TaxTMI 
TaxTMI 
2026 (1) TMI 1241
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.... common and interlinked, all the appeals as Tabulated below are taken up together and disposed of by this common order. S. No. Appeal No. Name of the Appellant Impugned Order No. & Date Duty & Penalty Demanded (Rs.) 1 C/42455/2015 M/s. Grobest Feeds OIO No. 41429 dated 19.09.2015 92,68,136 (Duty) + 92,68,136 (Penalty) 2 C/41663/2016 M/s. Grobest Feeds OIA No. 590/2016 dated 02.06.2016 11,87,371 (Duty) + 11,87,371 (Penalty) 3 C/41791/2016 M/s. Rohit Extraction OIA No. 591/2016 dated 03.06.2016 8,53,517 (Duty) + 8,53,517 (Penalty) 2.2 The appellants imported Squid Liver Powder from suppliers in the Republic of Korea, claiming classification under CTH 2301 20, being fish/mollusc meal unfit for human consumption, and availed concessional rate of Basic Customs Duty and exemption from CVD. The consignments were cleared under RMS. 2.3 The dispute arose from post-clearance departmental verification of supplier product literature, certificates of analysis and trade information and it emerged that the imported product consisted of squid liver paste mixed with substantial quantities of soyabean meal (about 40-50%), making the p....
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....his appeal as to i. Whether Squid Powder / Squid Liver Powder imported by the appellants is classifiable under Customs Tariff Heading 2301 or under Heading 2309? ii. Whether re-classification and confirmation of demand are sustainable when the Show Cause Notices do not clearly and specifically propose re-classification with cogent reasons? iii. Whether invocation of the extended period of limitation under Section 28(4) of the Customs Act is legally permissible in the facts of the present case? iv. Whether penalties under Section 114A and confiscation under Section 111(m) are sustainable? Question (i): Proper classification under the Customs Tariff 7.1 We find that the dispute revolves around the correct classification of the impugned goods, which admittedly consist of squid liver paste mixed with soyabean meal in substantial proportions. Heading 2301 of the Customs Tariff covers flours, meals and pellets of meat, fish, crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption. The HSN Explanatory Notes to Heading 2301 clarify that the products covered therein are obtained by processing the whole animal or animal prod....
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....duce a ready-to-use feed preparation, classification under Heading 2309 becomes inevitable in terms of Chapter Notes and HSN Explanatory Notes. The ratio laid down in these decisions applies on all fours to the present cases, as the composition, manufacturing process, and end-use of the impugned Squid Liver Powder are materially identical. For ready reference, we refer to the decision in M/s. Avanti Feeds Limited Vs. Commissioner of Customs, Chennai vide Final Order No. 40809/2025 dated 12.08.2025 which reads as follows: - "9.1 .... ..... ..... We are hence bound by our previous decision. Relevant portion of which [Final Order Nos. 40465 to 40468/2023 dated 22.06.2023] is reproduced below: - "6. We have gone through the appeals and have heard the parties. We find that the main issue under dispute is whether the imported goods i.e. 'squid liver powder' is classifiable under CTH 2309 as 'Preparations of a kind used in animal feeding' as finalized by Revenue, or under CTH 2301 as 'Flours, meals and pellets, of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption; greaves', claimed by the appellants. ....
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....sp; 2309 90 39 ---- Other Kg. 30% 2309 90 90 --- Other Kg. 30% 7.1 We find that M/s. Avanti Feeds Ltd. were aggrieved of the fact that a copy of the test report mentioned in their Order in Original was not given to them at the Show Cause Notice stage. We hence discard the test report and rely on the factual description given by the appellants of their imported products. 7.2 From the composition of the goods it is clear that 'squid liver powder' consists of two major ingredients, one of animal (squid) origin and the other of plant origin, with small quantities of other ingredients. The appellants are of the opinion that CTH 2309 is intended for products which are used for feeding the animals directly i.e. finished products. As per the Order in Original, the website of the supplier describes 'squid liver powder' as a high-quality feed ingredient for aqua feed (especially shrimp) and all type diet for animals. The flours, meals and pellets of heading 2309 are used mainly in animal feeding. Since these products and preparations are used 'in' animal feeding they include in their imported form feed stuff that cannot be consume....
