TaxTMI 
TaxTMI 
TaxTMI 
2026 (1) TMI 1173
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.... that CTH 2309 applies only to products supplied in a form suitable for direct use as animal food supplements, whereas vitamins and provitamins presented in forms permitting general usage-such as inputs or raw materials for further processing into aquatic, poultry, or cattle feed-should be classified under CTH 2936 and assessed at a Basic Customs Duty (BCD) rate of 7.5%, per Sl. No. 185 of Notification No. 50/2017-Customs, and Integrated Goods and Services Tax (IGST) at 18%, per Sl. No. 40 of Schedule III of Notification No. 1/2017 (IGST) dated 20.06.2017. A Show Cause Notice dated 08.03.2024 was issued to the appellant, proposing to deny the appellant's adopted classification and reclassify the goods under CTH 2936. It also sought to deny relevant notification benefits, and demand payment of short-levied duty amounting to Rs. 58,83,019/-, along with proposals for confiscation and penalties. Following due legal process, the Learned Commissioner confirmed the Show Cause Notice's proposals. The present appeal arises from that confirmation. 3. The learned Advocate Shri Shankey Agrawal appeared for the appellant and Ld. Authorized Representative Shri Sanjay Kakkar appeared for t....
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....9. The products meet all criteria for this classification and are distributed solely to animal feed-related businesses, demonstrating their intended use in animal husbandry. 3.1.4 These supplements do not belong under Chapter 29, which only covers separate, chemically defined compounds. Products formulated for animal feed, including other ingredients like sodium, calcium arsenate, phosphorous lead, and ascorbic acid, are specifically excluded. Therefore, the Adjudicating Authority's decision to classify them under Chapter 29 is incorrect. 3.1.5 The Ld. Counsel stated that the duty demand is arbitrary. Although the Authority classified the vitamins under CTH 2936 at a BCD rate of 7.5%, the Appellant paid higher rates (20%/15%), resulting in an overpayment of Rs 60,69,128, and prayed for a refund. The IGST demand at 18% lacks basis since any IGST paid would be recoverable via Input Tax Credit, and even if reverse charge IGST applies, the Appellant should still receive a refund. 3.1.6 The Ld. Counsel submitted that, under Section 111 of the Customs Act, simply seeking an exemption or classification does not amount to misdeclaration and confiscating goods due to a bona fid....
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....ectly by compression or by the addition of a binder (molasses, starchy substances, etc.) in a proportion not exceeding 3% by weight." He submitted that the main ingredients of the products of this Chapter were products obtained by processing vegetable or animal materials, whereas the impugned goods were vitamins not in micro-quantities, but of a concentration from 35 to 80%, which were not declared to have been obtained by processing vegetable or animal materials and were of such high concentration that they could not be by themselves used as animal feed or pre-mixes and are at best feed raw material. In fact as per the Certificate of Analysis produced by the appellant in their Appeal Memorandum, for the product 'Vitamin C35% Monophosphate Feed Grade' and 'Vitamin E 50 ADS Feed Grade', it was stated: "Not for Human/Medicinal use. For use in Animal Feed only, does not contain any animal origin including aquatic Marine." (emphasis added) He drew attention to the judgment of the Hon'ble High Court at Allahabad, in the case of Commissioner of Customs CGO Vs Sonam International Shop No. 9 [2020 (10) TMI 120 - ALLAHABAD HIGH COURT], wherein the Hon'ble Court examined th....
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....--- Other kg. 30% - 2309 90 90 --- Other kg. 30% - Revenue Tariff Item Description of goods Unit Rate of Duty (1) (2) XI --- PROVITAMINS, VITAMINS AND HORMONES (3) (4) (5) 2936 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 - Vitamins and their derivatives, unmixed : 2936 21 00 -- Vitamin A and their derivatives kg. 10% 10% 2936 22 -- Vitamin B1 and its derivatives : 2936 22 10 --- Vitamin B1 [Thiamine (INN), aneurine] and its salts kg. 10% 10% 2936 22 90 --- Other kg. 10% 10% 2936 23 -- Vitamin B2 and its derivatives : 2936 23 10 --- Vitamin B2 [Riboflavin(INN), lactoflavin] and its salts kg. 10% 10% 2936 23 90 --- Other kg. 10% 10% 2936 24 00 -- D- or DL-Pantothenic acid (....
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....e Act, 1975. GRI 1 states that: (i) headings of sections, chapters and subchapters are for reference only and (ii) for legal purposes, the classification shall be determined by the terms of headings and the relevant section or chapter notes. Thus, GRI 1 essentially establishes the primacy of the notes and terms of headings for determining the classification of a product. *****. *****. ***** (b) Role of HSN Explanatory Notes 37. The official interpretation of the HSN is provided in the Explanatory Notes published by the World Customs Organisation (hereinafter "Explanatory Notes"). Therefore, these Explanatory Notes form the foundation for interpreting the HSN. Given their importance for classification, it is apposite to understand how they can be used when addressing questions of classification under the First Schedule of the Act, 1975. 38. This Court, in Commissioner of Central Excise, Salem Vs Madhan Agro Industries (India) Private Ltd., reported in 2024 SCC OnLine SC 3775, while dealing with a classification dispute under excise law, made the following pertinent observations regarding consideration of the Explanatory ....
