TaxTMI 
TaxTMI 
2024 (10) TMI 1752
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....AAR in short). The said application was filed in the secretariat of the CAAR, Mumbai on 20.04.2022 along with enclosures in terms of Section 28H (1) of the Customs Act, 1962 (hereinafter referred to as the 'Act' also). The applicant sought advance ruling on appropriate classification of vitamin premixes. 2. The applicant is a leading transnational company in the chemical industry and is a part of the renowned BASF group, a global supplier of innovative feed additives for livestock, aquaculture and companion animals. Headquartered at Mumbai, the applicant has manufacturing facilities at Thane, Mangalore, Danej and Ankleshwar. The applicant imports and trades in various categories of products used in the preparation of animal feed supplements. One such group of products are vitamin premixes, imported from Applicant's parent company (BASF, Germany) and other third. parties (related/un-related) for use in the manufacture of animal feed/supplements. 3. The Customs Authority for Advance Ruling, Mumbai, after providing opportunity of Natural Justice to the applicant and considering the facts of the case and statutory provisions, ruled vide its Ruling dated 08.07.2022 tha....
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....ients, respectively; merit classification under CTH 23099090. They also provided a compendium of literature on this issue together with relevant Heading from Customs Tariff, HSN Explanatory notes, circulars, instructions and certain case laws. They did not press the commodities i.e. LUTA.CALPA N 98% and CHOLINC.LSG 75% for classification. Nobody appeared from the department to represent their case. 6 The Office of the Principal Commissioner of Customs (Port), Kolkata, however. vide their letter dated 06.10.2024 received in this office on 11.10.2024, submitted that the order of Hon'ble High Court dated 09.08.2024 in this matter has been accepted and that they (the applicant) are eligible applicant in terms of Section 28(E)(C) of the Customs Act, 1962. However, no comments on the merit of the case has been offered by any of the Jurisdictional offices. 7. The Advocate of the Applicant has filed an additional submission dated 09.10.2024 as detailed below in connection with the Personal Hearing held on 25.09.2024. During the course of Personal Hearing, the Applicant sought to withdraw their application for the two products namely Choline Chloride 75% and Lutavit(r) Calpan 98%.....
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....pplicant post import into India, or purchased from the Applicant through High Sea Sale. 11. The Applicant has also submitted the details of the names of buyers of each of the product in question, during the period of January 2019 to December 2023. and also the quantity purchased by each buyer as summarized below; SI. No. Product % of Total Quantity sold to Animal Feed manufacturers / Poultry Rearers / Animal Feed Premix Manufacturers (For period January 2019 to December 2023) % Quantity purchased by traders (For period January 2019 to December 2023) 1. Lutavit E50 91.2% 8.8% 2. Lutavit (r)A/D3 1000/200 Plus/ Lutavit (r)A/D3 1000/200 Nxt 95.7% 4.3% 3. Lutavit A 1000 Plus/ Lutavit A 1000 Nxt 100% 0% 4. Lutavit B2 SG 80 94% 6% 12. The applicant has clarified in his submission that even the quantity purchased by the traders, is by major traders like Kantilal Manilal and Company Private Limited and Dilipkumar & Co, who are renowned traders of animal feed for past many decades, therefore, it is established that the products in question are actually used for animal feeding. The product, even at the time of conception and ma....
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....erties of the original ingredients are not drastically altered. Carrier is an edible material to which ingredients are added to facilitate uniform incorporation of the latter into feeds. The active principles are absorbed, impregnated or coated into the edible material in such a way as to physically carry the active ingredient. When a carrier is used with a microingredient the mixing properties are drastically altered. 16. Premixes are formulations of one or more micro-ingredients (vitamins) mixed with diluent and carrier. As per the definition of Premix by the Author D. V. Reddy, a carrier is an edible material to which ingredients are added to facilitate uniform incorporation of such ingredients into feeds. It is evident that for undertaking such vitamin supplementation, the micro-ingredients like vitamins are first prepared into the form of premix, and the premix is then added to animal feed. Thus, such supplementation is necessarily done through a two-step process: 1) preparing of the premixes and 2) addition of premix to animal feed. Thus, "premixes" are an essential and an indispensable necessity for mixing micronutrients like vitamins in animal feed. 17. The carrier ab....
