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1994 (5) TMI 67
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....ctic uses. 5. It was their submission that these are animal feed supplements and in this connection they would draw attention to explanation II to Notification 234/82-C.E. and the language of the Heading 23.02 of Chapter 23. 6. They would also refer to Rule 3 of the rules for the interpretation of the schedule and submit that the Heading provides the most specific description is to be preferred to Heading providing a more general description. 7. It was also their contention that the products are exclusively used for animal feeding purposes and not for any other purposes. 8. It was their contention that a feed supplement is a formulation of a product which is to be added in the food as a supplement to make it a complete food in the final form. The feed supplements may therefore contain the contents which may be added to the animal feed in micro quantities usually in a concentration of parts per million to achieve a definite purpose like prevention of diseases, improvement in the performance of live stock, increase in production, increases in weight, increase in milk production, etc. 9. Pentaforte is mixed in micro quantities with poultry feed ....
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....d Poly sorbate, and also a solubiliser. The solvents used in the preparation are purified water and Polyethylene glycol. 21. They would also like to draw attention to Chapter note 1 to Chapter 29 which defines the scope of the Headings under Chapter 29 and Heading 2936 covers only specified items and does not cover products containing vitamins. 22. It is not in dispute that the products in question are for a specific purpose and not for general use. 23. It was their submission that the products in question were merely preparations of a kind used in animal feeding classifiable under Heading 23.02. 24. Further, the Collector has relied on Trade Notice 10/90 of Bombay Collectorate without distinguishing the earlier Trade Notice and has not realised that there is no consistency in the opinions so expressed. 25. The learned counsel further stated that they would also like to draw attention to the order of the Tribunal No. 755-756/91-C, dated 7-10-1991 [1992 (60) E.L.T. 124 (Tri.)] and HSN entry relating to Heading 23.09 in support of his contention. 26. The learned DR reiterated the department's view and explained that the active ingredients in both the ....
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....ngly the products in question are correctly classifable under heading 29.36 ibid." 30. We have considered the submissions of both the sides (including the case law cited). We observe that Chapter 23 of CET covers "Residues and Wastes from the food industries; prepared animal fodder" 31. As such, apart from the characteristic features, the properties and uses, it is necessary to ascertain how the product is obtained and processed or prepared, for the product must be either in the nature of a residue or waste from the food industries or prepared animal fodder or a preparation derived from or traceable to such a material, in order to attract any of the entries under this chapter; and the products included under Heading 23.02 by virtue of the Chapter note are also required to be ascertained accordingly. The language of the Chapter note which is significant and has a bearing on the controversy reads as follows : "CHAPTER NOTE" "Heading No. 2302 includes products of a kind used in animal feeding not elsewhere specified or included, obtained by processing vegetable or animal material's to such an extent that they have lost the essential characteristics if the o....
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....AQUATIC INVERTEBRATES, UNFIT FOR HUMAN CONSUMPTION; GREAVES 23.02- BRAN, SHARPS AND OTHER RESIDUES, WHETHER OR NOT IN THE FORM OF PELLETS, DERIVED FROM THE SIFTING, MILLING OR OTHER WORKING OF CEREALS OR OF LEGUMINOUS PLANTS. 23.03- RESIDUES OF STARCH MANUFACTURE AND SIMILAR RESIDUES BEET, PULP, BAGASSE AND OTHER WASTE OR SUGAR MANUFACTURE, BREWING OR DISTILLING DREGS AND WASTE, WHETHER OR NOT IN THE FORM OF PELLETS. 23.04- OIL-CAKE AND OTHER SOLID RESIDUES, WHETHER OR NOT GROUND OR IN THE FORM OF PELLETS, RESULTING FROM THE EXTRACTION OF SOYABEAN OIL. 23.05- OIL-CAKE AND OTHER SOLID RESIDUES, WHETHER OR NOT GROUND OR IN THE FORM OF PELLETS, RESULTING FROM THE EXTRACTION OF GROUND-NUT OIL. 23.06- OIL-CAKE AND OTHER SOLID RESIDUES, WHETHER OR NOT GROUND OR IN THE FORM OF PELLETS, RESULTING FROM THE EXTRACTION OF VEGETABLE FATS OR OILS, OTHER THAN THOSE OF HEADING NO. 23.04 OR 23.05. 23.07- WINE LEES ; ARGOL 23.08- VEGETABLE MATERIALS AND VEGETABLE WASTE, VEGETABLE RESIDUES AND BY-PRODUCTS WHETHER OR NOT IN THE FORM OF PELLETS, OF A KIND USED IN ANIMAL FEEDING, NOT ELSEWHERE SPECIFIED OR INCLUDED 23.09- PREPARATIONS OF A KIND USED IN AN....
