TMI Blog1998 (11) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Ranbaxy Laboratories Limited v. CCE; that against the said judgment of the Tribunal, an Appeal has been admitted by the Supreme Court 1998 (99) ELT A231J. The ld. Advocate. Shri V. Lakshmi Kumaran in fact gave of copy of the Order of the Apex Court admitting the Appeal. The Civil Appeal No. is 2284 of 1995 Dated 25.9.95. He objected to the hearings being proceeded with. Having heard both sides, we overruled the objection raised by the Revenue in the case before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e solvent does not render the product particularly suitable 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 (J) above with an added anti-dusting agent or a colouring or odoriferous substance added to facilitate their identification or for safety reasons, provided that the additions do not render the product particularly suitable for specific use rather than general use; (h) The following products, diluted to standard standard strengths, for the production of azo dyes; diazonium salts, couplers used for these salts and diazotisable amines and their salts. 2. This Chapter does not cover: (a) Goods of Heading No. 15.01 or glycerol (heading 15.06); (b) Ethyl alcohol: (c) Methane or propane (Chapter 27); (d) The compounds of carbon mentioned in Note 2 of Chapter 28: (e) Urea (Chapter 31); (f) Colouring matter of vegetable or animal origin (heading No. 32.03), synthetic organic colouring matter, synthetic organic products of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feeding stuffs of animals. It is there pointed out that food is essential for the maintenance of life. The nutrients in a feeding stuff enable the animal body to maintain 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 an soluble carbohydrates. 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 Vitamin 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the amino acids, vitamins and minerals must be present in the diet in a very definite ratio to energy so that the animal will receive enough of all essential nutrients 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 the Encyclopaedia Brittanica, Volume 9, Page No. 144 as 'Feed 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Since that date, there has been enormous expansion in large sale manufacture of vitamins, antibiotics, hormones and essential aminoacids. These substances have been added to mixed feeds as supplements 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V. Lakshmikumaran, V.S. Nankani, J.S. Patel. P.C. Anand and R.G. Sheth, Advocates appeared for the Assessees whereas Shri B.K. Gupta, the ld. Joint Chief Departmental Representative appeared for the Revenue. 21. It was argued for M/s. Tetragon Chemie (P) Ltd., that since there 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 there under. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jarat Sales Tax Act. 1969 or as entry No. 22 of Schedule 1 of the said Act. The Hon'ble Gujarat High Court had held that the term cattle and poultry feed must include not only that food which is supplied to domestic animals or birds as an essential ration for the maintenance of life, but also that feed which is supplied over and 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&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as a criterion for classification; that their labels show that the goods are used as animal feeding only; that the Department has not brought any evidence on record to show that the preparations are not used as animal feed supplements; that apart from tariff description, there was no other tariff definition in the tariff or rules; that the mere mixture of small quantity 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 8.9.98, 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 ers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plans could not be described as paper as that word was used in common parlance. On the Duplicators (P) Ltd. (1974) (33) STC 333 that stencil paper could not be classified as paper for the purposes of Orissa Sales Tax Act. It is a matter of common experience that the identity of 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 and Ors. which was a case und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (I) Limited. M/s. Protin Kern Ltd.; Commissioner of C.E. v. Wockhardt Pvt. Ltd. 1998 (100) ELT 486 Mayo (India) Ltd. v. CCE 1998 (8) ELT 630 fully support the above view. 