Customs, Excise and Gold Tribunal - Delhi
Tetragon Chemie (P) Ltd. And Ors. vs Cce And Ors. on 13 November, 1998
Equivalent citations: 1999(63)ECC709
ORDER G.R. Sharma, Member (T)
1. The present reference has arisen out of the decision of this Tribunal in the case of M/s. Tetragon Chemie (P) Ltd. Two Members had differed. One of the Members suggested that the matter should be referred to the Larger Bench in view of the fact that the Tribunal in the case of M/s. Roche Products Limited; in the case of M/s. Glaxo Labs (T) Limited; in the case of M/s. Punjab Bone Mills and in the case of M/s. Protin Kem had held that the goods were classifiable under Heading 23.02 of Central Excise Tariff Act, 1985 (CETA 1985) and that in the case of M/s. Ranbaxy Laboratories Ltd., the Tribunal had held that the goods were classifiable under Heading 29.36 of CETA 1985. Therefore, a reference was made to the third Member who held that the matter may be referred to the Larger Bench. Accordingly, the issue was formulated as "whether preparations of a kind used in animal feeding consisting of one or more vitamins mixed with diluents etc. are classifiable under Heading 29.36 as held in the case of M/s. Ranbaxy Laboratories Limited or under Heading 23.02 as held in the case of M/s. Glaxo Labs (I) Limited and M/s. Roche Products Limited
2. At the outset, the Joint Chief Departmental Representative, Shri B.K. Gupta pointed out that the issue involved in all these matters was decided by the Tribunal in favour of the Revenue in the case of Ranbaxy Laboratories Limited v. CCE ; that against the said judgment of the Tribunal, an Appeal has been admitted by the Supreme Court 1998 (99) ELT A231J. The Id. Advocate. Shri V. Lakshmi Kumaran in fact gave of copy of the Order of the Apex Court admitting the Appeal. The Civil Appeal No. is 2284 of 1995 Dated 25.9.95. He objected to the hearings being proceeded with. Having heard both sides, we overruled the objection raised by the Revenue in the case before us.
3. The Id. Jt. CDR also submitted that the referral order is about classification of the products either under Heading 23.02 or 29.36. He, therefore, submits that all the arguments from his side will be adduced on these 2 Headings only and that any other Heading or issue shall be decided by the respective Benches.
4. We also note that there is an Appeal No. C/48-51/98 by the Commissioner of C.E., Guntur v. Gowthami Solvent Oils Pvt. Limited. This case was heard by the Larger Bench of 5 Members and hence it has dilinked.
5. Form the arguments adduced before us and the evidence produced, we find that the 2 competing entries for the purpose of our determination are Heading 23.02 and Heading 29.36. For proper appreciation and understanding the importance and implication of the words used in the 2 disputed Chapter Headings of Central Excise Tariff Act. 1985, they reproduced hereunder:
CHAPTER 23: RESIDUES AND WASTES FROM THE FOOD INDUSTRIES; PREPARED ANIMAL FODDER.
Note: Heading No. 2302 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.
_________________________________________________________________________ Heading Sub-Heading Description of goods Rate of Duty (1) (2) (3) (4) _________________________________________________________________________ 23.01 2301.00 Residues and waste from the NIL food industries, including bagasse, other waste of sugar manufacture and oil cakes.
23.02 2302.00 Preparations of a kind used in NIL animal feeding, including dog and cat food.
_________________________________________________________________________ CHAPTER 29: ORGANIC CHEMICALS.
Notes:
1. Except where the context otherwise requires, the heading of this Chapter apply only to:
(a) Separate chemically defined organic compounds, whether or not containing impurities;
(b) Mixtures of two or more isomers of the same organic compounds (whether or not containing impurities), except mixtures of acrylic hydrocarbon isomers (other than stereoisomers), whether or not saturated (Chapter 27);
(c) The products of heading Nos. 29.36 to 29.39 or the sugar ethers and sugar esters and their salts of heading No. 29.40, or the products of heading No. 29.41, 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 use rather than for general use;
(f) The products mentioned in (a), (b), (c), (d) or (e) above with an added stabiliser necessary for their preservation or transport;
(g) The products mentioned in (a), (b), (c), (d), (e) or (J) above with an added anti-dusting agent or a colouring or odoriferous substance added to facilitate their identification or for safety reasons, provided that the additions do not render the product particularly suitable for specific use rather than general use;
(h) The following products, diluted to standard standard strenghts, for the production of azo dyes; diazonium salts, couplers used for these salts and diazotisable amines and their salts.
2. This Chapter does not cover:
(a) Goods of Heading No. 15.01 or glycerol (heading 15.06);
(b) Ethyl alcohol:
(c) Methane or propane (Chapter 27);
(d) The compounds of carbon mentioned in Note 2 of Chapter 28:
(e) Urea (Chapter 31);
(f) Colouring matter of vegetable or animal origin (heading No. 32.03), synthetic organic colouring matter, synthetic organic products of a kind used as fluorescent brightening agents or as lurniniphores (heading No. 32.04) or dyes or other colouring matter put up in forms or packings for retail sale (heading No. 32.12):
(g) Enzymes (heading No. 35.07);
(h) Metaldehyde, hexamethylenetetramine or similar substances, put up in forms (for example, tablets, sticks of similar forms) for use as fuels, or liquid or liquified gas fuels in containers of a kind used for filling or refilling cigarette or similar lighters and of a capacity not exceeding 300 cm3 (heading No. 36.06);
(y) Products put up as charges for fire-extinguishers or put up in fire-extinguishing grenades, of heading No. 38.13; ink removers of heading No. 38.23; or
(k) Optical elements, for example, of ethylenediamine tartrade (heading No. 90.01).
_________________________________________________________________________________ Heading Sub-Heading Description of goods Rate of Duty _________________________________________________________________________________ I. HYDROCARBONS AND THEIR HALOGENATED. SULPHONATED.
NITRATED OR NITROSATED DERIVATIVES.
XI.PROVITAMINS. VITAMINS AND HARMONES.
29.36 2936.00 Provitamins and vitamins, natural or 20% reproduced by synthesis (including natural concentrates), derivatives thereof used primarily as vitamins, and intermixtures of the foregoing, whether or not in any solvent.
___________________________________________________________________________________
6. The products in dispute in the case of various Appellants covered in these Appeals are as under;
PRODUCTS IN DISPUTE OF THE ASSESSEES COVERED IN THE CAPTIONED APPEALS.
____________________________________________________________________________________ PRODUCT ACTIVE INGREDIENT OTHER INGREDIENTS ____________________________________________________________________________________ (1) M/S. TETRAGON CHEMIE (P) LTD. CALCIUM CARBONATE (MINERAL) SYNOCARE-100 VIT B12 SODIUM BENZONE.
KAYSOL FORTE VIT K3 DEXTROSE. LACTOSE
(CARBOHYDRATE)
BCAREPLUS VIT B1 YEAST (PROTEIN) CALCUIM
VIT B3 CARBONATE (MINARAL) SOD.
BENZOATE SANTOQUIN
VIT B5 SOYAFLOUR (PROTEIN)
VIT B6
VIT B12
VIT E
FOLIC ACID
SOLVIT ADBEC VIT A DEXTROSE (CARBO-
HYDRATE)
VIT D3 LACTOSE (")
VIT B12 SOD. LAORYL SULPHATE
VIT E TWEEN80 SOD. BENZOATE BHT
VIT C LACTOSE (CARBOHYDRATE)
CCARE 500 VIT C SOD. BENZOATE
E CAE Se VIT E SELENIUM (MINERAL)
LACTOSE (CARBOHYDRATE)
DEXTROSE (")
SLs
SOD.BENZOATE
TWEEN 80
BCARE SPL. VIT B1 D.L. METHIONINE (AMINOACID)
VIT B2 CAL GLUCONATE (MINERAL)
VIT B3 DEXTROSE (CARBOHYDRATE)
VIT B5 LACTOSE (")
VIT B6 TRICALCIUM PHOS
SOD. METABISULFITE
VIT B12 SOD. BENZOATE
NUTRICARE HUBBARD VIT A1 SELENIUM (MINERAL)
VIT D3 CHLORIDE CHLORIDE ETHOX
YAVIN
VIT E
VIT K
VIT B1
VIT B2 SODBENZONATE
VIT B3 SOYA FLOUR (PROTEIN)
VIT B6
VIT B12
FOLIC ACID
SYNOCARE 200 VIT B12 CALCIUM CARBONATE
(2) M/S. SALVI CHEMICAL INDUSTRIES &
(3) M/S. SHRINIWAS CHEMICAL INDUSTRIES LTD.
CHOLINE CHLORIDE CHOLINE CHLORIDE
(4) M/S. VENKEY'S (INDIA) LIMITED.
GRANULATED TYLOSIN
FEED PREMIX TYLOSIN STARCH & VEGETABLE FAT.
VFUR 200 FURAZOLIDONE 20% CALCITO NOSO. AND NAOLIN
(5) M/S. MEPRO PHARMACEUTICALS LTD.
M. JAYPLEX VIT B12
VIT B1
VIT C RIBOFLAVIN NICTINAM DE
CALCIUM
PENTHOTHENATE
VIT B6
VITNKA VIT A PALMITATE
VIT D3 CHOLOCALCIFEROL BP (Vet.)
VIT E
VIT B12
(6) M/S. PHARMA RESEARCH & ANALYTICAL LAB.
VETA--A INJECTION
VETA--A SOLUTION
(7) M/S. AVATT CHEMICALS
MICROVIT E SILICA (CARRIER)
PROMIX 50 VIT E
(8) M/S. KENWELL (P) LTD.
GROVIRON FURAZOLIDENE AEROSIL
TALCUM POWDER CALCIUM
CARBONATE LIGHT
CALCIUM CARBONATE HEAVY
BINIT NITROFURAZONE FURAZOLIDENE NENAPHTHESE
SODIUM BISULPHITE (AS VIT.
K DE RIVATIVE VET.)
(9) M/S. FLEMMING (INDIA)
VISOLB VIT B2 RIBOFLAVINE
VIT B6 PYRIDOXINS HYDROCHLORIDE
VIT D PANTHENOL
VIT B12 NIACINAI(SIC)E
CYANOCOBALAMIN CHOLINE
CHLORIDE LLYSINE
DLMETHIONINE
(10) M/S. MEPRO CHEMICALS
FLOXAIDN CHOLINE BITARTRATE
DCALCIUM PENTOTHENATE
HIACIN
(11) M/S. GODREJ SOAPS (P) LTD.
NIGER SEED EXTRACTIONS.
RICE BRAN EXTRACTIONS.
(12) M/S. WESTERN HATCHERIES
Ventrimix DS D.O. Soya. Liquid Parafln, Endox D. Dry powder, Vit. AD3,
Vit. D2. Vit. K.
