TaxTMI 
TaxTMI 
2024 (9) TMI 188
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....T under S.No. 102 of Notification No. 02/2017-Integrated Tax Rate. During audit of records, it was observed that the goods imported were intermixture of vitamin A and vitamin D3 and derivatives of Vitamin A, thus are classifiable under CTH 2932100 which attract BCD @ 7.5%, Social Welfare Surcharge (SWS) 10%, IGST 18% [S. No 40 of Schedule-III notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017. Consequently, it was alleged that mis- classification of the imported goods had resulted in short levy of duty amounting to Rs. 76,39,881/-. The said importer in pre-notice Consultation proceedings stated that "Vitamin AD3 having active ingredient of Vitamin-A(1 lakh IU/gm and Vitamin D3 2lakh IU/gm) with carrier of organic matrix, inorganic matrix, preservative and Antioxidant, is render them suitable for the purpose of animal feeding alone. However, the department formed an opinion that the impugned goods are appropriately classifiable under CTH 29362100. Accordingly, a SCN dated 30.09.2020 was issued to the appellant demanding differential duty of Rs. 76,39,881/ along with interest as applicable. Thereafter, the matter was adjudicated by the Principal Commissioner of Customs v....
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....echnical literature both unequivocally confirms that the impugned goods are used for animal feeding. In addition to the technical literature, the ld. Counsel also submitted that several documents had been placed before the Principal Commissioner to substantiate that the impugned goods are known as feed additives in common trade usage viz. Details of Imports of impugned goods into India, Purchase Orders placed in the Domestic Market and the documents issued by the Ministry of Fisheries, Animal Husbandry and Dairying, the Department of Animal Husbandry and Dairying under the aegis of the Ministry of Fisheries, Animal Husbandry, and Dairying. He contended that the Ministry issues consolidated lists, which included the impugned product Vitamin AD3 1000:200 for import as animal feed additives and supplements. Therefore, even governmental documents establish that the impugned goods are appropriate for use in animal feeding alone. 3.2 The Ld. Counsel submitted that the Principal Commissioner considered the CBEC Circular No. 188/22/96-CX dated 26.03.1996, and had incorrectly interpreted that the circular applied only to animal feeds that contain vitamins in micro quantities. He submitted ....
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....s in each case. Tetragon Chemie dealt with premixes containing vitamins alongside a variety of other constituents already in the form of animal feed supplements. In contrast, the product in question is a specific intermixture of vitamins, without additional feed or mineral components, placing it squarely within the realm of Chapter 29 rather than Chapter 23. In support of his submission, learned AR relied upon the decision of Hon'ble High Court of Allahabad in the case of Sonam International, reported at 2012 (275) Ε.Ε.Τ. 326 (All.). HSN Explanatory Notes and Chapter Notes Interpretation: Ld. AR submitted that the HSN Explanatory Notes provide clarity on the exclusion of vitamins from Chapter 23, specifying that vitamins, whether or not chemically defined or intermixed, fall outside the scope of headings related to animal feed, especially when they do not alter the character of vitamins for general use. This distinction is crucial and supports the classification under Chapter 29, as the goods in question are vitamins with a specific use as feed additives, not general animal feed products. 4.2 Further, ld. AR submitted that the Chapter Heading 2309 is in th....
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....that the impugned order has attempted to distinguish Tetragon Chemie claiming that the product in the case of Tetragon Chemie consisted "of a mixture of vitamins, minerals and various other ingredients which was not similar to the product 'Recovit' as the same consists of only intermixtures of vitamins and, therefore, held it to be correctly classifiable under Chapter Sub-heading 2936.00. 5.2 In order to appreciate the submissions, we proceed to examine the goods imported by the appellant. We find that the appellant has imported goods, viz., 'Vitamin AD3'. We observe that as per the Material Safety Data Sheets (MSDS) of the supplier of the goods, M/s Xiamen Kingdom way Vitamins Ltd states that the impugned goods contain 53.2% Vitamins and the remaining elements are various carriers, stabilizers, etc. We proceed to examine the two competing headings, which is reproduced hereinafter: "2309 PREPARATIONS OF A KIND USED IN ANIMAL FEEDING: 2309 10 00 - Dog or cat food, put up for retail sale - 2309 90 - Other: 2309 90 10 í--- Compounded animal feed 2309 90 20 --- Concentrates for compound animal feed --- Feeds for fish (prawn, etc.) : 2309 90 31 ---- Prawn a....
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....ates, such as, for instance natural concentrates of vitamin A and D in various proportions, to which an additional quantity of vitamin A or D has been added subsequently. With the above classification guidelines, we now consider the impugned goods. We once again note that as per the product data sheet reproduced in the impugned order, Vitamin AD3 is a product that contains Vitamin A and Vitamin D3, which are coated by gelatin, starch, and sugar and stabilised with an antioxidant. We note that the impugned goods are not obtained by processing vegetable or animal materials, for it to be classified in Chapter 23. Consequently, we opine that Chapter 29 specifically covers the impugned goods, as has been held in the impugned order. 5.4 The Ld Counsel has contended that the Supreme Court's decision upholding the Tribunal's decision in the case of Tetragon Chemie squarely covers their product. We note that in the judgment in the case of Tetragon Chemie, the Tribunal held that pre-mixes including those containing mineral substances and vitamins or pro-vitamins are classifiable under CTH 23.09. In the instant case, we note that the product under question is not a pre-mix containing mineral....