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... early shows that the Chapter is to be construed not in the restrictive sense, but in the exhaustive sense. It was. therefore, argued that if the feed supplements also contained synthetic products, they cannot be excluded from the Chapter 23. It was argued that argued that similar issue came up before the Apex Court in the case of M/s. Sun Export Corporation 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstrued as covering other items also; that Chapter 23 covers all types of preparations which are used directly or indirectly for feeding. It was also argued that in the case 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. and Anr. v. State of Gujarat and Anr., 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the active substances (Vitamins, Aminoacids, Antibiotics, Coccidiostats. etc.). Stabilizers and antioxidents etc.. Certain organic or inorganic nutritive substances known as carriers which help in homogenous dispersion and mixing of the active 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 of classifying the product under Heading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consists of other nutrients; that vitamins was not the only ingredient; that vitamins is an ingredient in animal feed supplement: that from the procedure of manufacture, it would be seen that vitamins and other nutrients depending on the product are weighed, blended with diluents and mixed, the mixture is served and put into blender and mixed thoroughly and then taken for packing; that some products are a premix of vitamins and highly absorbent precipitated silica which acts as a carrier. It was argued that in the case of Reckitt Coleman of India Ltd., this Tribunal held: Therefore, in the context of the use of the words in the notification it appears to us that preparation as used in said item 14 would have to be a product prepared by addition, mixing or other such similar process to the original commodity in order to derive a new commodity. Product has been defined as 1. A thing produced, 2. A substance obtained from another by chemical change. In the case of M/s. Aries Agro-Vet Industries Private Lid., 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d product has to satisfy all the requirements of Chapter Note to Chapter 23 in view of the use of the expression 'include' in the notes. It was pointed out for the Assessees that such product satisfies description of Heading 23.02. It was also argued for the assessees that Chapter 29 applies to vitamins only and that vitamins mixed with other ingredients cannot be classified under Chapter 29.36 inasmuch as Heading 29.36 covers only pro-vitamins, vitamins, derivatives of pro-vitamins and vitamins used primarily as vitamins and intermixtures of vitamins and provitamins whether or not in any solvent. Thus the emphasis was on 'used primarily as vitamins'. It was submitted for the Assessees that the products in question are not used as vitamins, but are sold as animal feed supplements and. therefore, they cannot be classified under Chapter 29.36 inasmuch as the products in question not only contained vitamins, but contained substances like minerals, carbohydrates 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was submitted that even if Interpretative Rule 2(b) is applied, the classification of the goods has to be determined in accordance with the principles contained in Rule 3(a), 3(b) and 3(c) in a sequential manner. It was contended by the assessees that in terms of Rule 3(a), the Heading 23.02 provides most specific description and should be preferred to a more general description if at all in heading 29.36. It was submitted that Heading 23.02 was specific in comparison to Heading 29.36. Hence this Heading should be preferred. Subjecting the goods to the above test, it was contended that Heading 23.02 was more specific. It was alternatively contended that if the goods in question are treated as vitamins, even in that event, the process of preparation of the product in question does not amount to manufacture and since the starting material or raw materials for the products in question are vitamins themselves and if the final product 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 contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants will be classified under Heading 29.36. Referring to Trade Notice No. 175/CE/CH.29/BOL/90 Dated 18.12.90 issued by the Bolpur Collectorate, it was contended that this Trade notice clarified that a doubt has been raised regarding the correct classification of the products which consist of only different vitamins in definite proportions and no other ingredients except the solvents or stablizers or antioxidants. Stating that such products are generally used as animal feed supplements, the issue was whether these mixtures are classifiable under Heading 23.02 as animal feed supplements or under Chapter 30.03 as medicaments or under Chapter 29.36 as vitamins etc. It was clarified that such animal feed supplements which are just intermixtures of vitamins only and there is no other ingredients except solvents, stabilizers or antioxidants, are covered by Heading 29.36. Even though they are used as animal feed supplements, they cannot be classified 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 inasmuch as the preparations in dispute contain minerals, proteins, carbohydrates etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs do not otherwise require, classification has to be determined according to the provisions of the rules following Rule 1. Heading No. 74.01/02 consists of four items: (i) Copper matte, (ii) unwrought copper (refined or