VENTRIBEEPlus Deoiled Groundnut cake. Cal. Carbonate (H) Endox D. Dry
Powder. Lactose, Cal. D.. Panthothenate,. Tocopheryle.
Acetate. Folic Acid, Niacinamide. Vit. B 12, Vit. B6 Hcl.
Vit. BI. HCI.
Ventrimix Forte D.O. Soya, Vit. A, Vit. B2 Vit D3, Vit. K.
Ventrimin17 Choline chloride. Cobalt Sulphate. Copper Sulphate. Pot.
Iodide. Ferrous Sulphate. Manganese Sulphate. Zinc Oxide.
DCP. Cal. Carbonate (L), Cal. Carbonate (H). Lactose Cal.
Pantethenate, niacinamide. Vit. E. Vit. K3. Vit. B2. Vit.
B12. Vit. D3, Vit. A.
BIOSAFE Calcium Carbonated). Calcium Carbonate(H), Lactose.
Lactpbaccilus Spores. Vit. B12.
STRESVEL DM Water. Sorbitol, PropyoeneGlycol. Sod. Hydroxide.
Propyl, Gallate, Tween80. Vit. C. Vit. E.. Vit. D3. Vit. A.
VENTRIPLEX M DN Water, Amarnath Red, Saccarin, Sod. Citric Acid.
Ferrous Glycine Sulphate, Prophyl Parabene, Methyl
Paraben, Sod. EDTA DL methionine, D-Panthenol. Vit.
B6. Vit. B12. Vit. B2. Niacinamide. Mixed fruit Flavour,
Sod. Hydroxide.
VENTRIFORTEA DM Water. Citric Acid, Pepyo Gallate. Sorbitol. 70%
Glycerine. Tween80, Vit. A.
CHOLINEFEED Choline Chloride, D17. DM Water, Sipernat22
SELVITE Cal. Carbonate (H), Cal. Carbonate(L) Sipernet22.
Sodium Selenite, Vit. E.
SELVITE DS Cal. Carbonate (H). Cal. Carbonate (L) Sipernet22.
Sodium Selenite Vit. E (Acetate)
TR ACEMIN Copper, Iron, Iodine. Manganese, Sulphate Zinc Oxide.
Sodium Selenite, Cal. Carbonate (H).
SOUJCEL Calcium. Phosphorous. Vit. B12. Vit. 3. Propyl Gallate,
Propylene Glycol. Sod. Benzoate, Cilric Acid. Carmosine
Colour. Mixed fruit flavour. D.M. Water. Butylated
Hydroxy anisole.
PoultryMM Iron. Copper, Iodine. Calcium. Phosphorous Maganese.
Zinc.
VELDOT Dot, Talcom Powder. Aerosil 200, Cal. Carbonates (L)--,
Calcium Carbonate (H).
ALBEC ALBEC Zinc Bacilrecin, Cal. Carbonate
VFUR 200 Furazolidone, Talcom Powder. Aerosil 200, Cal. Carbonate
(L), Cal. Carbonate (H)
TOXI-Check Wheat Bran. Toxi Check Concentrate. Silicon dioxide.
7. Before proceeding with the classification proper, let us examine the technical literature on feed and animal feeding and preparations of a kind used in animal feeding.
8. In Websters New Twentieth Century Dictionary, at Page 671, several meanings of the word 'feed' when used as a noun are given. The appropriate meanings as applicable in the context of the use of the said noun in the entries in question, however, are as follows:
1. Food given to animals Fodder; Pasture;
2. The customary amount of fodder given at one time; as, to carry on a journey two feeds of oats;
3. A meal.
9. In he Oxford English Dictionary, Vol. IV, at Page 130, various meanings of the word 'feed' are given and out of them, only the following meanings appear to be relevant:
(3) Food (for cattle); fodder, Provender;
(4) A meal; a sumptuous meal; a feast.
It would thus appear that etymologically the word 'feed' means animal food or fodder.
10. 'Animal Feeding' and 'Cattle Feed' have acquired a precise meaning in the field of livestock and so also the word 'concentrates'. In the Book entitled 'Nutritive Values of Indian Cattle Feeds and the Feeding of Animals' by Shri K.C. Sen, which has been published by the Indian Council of Agricultural Research, New, Delhi. Chapter I entitled 'Nutrition of Animals' deals with the feeding stuffs of animals. It is there pointed out that food is essential for the maintenance of life. The nutrients in a feeding stuff enable the animal body to maintain energy, to perform the vital processes of life and provide the material to replace the essential tissues breakdown which occurs in the body continuously. Food also provides the constituents and the energy required for body growth, All feeding stuffs are composed of water and organic and mineral matter. Organic matter is composed of proteins, fats, crude fibre an soluble carbohydrates. Besides the above, there are substances known as vitamins which are considered to be essential for the proper nutrition of farm-stock. Of these, the more important ones from the point of view of cattle nutrition, are Vitamins A & D because they have to be supplied to the animals through their feeds; but Vitamin B and C can be synthesized in the ruminant body. The learned Author seems to point out that the ration of an animal may be divided for convenience into two parts; one for maintenance ration which is that portion of the diet which just enables the animal at rest to carry on the essential processes of life such as breathing and circulation of blood without either gain or loss of body weight. As, however, no animal is kept in a farm in a state of non-production, the requirements for maintenance from only a convenient basis for the calculation of rations for productive purposes. Whatever is supplied to the animal over and above its maintenance requirement is available for production such as for growth or fattening, for production of calf, for production of milk, or for output of work. These observations contained in a standard book published by the Indian Council of Agricultural Research establish two tilings; first that in the context of livestock, which is not intended to be kept in a state of non-production, food consists not only of that constituent which is essential for the maintenance of life but also of the other constituents which provide the energy required for production, be it the production of calf, or milk or output of work and, secondly that vitamins are considered essential for the proper nutrition of farm stock and some of the vitamins like Vitamin A and D have to be supplied to the animals through their feed. If this concept of cattle-feed is borne in mind, it would immediately clear that the said expression is not understood by the people conversant with the rearing of livestock as merely consisting of ration for maintenance, but also as comprehending ration for production purposes.
11. 'Nutrition of the Chicken' by Milton Scott Ph. D and Others, third edition 1982 was also referred to. It was pointed out that nutrition encompasses the procurement, ingestion, digestion and absorption of the chemical elements which serve as food. In addition, it includes the transport of these elements to all cells within the animal organism in the physical and chemical forms most suitable for assimilation and use by the cells. It was also submitted that in the book it has been mentioned that 40 chemical compounds are essential nutrients which must be present in the diet of the chicken in adequate amounts in optimum ratio to each other, and in an available form to promote maximum rate of growth, optimum egg production and reproduction with maximum efficiency of feed utilisation. The book also brings out that animals such as the chicken eat food primarily to satisfy an inner craving or hunger for energy. When this hunger is satisfied, the animal stops eating. Therefore, the amino acids, vitamins and minerals must be present in the diet in a very definite ratio to energy so that the animal will receive enough of all essential nutrients in satisfying its hunger for energy. The book also illustrates that Amino Acids and Vitamins are essential nutrients.
12. Animal Feed has been commented upon the Encyclopaedia Brittanica, Volume 9, Page No. 144 as 'Feed Animal are material on which animals are fed differ widely in chemical composition and nutritive value. For convenience they are divided into two general classes: Concentrates and Roughages. Concentrates include a large variety of feeds that have a high value because they are rich in easily digested nutrients, such as starch, fat and protein and are low in fibre or woody material which is not well digested. Roughages have a much lower value because they are relatively high in fibre and contain less of the more digestible nutrients. Good nutrition is necessary if animals are to be able to maintain health and produce satisfactory amounts of milk, eggs, meat, wool or work. Animals require each day food furnishing sufficient amount of protein, energy, vitamins. Plenty of water and air are also needed. Dealing in detail with the role of vitamins in animal feed, the learned authors have pointed out that the numerous scientific discoveries concerning vitamins had a profound effect upon livestock farming by increasing the efficiency of animal production and preventing serious nutritional diseases.
13. Vitamin A. which is required for growth, reproduction, milk production and even for the maintenance of nature animals, is most apt to be. lacking in livestock feeds. A serious deficiency of this vitamin makes animals especially subject to diseases of the respiratory tract and they often die of pneumonia. Next to Vitamin A, attention is given to Vitamin D in livestock feeding. This vitamin is needed to enable animals to assimilate and use the minerals, calcium and phosphorous. A deficiency of this vitamin causes serious bone diseases such as rickets in young growing animals. Because poultry have especially high vitamin D requirements, special vitamin D supplements are included in their rations, particularly under winter conditions or when they are confined away from the direct sunlight. This analysis of animal feeds also establishes two things; first that amongst the materials on which animals are fed are included concentrates which include a wide variety of feeds that have a high value and, secondly, that in order that animals are able to maintain health and produce satisfactory amounts of milk, eggs, meat, wool or work, they require sufficient amounts inter alia of vitamins including vitamins A and D. some of which are lacking in the traditional livestock feed.
14. Reference can also be made to McGraw-Hill Encyclopeadip of Science and Technology, Vol. I, Page 457 under the heading 'Animal-Feed Composition'. It has been there pointed out that the chemical of animal feeds can be considered as falling into three categories; water content (moisture), certain groups of natural organic compounds and inorganic or mineral elements. A group of essential but unrelated organic compounds, occuring in smaller concentration, consists of Vitamins. At Page 458. under the heading 'Feed Supplements' it has been observed that the manufacture of commercial mixed feeds has become a very important industry in the United States. Prior to 1949, the principal feed additives used in these mixed feeds were minerals and protein concentrates. Since that date, there has been enormous expansion in large sale manufacture of vitamins, antibiotics, hormones and essential aminoacids. These substances have been added to mixed feeds as supplements having either direct action or metabolism and growth or indirect action through control of bacterial growth and infection. Although an ample supply of all vitamin requirements of livestock usually can be made up through the use of common feeds, vitamins are becoming more general as feed additives in commercial feeds. Various kinds of vitamins are added to commercially mixed feeds for poultry, swine and, to a limited extent, for calves, Increasing amounts of fat soluble vitamin A are being produced for all types of livestock. This vitamin, which formerly was supplied as a fish liver oil to be fed separately because of the rapid destruction of the vitamin on oxidation, is available in a stabilised form with small particles of the covering of a synthetic wax, gelatin, or other material.
15. This study of animal feed composition and feed supplements brings into clear limelight the fact that in the manufacture of commercially mixed feeds, several feed additives are used and that amongst them are included vitamins A and D. These two vitamins are added as supplements in mixed feeds for cattle, poultry, swine and young calves.
16. The above description shows that a true and correct interpretation of words "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 food 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, eggs, meat, wool or feathers and in the case of animals also, for efficient output of work. It also becomes clear that in modern times, cattle feed and poultry feed include a large variety of concentrates in addition to roughages that have a high value because they are rich in easily digestible nutrients as feed supplement.