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....uested to withdraw their application in respect of two products namely Choline Chloride 75% and Lutavit(r) Calpan 98%, which is permitted. I have also considered the observation made by the Hon'ble High Court in its order dated 09.08.2024. Accordingly, I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework having bearing on the classification of the goods in question under the first schedule of the Customs Tariff Act, 1975 in respect of the following four items: i. Lutavit(r) E 50 ii. Lutavit(r) A/D3 1000/200 Plus iii. Lutavit(r) A 1000 Plus iv. Lutavit(r) B2 SG 80 22.2 Before deciding on the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/ Section notes along with HSN explanatory notes. 2309 PREPARATIONS OF A KIND USED IN ANIMAL FEEDING 2309 10 00 Dog or cat food, put up for retail sale kg 20% - 2309 90 Other - - - 2309 90 10 --- Compound ed animal feed kg. 15% - 2309 90 20 --- Concentrat es for compound animal kg. 15% - --- ....
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....umption by the animal such as stabilisers, anti-oxidants, etc. (3) Those which serve as carriers and which may consist either of one or more organic nutritive substances (manioc or soya flour or meal, middlings, yeast, various residues of the food industries, etc.) or of inorganic substances (e.g., magnesite, chalk, kaolin, salt, phosphates). The concentration of the substances described in (1) above and the nature of the carrier are determined so as to ensure, in particular, homogencous dispersion and mixing of these substances in the compound feeds to which the preparations are added. Provided they are of a kind used in animal feeding, this group also includes: (a) Preparations consisting of several mineral substances. (b) Preparations consisting of an active substance of the type described in (1) above with a carrier, for example products of the antibiotics manufacturing process obtained by simply drying the mass, i.e. the entire contents of the fermentation vessel (essentially mycelium, the culture medium and the antibiotic). The resulting dry substance, whether or not standardised by adding organic or inorganic substances, has an an....
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...., it is understood that Premixes have very high concentration of active ingredients generally dozens to hundreds of times or requirement and are administered in smaller quantities. Direct feeding of vitamins to the animals is dangerous in as much as they contain high concentration of vitamins and it could result in vitamin poisoning in animals. As vitamins cannot be directly administered, it has to be added to the feed before giving it to the animals. However, direct addition of the vitamins to the feed is not feasible. As per an authentic book by Author D.V. Reddy titled "Principles of Animal Nutrition and Feed Technology" relied upon by the applicant, micro-ingredients i.e. nutritional adducts (vitamins, antibiotics, minerals) / drugs, are added to the feed at very low levels, and the dispersion of such low concentrations of active ingredients poses a challenge to the manufacturers. The relevant portion from the book titled "Principles of Animal Nutrition and Feed Technology" is extracted as below: Microingredient Premixing Microingredients Microingredients are nutritional adducts or drugs that are added to the feed at very low levels. Dispersion of such low con....
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....C) No 1831/2003). This premixture is incorporated at levels typically between 0.2 to 0.5% in the compound feed. The manufacturing of premixtures requires a specific technology and is often performed by specialized companies. 22.9 From the above, it can be understood that Premixes are formulations of one or more micro-ingredients (vitamins) mixed with diluent and carrier. A carrier is usually an inactive accessory substance (vehicle) or a substance (such as a catalyst) with whose presence some element or group is transferred from one compound to another. As per the reference book "Principles of Animal Nutrition and Feed Technology", carrier is an edible material to which ingredients are added to facilitate uniform incorporation of such ingredients into feeds. Therefore, the carrier absorbs or coats the micro-ingredient in order to physically carry the micro-ingredient, thereby facilitating the uniform mixing of the product into the feed. I find that the wording used in HSN Explanatory Notes to Heading 2309 Para II(C), which reads - Preparations For Use In Making The Complete Feeds Or Supplementary Feed ..., spells out the similar function, nature, character, composition, etc. tha....
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....iquids [14]. Because silicas can be manufactured to conform to food-grade regulations, they can be used to absorb essential oils, flavors, and feed supplements such as choline chloride and vitamin E oil. The absorption of pesticides is also a major application. Often the liquid is released when the powder comes into contact with water, owing to the higher affinity of the silica surface for water than for the absorbed liquid. Potential benefits include more convenient dispensing and improved stability when sensitive materials are handled. In the last few years, new microgranulate carriers based on precipitated silicas have been successfully introduced to the major carrier applications. Based on advanced drying technology, these products offer the same good absorption characteristics but improved flow behaviour and dust-free handling. Silica gels can also be used to encapsulate molecules. For example, biological molecules such as enzymes have been embedded within silica gels, where they retain their bioactivity and remain accessible to external reagents by diffusion through the pore structure [15]. 22.13 Thus, on the basis of the above literatures, produ....
