Imported vitamin preparations for animal feed manufacturing classified under CTH 2309 9090 not 29.36

CESTAT Mumbai held that imported vitamin preparations for animal feed manufacturing are classifiable under CTI 2309 9090 rather than CTH 29.36 as determined by Commissioner of Customs. The tribunal ruled that goods containing vitamins with additives making them suitable for specific animal feeding purposes fall under heading 2309. Evidence showed appellant was manufacturer of animal feed supplements and imported goods were intended for such manufacture. The classification determination was based on condition of goods at time of import. Both orders dated 03.10.2017 and 17.07.2020 by Commissioner of Customs were set aside and appeal allowed.

---

---

Issues Involved:
1. Classification of imported goods
2. Demand of short-paid customs duty
3. Demand of erroneous refund

Detailed Analysis:

1. Classification of Imported Goods:
The primary issue was whether the imported goods should be classified under Customs Tariff Item (CTI) 2309 9090 as "Preparations of a kind used in animal feeding" or under Customs Tariff Heading (CTH) 2936 as "Vitamins and their derivatives."

- Arguments by Appellants: The appellants argued that the imported goods, which are animal feed additives/premixes containing vitamins and minerals, should be classified under CTI 2309 9090. They contended that the goods are certified as "feed grade" and are labeled "For animal use only; not for medicinal use, not for human use." They cited the Harmonized System of Nomenclature (HSN) and CBEC Circular No. 188/22/96-CX dated 26.03.1996, which supports the classification of such goods under heading 2309.

- Arguments by Revenue: The Revenue argued that the goods should be classified under CTH 2936, which covers vitamins in any form, regardless of their purity or the fact that they are mixed with other materials. They contended that the goods do not contain any carrier but are pure vitamins added with substances for preservation.

- Tribunal's Analysis:
- Test Reports: The test reports indicated that the imported goods contain vitamins and pro-vitamins at varying percentages but did not conclusively state whether these are "separate chemically defined organic compounds" for classification under Chapter 29 or "preparations of a kind used in animal feeding" for classification under Chapter 23.
- HSN Explanatory Notes: The Tribunal referred to the HSN explanatory notes, which describe the scope of headings 2309 and 2936. Heading 2309 includes preparations used in animal feeding, containing vitamins or pro-vitamins, amino-acids, antibiotics, etc., and stabilizers, antioxidants, and carriers. Heading 2936 covers vitamins and pro-vitamins, their derivatives, and intermixtures.
- Precedents: The Tribunal relied on the Larger Bench decision in Tetragon Chemie (P) Ltd., which classified similar goods under heading 2309, and the Supreme Court's decision in Abhi Chemicals & Pharmaceuticals Pvt. Ltd., which upheld the classification of animal feed supplements under heading 2309.

- Conclusion on Classification: The Tribunal concluded that the imported goods are classifiable under CTI 2309 9090 as "animal feed preparations" containing vitamins or pro-vitamins.

2. Demand of Short-Paid Customs Duty:
The original authority had re-classified the imported goods under heading 2936 and confirmed the demand for short-paid customs duty under Section 28 of the Customs Act, 1962, along with interest.

- Tribunal's Decision: The Tribunal set aside the impugned order dated 03.10.2017, which classified the goods under heading 2936 and demanded short-paid customs duty. The Tribunal held that the goods are correctly classifiable under CTI 2309 9090, and therefore, the demand for short-paid customs duty does not stand.

3. Demand of Erroneous Refund:
The subsequent impugned order dated 17.07.2020 confirmed the demand for the erroneous refund of the differential duty, which was paid back by the appellants upon finalization of provisional assessments.

- Tribunal's Decision: The Tribunal set aside the subsequent impugned order dated 17.07.2020, which treated the refund as erroneous based on the classification under heading 2936. Since the Tribunal concluded that the goods are classifiable under CTI 2309 9090, the demand for the erroneous refund is not legally sustainable.

Final Judgment:
The Tribunal set aside both the impugned order dated 03.10.2017 and the subsequent impugned order dated 17.07.2020. The appeals were allowed in favor of the appellants with consequential relief. The imported goods were held to be classifiable under CTI 2309 9090 of the First Schedule to the Customs Tariff Act, 1975.

---