17. But the concept of proper upkeep and rearing of animals has undergone vast changes and no one who plans to rear animals specially for commercial exploitation can leave the feeding to essential ration alone. The owner has to see that the animals are not only fully fed but are also in receipt of the proper kind of feed that will contribute to optimum growth, health and yield, be it meat, milk, leather, hair, eggs or feathers.
18. From what has been stated above, it becomes clear that in the technical and dictionary meaning of the terms 'cattle feed' include feed additives and feed supplement like proteins, minerals, vitamins etc. It is also clear that the essential question which will require to be determined in these Appeals concerning the said Headings, therefore, is whether the goods in question even if they be cattle feed, include food supplement or food additives.
19. Notification No. 6/84-CE Dated 15.12.94 which exempts animal feed supplements and concentrates, provides 'animal feed supplement means an ingredient or combinations of ingredients added to the basic feed mix or parts thereof, to fulfill the specific need usually used in micro quantities and requiring careful handing and mixing'. In the same Notification, the term animal feed concentrates means 'a feed intended to be diluted with other food ingredients to produce a 'complete feed optimum nutrition balance'.
20. S/Shri V. Lakshmikumaran, V.S. Nankani, J.S. Patel. P.C. Anand and R.G. Sheth, Advocates appeared for the Assessees whereas Shri B.K. Gupta, the Id. Joint Chief Departmental Representative appeared for the Revenue.
21. It was argued for M/s. Tetragon Chemie (P) Ltd., that since there is no appeal filed by the Department on the issue of limitation, arguments are being adduced only on classification of the products manufactured by the Appellants.
22. It was contended by the Id. Counsels for the Assessees that animal feed' has not been defined in the Tariff or the rules made there under. Therefore, reliance has to be placed on the technical literature on the subject and general understanding of the trade who deal in the goods or who purchase the goods, in addition to the case law on the subject. It was contended that affidavits from experts and their opinions were produced before the lower authorities indicating that the product manufactured by them was known in common paralance as concentrates, premix, feed additives and feed supplement. A reference was made to the decision of the Hon'ble Gujarat High Court in the case of M/s. Glaxo Laboratories (India) Limited 1979 (43) STC 386 wherein the Hon'ble High Court held that feed consists not only of that constituent which is essential for maintenance of life, but also other constituents which provide energy require for production, be it the production of calf or milk or output of work and that vitamins are considered essential for the proper nutrition of livestock and such vitamins A & D have to be supplied to the Animal through their feeds. The Hon'ble Gujarat High Court further observed that this study of animal feed composition and feed supplements brings out clearly the fact that in the manufacture of commercially mixed feeds, several feed additives are used and that amongst them, are included vitamins A & D. It was also observed: The Tribunal had there taken the view that those two products supplied mineral deficiencies in the normal feed for animals and poultry and that they promoted growth, production, health and breeding; that those products, therefore, were meant to serve as tonics for the animals or poultry. According to the view of the Tribunal in that case, the word 'feed' meant that the food especially for livestock or a mixture or preparation used for feeding livestock. Having regard to the said meaning of the word 'feed' according to the Tribunal, the two products in question could not be said to be cattle feed or poultry feed as the case may be. This view of the Tribunal was based on the narrow meaning which it assigned to the word "feed' which according to it, meant, in substance, ration for maintenance. This view, as earlier pointed out, is not correct'. It was contended that the cattle feed and poultry feed must include not only that food which is supplied to the 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 etc.
23. It was contended that the Hon'ble Bombay High Court in the case of Glindia Limited v. UOI 1998 (3) ELT 479 while citing the judgment in the case of Glaxo Labs (I) Limited decided by the Hon'ble Gujarat High Court, observed that the Hon'ble Gujarat High Court was required to consider whether certain vitamin products which were used for supplementing the feed for cattle and poultry should be classified as cattle feed in terms of the meaning of entry 21 of Schedule 1 of Gujarat Sales Tax Act. 1969 or as entry No. 22 of Schedule 1 of the said Act. The Hon'ble Gujarat High Court had held that the term cattle 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 and for production purposes.
24. The Id. Jt. CDR. countering the arguments based on the Hon'ble Gujarat High Court and Hon'ble Bombay High Court judgments submitted that these two judgments pertain to Sales Tax matters. It was contended by him that the Sales Tax Act is not the same as the Central Excise Act. The two Acts serve two different purposes and hence the finding under one Act cannot be taken directly as covering the matter precisely under a different Act. He submitted, therefore, that the ratio of the decision of these two judgments does not squarely cover the present cases. It was also contended that judgments in Sales Tax Laws do not apply to an interpretation of Central Excise Laws with which we are concerned. It was also contended that the cases decided by the Hon'ble Gujarat/Bombay High Courts pertained to the period before introduction of new Central Excise Tariff based on HSN; that in the erstwhile CET., there was no heading (Tariff item) corresponding to 23.09 of HSN or 23.02 of CETA 1985; that composition of the product is of material importance for deciding the classification under heading 23.02, 29.36 or 30.03 of CETA 1985; that composition of the products shows that they are not obtained by processing vegetable or animal material.
25. Revenue contended that Vitamins are also used for feeding the animals and that such vitamins fall specifically under Heading 29.36. Since there was a specific Heading for vitamins, these vitamins even if used in preparation of animal feed supplements, will be classifiable under Heading 29.36. It was argued also that solvents, stabilizers and antioxidents can be mixed with vitamins to be classified under Heading 29.36.
26. A lot of arguments were adduced by both the sides on the General Notes and Chapter Notes of Heading 23 and Heading 29.36. On behalf of the Assessees, it was contended that Heading 23.02 of CETA 1985 is based on Heading 23.09 of the HSN. It was submitted that under this Heading, a number of preparations are described. It was argued by the Assessees that Chapter Notes under this Heading in HSN provide: '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.
27. A reference was also made to other preparations and it was argued for the Assessees that other preparations included (A) preparations designed to provide the animal with all the nutrients, elements required to ensure the rational and balanced daily diet (complete feed); (B) preparations for supplementing the basic farm-produced feed (Feed supplements) and (C) preparations for use in making the complete feeds or supplementary feeds described in (A) and (B). It was contested by the counsels for the Assessees that their products are used as animal feed: that the tariff description stipulates the end use as a criterion for classification; that their labels show that the goods are used as animal feeding only; that the Department has not brought any evidence on record to show that the preparations are not used as animal feed supplements; that apart from tariff description, there was no other tariff definition in the tariff or rules; that the mere mixture of small quantity of vitamins does not by itself render the mixture of vitamin so as to bring it under Heading 29.36; that Experts/Specialists and Users/Dealers have certified that the goods in question are not vitamins, but only essential supplements required for animal feed; that these experts/specialists/users/dealers categorically stated that if animal feed supplements contain vitamins in a small quantity, even then the product is known and used as animal feed supplements; that for the manufacture of animal feed supplements, no drug licence is necessary. It was contended that the Tribunal in its final order No. 751/98-C Dated 8.9.98, on the question of classification of Ossidos based on protein and carbohydrates and to which minerals such as calcium is added, held that the product is classifiable under Tariff Item IB of the erstwhile Central Excise Tariff. It was argued for M/s. Tetragon Chemie (P) Ltd. that the Id. Commissioner held that animal feed supplements are not necessary for the bare maintenance of the animals, but only necessary when the daily animal feed is considered insufficient from the nutritional angle. Therefore, any final product to be classifiable under Heading 23.02, must necessarily be sufficient to meet the bare daily subsistence of the animal. But the products in question functionally differed from the faily feed that is given to the animal and that the feed that supplements the bare daily necessity by way of vitamins will have to be taken out of the purview of Heading 23.02 CETA 1985. It was contended by the Id. Counsels for the Assessees that a careful reading of the description of tariff heading 23.02 makes it clear that the preparations of a kind used in animal feeding merit classification under Heading 23.02 only; that for purposes of classification, it is the end use which Is relevant; that the labels affixed on them reveal that they are animal feed supplements: that Hon'ble Gujarat High Court in the case of Glaxo Laboratories (I) Limited, Hon'ble Bombay High Court in the case of M/s. Glindia Limited and the Apex Court in the case of M/s. Sun Exports Corporation held that animal feed includes animal feed supplement: that technical literature and expert opinions support the view that these products are preparations for supplementing the essential ration used as animal feed and hence merit classification under Heading 23.02.
28. To support their contention that end use is important for classification of the products, the Counsel cited and relied upon the judgment of the Apex Court in the case of M/s. Atul Glass Industries Ltd. wherein in para 8 and para 13, the Apex Court held:
8. The test commonly applied in such cases is: How is the product identified by the class or section of people dealing with or using the product? That is a test which is attracted whenever the statute does not contain any definition. Porrits & Spencer (Asia) Ltd. v. State of Haryana 1978 (42) STC 433. It is generally by its functional character that a prodict is so identified. In Commissioner of Sales Tax, U.P. v. Macneill & Barry Ltd. Kanpur , this Court expressed the view that ammonia paper and ferro paper, used for obtaining prints and sketches of site plans could not be described as paper as that word was used in common parlance. On the Duplicators (P) Ltd. (1974) (33) STC 333 that stencil paper could not be classified as paper for the purposes of Orissa Sales Tax Act. It is a matter of common experience that the identity of an article is associated with its primary function. It is only logical that it should be so. When a consumer buys an article, he buys it because it performs a specific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identifies it in the mind. In the case of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the article lies in its being a mirror. It was observed by this Court in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan and Ors. which was a case under the Sales Tax Law:
In determining the meaning or connotation of words and expression describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which they understand it that constitutes the definitive index of the legislative intention when the statute was enacted.
That was also the view expressed in Geep Flashlight Industries Ltd. v. Union of India and Ors. 1985 (22) ELT 3, Where the goods are not marketable that principle of construction is not attracted. Indian Aluminium Cables Ltd. v. Union of India and Ors. . The question whether thermometers, lactomerters. syringes, eye-wash glasses and measuring glasses could be described as 'glassware' for the purpose of the Orissa Sales Tax Act, 1947 was answered by the Orissa High Court in State of Orissa v. Janata Medical Stores 1976 (37) STC 33 in the negative. To the same effect is the decision of this Court in Indo International Industries v. Commissioner of Sales Tax. Uttar Pradesh 1981 ELT 325 SC, where hypodermic clinical syringes were regarded as falling more accurately under the entry relating to 'hospital equipment and apparatus' rather than under the entry which related to glass-wares' in the U.P. Sales Tax Act.