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....ucts are used for increased bioavailability. Water-miscible formulations have also been developed (224). Solutions of vitamin D in oil or in oil-on-dry carriers, e.g, corn or flour, are used in animal feeds. These diets contain high levels of minerals, and the vitamin D formulation is not stable unless it is protected. Several stable forms are patented and sold commercially; they include beadlets or powders of dry suspensions in gelatin, carbohydrates, wax, and cellulose derivatives (89,225-228). 22.15 Combination of vitamin A and vitamin D are used widely for animal feeding. Solutions of vitamin D in oil or in oil-on-dry carriers like corn or flour are used in animal feed. However, the animal feed containing high levels of minerals and vitamin D formulation is not stable unless protected. Stable forms of vitamin D formulations are beadlets or powders of dry suspensions in gelatin, carbohydrates, wax and cellulose derivates. In order to allow the vitamins to mix with the animal feed (which contains high levels of minerals), carriers of gelatin and glucose / fructose (i.e. carbohydrates) are added to the product. Therefore, the carriers added to Lutavit(r) A/D3 are specifically u....
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....use in animal feed, and is squarely covered under Heading 2309 - A preparation of a kind used in animal feeding. 22.19 Lutavit (r) B2 SG 80 : The applicant has provided reference to KIRK-OTHMER, ENCYCLOPEDIA OF CHEMICAL TECHNOLOGY, pg. 133 (4th Ed., Vol 25) which states: For therapeutic use, riboflavin is produced by chemical synthesis, whereas concentrates for poultry and livestock feeds are manufactured by fermentation using microorganisms such as Ashbya gossypii and Eremothecium ashbyii, which have the capacity to synthesize large quantities of riboflavin. Vitamin B2 (riboflavin) for therapeutic uses is produced by chemical synthesis, whereas for use in animal feeding, it is manufactured through fermentation using micro-organisms such as 'Ashbya gossypii'. 22.20 Lutavit(r) B2 SG 80 is produced by fermenting 'Ashbya gossypii'. Riboflavin currently available in the market and is primarily used as a feed additive and produced through the process of fermentation. During fermentation process for vitamin B2 (riboflavin), riboflavin crystallizes in the fermentation broth and these crystals are recovered from the broth and separated from the biomass. Vitam....
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.... these facts and processes I hold that Lutavit(r) B2 SG 80 is a vitamin premix for specific use in animal feed, and is squarely covered under Heading 2309. 22.24 I observe that all the subject products in question are specific vitamin premixes for animal feed and contain suitable carriers of silica, gelatin, sugars and fermentation residue, for allowing the homogenous mixing in animal feed. These products no longer have any general use as vitamin supplements. The applicant has also claimed that these vitamin premixes are solely meant for animal feed and are not suitable for human consumption. 22.25 Heading 2309 of the HSN Explanatory Notes excludes those vitamins which contain additives necessary for preservation and transportation of the vitamin itself and are suitable for general use. Those vitamins fall under Heading 2936. The relevant portion of the HSN Explanatory Notes to Heading 2309 states: "The heading excludes: ................. (e) Vitamins, whether or not chemically defined or intermixed, whether or not put up in any solvent or stabilised by the addition of antioxidants or anticaking agents, by adsorption on a substrate or by applying a ....
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....ay be diluted or added with additives for the purposes of preservation and transportation of the vitamin, provided that such additives do not render the vitamins for specific use. In the present case, from the technical documentation of the products and labels, I find that the aforesaid products in question are substantially added with carriers (with some amount of preservatives and anti- oxidants) rendering them suitable for specific use in animal feed only. The carriers are added in it for the specific end use purposes and for ensuring homogenous dispersion and mixing of the vitamin in the complete animal feeds. 22.28 Further, the boards Circular No. 188/22/95 dated 26.03.1996 mentions as below: "5. Heading 23.02 of Central Excise Tariff i.e. "preparations of a kind used in animal feeding including dog and cat food" corresponds to Heading 23.09 "Preparations of a kind used in animal feeding" or the HSN. As per Explanatory notes under Heading 23.09 of the HSN, the said heading covers complete animal feeds, supplementary animal feeds and preparations for use in making the complete feeds or supplementary feeds. The preparations for use in making complete feeds or supplem....
