation. 3. Aggrieved by the rejection of refund applications the?appellant preferred separate appeals one set before Collector of Customs (Appeals), Bombay and another set before Collector of Customs (Appeals), Calcutta. The appellate authority at Bombay accepted the claim of the appellant and granted the relief holding that the goods imported were in the nature of 'Animal Feed Additives' and as such fall under the heading 23.01.07. However, the appellate authority at Calcutta rejected the claim of the appellant and dismissed the appeal accepting the view of Assistant Collector (Refunds). 8. It is on this factual backdrop this Court in paragraph 14 of the report observed as below: 14. We have carefully gone through the minority and the majority views of the Tribunal. We find that Shri K. Gopal Hegde who has dealt with the issue in extenso, has taken note of the ratio laid down by the Bombay and Gujarat High Courts as well as a subsequent decision of the Tribunal itself in CCE v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 2001 (138) ELT 414 (LB) relates to the classification as to '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'. In appeal by revenue to Apex Court, in the judgment reported as Collector of Central Excise, Bangalore V. Tetragon Chemie P. Ltd - 2001 (132) ELT 525 (SC) categorically stated that the short question that arises for consideration in the present case relates to the products of the respondents which they represent as being animal feed supplements. It is not in dispute that the products of the respondents consist of one or more vitamins mixed together with dilutants and these products are used in a small quantity for improving animals performance. In Tetragon's case the Collector of Central Excise came to the conclusion that the product did not fall under Entry 2302 because the product had to be added in a small quantity to the main feed to get desired performance of the live stocks or to enhance the performa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stage 2 The material is subject to oxidation where nitric acid is added. Stage 3 Crystallized Stage 4 Centrifugation. The liquor which is extracted is added to stage 1 Stage 5 Solid from stage 4 is dissolved in water and material is precipitation with ammonia gas Stage 6 Centrifugation and material is washed with RO water. Stage 7 Drying Stage 8 The material is multimilled Stage 9 The material is blended with starch powder in a ration so as to have about 5% starch in the final product. Stage 10 The power is packed as niacin feed pre-mix. 16 Record reveals that on being questioned by Revenue as to at what stage of the segregation of two goods i.e. 'Niacin' & 'Niacin feed premix' takes place, the authorized signatory Sh. Kishore Deshmukh replied that the stage was '8'. On being specifically asked about the difference between the 'Niacin' before mixing with Starch and the 'Niacin' which is cleared on payment of duty Sh. Deshmukh stated that both the product are Niacin except that the Niacin which is consumed in the manufacture of Niacin Feed Premix is not subjected to the quality checks like Sulphate content and that is not monitored because the same is to be used fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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