13. An additional point arises in M/s. Hindustan Safety Glass Works Ltd. (Transfer cases No. 349. 350 and 355 of 1983). The manufacturers of" motor vehicles place orders with the appellant for the manufacture of screens for fitting in motor vehicles. They are commonly known as wind screens, rear screens and door screens. The screens are manufactured according to the specific shape and measurements indicated in the orders, for different vehicles require screens of different shapes and measurements. The screen is manufactured from sheet glass. It is first given shape and size according to the specifications contained in the order and thereafter subjected to the process of toughening. It is a fabricated article.
29. It was submitted for the Assessees that the decisions of this Tribunal in the case of M/s. Roche Products Ltd. M/s. Punjab Bone Mills Ltd. M/s. Glaxo Labs (I) Limited. M/s. Protin Kern Ltd.; Commissioner of C.E. v. Wockhardt Put. Ltd. 1998 (100) ELT 486 & Mayo (India) Ltd. v. CCE 1998 (8) ELT 630 fully support the above view.
30. In reply, it was argued for the Revenue that the Chapter Note under Heading 23 clearly brings out that the products for classification under this Chapter should be obtained by processing vegetable or animal material other than vegetable waste, vegetable residues and bye-products of such processing. It was contended that the products in question are not obtained by processing vegetable or animal material and. therefore, they cannot be classified under this Chapter. It was contended that synthetic products have no place under Chapter 23 and hence they cannot be classified under this Chapter. In support of this argument. Revenue relied on the judgments of this Tribunal in the case of M/s. Ranbaxy laboratories Limited . In this case, this Tribunal held that hence Pentaforte and famitone being admittedly preparations containing a number of vitamins as active ingredients are covered by the entry 29.36 and the fact that some minerals and materials are also present does not make any difference. A reference was made to the case of Aries Agro-Vet Industries Private Limited . In this case, this Tribunal had held that 'We agree that the mineral supplements are indeed part of the animal feed, but these supplements are not by themselves animal feed as one would understand "animal Feed". It was also argued by the Id. Jt. CDR that the Apex Court in the case of EskeyeJ Ltd. v. Collector of Central Excise held: "Here we find that Neftin-200 contain Furazolidone which is administered for prevention and treatment of ailments viz. Histomoniasis in poultry. Merely because Neftin-50 and Neftin-200 can also be used for improving egg production and increase in growth rate of broilers would not in any way detract from the fact that the said products are medicines for use in the: treatment and prevention of ailments in poultry. Once it is found that Neftin-50 and Neftin-200 are medicines for use for treatment and prevention of ailments in poultry, they have to be regarded as P&P medicines chargeable to excise duty under item No. 14E and the question whether the said products fall in the residuary entry at Item 68, does not arise.
31. Attacking the Order of the Hon'ble Vice-President in the case of M/s. Ranbaxy Laboratories Limited 1994 (53) 546, it was contended by the Counsels for the Assessees that the finding of the Id. Vice-President reading as: "33. Nowhere there is an iota of indication or slightest hint of synthetic material or mixtures thereof or of products made mainly or wholly of or from synthetic material(s)." was erroneous. It was argued before us that Chapter Note to Chapter 23 reads: Heading 23.02 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 characteristics of the original material, other than vegetable waste, vegetable residues and bye-products of such processing.' It was argued by the Id. Counsels before us that the word appearing in this Chapter note is 'includes'; that the word 'includes' is not an exhaustive word and that the use of the word 'includes' gives the definition and Chapter Heading an extensive scope. It was contended that an against this, 'used primarily or covers only' are restrictive definitions. The use of the word 'includes' in the chapter note clearly shows that the Chapter is to be construed not in the restrictive sense, but in the exhsustive sense. It was. therefore, argued that if the feed supplements also contained synthetic products, they cannot be excluded from the Chapter 23. It was argued that argued that similar issue came up before the Apex Court in the case of M/s. Sun Export Corporation and the Apex Court held: "We are in agreement with the above view expressed by the Bombay High Court. The Hon'ble Bombay High Court had relied on the judgment of the Hon'ble Gujarat High Court who had held: 'It was submitted by the respondents that the subsequent amendment expressly refers to animal feed supplements. This suggests that animal feed supplements were not previously included in the exemption notification. This reasoning must be rejected. The amendment appears to be clarificatory in nature. For example, the amendment now expressly refers 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.' On the findings of the Apex Court in the case of Eskayef Ltd., the Id. Counsels argued that Central Excise Tariff as it then was did not have a description of goods as it is at present against heading 23.02; that there were no two competing entries, but a residuary entry and that the present goods are not used for treatment and prevention of ailments and the case is clearly distinguishable.
32. For the Assessees, the arguments adduced were that it has been stated in the note that Heading No. 23.02 includes products of a kind used in animal feeding including dog and cat food. It was argued that the term 'include' is to be read in extentio. It was submitted that the Apex Court in the case of the Regional Director, Employees Stale Insurance Corporation v. Highland Coffee Works in para 7 held as under:
The word "include" in the statutory definition is generally used to enlarge the meaning of the preceding words and it is by way of extension and not with restriction. The word "include" is very generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the Statute and when it is so used, these words or phrases must be construed as comprehending, not only such things as they signify according to their natural import and also those things which the interpretation clause declares that they shall include.
33. Further a reference was also made to the decision of the Apex Court in the case of C.I.T. Andhra Pradesh v. Taj Mahal Hotels, Secundrabad AIR 192 SC 168 in which in para 6, the Apex Court held: 'The word "includes" is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the Statute. When it was so used, these words and phrases must be construed as comprehending not only such things, as they signify according to their nature and import but also those things which the interpretation clause declares that they shall include. The word "include" is also susceptible to other constructions which it is unnecessary to go into.
34. It was argued for the Assessees that Note 1 of Chapter 23 is not exhaustive or restrictive in nature, but contains inclusive definition of the product covered by Chapter 23; that use of the word 'includes' in the body of the Statute is to be construed as covering other items also; that Chapter 23 covers all types of preparations which are used directly or indirectly for feeding. It was also argued that in the case of M/s. Ranbaxy Laboratories Ltd., this Tribunal held that the fact that some minerals and materials are also present does not make any difference.' It was argued that why it should not be said about the products before us if they contain some vitamins, provitamins and mixtures thereof.
35. On the question of use of the word 'include' in Note to Chapter 23, Revenue contended that the Apex Court in the case of South Gujarat Roof Tiles Manufacturers Assn. and Anr. v. State of Gujarat and Anr. , ruled: "We do not think there could be any inflexible rule that the word "include" should be read always as a word of extension without reference to the context. Take for instance entry 19 in the Schedule which also has an Explanation containing the word "includes".' The Apex Court further held that "the use of the word includes in the restrictive sense is not uncommon to the observation of Lord Watson in Dilworth v. Commissioner of Stamps (1899) AC 99 which is usually referred to on the use of the word 'include as a word of extension is followed by these lines: But the word 'includes" is susceptible of another construction which may become imperative, if the context of the Act is sufficient to show that it was not only merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to mean and include' and in that case it may afford an exhaustive explanation of the meaning which for the purpose of the Act must invariably be attached to these words or expressions.
36. It was argued for the Revenue that in view of the above findings of the Apex Court, the true meaning of the expression 'include' is 'means and include' in the present context.
37. It was submitted on behalf of the Revenue that the word 'include' in Chapter note 1 of Chapter 23 should therefore be construed to indicate 'means and include' and, thus, the scope is not enlarged and since the products in question contain synthetic material, therefore, they cannot be classified under Heading 23.02. However, the Id. Counsels for the Assessees argued that in the present context, the use of the word 'includes' should be read as a word of extension.
38. The Counsels for the Assessees also submitted that the position in regard to the products in question was clarified by the CBEC in their Circular No. 188/22/96-CX Dated 26.3.1996. It was submitted for the Assessees that paras 5 & 6 of this Circular state that Heading 23.02 of Central Excise Tariff i.e. Preparations of a kind used for animal feeding including Dog and Cat feed corresponds to Heading No. 23.09 of HSN: Preparations of a kind used in animal feeding of 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 supplementary feeds are known in the Trade as 'Pre-mixes'. These preparations are combined compositions consisting of a number of substances, each type of these substances being present in the pre-mixes in varying proportions to serve a particular purpose. Explanatory Notes under Heading No. 23.09 of the HSN (page 177-178) further indicate that premixes contain, in addition to the active substances (Vitamins, Aminoacids, Antibiotics, Coccidiostats. etc.). Stabilizers and antioxidents etc.. Certain organic or inorganic nutritive substances known as carriers which help in homogenous dispersion and mixing of the active substances in the compound feeds to which the preparations referred to above are added.
39. In this view of the matter, it would appear that preparations containing the active substances (Vitamins or provitamins, aminoacids. antibiotics, coccidiostats etc.) along with the said carrier would fall under Heading 23.02 of the CETA provided such preparations are of a kind used for animal feeding. It may however be noted that Heading 23.09 of HSN excludes products of Chapter 29 and medicaments of Heading 30.03 or 30.04. Hence while deciding the classification of the products claimed to be animal feed supplements, it may be necessary to ensure that the said animal feed supplements are ordinarily or commonly known in the trade as products for specific use in animal feeding.
40. The Counsels for the assessees submitted that the above clarification sets all the doubts at rest and the only test of classifying the product under Heading 23.02 is that the said feed supplements are ordinarily or commonly known in the trade as products for animal feeding. The Id. Counsels submitted that the labels attached to the products, the expert opinions, dealer/user certificates clearly indicate the end use of the preparations. Since the end use indicate that the preparation was animal feed, therefore, nothing more remains to be decided and the products merit classification only under Chapter Heading 23.02.
41. Countering the above arguments based on the Board's Circular referred to above, the Id. Jt. CDR contended that the said Board's Circular was in modification of its earlier Circular No. 1/90 Dated 1.1.1990: that in this Circular, the Board had issued clarifications that mixtures of vitamins, even if used as feed supplements or animal feed addivities. may be classified under Heading 29.36. It was contended that products falling under Chapter 29 were excluded from classification under Chapter 23.09 of the HSN as was evident from Entry (e) under the Heading reading as "Heading excludes:". It was also argued that the preparations were of vitamins and since vitamins which were the only active ingredients and. therefore, fall under Chapter Heading 29, therefore, they were excluded for classification under Chapter 23.
