Customs, Excise and Gold Tribunal - Delhi
Collector Of Customs vs Sun Export Corporation on 11 May, 1989
Equivalent citations: 1989(22)ECC329, 1990ECR306(TRI.-DELHI)
ORDER
1.11.1988 K. Gopal Hedge, Member
1. Appeals 465 to 468/84C arise out of and are directed against the order-in-appeal bearing No. S/49-1630/84CL, S/49-181/85CL, S/49-182/85-CL and S/49-154/85CL dated 30.9.1985 passed by the Collector of Customs, (Appeals), Bombay.
Appeal No. C.1474/86 arises out of and is directed against the Order-in-Appeal bearing No. S/5-2694/2700/85 CAP/Asst. dated 20.2.1986 passed by the Collector of Customs (Appeals), Calcutta.
2. As all these appeals involve common questions of law and facts they are clubbed together, heard together and hence this common order. The undisputed facts are M/s. Sun Export Corporation, for short "the Corporation" imported several consignments describing them in their Bills of Entry as LUTAVIT (Vitamin AD-3-Feed Grade) which were classified by the Customs for the purpose of Customs duty under the heading 29.01/45 (17) under the Customs Tariff Act and charged duty at the rate of 70% + 35% +10% c.v.d. The Corporation's contentions that the goods imported are classifiable under the heading 23.01/07 Customs Tariff Act (CTA) was rejected by the adjudicating authorities. The adjudicating authority also rejected the contention of the Corporation that Pre-Mix of Vitamin AD-3 (Feed Grade) would also be exempt from payment of countervailing duty as per serial No. 21 of notification No. 234/82-CE dated 1.11.1982 was also rejected by the adjudicating authorities.
3. Feeling aggrieved by the various orders of adjudication, the Corporation filed separate appeals before the Collector of Customs (Appeals). The Collector of Customs (Appeals) passed a common order allowing the appeals by holding that the imported pre-mix Vitamins were in the nature of animal feed additives under heading 23.07 of the CCCN and included under the merged heading the merged hearing 23.01/07 of the Customs Tariff Act and as such they were entitled to the exemption from the whole of the additional customs duty under notification No. 48/79 dated 1.3.1979 as amended from time to time. The Collector of Customs (Appeals) therefore allowed all the appeals with consequential relief.
4. Feeling aggrieved by the order of the Collector (Appeals) as stated earlier, the Collector of Customs, Bombay preferred appeals 465 to 468/86.
5. The appeal No. C/1474/86 was filed by the Corporation since their refund claim was rejected by the Collector of Customs (Appeals), Calcutta.
6. Two identical questions arise in all these appeals. Firstly whether Lutavit AD-3 (Vitamin AD-3 feed grade) is classifiable under 23.01/07/CTA read with item No. 68 CET as contended by the Corporation or classifiable under heading 29.01/45(17)CTA and secondly whether the Corporation is entitled to the benefit of exemption Notification No. 48/79-Cus. dated 1.3.1979 and/or Notification 234/82-CE dated 1.11.1982.
7. To answer the above questions, it is necessary to refer to the competing entries in the Customs Tariff Act and also the exemption notifications.
______________________________________________________________________________________________ Heading No. Sub-heading No. Rate of duty Duration when and description ____________________________ Central of article Standard. Preferential Areas rates of duty Excise are protective Tariff Item ______________________________________________________________________________________________ (1) (2) (3) (4) (5) (6) ______________________________________________________________________________________________ 23.01/07 Residues and waste of food industries (for ex-
ample, inedible meat or fish flour or meal); milling residues, waste from sugar, brewing and distilling and starch industries; Oil cake and other residues from oil extraction (except dregs) products of vegetable origin of a kind used for animal food, not elsewhere specified or included; sweetened forage and other prepared animal folder. 60% 29.01/45 Organic compounds including antibiotics, hor-
mones, sulpha drugs, Vitamins and other products specified in Notes 1 and 2 to this Chapter:
(1) Not elsewhere specified 100% (2) Acid cresylic 100% 94% (3) The following alcohols, namely isopropyl al- 100% cohol, methyl alcohol, propyl alcohol.