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....wn case. In the EA 3 form in Column 8(A)(a) while giving description to classification of goods they have mentioned "animal food supplement classification under Heading 23.02 or 29.36. In spite of the fact that they had claimed only 23.02 in their classification list as apparent from the copy of the classification list effective from 1-3-88 filed by them as also para 1 of the appeal memorandum. 42. It is also interesting to note that in their appeal memorandum filed before the Collector (Appeals) in form EA 2 they had claimed classification under 29.36 CET or under any other appropriate heading as deemed fit. Even in the prayer before the Collector (Appeals) they have stated that "it is respectfully prayed that the impugned order in original 17/89, dated 17-7-1989 wrongly approving the product to be assessable at nil rate of duty under Heading 23.02 of CET may be ordered to be set aside and the correct classification under Chapter Heading 29.36 of CET chargeable to duty at the rate of 15% ad valorem or in any other heading as deemed fit may be ordered". In the appeal memorandum filed before us, on the contrary they have mentioned inter alia at page 9 para (a) "Hence this pr....
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...., of Heading No. 29.40 or the products of Heading No. 29.41 whether or not chemically defined. (d) The products mentioned in (a), (b) or (c) above dissolved in water. (e) The products mentioned in (a), (b) or (c) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use. (f) The products mentioned in (a), (b), (c), (d) or (e) above with an added stabiliser necessary for their preservation or transport. (g) The products mentioned in (a), (b), (c), (d), (e) or (f) above with an added-anti-dusting agent or a colouring or odoriferous substance added to facilitate their identification or for safety reasons, provided that the additions do not render the product particularly suitable for specific use rather than for general use". The heading entry, read with the above clauses, shows that this entry not only covers the items named therein but also products or preparations made from them or contain....
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....to the same point of view. 51. The question involved is the classification of two products viz. Pentaforte and Famitone. It is not in dispute that both the products are exclusively to be used as animal feed supplements and have all the essential characteristics thereof including the nature of packing, the indications thereon and the method of use. It is also not in dispute that both the products have apart from vitamins, other elements like minerals, specialised solvents, preservatives, anti-oxidants, chelating agents, promoters of absorption of soluble vitamins, anti-microbial preservatives, binders, etc. It is also admitted that both the products are to be exclusively used as animal feed supplements for vitamin enrichment in the animals. Under these circumstances the classification of the product is to be determined under Heading 23.02 or Heading 29.36. 52. Before a detailed discussion takes place certain facts have to be clarified. In this matter, the original show cause notice issued by the Assistant Collector to the appellants was for classifying these two products under Heading 30.03 as medicaments for animals. The Assistant Collector having been satisfied tha....
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.... titles of Sections and Chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the Headings and any relative Section or Chapter Notes and, provided such Headings or Notes do not otherwise require, according to the provisions hereinafter contained." 53.2 The title of Chapter 23 should not, therefore, influence us to interpret Heading 23.02. This is not to mean that Chapter Note 1 to Chapter 23 should also be ignored. Chapter Note 1 to Chapter 23 reads as under : "Heading No. 23.02 includes products of a kind used in animal feeding not elsewhere specified or included, obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, other than vegetable waste, vegetable residues and by-products of such processing." 53.3 This has been interpreted to mean that Heading 23.02 should be obtained by processing vegetable or any materials and not otherwise. According to me, this chapter note should not be interpreted in this manner. This Chapter note is an inclusive definition and not a specific definition. This Chapte....
