Antibiotic residue classification and valuation upheld on declared per-kilogram cost basis, with no active-mass reduction allowed.

Salinomycin 350 Mycelia, described as a residue of antibiotic manufacture and as a polyether antibiotic with anti-coccidial properties, was treated as classifiable under sub-heading 2941.90 rather than as an animal feed pre-mix under sub-heading 2302.00 because it was not shown to be animal feed and Chapter 29 classification did not depend on chemical definition alone. The HSN note exclusion for Heading 23.09 applied to the antibiotic-manufacturing residue. For valuation, the assessable value was upheld on the declared per-kilogram basis because the cost data reflected actual batch expenditure and there was no evidence supporting a mandatory 50% reduction on the basis of active mass potency.

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Issues: (i) Whether Salinomycin 350 Mycelia was classifiable under sub-heading 2941.90 as an antibiotic or under sub-heading 2302.00 as animal feed pre-mix; (ii) Whether the assessable value had to be reduced by 50% on the basis of active mass potency.

Issue (i): Whether Salinomycin 350 Mycelia was classifiable under sub-heading 2941.90 as an antibiotic or under sub-heading 2302.00 as animal feed pre-mix.

Analysis: The product was found to be the residue of the antibiotic manufacturing process, described by the assessee itself as a polyether antibiotic and anti-coccidial agent. The product was not shown to be animal feed or a feed pre-mix, and no evidence established its use in animal feeding. Chapter 29 did not require the product to be chemically defined for classification under the relevant heading. The exclusion in the HSN notes to Heading 23.09 applied because the product was an intermediate/residue of antibiotic manufacture with antibiotic content within the excluded range.

Conclusion: The product was correctly classified under sub-heading 2941.90 as an antibiotic, against the assessee.

Issue (ii): Whether the assessable value had to be reduced by 50% on the basis of active mass potency.

Analysis: The cost data showed that the assessable value was determined on the basis of total expenditure incurred on definite batches and on a per kilogram basis. There was no material to show that the quantities reflected in the cost certificates were later doubled at clearance or that duty could be computed only on active mass. The declared value had therefore been correctly adopted for valuation.

Conclusion: The assessable value was correctly taken at the declared per-kilogram value, against the assessee.

Final Conclusion: The classification and valuation adopted by the department were sustained, and the assessee received no relief.

Ratio Decidendi: A residue or intermediate of antibiotic manufacture may fall under the antibiotic heading even if it is not chemically defined, and assessable value must be computed on the basis supported by the actual cost data unless cogent evidence shows a legally permissible reduction.

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