(4) The following hydrocarbons, namely, 60% benezene, ethyl benzene, toluene, xylene.
(5) The following dye intermediates, namely C, Acid (2 Chloro-5-Toluidine-4-Sulphonic acid or 6-ChIoro-M-Toluidine4-Sulphonic Acid), H-Acid, I-Acid (2-Naphthylamine-5-Hydroxy-7- Sulphonic Acid), J-Acid urea, Acelo-Acet-Anilide, Aceto-Acet-O-ChlOro-Anilide, Aceto-Acet-O-
Toluidiries Aceto Acetic Ester (Ethyl/Methyl), 1-Amino-anlhra-quinone, 2-Amino-anthraquinone, (Beta-Amino-Anthraquinone), O-Amino Azo Toluene (2, 3/- Dimethyl-4-Amino-Azo-ben-zene or 4-Ortho-
Toluylazb-Ortho Toluidine), Amino Iso-G-Acid, I-Amino-6-Nitro-2-Naph-thal-4-Sulphonic Acid, Anthraquinone Beta naphthalene Thioglycolic Acid (2 Naphthyl thioglycolic Acid), beta naphthol, benzidine sulphate/Benzidine Dihydrochloride, Benzoyl J-Acid (2-Benzoyl Amino 5-Naphthol-7-Sul-
phonic Acid), Chicago Acid, 4-Chloro-2-Anisidine, M-Chloro Aniline, O-Chloro Aniline, P-Chloro Aniline, 4-Chloro-2-Nilro Anisole, 4-Chloro-2-Nitro Aniline, M-Chloro-Para-xylene, 4-Chloro-O-Toluidine, 5-Chloro-
O-Toluidine, 2:5 Dichloro Aniline, 1: 4 Diamino Anthraquinone, 1 : 5 Diamino Anthraquinonc, 2:5 Dichloro Nitric Benzene, Dimethylaniline, 2 : 5 Dimethyl-4-Chlorophenyl-Thioglycolic Acid, Dimethyl Sulphate, DinitroStilbene Disulphonic Acid (4, 4/Dinitro-Stilbene-2,2/Disulphonic Acid), Gamma Acid, Meta-Phenylene Diamine, Meta Toluylene Diamine, nevil Winther Acid, M-Nitro-Aniline, O-Nitro-Aniline, P-
Nitro Anisole, P-Nitrosophenol (l-Hydroxy-4-Nitro Benzene), Ortho Anisidine, Orthomitro-Toluene, Ortho Toluidine, M-Nitro P-Toluidine (HNPT), Para Anisidine, Para Nitro Aniline, Para Nitro Toluene, Para Nitro-
Toluene Sulphonic Acid or Para Nitro-Toluene-Ortho-
SulphonicAcid (Toluene-4-Nitro-2-Sulphonic Acid or Benzene-l-Methyl-4-Nitro-2-Sulphonic Acid), Para Toluidine, Para Toluidine meta Sulphonic Acid, Phenyl J. Acid (2-Phenylamino-5-Naphthol-7-Sulphonic Acid or 2-Phenylamino-5-Hydroxy-Naphthalene-7-sulphonic Acid or 2-Phenylamino-5-Hydroxy Naphthalene-7-Sulphonic Acid or 2-Phenylamino-5-Hydroxy Naphthalane-7-Sulphonic Acid), Peri Acid, Rhoduline Acid, G-jalt, R-Salt (2-Naphthol-3, 6-Disulphonic Acid, Sodium Salt), Schaeffcr's Acid, (2- naphthol-6-Sulphonic Acid), Sodium Naphthionate/ Naphthionic Acid, Sulphanilic Acid, Tobias Acid (2-Naphthylamine-l-Sulphonic Acid), Trichloro Benzene. 100% (6) The following dye intermediates, namely, 150% Diamino stilbene Disulphonic Acid (4, 4/Diamino Stilbene-2, 2/Disulphonic Acid), Diethyl, Meta amino-phenol (Meta-Diethylamino-phenol), Metanilic Acid, OrthoToluidine, Phenyl peri Acid (Phenyl amino Naphthalene-8-Sulphonic Acid), Quinizarine (1, 4-Dihydroxy-anthraquinone).
