2025 (8) TMI 818 - AT - Customs

Squid Liver Powder Classified Under Customs Tariff 2309 9090; Appeal Dismissed for Lack of Merit

M/s. Avanti Feeds Limited Versus Commissioner of Customs (Import), Chennai

The CESTAT Chennai upheld the classification of squid liver powder under Customs Tariff Heading 2309 9090, rejecting the appellant's contention for ... Classification of Squid Liver Powder - to be classified under Customs Tariff Heading (CTH) 2301 2011 or under CTH 2309 9090? - final order beyond the original proceedings initiated under the demand notices - HELD THAT:- When the OIO and OIA relies only upon the Chemical Examiner report (which was not provided to the Appellant) and the earlier consignments cleared by the appellant under 2309, the said order ought not to have upheld the ΟΙΟ/ΟΙΑ on some extraneous basis, which were never part of the original or appellate proceedings below. When the data as per the appellants own document from their suppliers was made the bed rock of the discussion, they were not at a disadvantage and no fault could be found on the final discussion and decision on this score. They have not demonstrated any prejudice caused to them by placing reliance on the supplier description of the goods on their website. Further, at para 5, of the OIO dated 15.05.2015, it has been recorded that the appellant had relied upon the production flow diagram of Squid Liver Powder given by their supplier M/s. Hyundai Special Foods Inc, South Korea. The appellant cannot blow hot and cold at the same time. The appellant had also in some of their earlier Bills of Entry classified the goods under CTH 2309 9090 but claimed that there is no estoppel in law as reasons for their change of stand. Further issue like squid liver powder being an attractant, was a fresh plea taken during the hearing and hence discussions on the legal issue would obviously be outside the file of the lower authority. Hence this plea has not merits. There is no fresh merit in the averments made by the appellant - appeal disposed off. 1. ISSUES PRESENTED and CONSIDERED 1.1 Whether the imported product 'Squid Liver Powder' is classifiable under Customs Tariff Heading (CTH) 2301 20 11 as claimed by the appellant or under CTH 2309 90 90 as held by the revenue authorities. 1.2 Whether the proceedings before the Tribunal should be kept pending due to a parallel challenge pending before the Hon'ble High Court under section 130 of the Customs Act, 1962. 1.3 Whether the Final Orders Nos. 40465 to 40468/2023 and 40324/2025 should be considered per incuriam and whether additional grounds of appeal and additional evidence can be admitted at this stage. 1.4 Whether the affidavit filed by an expert (Dr. Anuj Tyagi) can be admitted as additional evidence in the appeal. 1.5 Whether the classification of the product as a mixture should be determined by applying Rule 3(b) of the General Rules of Interpretation (GRI) based on the essential character of the goods. 1.6 Whether the principle of consistency and binding precedent applies to the classification issue, and whether earlier classification practices or Board circulars/GST clarifications affect the present classification. 1.7 Whether the appellant's plea that the impugned orders rely on extraneous material not part of original proceedings has merit. 2. ISSUE-WISE DETAILED ANALYSIS 2.1 Classification of 'Squid Liver Powder' under Customs Tariff Headings Relevant legal framework and precedents: - Customs Tariff Act, 1975 including Chapter 23 and relevant sub-headings 2301 and 2309. - General Rules of Interpretation (GRI), especially Rule 1 and Rule 3(b). - Harmonized System Nomenclature (HSN) explanatory notes for Chapter 23. - Judicial pronouncements emphasizing uniformity and consistency in classification and the doctrine of binding precedent. Court's interpretation and reasoning: - The product is a mixture of squid liver paste (animal origin) and soybean meal (plant origin). - Heading 2301 covers flours, meals, and pellets of fish or aquatic invertebrates unfit for human consumption, but excludes products containing plant-origin ingredients. - Heading 2309 covers 'Preparations of a kind used in animal feeding,' including mixtures designed for use in making complete or supplementary feeds, and products obtained by processing vegetable or animal materials to such an extent that they have lost essential characteristics of the original material. - The product is used as an ingredient in shrimp feed formulation, serving as an attractant and providing proteins, peptides, and amino acids that aid fish health and growth. - The Tribunal found that squid liver powder fits within CTH 2309 as it is a preparation used in animal feeding, not an end product itself, and contains multiple nutrients consistent with the HSN notes for heading 2309. - The appellant's contention that the product should be classified under 2301 was rejected because the mixture contains plant-origin ingredients and does not fall solely under flours or meals of fish or aquatic invertebrates. Key evidence and findings: - Supplier's description of the product as a high-quality feed ingredient for aqua feed and animal diets. - Composition details showing a mixture of squid liver paste and soybean meal. - HSN explanatory notes and tariff entries reproduced and analyzed in detail. Application of law to facts: - The plain reading of tariff headings and HSN notes supports classification under CTH 2309 90 90. - Rule 1 of GRI suffices for classification; Rule 3(b) on essential character is not required as classification is clear. Treatment of competing arguments: - The appellant's reliance on earlier classification under 2301 and Board circulars/GST clarifications was rejected as not binding and not determinative. - The appellant's argument that the product is a mixture requiring essential character analysis under Rule 3(b) was held unnecessary. - The appellant's contention that the product is not a preparation of a kind used in animal feeding was rebutted by detailed analysis of HSN notes and product use. Conclusions: - The classification of squid liver powder under CTH 2309 90 90 is correct and upheld. - The appeals challenging this classification are rejected. 