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....r alia covers reading vitamins and provitamins which improve digestion and, more generally, ensure that the animal makes good use of the feeds and safeguard its health. On the other hand, HS code 2936 coves vitamins and provitamins which are medicinal in nature and have much higher concentration of active substance. -- -- 5.5 A product deserves classification chapter 29 (equally applicable to heading 2936), if it is an item of general use, e.g., if a product is of specific use, say dietary supplement for human being product particularly suitable for a specific use rather than for general use. Vitamins and provitamins are normally covered under code heading 2936, but if they're prepared as food supplements in the form of tablets, etc. they would not be classifiable under this heading as the way they are presented, they are suitable for a specific use. Heading 2309 would cover items like feed supplements for animals that contain vitamins and other ingredients - such as cereals and proteins. These are covered in chapter 23 under heading code 2309, or antibiotic preparations used in animal feeding - for example a dried antibiotic mass on a carrier like ce....
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....ch of CESTAT in the decision of Tetragon Chemie (P) Ltd. Vs. CCE - 2001 (138) ELT 414 examined the scope of Heading 2309 in detail and after considering the various evidence and submissions, observed as follows: "72. The entire controversy centres round the contention whether Chapter 23 of CETA 1985 covers preparations of a kind used in animal feeding which contain minerals or synthetic active ingredients. Detailed arguments have been adduced on Note to Chapter 23. Revenue contended that Chapter 23, according to the Note covers only products of a kind used in animal feeding obtained by processing vegetable or animal materials. They supported this contention by citing and relying upon the decision of this Tribunal in the case of M/s. Ranbaxy Laboratories. It was contended for the Revenue that the word 'includes' used in the Chapter Note should be read as covers and does not extend the scope of the Chapter, whereas the Assessee's Counsels argued at length and submitted that the use of the word 'includes' extends the scope of the words used in the Chapter Note. We have perused the detailed arguments. On careful consideration of the submissions made and the....
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....s Circular, we find that such inter-mixtures are specifically covered by Heading 29.36. We have examined the preparations, their composition and the process of manufacture. We find that all these preparations comprise only just of inter-mixtures of vitamins without other ingredients, except solvents, stabilizers or anti-oxidants. Since the preparations before us comprise not only of vitamins, in addition, they contain carbo-hydrates, proteins, minerals etc. In terms of this Circular also, they will not be classifiable under Heading 29.36. The clarification on this issue was given by the Board by its Circular No. 188/22/96-C.X., dated 26-3-1996 wherein it was clarified in para 5 that Heading 23.02 of CETA 1985, i.e. preparations of a kind used in animal feeding including Dog and Cat food corresponds to Heading 23.09 'Preparations of a kind used in animal feeding' of HSN. As per explanatory notes under Heading 23.09, the said heading covers complete animal feeds, supplementary animal feeds and preparations for use in making a complete feed or supplementary feeds. The preparations for use in making complete feeds or supplemental feeds are known in the trade as premixe....
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....of Chapter 23 of HSN); and if we see this heading of HSN, we find that the examples of the type of products covered by it are as follows : 1. Sweetened Forage (including preparations containing molasses, wheat bran, palm kernel or copra oil-cake, etc. 2. Preparations containing cereals, half(?)-sugar mangolds, tallow, straw etc. 3. Preparations from leguminous vegetables, brewing drugs, oilcake, dairy by-products. 4. Fish or marine mammal solubles in liquid or viscose solutions or in paste or dried and derived from the manufacture of fish or marine meal or oil. 5. Whole green leaf protein concentrate and green fraction leaf protein concentrate obtained from alfalfa (lucerne). 6. Premixes (including those containing mineral substances and vitamins or provitamins, trace elements, appetizers, soya flour or meal, yeast etc." It is pertinent to mention that the preparations have been clarified and specified under Heading 23.09 of HSN which has been adopted under corresponding Heading 23.02 of CETA, 1985 and hence the statute is clear in so far as preparations are covered. The decision of the larger bench of the CESTAT regarding th....
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....re imported by said Kantilal Manilal) to be classifiable under the Heading 2309: a. Lutavit B2 SG 80 A; b. Lutavit A/D3 1000/200 Plus; and c. Lutavit E-50 22.36 The Customs Advance Ruling Authority in its Ruling dated 08.07.2022 in para 6.8 relied upon the decision of Hon'ble High Court in the matter of M/s Sonam International reported at 2012(275) ELT 326(ALL) and held that the vitamins of high concentration used for manufacture of animal feed would be classified under CTH 2936. He observed that admittedly all the products in this case had high concentration of vitamins ranging from 40% to 98%. 22.37 The applicant has argued that the decision of the Allahabad High Court in Commissioner of Customs, C.G.O v. Sonam International is not applicable in the instant case as the facts and circumstances in both the cases are distinct. 22.38 In the present application the applicant has mainly contended that the following four (4) products: LUTA.E 50, LUTA. A/D3 1000/200 PLUS, LUTAVIT A 1000 PLUS and LUTAVIT B2 SG 80 and did not press the commodities i.e. LUTA. CALPA N 98% and CHOLINC.LSG 75% for classification (which were a part of the subject classifi....