not), (iii) copper waste and scrap, and (iv) master alloys. Insofar as the terms of Heading No. 74.01/02 are concerned, the primary conclusion to which we have come is that brass scrap is not a master alloy. It is nobody's case that brass scrap belongs to either of the first two categories, namely, copper matte or unwrought copper. The only question then is whether the third item 'copper waste and scrap' includes brass scrap. Putting Rule 1 in simple language, classification has to be determined according to the description of the articles in the heading and, if the Heading or a Note does not otherwise require, according to the provisions 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 classificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in terms of the Interpretative Rules, the product qualifies for classification under Heading 29.36. 55. The ld. Counsels submitted that in their case, the goods are covered under Heading 23.09 of the HSN which corresponds to Heading 23.02 of CETA 1985; that the description of the goods under Heading 23.02 is more specific and, therefore, even by applying Rules 1 to 3, the goods in their case shall be classifiable only under Heading 23.02. 56. The ld. Jt. CDR submitted that even if it is presumed that the goods in dispute are not mixtures so as to fall under Heading 29.36 directly, they are most akin to mixtures provided under Heading 29.36 inasmuch as the meaning of the word 'akin', according to the dictionary, means 'related by blood or kindred character'; that the word 'kindred' means 'alive or similar in character'. It was submitted by the ld. Jt. CDR that even if the mixtures in the instant case cannot 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 submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce the item preparation is a multi-input item, therefore, Rules of Interpretation become relevant and are necessarily attracted. 63. Some appeals filed by M/s. Godrej Soaps Limited were also referred. Arguing the case of M/s. Godrej Soaps Limited, the ld. Counsel submitted that M/s. Godrej Soaps Limited had exported 8 consignments, out of which 2 consignments comprised of Niger Seed extractions and the remaining 6 consignments were of rice bran extractions. These goods were exported in the month of March. 1977. The Notification in operation at the time of export of these goods was Notification No. 16/77-CUS Dated 22.1.1977. The table appended to the said Notification did not include Niger Seed extractions and rice-bran extractions as an exempted animal feed. The appellants paid export customs duty on all these 8 consignments. Subsequently, they contended that Rice bran extractions and higher seed extractions were exempted, therefore, they submitted 8 refund claims. The Asstt. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingredients has clearly emerged as a single commodity and is known in the business circle or commercial parlance as such and in view of these provisions of Section 19 of the Customs Act are not attracted, nor has item No. 19 of the Indian Customs and Central Excise Tariff, any application whatsoever in the present case; that the Hon'ble Delhi High Court in the case of M/s. Modern Mills Limited had quoted the Customs Tariff Ruling No. 35 of 1969 Dated 27.8.69 reading as The Board has under consideration the liability of compound animal feeds to export duty under items 18, 19 and 21 of the Export schedule. These feeds are of different types like feeds for cattle, feeds for poultry, feeds for sheep etc. and are essentially compounded out of oil cakes, meals, rice and wheat bran, fish and meat meal, maize, gluten, molasses, vitamins etc. in varying proportions. As these feeds are compounded materials in which oil 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. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ration. 67. The ld. Counsel once again referred to the judgment of the Hon'ble Bombay High Court in their own case (supra). In this case, the Hon'ble High Court held: The sum total of this discussion is that the animal compound feed, although made up of five or more different ingredients, has clearly emerged as a single commodity and is known in the business circle or commercial parlance as such, and in view of this, the provisions of Section 19 of the Customs Act are not attracted nor has Item No. 19 of the Indian Customs and Central Excise Tariff any application whatsoever in the present case. The Hon'ble Court further held: I may here add that a similar question arose before the Delhi High Court in the case of The Modern Mills Limited v. Union of India and Ors. 1980 ELT 639. In the said case, the very question arose viz. whether animal feed or animal compound feed fell within the provisions of Section 19 of the 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 id ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas the Assessee's Counsels argued at length and submitted that the use of the word 'includes' extends the scope of the words used in the Chapter Note. We have perused the detailed arguments. On careful