2.2 Request to keep proceedings pending due to parallel High Court challenge Relevant legal framework and precedents: - Section 130 of the Customs Act, 1962. - Apex Court decisions clarifying that absence of stay or suspension order means proceedings before lower/quasi-judicial authorities continue. - Recent Supreme Court ruling emphasizing that courts and tribunals must decide cases on the law as it stands and cannot await outcomes of pending appeals or reviews unless specifically directed. Court's interpretation and reasoning: - No stay or suspension order was produced to the Tribunal. - The Tribunal is bound to decide the appeal unless a superior court directs otherwise. - The principle that judgments/orders remain binding and effective unless stayed or set aside applies. Conclusions: - The request to keep the appeal pending is rejected. 2.3 Admissibility of additional grounds and additional evidence Relevant legal framework and precedents: - Rule 23 of the Customs Excise Service Tax Appellate Tribunal (Procedure) Rules, 1982. - Apex Court rulings on the discretionary power of appellate tribunals to admit additional grounds or evidence. - Principles restricting admission of additional evidence to exceptional cases where evidence is of unimpeachable character, no prejudice is caused to the opposing party, and the evidence is necessary to remove lacunae. - Apex Court judgment in National Thermal Power Co. Ltd. Vs. CIT on jurisdiction to examine questions of law arising from facts on record. Court's interpretation and reasoning: - The affidavit of Dr. Anuj Tyagi was not produced before the original authority; revenue had no opportunity to examine or rebut. - The affidavit is not of unimpeachable character and only seeks to fill gaps in the case. - The appellant failed to show due diligence in producing the evidence earlier. - The Tribunal's discretion to admit additional evidence is exercised sparingly and was denied in this case. - Additional grounds of appeal raising question of law were not admitted as the matter was already decided and the authority is functus officio. Conclusions: - Additional evidence in the form of the affidavit is rejected. - Additional grounds of appeal on question of law are not admitted. 2.4 Application of Rule 3(b) of General Rules of Interpretation (GRI) on essential character of mixtures Relevant legal framework and precedents: - General Rules of Interpretation of the Customs Tariff, especially Rule 1 and Rule 3(b). - Principle that Rule 3(b) is applied only if classification under Rule 1 and Rule 2 is inconclusive or ambiguous. Court's interpretation and reasoning: - Classification under Rule 1 is clear as per tariff headings and HSN notes. - The product fits within heading 2309 without ambiguity. - Therefore, application of Rule 3(b) to determine essential character is unnecessary. Conclusions: - Rule 3(b) of GRI does not apply; classification under Rule 1 is sufficient. 2.5 Binding precedent and consistency in classification Relevant legal framework and precedents: - Doctrine of binding precedent as recognized by the Supreme Court. - Principle of judicial discipline requiring uniformity and consistency in decisions when facts are the same. - Apex Court rulings that wrong decisions cannot be binding and there is no estoppel against law. - Prior Final Orders Nos. 40465 to 40468/2023 and 40324/2025 on the same issue. Court's interpretation and reasoning: - The Tribunal is bound to follow its earlier decisions on the classification issue involving the same facts and parties. - Earlier classification practices by the appellant do not prevent rectification of wrong classification. - Board circulars and GST clarifications are not binding on the Tribunal and relate to a different statute. Conclusions: - The principle of binding precedent applies; earlier Final Orders are followed. - The appellant's plea based on earlier classification or circulars is rejected. 2.6 Allegation of reliance on extraneous material not part of original proceedings Court's interpretation and reasoning: - The impugned orders relied primarily on supplier's product description and composition, which were part of the record and known to the appellant. - The appellant had earlier classified the product under CTH 2309 in some Bills of Entry. - The appellant's fresh plea regarding the product being an attractant was a new argument raised at hearing, explaining why it was not part of original proceedings. - The Tribunal found no prejudice or disadvantage to the appellant due to reliance on supplier data. Conclusions: - The plea that impugned orders rely on extraneous material is without merit. 3. FINAL CONCLUSION Based on the above analyses, the Tribunal upheld the classification of 'Squid Liver Powder' under Customs Tariff Heading 2309 90 90, rejected the appellant's appeals, refused to admit additional evidence or grounds, and declined to keep the proceedings pending despite parallel litigation. The principle of binding precedent was applied, and the classification was found consistent with tariff entries, HSN explanatory notes, and judicial principles.