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TMI Blog2024 (4) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse (JNCH), Nhava Sheva, Taluka Uran, District Raigad, Maharashtra. 2.1 Briefly stated, the facts of the case are that the appellants herein is, inter alia, engaged in the manufacture of animal feed supplements/ concentrates which are described as 'Preparations of a kind used in animal feeding' under various brand names viz., Layvit Premix, Brovit Premix, Breevit Premix, Brovit Plus Premix, Composite Premix etc. by classifying the same under sub-heading 2309 9020 of the Central Excise Tariff. For this purpose, the appellants have registered with jurisdictional Central Excise authorities by duly filing the declaration under Rule 9 of Central Excise Rules, 2001. During such manufacturing process, the appellants had regularly imported since 2006 animal feed additives/premixes, vitamin premixes containing vitamins, minerals and other carriers for manufacture of animal feed supplements. The subject goods imported are certified by the manufacturers-supplier abroad such as M/s BASF-South East Asia Pte Ltd., Singapore; M/s Adisseo Asia Pacific Pte. Ltd., Singapore; M/s Synchem International Co. Ltd., China; DSM Nutritional Products Asia Pacific Pte Ltd., Singapore, as 'feed grade' and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28(1) of the Customs Act, 1962, besides confiscation of the same under Section 111(m) ibid and for imposition of penalty under Section 112(a) and/or Section 114A ibid. The SCN dated 03.06.2016 was adjudicated by the original authority in Order-in-Original dated 03.10.2017 by re-classifying the product as proposed in the SCN, confirming the demand of short paid customs duty under Section 28 of the Customs Act, 1962 along with interest and dropped the proposal for confiscation of imported goods and imposition of penalty on the importers as any malafide intention on the part of the importer has not been proved. Being aggrieved with the impugned order dated 03.10.2017, the appellants have filed this appeal before the Tribunal in Customs Appeal No.85017 of 2018. The subsequent imports of the identical goods by the appellants were also continued to be assessed provisionally in classifying them under heading 2309, against test bond and B.G. for differential customs duty and the goods were finally assessed on merits on the basis of test reports. 2.3 During the pendency of the above appeal, the imports which were provisionally assessed in respect of 33 B/Es, along with other B/Es which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, he pleaded that the imported goods cannot be used by the pharmaceutical industry nor by the food industry. The dispute in classification of the imported goods was raised by the Department for the first time in 2015, and all subsequent imports were cleared on provisional basis upon payment of differential duty and the same were finalized after receipt of the test reports from the Customs laboratory. Learned advocate claimed that in all test reports received, composition of the imported goods had been reported, and it is stated that these are other than food preparation/premixes, from which it can be inferred that the imported goods are not for food intended for human consumption and are only animal feed preparation/premixes. The test reports have been misinterpreted in the impugned order for classifying these as vitamins under heading 2936. 3.2 Learned Advocate submitted that the classification of imported goods declared by the appellants were duly supported by the Harmonized System of Nomenclature (HSN) which provides for coverage of the following types of goods under the heading 23.09 as 'Preparation of a kind used in animal feeding'. Hence, he stated that these goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd judgements of Hon'ble Supreme Court, in the respective cases mentioned below: (i) Tetragon Chemie (P) Ltd. Vs. Collector of C. Ex., Bangalore - 2001 (138) E.L.T. 414 (Tri.- LB) (ii) Commissioner of Customs, Chennai Vs. Lalchand Bhimraj - 2007 (220) E.L.T. 189 (Tri.-Chennai) (iii) Collector of Central Excise, Bangalore Vs. Tetragon Chemie (P) Ltd. - 2001 (132) E.L.T. 625 (S.C.) (iv) Commissioner of Central Excise, Pune Vs. Abhi Chemicals & Pharmaceuticals Pvt. Ltd. - 2005 (181) E.L.T. 351 (S.C.) (v) Dunlop India Limited & Madras Rubber Factory Ltd. Vs. Union of India and Others - 1983 (13) E.L.T. 1566 (S.C.) 4.1 Learned Authorised Representative (AR) reiterated the findings made by the Commissioner of Customs in the impugned order and submitted that issue of classification of impugned goods, has been examined in detail by the learned Commissioner of Customs. He stated that heading 2936 covers Vitamins in any form, regardless of their purity of regardless of the fact that they are mixed with some other material. Further, vitamins of all type, pure or impure, are clearly excluded from the heading 2309. In terms of Note to the Chapter 23, goods of this Chapter are of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty, in respect of various Bills of Entries filed during the disputed period. Further, it is also required to be decided whether the confirmation of the demand of erroneous refund of the differential duty which was paid back by the appellants is legally sustainable on the basis of the determination of the classification of impugned goods. 