42. Other point that came up for arguments was that in para 3 of the Circular dated 26.3.96, it was stated that Trade interests have, however, represented that animal feed supplements use vitamins, provitamins, amino acids, antibiotics, coccidiostats in very small quantities. It was argued for Revenue that in some of the products in dispute, vitamins and provitamins were not present in micro-quantities, but in substantial quantities, some times 50% to 80%. The Counsels for the Assessees, however, clarified that the active ingredients if viewed vis-a-vis total feed, they were in very small quantities. Revenue argued that the term micro has been defined in Concise Oxford Dictionary: I, Small. 2. denoting a factor of one millionth. It was submitted that the fact is that in some preparations, these items were present in substantial proportion which cannot be termed micro. A calculation chart was produced for M/s. Western Hatcheries, which is reproduced below:
M/s. Western Hatcheries Limited Appeal No. E/1908/95-D of 1995 ____________________________________________________________________________________________________________________ List of Classification Labels Composition Remarks % of vitamins. Test Report Products by Department Page Nos. Page Nos. etc.in the feed Page Nos.
in Vol. 2 in Vol. 3 in Vol. 2 ____________________________________________________________________________________________________________________
1. Ventrimix-DS 29.36 2 18 0.0008868% 57
2. Ventribee-Plus 29.36 3 19 0.00415125% 59
3. Ventrimix-Forte 29.36 4 20 0.0008878%
4. Toxi-Chek 3003.10 (Ambala) 2942.00 (Pune) 5 21 No vitamins 0.0125 to (Mold Inhibitor) 0.075% 61
5. Ventrimin-17 29.36 6 22 0.0168% (No dispute at Pune)
6. Biosafe 29.36 7 23 0.000005% 63
7. Veldot 3003.10 8 24 Coccidiostat 0.0083 to 65 (Ambala & Pune) (Dinitolmide) 0.0125%
8. Albac 3003.10 (Ambala) 9 25 Antibiotic 0.001 to 67 (No dispute at Pune) (Zinc Bacitracin) 0.004%
9. V-Fur 200 3003.10 10 26 Anti-biotic 0.01 to 0.04% 69 (Ambala & Pune) Furazolidone)
10. Stresvei 29.36 11 27 0.00788125 gms/bird
11. Ventriplex-M 29.36 12 28 0.001825 gms/bird 70
12. Ventri-forte-A 29.36 13 29 0.00275 gms/bird 72
13. Choline Feed 29.36 14 30 0.025% (No dispute at Pune) 14. Selvit-E 29.36 15 31 0.002% 74 (No dispute at Pune) 15. Selvit-E DS 29.36 16 32 0.002% 76 (No dispute at Pune)
16. Traccmin 29.36 17 33 No Vitamins 0.01659%
17. Solueal 29.36 18 34 0.000003 gms/bird (No dispute at Pune)
18. Poultry-PM 29.36 19 35 No Vitamins * In case of Product Nos. 1, 5, 7, 8, 9, 15, 17 the test Report concludes that these are "preparation of a kind used for Animal Feeding".
** In case of Product No. 2 the test report concludes that "it is composed of Vitamins and inorganic additives".
*** In case of Product No. 6. the test report concludes that "it is a kind of Animal Feed Supplement".
**** In case of Product No. 11. the test report concludes that "it is composed of acqueous solution of vitamin and aminoacid."
***** In case of Product No. 12, the test report concludes "it is a Vitamin A Preparation".
43. For the Assessees it was argued that there was no dispute that the product in question consists of other nutrients; that vitamins was not the only ingredient; that vitamins is an ingredient in animal feed supplement: that from the procedure of manufacture, it would be seen that vitamins and other nutients depending on the product are weighed, blended with diluents and mixed, the mixture is served and put into blender and mixed thoroughly and then taken for packing; that some products are a premix of vitamins and highly absorbent precipitated silica which acts as a carrier. It was argued that in the case of Reckitt & Coleman of India Ltd., this Tribunal held: "Therefore, in the context of the use of the words in the notification it appears to us that preparation as used in said item 14 would have to be a product prepared by addition, mixing or other such similar process to the original commodity in order to derive a new commodity." Product has been defined as 1. A thing produced, 2. A substance obtained from another by chemical change. In the case of M/s. Aries Agro-Vet Industries Private Lid. , this Tribunal held: "We agree that the mineral supplements are indeed part of the animal feed, but these supplements are not by themselves animal feed as one would understand 'Animal Feed'. We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements, substances that an animal needs in a balanced food." It was argued for the assessees that the above decision clearly supports their case that the preparations under consideration are animal feed supplements or that animal feed is a genre and these preparations are species: that description of goods under heading 29.36 refers to goods used primarily as vitamins; that this makes the end use important for classification; that end use of the goods in dispute as animal feed supplement is not contested nor rebutted by the Department by any evidence or expert opinion and hence Chapter 29 is not applicable to the goods in dispute; that Chapter Note 1 of Chapter 29 stipulates that the said chapter applies only to separate chemically defined organic compounds, whether or not containing impurities ana hence Chapter 29 is completely ruled out as the products in question contain minerals, carbohydrates, proteins etc.. and did not comprise only of vitamins or mixtures of vitamins whether or not in any solvent: that the term mineral refers to such component of food as iron, copper, phosphorous, calcium, iodine, selenium, fluorine and micro nutients, used loosely as any element, inorganic compound from earth's crust. In the circumstances, it was contended that heading 29.36 cannot attract goods containing minerals, carbohydrates, proteins etc. It was also argued that classification under Heading 29.36 is erroneous in as much as a few items did not contain any vitamins or provitamins.
44. It was argued for the Assessees that under the scheme of Tariff, the term 'include' referred to in Chapter Note to Chapter 23 cannot be equated with the word 'means' inasmuch as different words have been used in different Chapters in different contexts. A reference was made to Chapter Note 2 of Chapter 25 where the term refers only to 'cover only products', while in Chapter Note 2 to Chapter 31, the term is 'applies only'. Similarly in Chapter Note 3 to Chapter 31. the term is 'applies only'. It was submitted that it was not necessary that the said product has to satisfy all the requirements of Chapter Note to Chapter 23 in view of the use of the expression 'include' in the notes. It was pointed out for the Assessees that such product satisfies description of Heading 23.02. It was also argued for the assessees that Chapter 29 applies to vitamins only and that vitamins mixed with other ingredients cannot be classified under Chapter 29.36 inasmuch as Heading 29.36 covers only pro-vitamins, vitamins, derivatives of pro-vitamins and vitamins used primarily as vitamins and intermixtures of vitamins and provitamins whether or not in any solvent. Thus the emphasis was on 'used primarily as vitamins'. It was submitted for the Assessees thai the products in question are not used as vitamins, but are sold as animal feed supplements and. therefore, they cannot be classified under Chapter 29.36 inasmuch as the products in question not only contained vitamins, but contained substances like minerals, carbohydrates etc. It was also submitted that Chapter note 1 of Chapter 29 stipulates that the Chapter applies only to separate chemically defined organic compounds, whether or not containing impurities whereas Chapter note 1(d), 1(e), 1(f) and 1(g) constitute exceptions to this Chapter; that Chapter note 1(d), 1(e), 1(f) and 1(g) specify the permissible other ingredients in the goods covered in this Chapter. The permissible incredients are not minerals, carbohydrates, proteins etc. It was. therefore, contended by the Assessees that the description of the Heading 29.36 read with that Chapter note does not permit the addition of minerals, carbohydrates, proteins etc. Therefore, the products in question cannot be classified under Heading 29.36. 45. It was further contended that if certain goods cannot be classified, reading the description along with section notes and Chapter Notes or two Headings appear to be suitable for classification, then the classification can be decided in terms of interpretative rules. For the Assessees, it was contended that the description of the goods was clear, end use of the goods was not disputed and, therefore, there was no scope for examining the applicability of the Rules of Interpretation; that assistance from the Rules is sought only in cases of doubt or where by the nature of the goods, two equally applicable Headings are there. It was contended for the Assessees that none of the factors were present in the goods in dispute. Revenue, however, contested this on the same ground that the goods were not obtained from processing of vegetable or animal materials and since the active ingredient in the goods were vitamins and if it was contested that they contained other materials also, then invariably assistance of the Rules of Interpretation is to be taken. It was submitted that Rule 1 is general in nature.
46. Regarding applicability of Interpretation Rules, it was contended that interpretative Rule 2(b) applies only when there is a reference in a Heading to a material or to a substance. According to the Counsels for the Assessees, vitamins and provitamins of Heading 29.36 are independent goods as such, therefore, this heading cannot be treated as referring to a material or substance and hence Rule 2(b) of Interpretative Rules does not apply. It was further contended that, if by applying Rule 2(b), mixture of the combination of vitamins or substances with other materials can also be classified under Heading 29.36, then there need not be any specific reference to the term intermixture of the foregoing as appearing in Heading 29.36. It was submitted that even if Interpretative Rule 2(b) is applied, the classification of the goods has to be determined in accordance with the principles contained in Rule 3(a), 3(b) and 3(c) in a sequential manner. It was contended by the assessees that in terms of Rule 3(a), the Heading 23.02 provides most specific description and should be preferred to a more general description if at all in heading 29.36. It was submitted that Heading 23.02 was specific in comparison to Heading 29.36. Hence this Heading should be preferred. Subjecting the goods to the above test, it was contended that Heading 23.02 was more specific. It was alternatively contended that if the goods in question are treated as vitamins, even in that event, the process of preparation of the product in question does not amount to manufacture and since the starting material or raw materials for the products in question are vitamins themselves and if the final product is also treated as vitamins, then there is no emergence of a new product with a distinct name, character or use. Hence, the process of preparation of the products in question does not amount to manufacture.
47. In reply to the above contentions, it was argued for the Revenue that only products obtained by processing of animal or vegetable products can be classified under Chapter 23. Therefore, classification of the products in dispute under Chapter 23 is ruled out as no evidence has been brought on record by the Assessees that the ingredients used in the manufacture of the animal feed supplement were obtained by processing vegetable or animal material. It was submitted, therefore, that the only heading available for classification of the ingredients was Heading 29.36; that if it was contended that the goods cannot straightaway be classified under Chapter 29 under heading 29.36, then assistance shall have to be taken from Interpretative Rules; that by applying the rules of Interpretation, the goods merit classification under Heading 29.36. It was, therefore, contended that the Rules of Interpretation were applicable in the present case and by applying the interpretative rules, the goods are correctly classifiable under Heading 29.36.
48. On the question of which of the 2 Headings is more specific, the Assessees contended that Heading 23.02 was more specific than Heading 29.36 inasmuch as undoubtedly the products in question were preparations of a kind used in animal feeding. It was submitted that these preparations have been held to be feed supplements in the case of M/s. Sun Export Corporation . In this case, the Hon'ble Supreme Court, after quoting extensively from the Hon'ble Bombay High Court judgment in the case of M/s. Glindia Ltd. relying on the judgment of the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (India) Ltd., held: 'We are in agreement with the above view expressed by the Bombay High Court.
49. It was also argued that Entry 29.36 cannot take any intermixtures or mixtures of any substances other than provitamins and vitamins, natural or produced by systhesis, derivatives thereof, used primarily as vitamins. The Id. Counsels contended that the additional items in the products are Calcium Carbonate, Benzene, Dextrose, Lactose. Yeast, Soya Flour, Sodium Laryl Sulphate, Sodium Benzoate, Selerium, D.L. Methonine etc.: that these items are not covered by Heading 29.36.