consideration of the submissions made and the case law cited and relied upon by both sides, we find that there is no limiting factor in the Chapter note so as to restrict its meaning. On the contrary, we find that Heading 23.02 of CETA 1985 corresponds to Heading 23.09 of HSN. Explanatory Notes under Heading 23.09 of HSN speak of various preparations which contain minerals, vitamins, carbohydrates, proteins etc. These explanatory Notes of HSN clearly speak of feed additives and feed supplements. According to these Notes, animal feed additives and animal feed supplements are preparations meriting classification under heading 23.09 of HSN which corresponds to Heading 23.02 of the CETA 1985. We further note that this aspect of animal feed additives and feed supplements was 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct got the specific characteristic of Vitamins being active ingredients, therefore, they were classifiable under Chapter 29.36 and were specifically excluded from heading 23.02 of CETA 1985 in view of the expressions used 'not elsewhere specified'. 75. On careful consideration of the submissions made and the findings of the Tribunal in various cases cited and relied upon by both sides, we find that competing entries are Heading 23.02 and Heading 29.36. Heading 23.02 corresponds to HSN entry 23.09. Under Heading 23.09 of the HSN. there are detailed notes as reproduced in the preceding paragraphs which clearly bring out that the preparations as indicated under Heading 23.09 of the HSN are to be meticulously examined to find their scope and ambit. The Notes under Chapter 23 of HSN become very relevant as Heading 23.02 of CETA 1985 speaks of preparations and is pari materia to Heading 23.09 of HSN, and are to be taken into consideration while deciding the classification in terms of Central Excise Tariff Act, 1985 inasmuch 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 CCE, Shillong v. Woodc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under the Notification dated 30.6.1975.' 78. Meaning of 'preparation' came up for consideration before the Tribunal in the case of Reckitt and Colman of India Ltd. and this Tribunal observed: '34. But then the further question is whether they could be further called preparations on the basis of flour. As mentioned earlier the contention for the department is that the word preparations would only mean the end result, giving rise to a product, and not necessarily to a product arrived at by way of a process of addition to the original material. But, in the context of the words used in item 14 this meaning does not appear to us to be appropriate. We feel so since flour itself is a product obtained by grinding the grain. If. therefore, the grain in the form of flour is itself to be treated as preparation, then the words preparation with a basis of flour would appear to be a tautological repetition. Therefore, in the context of the use of the words in the notification, it appears to us that preparations as used in the said item 14 would have to be a product prepared by addition, mixing or other such similar process to the original commodity in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e meaning of the words or phrases occurring in the body of the statute. 83. Examining the facts before us that Note under Chapter 23 of CETA speaks of 'products' and Heading 23.02 speaks of 'preparations' we find that preparations are different from products and if the term includes was not there, there would have been difficulty in the application of the term 'products' to preparations. Hence, the term includes enlarges the scope of Heading 23.02 and does not signify the phrase 'means includes' as contended by the Revenue. 84. (a) This essentially relevant reference, therefore, leads us to examine in detail 'preparation' figuring in HSN Heading 23.09. On an examination of this Heading, we find that Heading 23.09 provides 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 feed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntration of the active substance, and are often put up in a different way. 87. Examining the preparations mentioned under heading 23.09 of HSN. we note that these preparations contain minerals, carbohydrates, vitamins etc. In construing entries of goods in excise, customs, or Sales Tax Acts, resort should normally be had not to the scientific or technical meaning but to their popular meaning viz. the meaning attached to the expressions by those dealing in them. The justification of the rule that the words are to be understood in their natural, ordinary or popular sense is well expressed by Justice Frankfurter: After all legislation when not expressed in technical terms is addressed to common run of men and is, therefore, to be understood according to sense of the thing, as the ordinary man has a right to rely on ordinary words addressed. The Hon'ble Supreme Court has consistently taken the view that, in determining the meaning or connotation of the words and expressions describing an article in a tariff schedule, one principle which is