6.2 In order to address the above issue of classification of imported goods, we would like to refer the relevant legal provisions contained in Section 12 of the Customs Act, 1962; the Customs Tariff Act, 1975 and rules framed thereunder for consideration of proper and appropriate classification of the subject goods under dispute. "Section 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." "Section 1. Short ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to (a), shall be classified as if they consisted of the material or component which gives them their essential character, in so far as this criterion is applicable. (c) When goods cannot be classified by reference to (a) or (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration. 4. Goods which cannot be classified in accordance with the above rules shall be classified under the heading appropriate to the goods to which they are most akin. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er column (4) shall be applicable. ADDITIONAL NOTES In this Schedule,- (1)(a) "heading", in respect of goods, means a description in list of tariff provisions accompanied by a four-digit number and includes all subheadings of tariff items the first four-digits of which correspond to that number; (b) "sub-heading", in respect of goods, means a description in the list of tariff provisions accompanied by a six-digit number and includes all tariff items the first six-digits of which correspond to that number; (c) "tariff item" means a description of goods in the list of tariff provisions accompanying eight digit number and the rate of customs duty; (2) the list of tariff provisions is divided into Sections, Chapters and Sub-Chapters; (3) in column (3), the standard unit of quantity is specified for each tariff item to facilitate the collection, comparison and analysis of trade statistics." 6.3 From plain reading of the above legal provisions, it transpires that in order to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classification of the imported goods. The relevant headings and their tariff entries in the First Schedule to the Customs Tariff Act of contending Chapter headings 2309 and 2936 are extracted as below: "CHAPTER 23 Residues and waste from the food industries; prepared animal fodder NOTE : Heading 2309 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. xx xx xx xx xx Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) 2309 PREPARATIONS OF A KIND USED IN ANIMAL FEEDING 2309 10 00 - Dog or cat food, put up for retail sale Kg. 30% - 2309 90 - Other: 2309 90 10 --- Compounded animal feed Kg. 30% - 2309 90 20 --- Concentrates for compound animal feed Kg. 30% - --- Feeds for fish (prawn etc.): 2309 90 31 ---- Prawn and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the sub-heading of this Chapter Tariff Item Description of goods Unit Rate of Duty Standard Preferential Areas (1) (2) (3) (4) (5) XI --- PROVITAMINS, VITAMINS AND HORMONES 2936 PROVITAMINS AND VITAMINS, NATURAL OR REPRODUCED BY SYNTHESIS (INCLUDING NATURAL CONCENTRATES), DERIVATIVES THEREOF USED PRIMARILY AS VITAMINS, AND INTERMIXTURES OF THE FOREGOING, WHETHER OR NOT IN ANY SOLVENT - Vitamins and their derivatives, unmixed: 2936 21 00 -- Vitamin A and their derivatives Kg. 10% 10% 2936 22 -- Vitamin B1 and its derivatives: 2936 22 10 --- Vitamin B1 [Thiamine (INN), aneurine] and its salts Kg. 10% 10% 2936 22 90 --- Other Kg. 10% 10% 2936 23 -- Vitamin B2 and its derivatives : 2936 23 10 --- Vitamin B2 [Riboflavin(INN), lactoflavin] and its salts Kg. 10% 10% 2936 23 90 --- Other 2936 24 00 -- D-or DL-Pantothenic acid (Vitamin B5) and its derivatives Kg. 10% 10% 2936 25 00 -- Vitamin B6 and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feeds" covered under CTI 2309 9010 and 2309 9010; (iii) the third one i.e., "feeds for fish, prawns, shrimps" covered under CTI 2309 9031, 2309 9032 and 2309 9039; and (iv) the fourth one i.e., "preparations for use in making the complete feeds or supplementary feeds" as referred at (i) and (ii) above, for various animals, consisting of a number of substances which vary according to the animal production required covered under CTI 2309 9090. 8.3 Broadly, we find that the chapter heading 23 deals with "Residues and waste from the food industries; prepared animal fodder", whereas the chapter heading 29 deals with products of "organic chemicals" which are separate chemically defined organic compounds, whether or not containing impurities. Thus, in order to evaluate the proper classification of imported goods, necessarily one had to take recourse to the actual test reports of the imported goods. 9.1 On the factual matrix, as all the imported goods under dispute have been tested by drawing representative samples, the results of such testing in the form of test reports should provide the details about the imported goods and would be of assistance in proper classification of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... show cause notice, which proposes to reject the declared classification under CTH 23.09 and reclassify the imported products under CTH 29.36 or 30.03.......Perusal of the test reports lead to some interesting findings. Presumably, for products, namely, Lutavit E 50 Premix, , Microvit H Promix Biotin 2%, and Microvit B12 Promix 10000, where the test reports say that they are medicaments, the proposal is to reclassify them under CTH 30.03. Among these three, only in respect of Lutavit E 50 Feed Premix, the test report says that it is a medicament as described in USP "Vitamin E preparation" Vol. 3 Pg. No. 3867:2009". For the remaining two, the report certifying them to be medicaments is not accompanied by any reason. Under such circumstances, considering the strong arguments put forward by the importer regarding presence of therapeutic or prophylactic properties etc., as well as the explanatory notes which certify that all preparations listed in an official pharmacopeia need not necessarily by classified under CTH 30.03, I