50. It was contended for the Assessees that entry 29.36 clarifies that mixtures of vitamins only, with no other ingredients except solvents, stabilizers and antioxidents. will be classified under Heading 29.36. Referring to Trade Notice No. 175/CE/CH.29/BOL/90 Dated 18.12.90 issued by the Bolpur Collectorate, it was contended that this Trade notice clarified that a doubt has been raised regarding the correct classification of the products which consist of only different vitamins in definite proportions and no other ingredients except the solvents or stablizers or antioxidents. Stating that such products are generally used as animal feed supplements, the issue was whether these mixtures are classifiable under Heading 23.02 as animal feed supplements or under Chapter 30.03 as medicaments or under Chapter 29.36 as vitamins etc. It was clarified that such animal feed supplements which are just intermixtures of vitamins only and there is no other ingredients except solvents, stabilizers or antioxidents, are covered by Heading 29.36. Even though they are used as animal feed supplements, they cannot be classified under Chapter Heading 23.02 as preparations of a kind used in animal feeding. It was contended for the Assessees that this clarification helps their case inasmuch as the preparations in dispute contain minerals, proteins, carbohydrates etc.
51. It was argued by the Id. Counsels that the position has been clarified under Notes on Pages 403 to 404 of HSN Explanatory Notes. It was argued that this clarification issued by the Bolpur Collectorate makes it very clear that mixtures of vitamins consisting other minerals or synthetic materials will not be classified under Heading 29.36.
52. It was argued for the Assessees that in the case of C.C.E. Shillong v. Wood Craft Products Limited , it was held by the Apex Court: The structure of Central Excise Tariff is based on the internationally accepted nomenclature found in the HSN and, therefore, any dispute relating to tariff classification must, as far as possible, be resolved with reference to the nomenclature indicated by the HSN unless there be an express different intention indicated by the Central Excise Tariff Act 1985 itself, It was contended by the Id. Counsels that this decision of the Apex Court was further followed by the Apex Court in the case of CCE, Hyderabad v. Bakelite Hylum Ltd. and that Explanatory Notes under heading 23.09 shall be fully applicable to determination of classification under heading 23.02 of CETA 1985.
53. On this issue, the Department submitted that the products in dispute are mixtures mainly of vitamins. There is a specific entry in the tariff for vitamins and mixtures thereof mentioned under Heading 29.36. It was submitted that mixtures thereof are also covered by this heading. It was argued by the Id. Jt. CDR that in the absence of composition of each articles, it cannot be said that they were containing materials other than eligible for classification under Heading 29.36. The Id. Jt. CDR pointed out that since Chapter 23 was not applicable inasmuch as the products were not obtained by processing vegetable or animal materials and, therefore, the only entry under which they could be classified was Heading 29.36. He submitted that for classifying the goods under Heading 29.36, interpretative rules become relevant. He referred to the judgments of the Apex Court in the case of Khandelwal Metal & Egineering Works and Anr. etc. v. Union of India and Ors. , stating that in Para 28 and 29 of their judgments, the Apex Court held:
28. Turning to Rule 1 of the Import Tariff, in so far as relevant, classification has to be determined according to the terms of the Headings; and, provided such headings do not otherwise require, classification has to be determined according to the provisions of the rules following Rule 1. Heading No. 74.01/02 consists of four items: (i) Copper matte, (ii) unwrought copper (refined or not), (iii) copper waste and scrap, and (iv) master alloys. Insofar as the terms of Heading No. 74.01/02 are concerned, the primary conclusion to which we have come is that brass scrap is not a master alloy. It is nobody's case that brass scrap belongs to either of the first two categories, namely, copper matte or unwrought copper. The only question then is whether the third item 'copper waste and scrap' includes brass scrap. Putting Rule 1 in simple language, classification has to be determined according to the description of the articles in the heading and, if the Heading or a Note does not otherwise require, according to the provisions of the other Rules. Notes. In the instant case, the terms of the relevant Heading do not, by themselves, yield an answer to the question whether copper waste and scrap includes brass scrap. But, the particular Heading does not require or provide that the other rules should be excluded while determining the classification of articles under that Heading. That is how. Rules 2 to 4 become relevant for deciding the question whether 'copper waste and scrap' includes brass scrap. What is meant by the clause in Rule 1: "and. provided such Headings or Notes do not otherwise require" is not that a Heading must require that the provisions contained in the rules following Rule 1 should be applied. What it means is exactly the opposite, namely, that if a Heading does not require the exclusion of the other rules, those other rules must also be applied for determining the classification of an article. Therefore, all the relevant rules of interpretation in the Import Tariff come into play in the classificatory process. Rules 2 to 4 of the Import Tariff are not a mere adornment. Nothing ever is an adornment in an Import Tariff. Therefore, classification has to be determined both according to the terms of the Headings and according to the provisions of the rules unless, a particular Heading or Note excludes the application of rules other than Rule 1.
29. Accordingly, we must turn to Rules 2 to 4 for determining the classification of brass scrap. By reason of the concluding part of Rule 2(b), classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule 3. Clause (a) of Rule 3 has no application: Applying the principle contained in Rule 3(b), which is relevant for our purpose, brass is a mixture of copper and zinc, usually in the proportion of 60:40 See pages 22 and 23 of Merriman's 'A Dictionary of Metallurgy' but. in which the component of copper may be anywhere between 67% and 70% See Encyclopaedia Britannica, Volume I, Page 649. Since copper gives its 'essential character' to brass, brass scrap has to be classified as 'copper waste and scrap' within the meaning of Heading No. 74.01/02. Alternatively, Rule 4 would yield the same result if it is assumed, for which there is no justification, that brass scrap does not fall within any Heading of the First Schedule. If it does not. it has to be classified, by reason of Rule 4, under the Heading appropriate to the goods to which it is most akin. Brass, unquestionably, is most akin to copper and therefore brass scrap has to be classified as 'Copper waste and scrap'.
54. The Id. Jt. CDR submitted that analysing the product in terms of the Interpretative Rules, the product qualifies for classification under Heading 29.36.
55. The Id. Counsels submitted that in their case, the goods are covered under Heading 23.09 of the HSN which corresponds to Heading 23.02 of CETA 1985; that the description of the goods under Heading 23.02 is more specific and, therefore, even by applying Rules 1 to 3, the goods in their case shall be classifiable only under Heading 23.02.
56. The Id. Jt. CDR submitted that even if it is presumed that the goods in dispute are not mixtures so as to fall under Heading 29.36 directly, they are most akin to mixtures provided under Heading 29.36 inasmuch as the meaning of the word 'akin', according to the dictionary, means 'related by blood or kindred character'; that the word 'kindred' means 'alive or similar in character'. It was submitted by the Id. Jt. CDR that even if the mixtures in the instant case cannot directly be classified under Chapter 29.36, they being akin to mixtures classifiable under 29.36 shall be classified under Heading 29.36 as active ingredients in the products is vitamins or provitamins.
57. It was submitted by the Id. Counsels that the Larger Bench of this Tribunal in the case M/s. Hindustan Packaging Co. Limited 1995 (75) ELT 3131 held that rules of interpretation are invokable only if classification cannot be determined according to the terms of Headings and relative Section or Chapter Notes provided such Headings or Notes did not require otherwise.
58. The Id. Jt. CDR submitted that the Apex Court in the case of Khandewal Metal & Engg. Works v. Union of India cited above, held that Rules of Interpretation can be invoked to determine correct classification of composite goods and that in the instant case, the products in dispute are claimed to be composite goods and hence the decision of the Apex Court is fully applicable to the facts of the present case.
59. A reference was made to the Compendium of Classification opinions of the Customs Cooperation Council, holding that products used for making animal feeds containing di-sodium, clacium, magnesium, calcined, dolomite with phosphoric acid etc. were classifiable under HSN heading 23.09 which corresponds to CETA 1985 heading 23.02. The Counsels submitted that the products which have been claimed as animal feeding supplements by the Assessees did not contain only vitamins, but other ingredients also; that the term used in the note under Chapter 23 of CETA 1985 is 'products', whereas the description of the goods against Heading 23.02 is preparations of a kind used in animal feeding including Dog and Cat feed.
60. What is the meaning of the term 'product'? In the case of Collector, Central Excise v. Protein Products of India , the Apex Court observed: The word "product" is defined in Webster Comprehensive Dictionary as "anything produced or obtained as a result of some operation or work. Preparation--Preparation would have to be a product by addition, mixing of other such similar process to the original commodity in order to derive a new commodity--as held in Reckitt Colman of India Ltd. .
61. It was argued that preparation is a multi-input item whereas a product is a natural item which is produced on account of certain operation or work.
62. The Id. Jt. CDR contended that a preparation is a multi-input item, meaning thereby that it contains more than one input. A product may or may not be multi-input item; so also can be said of the preparations. Since the item preparation is a multi-input item, therefore, Rules of Interpretation become relevant and are necessarily attracted.
63. Some appeals filed by M/s. Godrej Soaps Limited were also referred. Arguing the case of M/s. Godrej Soaps Limited, the Id. Counsel submitted that M/s. Godrej Soaps Limited had exported 8 consignments, out of which 2 consignments comprised of Niger Seed extractions and the remaining 6 consignments were of rice bran extractions. These goods were exported in the month of March. 1977. The Notification in operation at the time of export of these goods was Notification No. 16/77-CUS Dated 22.1.1977. The table appended to the said Notification did not include Niger Seed extractions and rice-bran extractions as an exempted animal feed. The appellants paid export customs duty on all these 8 consignments. Subsequently, they contended that Rice bran extractions and higher seed extractions were exempted, therefore, they submitted 8 refund claims. The Asstt. Collector rejected the claim. In appeal also, the Exporter did not succeed. Hence the Appeal was filed before the Tribunal. The Member who wrote the order after examining the submissions set aside the impugned order and allowed the Appeal. However, the second Member did not agree with the findings of the other Member. The matter was referred to the third Member and hence the case has come before the Larger Bench.