fairly well settled is that those words, and expressions should be construed in the sense in which they are understood in the trade b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end the scope of the heading so as to include preparations not confined to those obtained by processing animal or vegetable material but to preparations containing synthetic materials also. 91. Let us examine the matter before us for determining the identity of the goods. We have (a) Technical Literature; (b) End Use certificates by Experts and Affidavits from Dealers/Users; (c) Definition of 'Animal Feed Supplement' given for the purpose of exemption under Notification No. 6/84-CE Dated 15.12.94; (d) Description of the goods provided for under Heading 23.09 of HSN; (e) Clarifications contained in Board's Circulars (1) Circular No. 1/90 Dated 1.1.1990; (2) Circular No. 188/22/96-CX Dated 26.3.1996 and (3) Trade Notice issued by Bholpur Collectorate dated 18.12.1990; (f) Case Law on the subject--(i) the decision of the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (India) Ltd. 1979 (43) STC 386; (ii) Judgment of the Hon'ble Bombay High Court in the case of M/s. Glindia Limited 1988 (36) ELT 479 and (iii) Judgment of the Apex Court in the case of Sun Exports Corporation v. CC: 1997 (93) ELT 641; (g) Findings of the Tribunal in the case of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts comprise of proteins, minerals, vitamins etc. 95. The Technical literature discussed in the foregoing paragraphs, thus, clearly brings out that animal feed stuff is that part of the feed which is essential for the maintenance of life which has been termed ration . This aspect was very lucidity discussed in the judgment of Aries Agro-Vet Industries Private Limited. In para 10 of this Order, this Tribunal observed: 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'. It is a fact that Aries Agro-Vet describe their goods as animal feed supplements, but we do not think that this by itself should tell against them. 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. Thus, the position has been very clearly examined and brought out in this decisions of the Tribunal, making it clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manufactures' Association and the Affidavits by the Users/Dealers clearly indicate that the preparations are animal feed supplements. DEFINITION OF ANIMAL FEED SUPPLEMENT: 99. Animal Feed Supplement or Preparations have not been adequately defined in the Schedule to the CETA 1985 or the Rules there under. However, we note that feed supplement and concentrates have been defined under Exemption Notification No. 6/84-CE Dated 15.12.94 wherein it has been set out animal feed supplement mean an ingredient or combination of ingredients added to the basic feed mix or parts thereof to fulfil the specific need usually used in micro-quantities and requiring careful handling and mixing. Further, Animal feed Concentrates means a feed intended to be diluted with other feed ingredients to produce a complete feed optimum nutrition balance. This definition, though given for the specific purpose, can be only a guide for understanding the meaning of the terms used in the Notification in particular, but can be generally understood to so mean. These preparations are pre-mixes and mixed in feed in small micro-quantities used for feeding the animals. Thus, these definitions, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the said heading covers complete animal feeds, supplementary animal feeds and preparations for use complete animal feeds, supplementary animal feeds and preparations for use in making a complete feed or supplementary feeds. The preparations for use in making complete feeds or supplementary feeds are known in the trade as premixes. These preparations of compound compositions consisting a number of substances, each type of these substances being present in the premix in varying proportions to serve a particular purpose. Explanatory Notes under Heading 23.09 of HSN (Pages 177-178) further indicate that premixes contained in addition to the active substances (vitamins, amino acids, antibiotics, coccidiostats etc.) and stabilizers, antioxidants, solvents etc' In para 6, the Board clarified In this view of the matter, it would appear that preparations containing active substances (Vitamins or provitamins, amino-acids, antibiotics, coccidiostats etc.) along with the said carriers would fall under Heading 23.02 of CETA 1985, provided such preparations are of a kind used in animal feeding. It may, however, be noted that Heading 23.09 of HSN excludes products of Chapter 29 and medicam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by Heading 23.02 of CETA 1985 if they are known in the trade and used in animal feeding. CASE LAW ON THE SUBJECT: GLAXO LABORATORIES INDIA LIMITED: (by Hon'ble Gujarat High Court). 