(7) Fast colour bases ordinarily used as coupling 100% components.
(8) Fast colour salts. 100% (9) Naphthols ordinarily used as coupling com- 100% ponents.
(10) The following compounds, namely, Acids, not 100% elsewhere specified, acetic acid, carbolic acid (phenol), citric acid, tartaric acid, rennet essence.
(11) Aromatic chemicals, namely, such organic 100% chemicals as are ordinarily used for imparting aroma to perfumery, cosmetics, toilet products, food products, and beverages.
(12) Insecticide, pesticide and fungicide chemicals. 100% (13) Pharmaceutical chemicals, that is, chemicals 100% 90% having prophylactic or therapeutic value and used solely or predominantly as drugs, not elsewhere specified.
(14) The following pharmaceutical chemicals, 100% namely, Cocaine, alkaloids of opium and their derivatives. Alkaloids of cinchona and other alkaloids which are chemically identical with cinchona alkaloids.
(15) Antibiotics. 100% 94% (16) Sulpha Drugs. 100% 94% (17) Vitamins. 100% 94% (18) Saccharine and such other substances as the Rs. 20 per Kilogram Central Government may by notification in the official gazette declare to be of a like nature or use to saccharine; and intermediates used in the manufacture of saccharine or such other sub stances and notified by the Central Govt. as aforesaid.
(19) Laboratory chemicals, Organic and inorganic, 100% as defined in note 2 to this chapter (20) Caprolactum and dimethyl Terephthalate. 150% 140% (21) Camphor. 150% (22) Aniline (Aniline oil). 150% (23) Terephthalic Acid. 150%
8. In the statement of facts, the Principal Collector of Customs, Bombay has stated, among other things "M/s. Sun Export Corporation (hereinafter referred to as importers) imported the consignments of Vitamin AD-3 (Feed Grade) which were assessed to duty under heading 29.01/45(17) of the Customs Tariff Act, 1975 read with item 68 of C.E.T. Subsequent to payment of duty the importers filed a refund claim with the Asstt. Collector of Customs (Refunds) on the ground that the impugned goods were correctly assessable under heading 23.01/07 of C.T.A. 1975 as animal feed and under item 68 of C.E.T. read with Notification No. 48/79 dated 1.3.1979(Cus) and thus these were exempted from levy of additional duty. The Asstt. Collector, Refunds rejected the importer's claim on the plea that since Vitamins per se and vitamins as such have been included under heading 29.01/45 of the Customs Tariff, the imported vitamins were correctly classifiable under heading 29.01/45 (17) of the Customs Tariff since vitamins have been specifically included therein".
9. Thereafter, the learned Collector referred to the Collector (Appeals) order and contended that the Collector (Appeal)'s order was not based on facts and does not appear to be legal and proper. The Collector of Customs also attacked Dy. Chief Chemist's clarification dated 30.12.1985 which was to the effect that Chapter 29 specifically covers intermixtures of vitamins.
10. In the appeal filed by the Corporation, it was contended inter-alia Lutavit A/D-3/500/100 is which is a brand name for vitamin AD-3 (Feed Grade) is an additive to the animal feed to supplement the vitamin contents in the synthetic form.
11. It is thus seen that there is no dispute between the parties that the goods imported were Pre-mix of Vitamin AD-3 (Feed Grade). The question therefore arises whether pre-mix of Vitamins (Feed Grade) would fall under heading No. 29.01/45 (17) or 23.01/07.