64. The Id. Counsel submitted that the judgment of the Bombay High Court in the case of M/s. Glindia Limited v. Union of India 1988 (36) ELT 479 is distinguishable inasmuch as the nature of entries involved are different because in the Notification interpreted by the Hon'ble Bombay High Court, the entry reads: 'Animal Feed including compound livestock feed' whereas the entry No. 21 of CTA Schedule 2 read Animal feed': that in M/s. Glindia's case, the assessees themselves did not claim the item to be animal feed themselves, but they claimed as animal feed supplement and sought the benefit of Notification whereas in the present case, the Appellants specifically claimed the items to be only as ingredients and not as animal feed; that in the Glindia's case, the judgment entirely depended on technical books and literature and on the interpretation of the scope of the entry under exemption notification whereas in the instant case, specific trade/common parlance evidence was led. The Id. Counsel also submitted that the judgment of the Hon'ble Gujarat High Court in the case of Glaxo Laboratories v. State of Gujarat 1979 (43) STC 386 is also distinguishable inasmuch as tariff entries are not comparable; that the ratio of the judgment is specific to the entry; that in M/s. Glaxo Laboratories case, the Court did not have any common parlance/Trade evidence before it whereas in the present case, common parlance/trade evidence was led and was not rebutted by the Department. It was submitted by the Id. Counsel that in the case of Aries Agro-vet Industries Pvt. Ltd. v. CCE , the Tribunal had specifically held that the goods there were not animal feed by themselves, but only additives; that in the instant case also, the goods are additives and not animal feed by themselves as has been certified by Experts in their opinion and Users in their Affidavits; that the onus of proof was on the Department; that the Hon'ble Bombay High Court in their own case 1981 ELT 555 observed that de-oiled cakes and animal compound feed are two entirely different commodities; that animal compound feed, although made up of five or more different ingredients has clearly emerged as a single commodity and is known in the business circle or commercial parlance as such and in view of these provisions of Section 19 of the Customs Act are not attracted, nor has item No. 19 of the Indian Customs and Central Excise Tariff, any application whatsoever in the present case; that the Hon'ble Delhi High Court in the case of M/s. Modern Mills Limited had quoted the Customs Tariff Ruling No. 35 of 1969 Dated 27.8.69 reading as The Board has under consideration the liability of "compound animal feeds" to export duty under items 18, 19 and 21 of the Export schedule. These feeds are of different types like feeds for cattle, feeds for poultry, feeds for sheep etc. and are essentially compounded out of oil cakes, meals, rice and wheat bran, fish and meat meal, maize, gluten, molasses, vitamins etc. in varying proportions. As these feeds are compounded materials in which oil cake or meal is only one of the raw materials and these are commercially known as cattle feed, poultry feed, etc. these should be taken as such for assessment. As there is no entry in the Export Tariff for animal feeds, these will not attract any export duty.
65. The Id. Counsel submitted that in Indian Standards IS:9703-1980, in the Foreword Para, it had inter alia been stated "In the field of animal feeds manufacturing industry, a large number of feedingstuffs (ingredients) are utilized, which may be bye-products of other industries and also subjected to certain processing before utilization. It has been observed that different names are attributed to the same feedingstuff in different parts of the country resulting in confusion and misunderstanding amongst different interests. Therefore, with a view to familarizing all interests with correct terms, this standard is being issued. It is expected that this standard when issued would help in removing any ambiguities and facilitate understanding and adoption of the correct terms." In the Foreword of IS:3593-1979, against Para, it has been clarified: 'Solvent-extracted rice bran now finds extensive application as an ingredient in compounded livestock feed as well as in poultry feeds due to the fact that it is more stable over a prolonged period if proper quality control is exercised in its production.' The Id. Counsel submitted that this Standard prescribes the requirements and the methods of sampling and testing for solvent extracted rice bran for use as livestock feed. It was also argued that under IS:2052-1979, ingredients for compounded cattle feed are listed; that rice bran and solvent extracted rice bran and higher seed oil cake and solvent extracted higher seed oil cake are shown in the list appended under the aforesaid Indian Standard. Certificate of The Compound Livestock Feeds Manufacturers Association of India also informs that higher seed extractions are not animal feed by themselves in so far as this feed ingredient cannot be fed to the livestock directly.
66. It was also argued that animal feed is defined as 'Nutriment' prepared and given to farm animal to ensure adequate growth, reproduction and health. It was further argued that technically, livestock feeds are generally placed into 2 categories--roughages and concentrates. Roughages have a high fibre content and low digestible nutrients: in this group are various green fodders, hays, straws and silages. Legume roughages are higher in protein content than the non-legume roughages, and their use in the cattle ration calls for a decreased amount in the concentrates fed to balance the ration.
67. The Id. Counsel once again referred to the judgment of the Hon'ble Bombay High Court in their own case (supra). In this case, the Hon'ble High Court held: "The sum total of this discussion is that the animal compound feed, although made up of five or more different ingredients, has clearly emerged as a single commodity and is known in the business circle or commercial parlance as such, and in view of this, the provisions of Section 19 of the Customs Act are not attracted nor has Item No. 19 of the Indian Customs and Central Excise Tariff any application whatsoever in the present case." The Hon'ble Court further held: "I may here add that a similar question arose before the Delhi High Court in the case of The Modern Mills Limited v. Union of India and Ors. 1980 ELT 639. In the said case, the very question arose viz. whether animal feed or animal compound feed fell within the provisions of Section 19 of the Customs Act and/or Item No. 19 of the Indian Customs and Central Excise Tariff. On considering this matter, the said Court, held that although the animal compound feed was made up of different ingredients, a new product had resulted and the identity of the material mixed was lost and the provisions of Section 19 of the Customs Act, 1962 or Item 19 of the Indian Customs and Central Excise Tariff would not be applicable.
68. The Id. Counsel also referred to the judgment of the Hon'ble Madras High Court , In para (11), the Hon'ble High Court held: 'At this stage itself, I may say that where the Asstt. Collector, Customs, went wrong is that the exemption under the last of the notifications viz. Notification No. 16 does not specifically mention tapioca chips and therefore by a process of deduction, which I consider as illogical, held the tapioca chips were subject to customs duty. This is not the correct way of interpreting the notification at all.
69. The Id. Counsel also referred to the certificates of experts and their opinions as also to the affidavits filed by the Users of the goods. It was, therefore, argued that no duty was chargeable on the goods exported by the Appellants.
70. As against this, the Id. Jt. CDR submitted that the goods exported by Appellants were used as animal feed and since they were used as animal feed, therefore, they fell under entry 21 of Schedule 2 of the Customs Tariff Act, 1975. He submitted that since there was no exemption for these goods, duty has rightly been demanded and the refund claims thereof have rightly been rejected.
71. We have considered the extensive arguments adduced by both the sides. We have also perused the case law on the subject. We have also examined the technical literature, the opinions expressed by various experts and affidavits filed by users. We have also perused the evidence on record.
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 case law cited and relied upon by both sides, we find that there is no limiting factor in the Chapter note so as to restrict its meaning. On the contrary, we find that Heading 23.02 of CETA 1985 corresponds to Heading 23.09 of HSN. Explanatory Notes under Heading 23.09 of HSN speak of various preparations which contain minerals, vitamins, carbohydrates, proteins etc. These explanatory Notes of HSN clearly speak of feed additives and feed supplements. According to these Notes, animal feed additives and animal feed supplements are preparations meriting classification under heading 23.09 of HSN which corresponds to Heading 23.02 of the CETA 1985. We further note that this aspect of animal feed additives and feed supplements was noted by the Tribunal in its judgment in the case of Aries Agro-Vet Industries (P) Limited and observed that 'We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements, substances that an animal needs in a balanced feed.
73. We further note that these preparations known in the trade as 'premixes' are generally speaking compound compositions consisting of a number of substances (sometimes called additives) the nature and proportions of which vary according to the animal production required. Then further details are furnished. This clearly shows that in so far as preparations mentioned under heading 23.09 of HSN are concerned, they include synthetic materials also and are not confined to products obtained by processing animal or vegetable materials. This also supports the view that the use of the word 'includes' has been definite to extend the scope of the heading. Further the preparations described under heading 23.09 of HSN cannot be ignored in view of the note. On the contrary, we shall have to give due weightage of them.
74. We find that the disputes arose in view of the clarifications given by the Board under Circular no. 1/90 which was subsequently modified by issue of Circular dated 26.3.1996. With the finding of the Tribunal in the case of M/s. Ranbaxy Laboratories Limited where the Tribunal held that in terms of Chapter note under Chapter 23 of CETA 1985. this Chapter covers only products of a kind used in animal feeding obtained by processing vegetable or animal materials, the interpretation given by the Tribunal in the case of M/s. Ranbaxy Laboratories Limited to these words was that Chapter Note is very clear and specific: that only such items which are obtained by processing of vegetable and animal material will be classifiable under this Chapter. Since the preparations in dispute contain active ingredients which appear to be of synthetic origin, therefore, the Tribunal held that we have to look to other chapters for classification of the products as admittedly the products in dispute contain materials other than those obtained by processing vegetable and animal material. The products in dispute are claimed to contain vitamins, provitamins, concentrates of vitamins, carbohydrates, minerals, proteins etc. The Tribunal, therefore, held that since mixtures were of mainly vitamins and since the product got the specific characteristic of Vitamins being active ingredients, therefore, they were classifiable under Chapter 29.36 and were specifically excluded from heading 23.02 of CETA 1985 in view of the expressions used 'not elsewhere specified'.
75. On careful consideration of the submissions made and the findings of the Tribunal in various cases cited and relied upon by both sides, we find that competing entries are Heading 23.02 and Heading 29.36. Heading 23.02 corresponds to HSN entry 23.09. Under Heading 23.09 of the HSN. there are detailed notes as reproduced in the preceding paragraphs which clearly bring out that the preparations as indicated under Heading 23.09 of the HSN are to be meticulously examined to find their scope and ambit. The Notes under Chapter 23 of HSN become very relevant as Heading 23.02 of CETA 1985 speaks of preparations and is pari materia to Heading 23.09 of HSN, and are to be taken into consideration while deciding the classification in terms of Central Excise Tariff Act, 1985 inasmuch as the Central Excise Tariff is now based generally on the HSN nomeclature. This was so held by the Apex Court in the case of CCE, Shillong v. Woodcraft Products Limited cited above. There is no indication in Chapter 23 in CETA 1985 that HSN note under corresponding Heading 23.09 shall be excluded. This becomes all the more relevant inasmuch as Chapter Note under Chapter 23 of CETA 1985 speaks of 'products' and does not speak of 'preparations' whereas the description against Heading 23.02 of CETA 1985 reads 'preparation of a kind used in animal feeding including dog and cat food'. This description corresponds to description given in HSN heading 23.09. Therefore, for understanding the implications and the scope and importance of the term 'preparation', a reference to HSN becomes all the more essential and relevant.
76. For understanding the implications of the use of the word 'products' in note under Chapter 23 of CETA 1985 and the use of the word preparations' under heading 23.02. let us examine these two words, and then find out the implication of the word 'includes'.
77. We note that the issue as to what is meant by the word 'product' came up before the Apex Court in the case of Collector of Central Excise v. Protein Products of India. The Apex Court in para 7 of its judgment held:
'7. The products in question are derived merely by the extraction of the mineral parts of the bones. Gelatine is obtained by a further treatment, with an alkali, of the ossein manufactured from the bones. It is the collagen which forms the organic content of the bones and is utilised in the manufacture of ossein and gelatine. The word 'product' is defined in Webster's Comprehensive Dictionary as "anything produced or obtained as a result of some operation or work". The expression 'bone products' therefore merely means anything produced or obtained from bones. Whether such derivation is by a simple physical process or by a chemical reaction would seem to make no difference to the end product. Buttermilk, for instance, does not cease to be a milk product merely because a chemical process is involved in the transformation. The ossein and gelatine manufacture by the respondent can, without straining the expression used in the notification, be described as bone products. We are, therefore, in agreement with the view taken by the Tribunal that the products manufactured by the Respondent Company are eligible to the exemption under the Notification dated 30.6.1975.'