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....ntention that Heading 23.02 should cover only those animal feeds and animal feed supplements which are in the nature of residues or waste from the food industry has to be negatived. 53.5 Coming to Heading 29.36 this Heading is very specific in nature viz. "Provitamins and vitamins, natural or reproduced by synthesis (including natural concentrates), derivatives thereof used primarily as vitamins, and intermixtures of the foregoing, whether or not in any solvent." (emphasis supplied). A plain reading of Heading 29.36 would indicate that the Heading would cover vitamins, provitamins and derivatives thereof used as vitamins and intermixtures of the foregoing only. In other words if these vitamins, provitamins and their derivatives are mixed with other substances, such mixtures are not to be classified under Heading 29.36. Any attempt to classify products which are mixtures of vitamins, provitamins, their derivatives with other substances like minerals, anti-oxidants, stabilisers, appetisers, etc., by use of Interpretative Rule 2(b) would result in classifying certain products under Heading 29.36 which are not to be classified therein. In other words we would be doing viole....
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....(e) The products mentioned in (a), (b) or (c) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use." In fact Note 1(e) clarifies all the doubts on the point viz. that when products of Heading 29.36 are dissolved in other solvents (other than water) such products would still come under Heading 29.36 provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transportation and that the solvent does not render the product particularly suitable for specific use rather than for general use. In the instant case, for example in the product, Famitone, the solvent used is water as also polyethylene glycol. While water will dissolve the vitamin C (ascorbic acid) vitamins A, D & E are not dissolvable in water but are dissolvable in polyethylene glycol and polyethylene glycol would appear to be used specifically in this case to render the product to be used....
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....pleaded that the product in dispute is Pentaforte and Famitone manufactured by the appellants and the appellants are marketing these goods as animal feed supplements. He pleaded that the composition of Pentaforte powder is as under :- PENTAFORTE POWDER Active Ingredients Each Gm to contain Vitamin B2 IP 50.00 mg Vitamin D3 IP 12,000 10 Vitamin A IP 82,500 10 Vitamin K3 IP 66 10.00 mg. Vitamin E VSP 10.00 mg Calcium Sulphate USNP quivalent to Calcium 185.00 mg Magnesium Oxide (Light) quivalent to Magnesium Other 30.00 mg Purified Water IP 18.0 Granulating Fluid Sodium Benzoate IP 0.15 Antimicrobial Preservative Methyl Paraben Sodium IP 0.15 Antimicrobial Preservative Starch Maize IP 3.0 Binder Butylated Nydroxyanisole IP 0.1 Antioxidant Butylated Hydroxytohien IP 0.1 Antioxidant Soyabean Oil VSP 7. 1.0 Solvent Composition of Famitone Liquid is as under :- FAMITONE LIQUID Active Ingredients Each 5 ml to contain Vitamin D3 IP 25,000 10 Vitamin A Palitate IP 2,50,000 10 Vitamin E Acetate IP ....
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....eading 2936.00 has been claimed and the assessee being not satisfied with the order passed by the Collector (Appeals) is before the Tribunal. He has referred to para Nos. 41 and 42 of the order passed by the Hon'bel Vice President and argued that there was no appeal filed by the assessee before the Collector (Appeals) and as such, para No. 42 of the order passed by the Hon'ble Vice President is factually incorrect. On merits, he referred to the description of the Heading 23.02 and also referred to Heading 23.09 HSN Explanatory Note 2. He argued that the animal feed includes poultry feeding. He argued that the product is marketed as poultry not to be used as a medicine. In support of his argument he cited the decision of the Tribunal in the case of Roche Products Ltd. v. Collector of Central Excise vide Order No. 1101/90-C. He argued that the earlier order of the Tribunal in the case of Roche Products Ltd. v. Collector of Central Excise is in favour of the assessee and argued that the correct classification is under Heading 23.02. He also referred to the decision in the case of Glaxo Laboratory (India) Ltd v. Collector of Central Excise vide Order No. 755 and 756, dated 7-10-1991 [1....