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....lements'. Para II(C) covers premixes consisting of a vitamin along with a suitable carrier added to ensure homogenous dispersion and mixing of the vitamin in the compound feeds to which the preparations are added. Secondly, as per General Rules of Interpretation, classification of goods shall be determined according to the terms of the headings of the tariff schedule, the section notes and chapter notes. As per the Chapter Notes in the First Schedule to Customs Tariff Act, 1975, Heading 2309 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. The CTH 2309 starts with CTI 23091000 - Dog or Cat food, put up for retail sale followed by 230990- Other. The Sub Heading 230990 - Other is further categorized by triple dash tariff item: Compounded animal feed, Concentrates for compound animal feed, Feeds for fish (prawn, etc.) and others. The products in question are neither dog or cat food, nor are they prawn, shrimp, fish ....
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....asic or fundamental character of the article lies in its being a mirror." 22.40 Similarly, Hon'ble Supreme Court in the case of Commissioner of Central Excise Vs. Wockhardt Life Sciences Ltd. reported in 2012 (277) E.L.T. 299 (S.C.) has held that the functional utility and predominant usage of the commodity must be taken into account apart from understanding in common parlance to determine the correct classification of the product. 22. On the basis of the literature provided by the applicant, CTH HSN explanatory notes, Circulars, Case laws discussed above, I come to the conclusion that the subject goods contended by the applicant in the present submission i.e. LUTA.E 50, LUTA. 0A/D3 1000/200 PLUS, LUTAVIT A 1000 PLUS and LUTAVIT B2 SG 80 are vitamin premixes with carrier with a small quantity of added anti-oxidants and preservative solely to be used in animal feed. Accordingly, the abovementioned subject goods merit classification under Customs Tariff Heading 2309, more specifically under CTI 2309 9090 of the First Schedule of the Customs Tariff Act, 1975. I rule accordingly. ============= Document 1 1 Complex composition. Good quality premixes generally include 6....
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....ion of water the oily vitamin E acetate is set free on the surface Residue on ignition 45 - 46% (at 600 ℃) Lutavit® E 50 S can be used for this area of appli- cation as well. The milky emulsion formed is stable. The mixing behavior of the powder in premixes and feeds is excellent. Because of its high particle number and good dispersibility in water, Lutavit3 E 50 S is particularly suitable for: 1. Feed mixtures with high contents of choline chloride, trace elements, and alkaline substances, 2. Milk replacers for piglets, calves, and other animals, 3. Water-dispersible multivitamin mixtures, which are administered directly via the drinking water, Document 3 D - BASF The Chemical Company Lutavit® A/D 1000/200 Plus Active ingredients Vitamin A acetate (retinyl acetate) Vitamin D. (cholecalciferol) in mixed and mineral feeds, premixes, etc. is excellent. In terms of nutritive physiology, the vitamin A: vitamin D., ratio of 5 : 1 permits the products to be used in all species of animals. If a different vitamin A:vitamin D, ratio is necessary in the diet than is present in Lutavit A/D3. the dosage of the product should be geared to the vitamin D. c....
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....ood flowability and to avoid lump formation, the dry powder particles are additionally treated with a anti-caking agent. Other chemical and physical data The stability of vitamin A in mixed and mineral feeds or premixes has to be assessed as somewhat less than in the commercial product. Loss on drying at most 5% Formulation powder Particle size at least 97% Document 5 D- BASF The Chemical Company Lutavit® B, SG 80 Active ingredient Vitamin B2 (riboflavin) Application Lutavit B2 SG 80 is suitable for all types of vitamin blends, premixes, mineral, and mixed feeds. The flowability and mixing behavior of the product is excellent and ensures homogeneous mixing in all types of feed. Lutavit B2 SG 80 - a spray granulated product - hardly forms any dust and has outstanding flow properties. It is especially suitable for use in fully automatic small component dosage units. PRD-No. 30215030 Articles 54690103 25 kg plastic bag 54690209 500 kg big plastic bag. coated, antistatic Specification Content min. 80% (method: modified according to Ph. Eur. Il) For further information "Standard purposes)" available https://worldaccount.bas....