1998 (11) TMI 691 - AT - Central Excise

Classification of Animal Feed Supplements under Central Excise Tariff Act: Tribunal Decision

The Tribunal held that preparations used in animal feeding, including vitamins and other ingredients, are classified under Heading 23.02 of the Central ... - Issues Involved:1. Classification of animal feed supplements under Heading 23.02 or 29.36 of the Central Excise Tariff Act, 1985 (CETA 1985).2. Interpretation of the term 'includes' in Chapter Note 1 of Chapter 23.3. Applicability of technical literature, expert opinions, and trade understanding in determining classification.4. Relevance of previous judgments and Board's Circulars in classification.5. Classification of Niger Seed and Rice Bran Extractions under the Export Tariff.Issue-wise Detailed Analysis:1. Classification of Animal Feed Supplements:The primary issue was whether preparations used in animal feeding, containing vitamins and other ingredients, should be classified under Heading 23.02 or 29.36 of CETA 1985. The Tribunal noted that Heading 23.02 corresponds to Heading 23.09 of the Harmonized System of Nomenclature (HSN), which includes preparations used in animal feeding, such as complete feeds, supplementary feeds, and premixes containing vitamins, minerals, and other substances. The Tribunal concluded that these preparations, even if containing synthetic materials, fall under Heading 23.02, provided they are known and used as animal feed supplements in trade.2. Interpretation of the Term 'Includes':The term 'includes' in Chapter Note 1 of Chapter 23 was debated extensively. The Tribunal held that 'includes' is used to extend the scope of the chapter, covering preparations not confined to those obtained by processing vegetable or animal materials. This interpretation aligns with the explanatory notes under Heading 23.09 of HSN, which encompass preparations containing synthetic materials.3. Applicability of Technical Literature, Expert Opinions, and Trade Understanding:Technical literature, expert opinions, and affidavits from users and dealers were considered crucial in determining the classification. The Tribunal emphasized that the meaning of terms in the tariff should be understood as they are in trade and commerce. The preparations in question were identified as animal feed supplements based on their use, labels, and expert testimonies, supporting their classification under Heading 23.02.4. Relevance of Previous Judgments and Board's Circulars:Previous judgments, such as those by the Hon'ble Gujarat High Court in Glaxo Laboratories and the Hon'ble Bombay High Court in Glindia Limited, were cited to support the view that animal feed supplements are included under animal feed. The Tribunal also referred to the Supreme Court's decision in Sun Exports Corporation, which held that animal feed supplements are covered under the generic term 'animal feed.' Board's Circulars, including Circular No. 1/90 and Circular No. 188/22/96-CX, were examined, with the latter clarifying that preparations containing active substances along with carriers fall under Heading 23.02.5. Classification of Niger Seed and Rice Bran Extractions:The Tribunal also addressed the classification of Niger Seed and Rice Bran Extractions under the Export Tariff. It was held that these items are ingredients of animal feed and are correctly classifiable under Heading 21 of the Second Schedule (Export Tariff). The Tribunal relied on technical literature and judicial pronouncements to conclude that these extractions are animal feed.Conclusion:The Tribunal concluded that preparations used in animal feeding, containing vitamins and other ingredients, are classifiable under Heading 23.02 of CETA 1985. The term 'includes' in Chapter Note 1 of Chapter 23 extends the scope to cover preparations with synthetic materials. Technical literature, expert opinions, and trade understanding play a significant role in classification. Previous judgments and Board's Circulars support the view that animal feed supplements fall under Heading 23.02. Niger Seed and Rice Bran Extractions are classified under Heading 21 of the Export Tariff as animal feed. The files were directed to respective Benches for passing appropriate orders on other issues, if any.