103. In this case, the Hon'ble Gujarat High Court had before it the question of classification of 4 products for decision whether on the facts and in the circumstances of the case, viz. Vitablend AD 3 and AD 3 Forte are covered by Entry 21 of Schedule 1 of the Gujarat Sales Tax Act 1969 for the year 1969 and whether on the facts and in the circumstances of the case, Vitablend AB 2D 3 and Vitablend WM Forte are covered by Entry of Schedule I of the Gujarat Sales Tax Act 1969 for the year 1969. The Hon'ble High Court after examining the technical literature on the subject, observed: 'From what has been stated above, it becomes clear that even in its popular sense, that is to say, the sense in which people conversant with livestock farming and poultry raising and those dealing in cattle-feed or poultry-feed would attribute to those words, ration for production, such as feed additives or supplements like proteins, minerals, vitamins etc., would truly constitute &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Bombay High Court followed the judgment of the Hon'ble Gujarat High Court which has already been dealt with in the preceding paragraph, we hold that the same argument can be given in support of this judgment and its applicability to the facts of the present case. SUN EXPORT CORPORATION: (Hon'ble Supreme Court) 106. In the case of M/s. Sun Export Corporation, the issue before the Apex Court was that the Appellant Importer had imported 6 consignments of goods (premixes of Vitamin Ad-3 Mix (feed Grade) at Bombay and 7 consignments of similar goods at Calcutta. These consignments were assessed to duty under Heading 29.01/45 (17) of the then Customs Tariff Act, 1975 read with item 68 of the erstwhile Central Excise Tariff. The importer paid the duty and later on claimed refund of duty claiming that the goods imported were classifiable under item 23.01/07 as 'Animal Feed and as per Notification No. 234/82 CE. Dated 1.11.1982, these goods were exempted from levy of duty. Lower authorities rejected the claim. The Apex Court after examining the decision of the Hon'ble Bombay High Court in the case of M/s. Glindia Limited, held We are in agreement wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preparations were animal feed supplements that Heading 23.02 provided the most specific description and. therefore, according to Interpretative Rule 3, most specific description is to be preferred to more general description. The Assessee also contended that the products were exclusively used for animal feeding purposes; that the feed supplement is a formulation of a product which is to be added in the food as a supplement to make it a complete food in the final from; that the feed supplements contain certain items which may be added to the animal feed in micro quantities usually in a concentration of parts to achieve a definite purpose like prevention of diseases, improvement in the performance of livestock, increase in production, increases in weight, increase in milk production etc. It was their case that Penta Forte power, apart from vitamins, the preparation also contains Calcium sulphate and magnesium oxide which an: minerals and that the solvent was soyabean oil; that in the case of Famitone. the active ingredient includes, apart from vitamins, Ascorbic acid and Poly Sorbate and also a solubiliser and that the solvent used in Polyethylene Glycol. 109. The Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as supplement to animal feed does not help the cause of the Appellants and these products are outside the scope of Chapter 23. 110. We have examined the above observations. We note that the word 'includes clearly shows that in addition to preparations mentioned under heading 23.02. it 'includes' products of a kind used in animal feeding and by products of such processing. We note that the Tribunal failed to observe the words 'products' in the Note of Chapter 23 of CETA 1985 and 'preparation' under Heading 23.02 of CETA 1985. We have observed elsewhere that 'product' and 'preparation' are not the same thing. They represent 2 different distinct items. In case the word 'include' is interpreted to read as 'means and includes', then, perhaps preparations as described under Heading 23.02 of CETA 1985 will not be included. We have discussed at length the significance of the word 'includes' and have held that 'includes' used in Chapter Note extends the scope and coverage of the Chapter and, therefore, 'preparation' described under Heading 23.02 of CETA 1985 will be covered even if they are not obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in paste or dried and derived from the manufacture of fish or marine meal or oil. 5. Whole green leaf protein concentrate and green fraction leaf protein concentrate obtained from alfalfa (lucerne). 6. Premixes (including those containing mineral substances and vitamins or provitamins, trace elements, appetizers, soya flour or meal, yeast etc.) 113. Again in para 38 of Ranbaxy's Order, the Tribunal deserved: 38. In the above illustrations, the nature and type of products are worth noting; and it is significant that even where there is a reference to substances or preparations containing proteins or minerals or vitamins, anti-biotics, etc. the basic material is always derived from the processing of residues or waste from food industry. 