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....s Agro-Vet Industries Pvt Ltd., Bombay v. Collector of Central Excise, Bombay reported in 1984 (16) E.L.T. 467 (Tribunal). He reads Heading 23.02 and also Chapter Note 1. He cited the following decisions : (1) 1990 (48) E.L.T. 40T - Shri Paper Mills v. Collector of Central Excise (1) 1988 (37) E.L.T. - Chetna Polycoats (P) Ltd. v. Collector of Central Excise Shri Kak, the learned Joint CDR argued that Chapter Note 1 has to be restricted and Chapter Heading is very relevant for classification. In support of his argument, he cited a decision of the Tribunal in the case of Collector of Central Excise v. Roha Dye Chem Pvt. Ltd., reported in 1989 (41) E.L.T. 667 (Tri.). He also argued that the process used is "animal feeding" and not "animal feed". The first phrase is a verb, whereas the second one is a noun. If the term had been "animal feed', then very clearly the preparation used as parts in "animal feed" would be covered by Chapter 23.02, but this is not so in the present case. It is an admitted fact that both the products (Pentaforte and Famitone) are supplements in the sense that they enhance the function of the main animal feed. It is not a supplement which is ....
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....cable in this case. He again referred to the larger Bench decision of the Tribunal in the case of Aries Agro-Vet Industries Pvt. Ltd., Bombay v. Collector of Central Excise, Bombay reported in 1984 (16) E.L.T. 467 (Tribunal) where the Tribunal had held that "the products marketed by Aries Agro-Vet Industries are only mineral additives or mixtures to be added to ordinary feed. The mineral supplements are indeed part of the animal feed but these supplements are not by themselves animal feed as one would understand "animal feed". Feed can never be only one or another of the various ingredients, elements, substances that an animal needs in a balanced diet." He argued that the decision of the larger Bench in the case of Aries Agro-Vet Industries Pvt. Ltd., Bombay v. Collector of Central Excise, Bombay reported in 1984 (16) E.L.T. 467 has been upheld vide Civil Appeal No. 17 of 1984. He also referred to S.P. Sarkar's Words and Phrases. He also referred to the judgment in the case of Metro Satellite Ltd. v. Collector of Central Excise reported in 1990 (45) E.L.T. 697 (Tribunal). He referred to para No. 4 of the said decision. Shri Kak, the learned Joint CDR argued that it does not fall un....
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....thereof, used primarily as hormones; other steroids used as primarily as hormones. 15%" A perusal of Note 1 to Chapter 23 shows that Heading No. 23.02 includes products of a kind used in animal feeding, not elsewhere specified or included, obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, other than vegetable waste, vegetable residues and by-products of such processing. My learned brother, Shri S.K. Bhatnagar, Vice President in his order on internal page 5 in para No. 27 has observed that the appellant's products are apparently synthetic preparations consisting basically of an admixture of vitamins as active ingredients, although they contain a small quantity of other mineral elements or compounds as would be evident from the composition indicated by the appellants in their appeal memo. I have already reproduced the composition in para No. 57 of my order above. This means the wording of the Chapter Note 1 "not elsewhere specified or included" is very relevant. This means Chapter Note 1 clearly lays down that if the product is specified in any other heading, the product would fall ....
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....etic preparations. For classification we have to look at the function and use of the article and it is the most important criteria for determining the essential character of an article. The product in dispute by no stretch of imagination can be treated as an animal feed. The Tribunal in the case of Crompton Greaves Ltd. v. Collector of Customs reported in 1989 (43) E.L.T. 788 (Tribunal) in paras 5 and 6 had held as under :- * * * * * * * The same were the observations of the large Bench in the case of Precious Industries v. Collector of Customs reported in 1989 (44) E.L.T. 47. The Tribunal in its earlier decision in the case of Aries Agro-Vet Industries Pvt. Ltd., Bombay v. Collector of Central Excise, Bombay reported in 1984 (16) E.L.T. 467 (Tribunal) (Paras 7 to 10) had held as under :- * * * * * * * This decision of the Tribunal was upheld by the Hon'ble Supreme Court vide Civil Appeal No. 17/1984. The Tribunal in the case of Collector of Central Excise v. Roha Dye Chem Pvt. Ltd. reported in 1989 (41) E.L.T. 667 (Tribunal) had held as under :- "12. Though it is true that Chapter titles by virtue of the Rules for the inte....