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.... The flours, meals and pellets of this heading are used mainly in animal feeding, but may also be used for other purposes (e.g. as fertilizers) (2) Greaves, the membranous tissues remaining after pig or other animal fats have been rendered. They are used mainly in the preparation of animal foods (e.g. dog biscuits) but they remain in the heading even if suitable for human consumption. ************ 23.09 - Preparations of a kind used in animal feeding 2309.10 - Dog or cat food, put up for retail sale 2309.90 - Other This heading covers sweetened forage and prepared animal feeding stuffs consisting of a mixture of several nutrients designed : (1) to provide the animal with a rational and balanced daily diet (complete feed); (2) to achieve a suitable daily diet by supplementing the basic farm-produced feed with organic or inorganic substances (supplementary feed); or (3) for use in making complete or supplementary feeds. The heading includes products of a kind used in animal feeding, obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the ....
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....und compositions consisting of a number of substances (sometimes called additives) the nature and proportions of which vary according to the animal production required. These substances are of three types : (1) Those which improve digestion and, more generally, ensure that the animal makes good use of the feeds and safeguard its health : vitamins or provitamins, amino-acids, antibiotics, coccidiostats, trace elements, emulsifiers, flavourings and appetisers, etc. (2) Those designed to preserve the feeding stuffs (particularly the fatty components) until consumption by the animal : 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, homogeneous dispersion and mixing of these substances in the compound feeds to which the preparations are added. Pro....
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....to improve not only the feed palatability thereby reducing wastage but also to increase feed intake resulting in fish growth, and are mainly used in captive fish farms. It hence ensures that the fish/shrimp make good use of the feeds and safeguard its health. Moreover, attractants have multiple benefits apart from attracting fish to the feed. Ingredients like proteins, peptides and amino acids, also found in squid liver powder, are known to improve the growth, activity of digestive enzymes, nutrient absorption and specific immunity. They aid the appetite of fish and help to provide the animal with a rational and balanced daily diet ensuring their health and growth. This being so apart from a plain reading of the Customs Tariff the classification of squid liver powder under 2309 also satisfies the relevant notes (A) and (C) of II 'Other Preparations' given in the HSN, extracted above. Hence squid liver powder merit classification under the CTH 2309. Since the product is described as being a high-quality feed ingredient for aqua feed and all type diet for animals, the product which is not for exclusive use for fish, prawn etc. has been correctly classified under CTH 23099090. ....
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....ime barred and the appellant has not challenged the same and the same has attained finality. Going by the appellants plea they would also be bound by their earlier declaration. But that is not so. As stated by the Hon'ble Apex court in the case of UOI (Railway Board) and Ors. Vs J.V. Subbaiah and Ors. [1996 (2) SCC 258], equality /precedent cannot be attracted in cases where wrong orders have been issued. Again, in Elson Machines Pvt. Ltd. Vs. Collector of Central Excise [1988 (38) ELT 571 (SC)] it was held by the Hon'ble Supreme Court that Excise Authorities were not estopped from taking a view different than in the approved classification list and that there can be no estoppel against law. We find that the lower authority has given a reasoned order for his decision and the classification has not been done in an arbitrary or capricious manner. Hence on its own this ground cannot be treated as valid for setting aside the order of the lower authority. 10. We now take up the various case laws submitted by both the appellants. M/s. Avanti Feeds Ltd. have referred to the following judgments in support of their stand that there is no estoppel from the appellant taking a differe....
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....n question in the cited judgment pertains to yeast which is a single ingredient product covered under a specific heading and the decision is applicable to the peculiar facts of that case. The issue relating to squid liver powder being covered under 2309 has been discussed elaborately above. They have further relied upon the following decision of the Hon'ble Supreme Court and the Tribunal:- (a) Hindustan Ferodo Ltd. Vs. CCE - 1997 (89) ELT 16 (SC) (b) UOI Vs. Garware Nylons Ltd. - 1996 (87) ELT 12 (SC) (c) Jai Kunkan Foods Vs. Commissioner of Customs - 2023 (4) TMI 1033 -CESTAT New Delhi to state that the onus of establishing that goods are classifiable under particular Tarif entry are upon Revenue. We find from the discussions above, that Revenue has discharged this duty effectively and that the discussions made in the impugned orders show the correct classification of goods under CTH 2309. They further relied upon the following judgments/decisions:- (a) Marsons Fan Industries Vs. CCE - 2008 (225) ELT 334 (SC) (b) Commissioner of Customs Vs. Viraj Impex Ltd. - 2017 (346) ELT 188 (Bom.) (c) Viacom 18 Media Pvt. Ltd. ....