114. In the above analysis what has been forgotten is that we are dealing with the additives and supplements and not with the ration. There is no doubt that the preparations with which we are dealing are not rations for daily subsistence of the animal but these preparations are given in addition to (he ration to obtain the desired results. The finding of the Tribunal, therefore, is wrong as it has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no tariff item as comparable to heading 23.02 of CETA 1985 but there was a residuary Tariff item 68 which covered all goods not elsewhere specified. Secondly, we find that in that case the dispute was between Tariff Item 14E Tariff Item 68 for the classification; that there was evidence to prove the Neftin 50 and Neftin 200 contained furazolidone which figured in British Pharmacopea and also prescribed as medicine in U.K. In the instant case, Revenue has not placed any evidence on record to prove that the preparations for decision before us were not used in animal feeding. It was also argued by the Counsels for the Assessees that CETA 1985 is now based on HSN and that in the Compendium of Rulings on HSN. it has been clearly clarified that Animal feed preparations shall be classifiable under Heading 23.09 of HSN. 117. For Revenue. It was argued that since the goods contain vitamins and/or provitamins and mixtures thereof, they were correctly classifiable under Heading 29.36 of CETA 1985. The contention of the Revenue was that the active ingredient in the preparations were vitamins and/or provitamins; that vitamins and provitamins or mixtures thereof are covered by a spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and provitamins: that these preparations are thus excluded from qualifying for classification under heading 29.36 of CETA 1985. It was argued for the assessees that applicability of Rules of Interpretation except Rule 1 is prohibited in view of the Chapter note 1 to Chapter 29 which provides. 1. Except where the context otherwise requires, the headings of the Chapter 'apply only to'....: that words 'apply only to' restrict the applicability of Rules of Interpretation; that in the present case the context does not require the applicability of the Rules of Interpretation. It was argued for the Assessees that premixes which the preparations are called do contain synthetic materials like proteins, carbohydrates, minerals etc; that notes under heading 29.36 of HSN lay emphasis on the words 'used primarily as vitamins'; that no evidence has been placed on record by the Revenue that the preparations under consideration are used primarily as vitamins. 119. We have carefully considered the rival submissions. We find that Chapter note 1 to Chapter 29 of CETA excludes the applicability of Rules of Interpretation except Rule 1 inasmuch as the words used in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments also, and we find that they support the view of the department that they are ingredients of animal feed. We have also perused 2 judgments of the Tribunal cited by the ld. Counsel namely (a) CCE v. Surinder Cotton Mills Fert. Ltd. T and (b) Schokhi Industries Pvt. Ltd. v. CC. These judgments also do not help the assessee in view of the High Courts and Supreme Court's judgments discussed herein. We note that the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (I) Limited, after detailed examination of the technical literature on the subject and other evidence, observed: Cattle-feed and Poultry-feed , however, are words which are used in the context of the mixed feed of live-stock and poultry, both of which are reared for production purposes not only domestically, but also commercially. From what has been stated above, it becomes clear that even in its popular sense, that is to say, the sense in which people conversant with live-stock farming and poultry raising and those dealing in cattle-feed or poultry-feed would attribute to those words, ration for production, such as feed additives or supplements like proteins, minerals, vitamins etc. would truly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondent that even if the two products fall under Tariff item 68 the benefit of the exemption Notification No. 55 of 1975 cannot be given to these products because these products are not animal feeds. They are merely animal feed supplements. This exemption notification has been amended by another Notification No. 6 of 1984, dated 15th February 1984 as a result of which the item 'animal feed including compound livestock feed' is now substituted by 'animal feed including compound livestock feed, animal feed supplements and animal feed concentrates'. After coming into force of this notification, the petitioners have been given the benefit of full exemption. The only question is whether prior to this notification, the petitioners are entitled to exemption under the original notification No. 55 of 1975. In the case of the petitioners themselves namely Glaxo Laboratories (India) Limited v. The State of