12. As per the Chapter heading of Chapter 23, that chapter covers residues and waste from the food industries; prepared animal fodder. Shri Nankani did not contend that the vitamin pre-mix imported by the Corporation is a residue and waste from the food industries. He practically conceded that the goods imported are not prepared animal fodder. He, however, urged since the goods imported are animal feed supplement, they would fall under heading 23.01/07. According to Shri Nankani the Customs Tariff heading 23.01/07 is the same as B.T.N. heading 23.09. Shri Nankani urged that Vitamin pre-mix is designed to provide the animal with all the nutrient element required to ensure a ration and balanced diet. He also urged that they are additives and therefore the pre-mix of Vitamin AD-3 having the brand name or trade name nutrient falls under the heading 23.01/07. The further contention of Shri Nankani was that in the case of Glindia Ltd. v. Union of India 1988 (36) ELT 479 (Bom) had held that animal feed supplements are not medicine or drug within the meaning of Drugs and Cosmetics Act and therefore not classifiable under item 14-E of the Central Excise Tariff and they fall under the residue item 68. The further contention of Shri Nankani was that even though animal food supplements and animal feed concentrate came to be specifically included in the amended Notification No. 6/84CE dated 15.2.1984, animal feed supplements were entitled to benefit of Notification 55/75CE as held by the Bombay High Court in the case referred to above. Shri Nankani urged that the pre-mix of Vitamin AD-3 (feed grade) cannot be classified as falling under heading 29.01/45 of CTA since they are not drugs and they do not conform to pharmacopoeial standards and they cannot be used for the diagnosis, treatment, mitigation or prevention of disease in human being or animals. Shri Nankani further submitted that since the goods in question is required to be classified under C.T.A. 23.01/07 no countervailing duty is leviable having regard to the Notification No. 48/F.No. Bu(Cus) 79 dated 1.3.1979. Alternatively, Shri Nankani urged that even if the goods in question is considered as drug then also countervailing duty is not leviable having regard to the notification No. 234/82 CE dated 1.11.1982. He urged that under the above Notification all bulk drugs are exempted from payment of the whole of excise duty leviable thereon. And if no excise duty is leviable no countervailing duty can be charged. Alternatively, Shri Nankani contended that if for any reason this Bench is to take a view that the goods in question is classifiable under the heading 29.01/45(17) then also no countervailing duty can be charged since animal feed including compound livestock feed is exempted from the whole of duty of excise under Notification 234/82 CE dated 1.11.1982.
13. Shri Durgayya appearing for the Collector firstly contended that reference to BTN is mis-conceived. Under the Customs Tariff Act, the BTN had not been bodily lifted and put into the tariff headings. The BTN heading 23.09 is all comprehensive whereas Customs Tariff heading 23.01/07 is limited in its scope and it applies only to prepared the animal fodder and the pre-mix of vitamin and under no circumstance the goods can be considered as prepared animal fodder. He, therefore, urged that the Collector of Customs (Appeals) Bombay committed a fundamental error in holding that the Customs Tariff Act 23.01/07 is the same as BTN Chapter heading 23.09/. Shri Durgayya further contended that the Assistant Collector's and the Collector of Customs (Appeals), Calcutta's orders were right in classifying the goods in question as falling under 29.01/45 (17). Shri Durgayya further submitted that Customs Notification No. 48/79 dated 1.3.1979 will have no application since heading No. 29.01/45 is not one of the headings appearing in the table to the Notification No. 48/79 dated 1.3.1979. It was also urged by Shri Durgayya that having regard to the contention of the Corporation that what has been imported by them are not drugs their contention that no countervailing duty can be charged on the ground that the goods imported by them is covered by item 21 of the Schedule to Notification No. 234/82 CE dated 1.11.1982 cannot be accepted. It was also urged by Shri Durgayya that the imported goods cannot be considered as animal feed or compound livestock feed falling under item 10 of the Schedule to the Notification No. 234/84 CE and as such, the contention of the learned advocate for the Corporation that no c.v.d. is chargeable to the goods imported is not legally tenable.
14. We shall in the first instance consider whether the pre-mix of vitamin AD-3 (feed grade) is classifiable under 23.01/07 of C.T.A. or classifiable under 29.01/45 (17). As stated earlier, it was not the contention of the Corporation that pre-mix of Vitamin AD-3 (feed grade) are residuary and waste from the Food Industries. It was also not their contention that pre-mix is a sweetened forage. Their contention is it is a feed supplement and therefore it has to be considered as prepared animal fodder. It is conceded that the vitamin pre-mix of feed grade cannot be directly served to the animal. It is to be added to the animal feed. Even according to the BTN on which the Corporation relied heavily, the preparations known in the trade as "pre-mixes" are, generally speaking compound composition 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: they are:-
(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. magnasite, chalk, kaolin, salt, phosphates).
It is then stated in the BTN: "The concentration of the substances described in (1) 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.
