2015 (12) TMI 1150 - SC - Customs

Supreme Court upholds Department's classification of Virginiamycin under Customs Tariff, setting aside CESTAT order.

The Supreme Court ruled in favor of the Department's classification of Virginiamycin under specific Customs and Central Excise Tariff Headings, setting ... Classification of goods under Customs and Central Excise Tariff - Premix animal feed versus pure chemical classification - Specific inclusion in a Chapter Note prevails in classification - Interpretation of Chapter Note 1(a) to Chapter 29Classification of goods under Customs and Central Excise Tariff - Premix animal feed versus pure chemical classification - Interpretation of Chapter Note 1(a) to Chapter 29 - Whether Virginiamycin imported as STAFAC 1000 is classifiable under Heading 2941.90 (Chapter 29) or under Heading 2309.90/2302.00 as a preparation of a kind used in animal feed. - HELD THAT: - The CESTAT had followed the earlier decision in Tetragon Chemie Pvt. Ltd., which concerned a premix product composed of multiple additional substances and permitted classification as either vitamins (Chapter 29/36) or as preparations for animal feed (Chapter 23). This Court held that Tetragon is distinguishable because the present imported goods, Virginiamycin, are a well-defined chemical of 100% purity with antibacterial properties and are specifically included under Chapter 29 by virtue of Chapter Note 1(a). Given that the product is not a premix containing ancillary ingredients but a pure chemical specifically covered by the Chapter note, the reasoning and classification in Tetragon do not apply. The specific inclusion under Chapter 29 therefore determines classification in the present case.Virginiamycin (STAFAC 1000) is classifiable under Heading 2941.90 (Chapter 29) rather than under Heading 2309.90/2302.00; the appeals are allowed and the order of the CESTAT is set aside.Final Conclusion: Appeals allowed; CESTAT order set aside and Virginiamycin held to be classifiable under Chapter 29 (Heading 2941.90) on the basis of its character as a pure chemical specifically included by Chapter Note 1(a). Issues:Classification of Virginiamycin under Customs and Central Excise Tariff Headings.Analysis:The Supreme Court considered the classification of Virginiamycin imported under the brand name STAFAC 1000 under Customs Tariff Heading 2941.90 and Central Excise Tariff Heading 2941.90 versus Customs Tariff Heading 2309.90 and Central Excise Tariff Heading 2302.00. The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) had relied on a previous judgment in the case of Tetragon Chemie Pvt. Ltd. & Ors. v. CCE, which was upheld by the Court. However, the Department challenged this decision, arguing that the Tetragon Chemie Pvt. Ltd. judgment was not applicable in the current scenario. The Department contended that the CESTAT overlooked the classification of the products under sub-heading 2941.90 of the Central Excise Tariff as opposed to sub-Heading 2302.00 for premix animal feed. This argument was supported by a previous judgment in the case of Pfizer Ltd. v. Commissioner.The Court found merit in the Department's submission, noting that the Tetragon Chemie Pvt. Ltd. judgment dealt with different classifications, specifically 29/36 as Vitamins or 23.09/23.02 as preparations used in animal feed. In that case, the product was a premix containing various additional items. In contrast, Virginiamycin in the present case was a well-defined chemical of 100% purity with antibacterial properties, classified under Chapter 29. The Court concluded that the Tetragon Chemie Pvt. Ltd. judgment was not applicable to the current case due to the distinct nature of the imported goods.Consequently, the Court allowed the appeals and set aside the CESTAT's order, ruling in favor of the Department's classification of Virginiamycin under the specified Customs and Central Excise Tariff Headings.