Gujarat reported in 1979 43 Sales Tax Cases, page 386, the Gujarat High Court was required to consider whether certain vitamin products including Vitablend WM Forte which were used for supplementing cattle and poultry feed should be classified as 'cattl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court as well as High Courts have placed reliance on the meaning of certain terms as given in the Encyclopedia Brittanica as well as the dictionary meaning of the terms. We cannot ignore the reliance placed by the judicial authorities on technical literature as there cannot be very hard and fast rule on the subject. Moreover, there are a number of reported cases of the Apex Court as well as High Courts having placed reliance on standard works and Dictionaries such as Websters Dictionary, Encyclopedia Brittanica and guidelines in this regard. We feel that the rule in this regard should be that the words should be construed in the popular sense is a qualified rule and should apply if the statute contains language which is capable of being construed in a popular sense. 124. Looking to the various aspects of the matter, the technical literature on the subject and judicial pronouncements made, we hold that higher seed/rice bran extractions are animal feed and correctly classifiable under heading 21 of 2nd Schedule (Export Tariff). 125. In para 36 Of its judgment in the case of Dunlop India Limited and Madras Rubber Factory Ltd. v. UOI and Ors., the Apex Court rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter with which the Statute is dealing, would attribute to it. This proposition was further followed by the Apex Court in its judgment in the case of Navopan India Ltd. v. CCE, Hyderabad. We note that this ruling of the Apex Court is most apt for application to the facts of the present case in support of the contention of the Assessees. In the case before us, a number of Certificates of Experts were produced that the product is a preparation of a kind used in animal feeding; affidavits of Users/Dealers were also produced to show that the preparations are bought and sold as preparations of a kind used fin animal feeding. 127. In the case of Colgate Palmolive (India) Limited v. Union of India and Ors., the Hon'ble Bombay High Court in para 15 of its judgment, quoting from a decision of the same Court in the case of Sandoz (India) Limited v. UOI and Ors. in Spl. Civil Application No. 2829 of 1974 Dated 5.7.1979), held: It is settled law that in a case of taxation, the burden of proving that the necessary ingredients prescribed by the taxing provision are satisfied is entirely upon the taxing authority. It was primarily, therefore, for the taxing authority to satisfy the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truing 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. In the case before us, the description of the goods in heading 23.02 of CETA 1985 is 'Preparations of a kind used for animal feeding'. Ample evidence was produced by the Assessees to prove that the product was a preparation of a kind used in animal feeding. Obviously, the meaning of the words was clear, unambiguous and, therefore, there should be no dispute for accepting the goods as classifiable under Heading 23.02 of CETA 1985. 131. In para 15 of their judgment in the case of Union of India v. Garware Nylons Limited, the Apex Court ruled:.... It is for the Taxing Authority to lay evidence in that behalf even before the first adjudicating authority. Especially in a case as this, where the claim of the assessee is borne out by the trade enquiries received by them and also the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence. Unfortunately, no such attempt was made. As stated, the evidence led in this case conclusive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , what has to be seen is as to whether, in this case before us, any such clinching evidence of common trade understanding has been placed on record so as to put the matter beyond all possible doubt and justify the respondents contention for ignoring any type of reference to technical literature. On a cumulative reading of the record, we reply in the affirmative. We certainly also take into consideration the principles laid down by the Hon'ble Supreme Court in the Sun Exports Corporation's case. There is a treasure of valuable wealth placed on record by the Appellants to support the view that preparations in dispute are preparations squarely falling in those preparations given under heading 23.09 of HSN which corresponds to heading 23.02 of CETA 1985. We feel that Explanatory notes to the HSN are as representative and symbolic of the common trade parlance and these notes particularly those under heading 23.09 also throw light on the question that pre-mixes including those containing mineral substances and vitamins or provitamins, trace elements, appetisers, soya flour or meal, yeast, etc. are covered by it. We think that the test laid down by Hon'ble Bombay High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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