15. Admittedly, the imported goods are only Vitamin A&D in certain proportions and they do not contain any other substance. Therefore, the pre-mix of vitamin AD-3 (feed grade) cannot be considered as prepared animal fodder so as to classify it under the Customs Tariff Act heading 23.01/07. We, therefore, reject Shri Nankani's contention that the pre-mix of Vitamin AD-3 (feed grade) is classifiable under heading 23.01/07 C.T.A.
16. Coming to the Department's contention that the pre-mix of Vitamin AD-3 (feed grade) is classifiable under C.T.A. 29.01/45(17), it is true that in the entire Chapter 29 the pre-mix of vitamin does not specifically appear. But vitamins appear specifically under the heading 29.01/45(17). According to Rule (1) of the Rules for the interpretation of the Customs Tariff Act the classification shall have to be determined according to the terms of the Headings and any relative section or Chapter Notes. As per Rule 2(b) of the above Rules any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other material or substances. In reference to goods of a given material of substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance.
17. As per Rule 4 of the Interpretation Rules goods not falling within any heading of schedule shall be classified under the heading appropriate to the goods to which they are most akin.
18. Note (1) of Chapter 29 reads:
This Chapter is to be taken to apply only to:-.
(a) .
(b) .
(c) The following products whether or not chemically defined.
(i) .
(ii) .
(iii) .
(iv) Pro vitamins 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).
19. Now as per Interpretation Rules classification is required to be determined according to the terms of the headings and any relative section or Chapter Notes.
20. The Chapter Note 1-(c)(iv) includes intermixtures of the vitamin. The vitamin pre-mix imported by the Corporation squarely falls within item 17 of heading No. 29.01/45.
21. It was not the contention of either side that pre-mix of Vitamin AD-3 (feed grade) falls under any other chapter or heading. Therefore, having regard to Rule 4 of the Interpretation Rules, the pre-mix of vitamin AD-3 (feed grade) is required to be classified under sub-item 17 of heading 29.01/45. Even without the aid of Rule 4 of the Interpretation Rules, having regard to Rule (1) of the said Rules the Chapter Note 1(c)(iv) is applicable to the pre-mix of vitamin AD-3 and therefore the same is required to be classified under heading 29.01/45(17). The Collector of Customs (Appeals), Calcutta and the Asstt. Collector were right in classifying the pre-mix of vitamin AD-3 under the heading 29.01/45, CTA and the Collector of Customs (Appeals), Bombay committed an error in law in classifying the pre-mix of Vitamin AD-3 (feed grade) as falling under C.T.A. heading 23.01/07.
22. The only other question that remains for consideration is whether any countervailing duty or additional duty of excise contemplated by Section 3 of the Customs Tariff Act 1975 is chargeable to the goods imported.
23. There is no dispute that the goods imported are pre-mix of vitamin AD-3 (feed grade) not for medicinal use. There is also no dispute that pre-mix of vitamin AD-3 (feed grade) is an animal feed supplement. The Bombay High Court in the case of Glindia Ltd. v. Union of India (supra) rejected the contention urged on behalf of Union of India that animal feed supplement must be treated as medicines falling under Entry 14-E CET because by feeding vitamin animal's ailments are prevented. The High Court observed: "Sometimes animal feed or poultry feed is already fortified with these vitamins when sold. Sometimes, however, farmers prefer to add the vitamins to animal feed or poultry feed separately. These products strengthen the nutritional quality of animal feeds, thus, for example, items like Bournvita or Complan also add nutrients to milk, but they were not for that reason, medicines. In a general sense, every kind of nourishment strengthens the body against ailment. But such nourishment cannot be considered as a medicine or a drug. The two products are also known in the trade as supplements and they are sold by the suppliers of animal feed. The two preparations cannot therefore, be classified under item 14-E of the Central Excise Tariff but would fall under the residuary item 68 ibid."