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.... mis-classified under Heading 2301, and clearly propose re-classification under Heading 2309. The notices further articulate the basis for such proposed reclassification by expressly referring to the composition of the goods, namely the admixture of squid liver paste with soyabean meal in substantial proportions, the process of manufacture, the intended use as animal/fish feed, and the relevant Chapter Notes and HSN Explanatory Notes governing classification under Chapter 23. 8.4 We also find that the Show Cause Notices thus set out not only the proposed tariff heading but also the factual and legal rationale underpinning the proposal. The appellants were clearly informed that the Department's case rested on the premise that the impugned goods were not mere fish meal or marine offal but were formulated feed preparations falling within the scope of Heading 2309. The notices also proposed demand of differential duty, interest, confiscation, and penalty by invoking the extended period, thereby leaving no ambiguity as to the nature of allegations or the consequences sought to be visited upon the appellants. 8.5 It is a settled principle of law that a Show Cause Notice is required....
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....how Cause Notices. 8.9 Accordingly, we hold that the Show Cause Notices in the present cases contain the necessary factual foundation, legal basis, and proposed action to sustain reclassification under Heading 2309 and the consequential demands. The adjudication orders and the appellate orders have not travelled beyond the scope of the notices but have merely examined and adjudicated upon the very issues expressly raised therein. 8.10 We therefore reject the appellants' contention that the re-classification and confirmation of demand are vitiated on account of any infirmity in the Show Cause Notices. Question (iii) Whether invocation of the extended period of limitation under Section 28(4) of the Customs Act is legally permissible in the facts of the present cases? 9.1 The appellants submit that the imports were made openly, goods were cleared under RMS and there was no suppression or wilful misstatement. It is contended that the issue is one of interpretation of tariff headings and hence the extended period cannot be invoked. 9.2 The Revenue argues that the appellants failed to disclose the crucial fact that the goods contained substantial quantities of soyabean mea....
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.... disclosure. The Hon'ble Supreme Court in Union of India v. Rajasthan Spinning & Weaving Mills [2009 (238) ELT 3 (SC)] has clearly held that procedural facilitation cannot be equated with substantive compliance, and that statutory obligations cannot be diluted by administrative mechanisms. 9.7 We also reject the appellants' plea that extended period cannot be invoked in classification disputes. The law is well settled that classification disputes are not immune from invocation of extended limitation, where suppression or misstatement of material facts is established. In Jaiprakash Industries Ltd. v. CCE [2002 (146) ELT 481 (SC)], the Hon'ble Supreme Court held that suppression of facts relating to the nature and characteristics of goods, even in matters of classification, would justify invocation of the extended period. Similarly, in Tamil Nadu Housing Board v. CCE [1994 (74) ELT 9 (SC)], the Apex Court clarified that where vital facts are withheld from the department, limitation would run from the date of discovery and not from the date of clearance. 9.8 The appellants' contention of bona fide belief also does not inspire confidence. Bona fide belief, to be a valid defence, ....
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....a fide belief be sustained in the absence of full disclosure. 9.12 Consequently, the invocation of the extended period of limitation under Section 28(4) of the Customs Act, 1962 is legally valid and sustainable. Question (iv) Whether penalties under Section 114A and confiscation under Section 111(m) are sustainable? 10.1 The appellants contend that there was no intention to evade duty and that penalties and confiscation are not warranted. Reliance was placed on Northern Plastics Ltd., Surbhit Impex Pvt. Ltd., Finesse Creation Inc. and similar decisions. 10.2 The Revenue submits that once suppression of material facts is established, penalty under Section 114A follows as a statutory consequence. Mis-declaration of composition renders the goods liable to confiscation under Section 111(m). 10.3 Once the ingredients of Section 28(4) are satisfied, the imposition of penalty under Section 114A follows as a statutory consequence. In the present cases, suppression of material facts stands clearly established, and the appellants have failed to demonstrate any mitigating circumstances warranting waiver or reduction of penalty. The reliance on foreign certificates, past clearan....