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....aking the complete feeds or supplementary feeds. In the instant case, the Vitamin AD3 is to be mixed with an animal grade carrier, for it to be classifiable under Heading 2309. The HSN Explanatory notes to Chapter Heading 2936 also states that constituents of natural vitamins can be used in animal feed. In this context, we note that the Hon'ble Supreme Court in its judgment in the case of M/s Thermax Ltd Vs Commissioner of Central Excise, Pune [2022 (382) E.L.T. 442 (S.C.)] has highlighted the persuasive value of the HSN and held as follows:- "6. The definition of a product given in the HSN should be given due weightage in the classification of a product for the purpose of levying excise duty. This is because in the Statement of Objects and Reasons of the Bill leading to enactment of Central Excise Tariff Act, 1985, it was clearly stated that the pattern of tariff classification is broadly based on the system of classification derived from the International Convention on the Harmonised Commodity Description and Coding System (Harmonised System) with such contraction or modification thereto as are necessary, to fall within the scope of the levy of Central Excise duty. The tariff s....
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....r as possible, be resolved with reference to the nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act, 1985 itself. The definition of a term in the ISI Glossary, which has a different purpose, cannot, in case of a conflict, override the clear indication of the meaning of an identical expression in the same context in the HSN. In the HSN, block board is included within the meaning of the expression "similar laminated wood" in the same context of classification of block board. Since the Central Excise Tariff Act, 1985 is enacted on the basis and pattern of the HSN, the same expression used in the Act must, as far as practicable, be construed to have the meaning which is expressly given to it in the HSN when there is no indication in the Indian tariff of a different intention." 7. Commenting on the importance of taking guidance from HSN Classification and how a taxing statute should be construed in consonance with their commonly accepted meanings in the trade and popular sense, Justice Sanjiv Khanna in D.L. Steels (supra) also so correctly observed as follows :- "9. The Harmonised System of Nomenclature, develo....
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....n the popular sense, which is the sense attributed to it by those people who are conversant with the subject matter that the statute is dealing with. This principle should commend to the authorities as it is a good fiscal policy not to put people in doubt or quandary about their tax liability. The common parlance test is an extension of the general principle of interpretation of statutes for deciphering the mind of the law-maker. However, the above rule is subject to certain exceptions, for example, when there is an artificial definition or special meaning attached to the word in a statute, then the ordinary sense approach would not be applicable." 5.6.1 It is important to note here that in the aforesaid judgment, the Supreme Court has reiterated the view that the HSN code is the bedrock of custom controls and procedures. It has also been held that as per the HSN, classification is done by placing the goods under the most apt and fitting sub-heading. Accordingly, in our view the impugned product is appropriately classifiable under CTH 2936. 5.7 We also take note of the fact that the chemical composition of the impugned goods is synthetic and the product is not derived out of proc....
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....ation of a kind used for animal feeding and are so described. 127. Though the case of Tetragon Chemie (supra) does not seem to apply on the facts and circumstances of the present case, but it shall be appropriate to observe that presence of vitamin-E between 45-50% or 900.90 grams out of 100 grams, does not seem to cover by HSN Code 2309. More so when admittedly, the goods seized were sent to industries in Maharashtra for manufacturing of animal feed supplement for animal feed. In case goods imported itself were animal feed supplement as claimed, then there would have been no occasion to send the goods to utilise it for preparation of animal feed supplement. Virtually, the overwhelming presence of vitamin-E in the goods seized shows that deliberately, knowingly and intentionally, it was imported as vitamin-E and sent to various industries for preparation of 'animal feed supplement' which has been virtually admitted by the witnesses. 128. It has been admitted by the respondent's counsel that vitamin-E supplied by the respondent M/s. Sonam International, is used for making broiler premix, layer premix, SK bed, SK Mix, ABDK, etc. In case the goods in question for preparation would....
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....ties and requiring careful handling and mixing" Further, "Animal feed Concentrates" means a feed intended to be diluted with other feed ingredients to produce a complete feed optimum nutrition balance." Thus, even if in view of the definition clause, the ingredients of animal feed supplement to the extent it relates to vitamins amino acids, antibiotics, coccidiostats, trace elements, emulsifiers, flavorings and appetizers etc., should be in minute quantity. This fact is evident from the evidence on record which shows that the goods seized by the appellant, were used in preparation of animal feed supplement in the industries (supra). 131. That is why, Chapter 23 under heading 2309 includes product of a kind used as animal feeding not elsewhere specified or included, obtained by processing vegetables or animal material to such extent that they have lost the essential characteristics of the original material, other than vegetable wastes, vegetables residues and by-product of such processing. Thus, note under Chapter 23 itself provides that the product under heading 2309 contains the preparation under heading 2309 which has lost their original identity or essential characteristics ....