24. The High Court further observed in the case of the petitioners themselves, namely, Glaxco Laboratories India Ltd. v. The State of Gujarat reported in [1979] 43 STC 386, the Gujarat High Court was required to consider whether certain vitamin products including Vitablend WM Forte which are used for supplementing cattle and poultry feed should be classified as "cattle feed" within the meaning of Entry 21 of Schedule I of the Gujarat Sales Tax Act, 1969 or "poultry feed" within the meaning of Entry 22 of Schedule I of that Act. The Gujarat High Court has held that the terms "cattle feed" and "poultry feed" must include not only that food which is supplied to domestic animals or birds as an essential ration for the maintenance of life but also that feed which is supplied over and above the maintenance requirements for growth or fattening of and for production purposes such as for reproduction, for production of milk, eggs, meat, etc. or for efficient output of work. The same reasoning would apply to the present case also. These products are also fed to animals or poultry to give them better nourishment. They would therefore, qualify as "animal feeds".
25. In the same judgment it was contended on behalf of the Union of India that animal feed supplements were not included in the original Exemption Notification No. 55/75 CE which came to be included in the amended Notification No. 6/84 CE dated 15.2.1984 and as such the petitioners before the High Court were not entitled to the benefit of exemption in respect of the products which are animal feed supplements. The High Court while rejecting this contention, observed : "This reasoning must be rejected. The amendment appears to be clarificatory in nature. For example, the amendment now expressly refers also to animal feed concentrates which were not expressly referred to earlier. It cannot be said that animal feed concentrates are not animal feed. In the same manner products which supplement animal feed and are generally added to animal feed are also covered by the generic term 'animal feed' ".
26. From the judgment of the Bombay High Court, it is clear that animal feed supplements are also animal feed. They would not fall under tariff item 14-E but they would fall under residuary item 68.
27. The question as to whether Di-Calcium Phosphate of animal feed grade is entitled to benefit of Notification No. 55/75 CE under which animal feed has been exempted from payment of duty was considered by this Bench in its Order No. 543/1988-C dated 13.6.1988 in the case of Collector of Central Excise, Chandigarh v. Punjab Bone Mills (Appeal No. 615/85-C with E/Cross/64/1988-C). The further question whether animal feed supplement is entitled to the benefit of Exemption Notification No. 55/75 before its amendment also came up for consideration before this Bench in the above case. The Bench observed:
We observe that di-calcium phosphate is also to meet the mineral needs of the animals and it has been conceded by the Department that it is a supplement which is required to be added to the feed. The only objection of the Revenue is that being a supplement, it could not be considered as animal feed itself.
After referring to the judgment of the Gujarat High Court, the Bench observed:
We observe that inasmuch as the Hon'ble High Court of Gujarat has held that the supplements and additives are in the nature of animal feed, the addition of the item of animal feed supplements to the exemption notification later can only be held clarificatory in nature.
28. Thus, it is clear that the pre-mix of vitamin AD-3 feed grade (not for medicinal use) fall under item 68 of the First Schedule to the Central Excise and Salt Act.
29. The goods falling under the item 68 Central Excise & Salt Act, 1944 and falling under the Chapters specified in the Table to the Notification No. 48/F No. Bud. Cus. 79 dated 1.3.1979 are wholly exempted from the payment of additional duty leviable on such goods under Section 3 of the Customs Tariff Act. Shri Nankani had contended that since Lutavit falls under item No. 68 of the Central Excise & Salt Act and it is also covered under Chapter 23 of the Customs Tariff Act, no additional (countervailing) duty can be charged. We have held against Shri. Nankani that the goods imported fall under Chapter 23 of the Customs Tariff Act. On the other hand, our finding was that the goods imported fall under heading 29.01/45 (17) of the Customs Tariff Act. Having regard to our said finding the Exemption Notification No. 48/79 dated 1.3.1979 is inapplicable.
30. It was the submission of Shri. Nankani even if it is held that the goods imported do not fall under the heading 23.01/07 the same is exempted from payment of additional (countervailing) duty as provided in the exemption Notification No. 234/82-CE dated 1.11.82. He had contended that item 21 of the schedule to the Notification No. 234/82 relates to bulk drugs and intermediates and if the Department's contention is accepted that the goods imported are drugs then the same is exempted from payment of excise duty and therefore no c.v.d. can be charged. Alternatively, Shri. Nankani contended the goods imported fall within item 10 of the Schedule to the Notification 234/82-CE. Since the animal feed supplement is also animal feed and therefore the same is exempted from payment of Central Excise duty under Notification 234/82 and as such no additional (coutnervailing) duty is chargeable to the imported goods.