have come to the conclusion that the investigation has not been able to unearth sufficient evidence to prove their contention that any of the products which are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 & GIR 2, is to be exhausted. As it could be seen that in the present case, when the classification of goods can be arrived at by following GIR-1, by detailed analysis of the specific customs tariff items under the respective headings, then there is no case for invoking GIR-3(a) arbitrarily. The difficulty in applying the GIR-3(a) is that at the chapter heading level both 2309 and 2936 provide specific description namely, 'animal feed preparations' and 'vitamins and pro-vitamins', respectively. Further, the learned Commissioner of Customs in the impugned order had not taken a view about the classification of the impugned goods under any specific CTI for enabling comparative analysis at the eight digit level, while the appellants had claimed the classification under CTI 2309 9090. Thus, it is not feasible to determine appropriate classification by application of GIR-3(a) alone. 12.1 In order to further examine the classification in terms of various customs tariff entries under the two contending sub-headings, we would like to examine the HS explanatory notes of the WCO, which describe in detail the scope and coverage of goods under Customs classification. The extract of HS classif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h greaves or meat meal. (3) Sweet preparations, whether or not containing cocoa, designed solely for consumption by dogs or other animals. (4) Feeding preparations for birds (e.g., a preparation consisting of millet, canary seeds, shelled oats and linseed, used as a main or complete food for budgerigars) or fish. The animal feeding preparations of this heading are often put up in the form of pellets (see the General Explanatory Note to this Chapter). 12.2 In careful reading of the above HSN explanatory notes, it is understood that heading 2936 covers under its scope (i) vitamins (ii) pro-vitamins and (iii) derivatives and in the mixtures of the above (i) and (ii). Vitamins are described as active agents, usually of complex chemical composition, which are obtained from outside sources and are essential for proper functioning of human or other animal organisms. The various vitamins specified in the explanatory notes are Vitamin A, B1, B2, B3, B5, B6, B12, C, E and other Vitamins. Further, pro-vitamins are vitamins obtained in nearly final form, from outside sources, as vitamins cannot be synthesized by human body. These are effective in relatively minute amounts and may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... feed i.e., feed supplements; (iv) animal feed preparations, for use in making the complete feeds or supplementary feeds stated at (ii) & (iii) above, containing (a) vitamins or pro-vitamins, amino-acids, antibiotics, coccidiostats, trace elements, emulsifiers, flavourings and appetisers etc. for improving digestion and ensure that the animal makes good use of the feeds and safeguard its health; (b) stabilisers, antioxidants etc., for the purpose of preserving the feeding stuffs and the consumption by the animal; (c) organic nutritive substances such as manioc or soya flour or meal, middlings, Yeast, various residues of the food industries, inorganic substances such as magnesite, chak, kaolin, salt, phosphates, with serve as carriers. The concentration of the substances and the nature of carrier substance is determined for ensuring homogeneous dispersion and mixing of these substances in the compound feeds to which the preparations are added. The aforesaid explanatory notes clearly provide that animal feed supplements, containing vitamins or pro-vitamins remain classified under the scope of heading 2309. Further, the exclusion provided from the scope of coverage un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er represented that animal feed supplements use vitamins, pro-vitamins, amino-acids, antibiotics, "Coccidiostats" etc. in very small quantities (micro-quantities) and that the feed supplements contain other organic and in-orgainc feed ingredients as well. They have also represented that such micro-nutrients do not have any independent identity as pure chemicals, that they cannot be easily separated into individual pure chemicals; nor do they conform to standards laid down for medicaments. As such, it is claimed that animal feed supplements cannot be classified under Chapter 29 or Chapter 30 of the Central Excise Tariff merely because they contain the said micronutrients. 4. They matter has been further examined by the Board in consultation with the Chief Chemist, Central Revenue Chemical Laboratory (CRCL), New Delhi. 5. Heading 23.02 of Central Excise Tariff i.e. "preparations of a kind used in animal feeding including dog and cat food" corresponds to Heading 23.09 "Preparations of a kind used in animal feeding" or the HSN. As per Explanatory notes under Heading 23.09 of the HSN, the said heading covers complete animal feeds, supplementary animal feeds and preparations for us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g their line of reasoning have been quoted before me which have been discussed here-inbefore. The show cause notice, on the other hand places reliance on the decision of the Hon'ble Allahabad High Court in the case of Sonam International, which according to the importer, is in the nature of sub-silentio, and therefore, is of no precedentiary value in the facts of their case. Therefore, it becomes necessary to refer to the above mentioned judgment to see the basis on which the Hon'ble High Court has arrived at the decision to