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....ce the First Schedule of the Act, 1975 was amended to be in accordance with the HSN, the Explanatory Notes, being the official, international interpretation, are the most authentic guide to understanding the scope of the headings. (emphasis added) 7. It may also be relevant at this stage to extract the summary of the Courts findings laying out the governing principles for applying (i) the 'common or trade parlance test' and (ii) the 'consideration of use test', which has been referred to by revenue. "(c) Summary 66. Based on the aforementioned case law, the following governing principles can be culled out with regard to the application of the common or trade parlance test while dealing with classification disputes under taxation laws: a. The common or trade parlance test must be applied restrictively. Its function is limited to ascertaining the common or commercial meaning of a term found within a tariff heading or its defining criterion. b. The trade or common parlance test can be invoked when dealing with a classification dispute only when the following conditions are satisfied. i. The governing statute....
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....s in the reclassification of a good that is clearly identifiable under a particular heading according to the statute, simply because that good is marketed or called by a different name in trade or common parlance. ii. Conversely, the test cannot be used to challenge the classification of goods under a statutory heading if those goods retain the essential characteristics defined by that heading, even if they have a unique or specialised trade name. In other words, the character and nature of the product cannot be veiled behind a charade of terminology which is used to market the product or refer to it in common or commercial circles. g. To establish a separate commercial identity, it is essential to demonstrate that the good has undergone such a substantial transformation that it can no longer be characterised as a mere subtype or category of a broader class and thus falls outside the ambit of the common or commercial understanding associated with such a class of goods. *****. *****. ***** Summary 96. Based on the aforesaid discussion, the legal position regarding consideration of use when dealing with classification disputes under the....
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....Common Parlance Test' or 'Trade Parlance Test', the impugned goods are classified as Animal Feed Supplements. We examine the appellants claim for 'Trade Parlance Test' in the light of the governing principles as set out in WELKIN FOODS (supra). As per the judgment the common or trade parlance test must be applied restrictively to ascertain the common or commercial meaning of a term found within a tariff heading or its defining criterion. Moreover, in this case the terms employed in chapters 23 and 29 are scientific or technical in nature and the statutory context indicates that the words must be construed in a technical sense. Further, in such a situation it is for the importer who asserts a meaning of a term based on common or trade parlance, to present satisfactory evidence to support that claim which is not forthcoming. Hence the resort to 'Trade Parlance Test' may not be available in this case. As regards the resort to classifying the goods as per end use, it can be considered as a relevant factor when dealing with classification, only if the concerned tariff heading allows for consideration of 'use' or 'adaptation', either explicitly or implicitly. We find that Heading 23.09 d....
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....d (whether or not containing impurities), except mixtures of acyclic hydrocarbon isomers (other than stereoisomers), whether or not saturated (Chapter 27); (c) the products of headings 2936 to 2939 or the sugar ethers, sugar acetals and sugar esters, and their salts, of heading 2940, or the products of heading 2941, 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 (including an. anti-caking agent) 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 or an emetic added to facilitate their identification or for safety reaso....
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....e find that the HSN and the Customs Tariff of Chapter 23 are aligned at the 6digit level [i.e. Single Dash ("-") level]. The judgment goes on to say that the First Schedule to the Act of 1985 is based on the HSN, which is an internationally standardized system developed and maintained by the World Customs Organization for classifying products, and unless the intention to the contrary is found within the Act of 1985 itself, the HSN and the Explanatory Notes thereto, being the official interpretation of the Harmonized System at the international level, would be of binding guidance in understanding and giving effect to the headings in the First Schedule. We do not discern any such contrary intention and hence recourse can be had to the HSN Notes. 13. Note (II) to Chapter Heading 23.09 of the HSN is divided into three parts: (A) Preparations designed to provide the animal with all the nutrient elements required to ensure a rational and balanced daily diet (Complete Feed). (B) Preparations for supplementing (Balancing) farm-produced feeds (Feed Supplements), and; (C) Preparations for use in making the complete feeds or supplementary feeds described in (A) a....
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....acturing 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-ingredients (vitamins) mixed with diluent and carrier." There being no Certificate from the Chemical Examiner to show whether the impugned goods are pure chemicals or are mixture concentrates or pre-mixes, the benefit of classification must go to the appellant. In the case of classification of goods, it is for revenue to discharge the burden of proof and to show that the particular case or item in question, is taxable in the manner claimed by them. [See: Union of India Vs Garware Nylons Ltd. - 1996 (87) E.L.T. 12 (S.C.); HPL Chemicals Ltd. Vs Commissioner of Central Excise, Chandigarh - 2006 (197) ELT 324 (SC)]. Revenue having failed to do so and hence the impugned order merits to be set aside. This being so the question of demand for duty, interest and the imposition of fine and penalty does not arise. 15. Further we also find that a Coordinate Bench of this Tribunal in the case of B.V. Bio Corp Private Limited, Venkateshwara B.V. Bio Corp Private Limited (Formerly B.V. Bio Corp Privat....