31. While considering the first question, namely, whether the goods are classifiable under Tariff Item 23.01/07 or falls under tariff item 29.01/45-11, we have held the pre-mix of vitamin AD-3 (feed grade) is not a drug. It does not conform to any pharmacopoeial standards. It cannot be used for the diagnosis, treatment, mitigation or prevention of diseases in human beings or animals. In the said view of the matter, Shri Nankani's contention that the goods imported would fall under item 21 of the Exemption Notification No. 234/82 has to be rejected.
32. But then, there is force in his contention that the goods imported would fall within item 10 of the Schedule to the Notification 234/82-CE dated 1-11-1982.
33. The material portion in the Notification 234/82 dated 1.11.1982 reads:
In exercise of the powers by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. l04/82-Ccntral Excise, dated the 28th February, 1982, the Central Government hereby exempts goods of the description specified in the Schedule hereto annexed and falling under item No. 68 of the First Schedule to the Central Excise and Salt Act, 1944 (1 of 1944) from the whole of the duly of excise leviable thereon under Section 3 of the said Act.
34. In the schedule to the said Notification as many as 41 items were specified. Item 10 of the Schedule reads : "Animal feed including compound live slock feed."
If the pre-mix of Vitamin AD-3 is considered as animal feed then the same is exempted from the whole of duty of excise under the Exemption Notification No. 234/82-CE since the same falls under item No. 68 of the First Schedule to the Central Excise and Salt Act, 1944. The Bombay High Court in the case of M/s. Glindia Ltd. (supra) and the Gujarat High Court in the case of Glaxo Laboratories India Ltd. (supra) have held that the term "Cattle feed" must include not only that food which is supplied to domestic animals or birds as an essential ration for the maintenance of life but also that feed which is supplied over and above the maintenance requirements for growth or fattening and for production purposes such as, for reproduction, for production of milk etc. The Bombay High Court has also held that "the products which supplement animal feed and are generally added to animal feed are also covered by the generic term 'animal feed'".
The ratio of the decision of the Gujarat High Court was accepted by this bench in the case of Collector of Central Excise, Chandigarh v. Punjab Bone Mills (supra).
35. Following the ratio of the decision of the Bombay and Gujarat High Court as well as our own decision, in the case of Collector of central Excise, Chandigarh, we hold the pre-mix AD-3 (Feed Grade-for medicinal use) is an animal feed supplement and therefore falls within the broad category of animal feed and since there is no dispute that the goods in question falls under item 68 of the Central Excises & Salt Act, we hold that the same is exempted from payment of Central Excise duty under Exemption Notification No. 234/82-CE dated 1.11.1982.
36. The next question that arises for our consideration is whether additional (countervailing) duty is chargeable on the pre-mix of Vitamin AD-3. (Feed Grade - not for medicinal use). The additional (countervailing) duty is leviable under Section 3 of the Customs Tariff Act, 1975. The material portion of that Section reads:
Any article which is imported into India shall, in addition, be liable to a duty (hereinafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India.
Under the above section, the additional (countervailing) duty that could be levied is equal to the excise duty for the time being leviable on the goods. If no excise duty is leviable on the goods in question on account of the exemption from payment of Central Excise duty under the Notification 234/82CE dated 1.11.1982 no additional (countervailing) duty can be charged on the imported goods.
37. In the various orders passed by the Asstt. Collectors which were set aside by the Collector of Customs (Appeals), Bombay as well as in the order of the Collector of Customs (Appeals), Calcutta, they did not consider as to whether the imported goods are exempted from payment of Central Excise duty and as such no additional (countervailing) duty would be charged on the imported goods. Apparently, such a contention had not been urged on behalf of the Corporation.
38. On consideration of all the aspects, while rejecting Shri Nankani's contention that the goods imported, namely, Lutavit AD-3 500/100/BASFFccd Grade (not for medicinal use) is classifiable under the Customs Tariff heading 23.01/07. We hold the same is classifiable under the Customs Tariff heading 29.01/045 (17). He further hold that no additional (countervailing) duty is chargeable to the goods imported as they arc not liable to Central Excise duty having regard to the Exemption Notification 234/82CE dated 1.11.1982.