order classification of vitamins under CTH 29.36, the relevant portions of the judgment is reproduced below: xx xx xx xx xx A perusal of the above would clearly reveal that the Hon'ble High Court has gone into the issue in detail, have considered the various facets of the dispute, taken into account case laws and only thereafter, given a detailed and reasoned order. Therefore, any claim that this order was made only in passing, and has no value as a precedent would not stand up to scrutiny... xx xx xx xx xx In the view of such clear cut findings on various aspects of the dispute before me, I have no option but to reject the importer's contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported goods shall be under heading 29.36, inasmuch as the imported goods are 'vitamins' , irrespective of the intended use of such goods in animal feeding/poultry. 15. On careful examination of the above case law and the findings of the Commissioner in the present case, we find that the Hon'ble High Court had taken the considered view in the classification of the imported goods on the basis of certain specific facts viz., test reports of the imported goods from Nepal through Indian Land Customs border at Sonauli-Birganj, as provided by Analytical Testing Corporation which did not contain any Calcium Carbonate as declared by the importer; recovery of invoice issued by the German manufacturer to the Nepal exporter indicating that the goods have been firstly imported into Nepal from Germany indicating the 4-digit HSN code as 29.36, which was subsequently imported into India; documents evidencing sale of imported goods for preparation of animal feed supplement. The relevant paragraphs of the judgement in the relied upon case are extracted below: "Facts of the case : 3. Directorate of Revenue Intelligence, (in short DRI) Lucknow, received information that respondent M/s. Sonam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) which was relied by the Revenue, the Co-ordinate Bench of the Tribunal had solely decided the issue of classification of 'niacin' on the basis of their difference in purity for I.P. grade and Feed grade, as therefore the said decision cannot be relied upon for classification of 'vitamins' in general, as in the present case. 17. On the other hand, we find that decision of the Larger Bench of the Tribunal is in support of the conclusion arrived by us, as in the case of Tetragon Chemie (P) Ltd. (supra), the Tribunal has held that pre-mixes including those containing mineral substances and vitamins or pro-vitamins, trace elements, appetisers, soya flour or meal, Yeast etc. is classifiable under heading of 2309 of HSN which corresponds to heading 23.02 of CETA. The relevant paragraphs of the said decision is extracted and given below: "The present reference has arisen out of the decision of this Tribunal in the case of M/s. Tetragon Chemie (P) Ltd. Two Members had differed. One of the Members suggested that the matter should be referred to the Larger Bench in view of the fact that the Tribunal in the case of M/s. Roche Products Limited; in the case of M/s. Glaxo Labs (I) Limited; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch have been referred to us. On the basis of the aforesaid reasoning the question has been answered in favour of the assessees in so far as reference in Tetragan case & Allied cases are concerned..." The afore said decision of the Larger Bench of the Tribunal has also been upheld by the Hon'ble Supreme Court in its judgement dated 24.07.2001 in Civil Appeal filed by the department - 2001 (132) E.L.T. 525 (S.C.) against the decision of the Larger Bench. 18. Furthermore, we also find that the Hon'ble Supreme Court in the case of Abhi Chemicals & Pharmaceuticals Pvt. Ltd. (supra) had decided the issue of vitamin mix with anti-oxidants, minerals, solvents, stabilisers used as animal feed is classifiable as animal feed supplement under heading 23.02 of CETA and not as intermixture of vitamins under sub-heading 2936.00. the relevant paragraph of the above judgement is extracted and given below: "2. The respondent is the manufacturer of Dailymix. Four show cause notices were issued alleging that they had mis-classified their products under C.S.H. No. 2302.00 and cleared at nil rate of duty. The show cause notices added that these products are intermixture of vitamins and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question are animal feed supplements and that the animal feed supplements were rightly included in Tariff Item 23.02 being preparation of a kind used in animal feeding including dogs and cats food. The Bench has agreed with the conclusion of the Tribunal that even food supplements like the products of the respondents therein which are used in animals feeding would fall under Heading 23.02 This Court while affirming the decision of the Tribunal dismissed the civil appeals. 15. For the foregoing reasons, we are of the opinion that the contentions in the civil appeal are apparently contrary to the stand taken by the Department in the circulars mentioned supra and we, therefore, have no hesitation in dismissing the appeal as bereft of any merits. However, we say no costs." 19. In view of the foregoing discussions and analysis, and on the basis of the judgements of the Hon'ble Supreme Court and the decision of the Tribunal as discussed above, we are of the considered view that the impugned goods are classifiable under 2309 9090 of the First Schedule to the Customs Tariff Act, 1975. Accordingly, the impugned order dated 03.10.2017 classifying imported goods under heading 29.36 does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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