39. While confirming the classification made by the Collector (Appeals), Calcutta as well as the various Asstt. Collectors and while setting aside the classification made by the Collector of Customs (Appeals), Bombay, we direct that the Corporation shall be granted consequential relief by way of refund of additional (countervailing) duty charged on the imported goods in the various Bills of Entry.
40. Subject to the above modification, the appeals filed by the Collector of Customs, Bombay CE 465 to 468/84 are allowed and the appeal filed by the Corporation, namely, Appeal No. C.1474/84C is rejected.
25.04.1989 K. Prakash Anand, Member
1. I have perused the foregoing decision of Shri Hegde: with respect, I cannot agree with his view on the issue of countervailing duty.
2. There are a number of decisions of this Tribunal in which it has been held that animal feed-supplements, by themselves, cannot be considered as "animal feed". This was the view taken in 1984 in the case of Aries Agro-vet Industries Pvt. Ltd. v. Collector of Central Excise, Bombay -. This was also the view taken in a large number of appeals filed by the department in the case of Collector of Customs & Central Excise, Guntur v. Surendra Cotton Oil Mills in Order Nos. 514 to 556/88-D dated 8.8.1988. The view taken was that while it is true that addition of certain products enrich feed given to animals including catties, poultry etc. to ensure a balanced diet, such additives by themselves are not complete animal feeds as such. For its proper growth and health, an animal needs various nutrients like minerals, vitamins, proteins, fats, carbohydrates, calcium, metals and even roughage. Additives, minerals and supplements, individually cannot make whole animal feed. In other words, a protein additive or an iron additive or vitamin additive cannot be considered an animal feed. Therefore, while the mineral supplements have been held to be part of animal feed, but such supplements have been held not to be animal feed by themselves as feed cannot be only one of the various ingredients an animal requires in a balanced diet. Anything that is fed to the animal for its growth, sustenance or production cannot be considered as "animal feed", the Tribunal has held.
3. In the Aries Agro-vet Industries Pvt. Ltd., case (supra) Gujarat High Court judgment in the case of Glaxo Laboratories had been noticed by the Tribunal but it was held as not applicable in the interpretation of Central Excise Tariff since it was delivered in a Sales-tax matter.
4. We do not find that the views expressed by the Tribunal in various decisions which were in favour of the department were placed before the Bombay High Court.
5. On the other hand, we find that M/s. Aries Agro-vet Industries Pvt. Ltd. had gone up in appeal against the decision of the Tribunal against them in Civil Appeal No. 17/1984. This appeal was dismissed at the admission stage.
6. Accordingly, I hold that premix AD-3 (feed grade for medicinal use) and pre-mix AD-3 (feed grade not for medicinal use) are animal feed-supplements. They would fall outside the category of animal feed and, therefore, would not be exempted for payment of central excise duly under Notification No. 274/82 dated 1st November, 1982.
7. In accordance with this view, additional (countervailing) duty would be chargeable on the pre-mix of vitamin AD-3 (feed grade for medicinal use) and pre-mix AD-3 (feed grade, not for medicinal use) under Section 3 of the Customs Tariff Act, 1975. It would be equal to the excise duty leviable on such goods produced or manufactured in India.
8. However, so far as classification of Lulavit AD-3 500/100/BASF feed grade (not for medicinal use) is concerned, I agree with Brother Hedge that the same is classifiable not under Customs Tariff Heading 23.01/07, but for reasons ably brought out in his judgment, is classifiable under Customs Tariff Heading 29.01/045(17). Therefore, the order of the Collector of Customs (Appeals) Bombay, holding that Customs Tariff Heading 23.01/07 is applicable, is set aside. The orders of Collector of Customs (Appeals) Calcutta, holding that the goods fall under Heading 29.01/45(17) are upheld.
9. I dispose of the appeal accordingly.
11.05.1989 D.C. Mandal, Member I agree with Brother Shri Anand.
Appeals No. C/465 to 468/84-C are allowed and appeal No. C/1474/86-C is dismissed.