78. Meaning of 'preparation' came up for consideration before the Tribunal in the case of Reckitt and Colman of India Ltd. and this Tribunal observed:
34. But then the further question is whether they could be further called preparations on the basis of flour. As mentioned earlier the contention for the department is that the word "preparations" would only mean the end result, giving rise to a product, and not necessarily to a product arrived at by way of a process of addition to the original material. But, in the context of the words used in item 14 this meaning does not appear to us to be appropriate. We feel so since flour itself is a product obtained by grinding the grain. If. therefore, the grain in the form of flour is itself to be treated as preparation, then the words "preparation with a basis of flour" would appear to be a tautological repetition. Therefore, in the context of the use of the words in the notification, it appears to us that "preparations" as used in the said item 14 would have to be a product prepared by addition, mixing or other such similar process to the original commodity in order to derive a new commodity. In that sense mere grinding of barley grain to prepare barley flour or barley powder (as in the case of Purity Barley) would not appear to us to amount to a preparation.'
79. Having examined the meanings of the words 'product' and 'preparation', we find that these two items are different, therefore, the word 'includes' used in Note under Chapter 23 of CETA which generated a lot of heat in the arguments of both sides not only becomes relevant but assumes significance also.
80. Decisions of the Apex Court in the case of Highland Coffee Works etc., CIT v. Tajmahal Hotel and South Gujarat Roofing Tiles Manufactures' Association and Another were cited and it was argued for Revenue that the Apex Court observed: 'We do not think that there could be any inflexible rule that the word include should be read always as a word of extension, without reference to context.' Further, The use of the word 'includes' in the restrictive sense is not unknown. The observation of Lord Watson in Dilworth v. Commissioner of Stamps 1899 AC 99 which is usually referred to on the use of include as a word of extension is followed by these lines: "But the word 'includes' is susceptible of another construction which may become imperative, if the context of the Act is sufficient to show that it was not merely employed for the purpose of adding to the natural significance of the words or expressions defined". It was. therefore, submitted that the word 'include' used in the Note to Chapter 23 does not mean that the word extends the meaning and coverage by the Note to Chapter 23 of CETA 1985.
81. For the Assessees, it was submitted that the following observation of the Apex Court was significant and binding:
The word 'includes' in the statutory definition is generally used to enlarge the meaning of the words or phrases occurring in the body of the statute; and when it is so used, these words or phrases must be construed as comprehending not only such things as they signify according to their natural import but also those things which the interpretation clause declares that they shall include.
82. It was also argued for the Assessees that the Apex Court also observed: The word includes is often used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute.
83. Examining the facts before us that Note under Chapter 23 of CETA speaks of 'products' and Heading 23.02 speaks of 'preparations' we find that preparations are different from products and if the term includes was not there, there would have been difficulty in the application of the term 'products' to preparations. Hence, the term includes enlarges the scope of Heading 23.02 and does not signify the phrase 'means & includes' as contended by the Revenue.
84. (a) This essentially relevant reference, therefore, leads us to examine in detail 'preparation' figuring in HSN Heading 23.09. On an examination of this Heading, we find that Heading 23.09 provides "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. Further describing the sweetened forage and other preparations, it has been provided in note 'C reading as 'Preparations for use in making the complete feeds or supplementary feeds described in (A) and (B) above.'--These preparations, known in trade as "premixes", are, generally speaking, compound 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. and (3) Those which serve as carries and which may consist either of one or more organic nutritive substances (manioc or soya flour or meal, middings, yeast, various residues of the food industries etc.) or of inorganic substances (e.v. magnesite. chalk, kaolin, salt, phosphates).
84. 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.
85. 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 antibiotic content ranging generally between 8% and 16% and is used as basic material in preparing, in particular, "premixes".
86. The preparations of this group should not, however, be confused with certain preparations for veterinary use. The latter are generally identifiable by the medicinal nature and much higher concentration of the active substance, and are often put up in a different way.
87. Examining the preparations mentioned under heading 23.09 of HSN. we note that these preparations contain minerals, carbohydrates, vitamins etc. In construing entries of goods in excise, customs, or Sales Tax Acts, resort should normally be had not to the scientific or technical meaning but to their popular meaning viz. the meaning attached to the expressions by those dealing in them. The justification of the rule that the words are to be understood in their natural, ordinary or popular sense is well expressed by Justice Frankfurter: "After all legislation when not expressed in technical terms is addressed to common run of men and is, therefore, to be understood according to sense of the thing, as the ordinary man has a right to rely on ordinary words addressed." The Hon'ble Supreme Court has consistently taken the view that, in determining the meaning or connotation of the words and expressions describing an article in a tariff schedule, one principle which is fairly well settled is that those words, and expressions should be construed in the sense in which they are understood in the trade by the dealer and consumer. The reason is that it is they who are concerned with it and it is the sense in which they understand it which constitutes the definitive index of legislative intention.
88. In para 13 of its judgment, the Apex Court in the case of Union of India v. Garware Nyons Ltd. held: "Stated briefly, we should understand the expression occurring in item 18 of the Act in the sense, in which the persons who deal in such goods understand it normally.
89. In para 6 of its judgment in the case of Frick India Ltd. 1990 (48) ELT 627, the Apex Court held: "It is well settled that the headings prefixed to sections or entries cannot control the plain words of the provisions: they cannot also be referred to for the purpose of construing the provision when the words used in the provision are clear and unambiguous; nor can they be used for cutting down the plain meaning of the words in the provision. Only in the case of ambiguity or doubt, the heading or sub-heading may be referred to as an aid in construing the provision, but even in such a case, it could not be used for cutting down the wide application of the clear words used in the provision." Examining the preparations given under heading 23.09 of HSN. we find that they are clearly defined and show the contents leaving no ambiguity or doubt and shall have to be given the importance they deserve in view of the Apex Court's decisions cited above.
90. If any term or expression has been defined in the enactment, then it must be understood in the sense it is defined, but in the absence of any definition being given in the enactment, the meaning of the term in common parlance has to be adopted. If the statute is passed with reference to a particular trade, business or transaction and words are used therein which every body, conversant with that trade, business or transaction knows and understands to have particular meaning in it then the words are to be construed as having that particular meaning. In the case before us, we find that preparations have been clarified and specified under heading 23.09 of HSN which has been adopted under heading 23.02 of CETA 1985 and hence the statute is clear in so far as preparations are concerned. These preparations, may contain minerals, vitamins, proteins etc. Therefore, the note of heading 23.02 of CETA 1985 has to be read and meant to extend the scope of the heading so as to include preparations not confined to those obtained by processing animal or vegetable material but to preparations containing synthetic materials also.
91. Let us examine the matter before us for determining the identity of the goods. We have (a) Technical Literature; (b) End Use certificates by Experts and Affidavits from Dealers/Users; (c) Definition of 'Animal Feed Supplement' given for the purpose of exemption under Notification No. 6/84-CE Dated 15.2.1984; (d) Description of the goods provided for under Heading 23.09 of HSN; (e) Clarifications contained in Board's Circulars (1) Circular No. 1/90 Dated 1.1.1990; (2) Circular No. 188/22/96-CX Dated 26.3.1996 and (3) Trade Notice issued by Bholpur Collectorate dated 18.12.1990; (f) Case Law on the subject--(i) the decision of the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (India) Ltd. 1979 (43) STC 386; (ii) Judgment of the Hon'ble Bombay High Court in the case of M/s. Glindia Limited 1988 (36) ELT 479 and (iii) Judgment of the Apex Court in the case of Sun Exports Corporation v. CC 1997 (93) ELT 641; (g) Findings of the Tribunal in the case of Ranbaxy Laboratories Limited v. CCE. New Delhi 1994 (53) ECR 546, Aries Agro-Vet Industries (Pvt. Ltd.) and Eskayef Ltd. .
Technical Literature:
Meaning of Feeding Stuffs.
92. The Book on Animal Nutrition for Tropics by Raghbir under heading 'Concentrates' on Page 160, stipulates: 'It is mentioned that for the proper feeding of livestock, a certain protion of ration includes cereals and their bye-products, oil cakes and mineral supplements'. In the Wealth of India (1953 Edition), Feeding Stuffs have been defined as 'Feeding stuffs for dairy cattle may be broadly classified in roughages and concentrates. The roughages consist of succulent feeds (natural grazing cultivated grazes, cultivated fodders and root crops) and dry materials (Legume grains and cereal grains) and protein rich materials (oil seeds, oil seed cakes and meals). In addition to roughages and concentrates, dairy animals also require a certain amount of common salt to keep them in good condition.' It becomes quite clear that technically, livestock feed are generally placed into two categories of roughages and concentrates.
93. It is evident from the analysis of animal feeds also that amongst the materials on which animals are fed are included concentrates which include a wide variety of feeds that have a high value and secondly that in order that animals are able to maintain health and produce satisfactory amounts of milk, eggs, meat, wool or work, they require sufficient amounts of vitamins including Vitamin A & D, some of which are lacking in the traditional livestock feed. This also brings out clearly the fact that in the manufacture of commercial mix-feeds, several feed additives are used and that amongst them are Vitamins, including Vitamin V & D.
94. From what has been stated above, it becomes clear that even in its popular sense, that is to say, the sense in which people conversant with livestock farming and poultry raising and those dealing in cattle-feed or poultry feed would attribute to those words, ration for production, such as feed additives or supplements like proteins, minerals, vitamins etc. In such a context, it is clear that feed additives or animal feed supplements are added to the animal feed, which is termed 'ration which is necessary for maintaining the" life of the livestock. These additives/supplements comprise of proteins, minerals, vitamins etc.
95. The Technical literature discussed in the foregoing paragraphs, thus, clearly brings out that animal feed stuff is that part of the feed which is essential for the maintenance of life which has been termed "ration". This aspect was very lucidity discussed in the judgment of Aries Agro-Vet Industries Private Limited. In para 10 of this Order, this Tribunal observed: "We agree that the mineral supplements are indeed part of the animal feed, but these supplements are not by themselves animal feed as one would understand 'animal feed'. It is a fact that Aries Agro-Vet describe their goods as animal feed supplements, but we do not think that this by itself should tell against them. We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity; and that feed can never be only one or another of the various ingredients, elements, substances, that an animal needs in a balanced feed." Thus, the position has been very clearly examined and brought out in this decisions of the Tribunal, making it clear that animal feed is supplemented by addition of proteins, vitamins, carbohydrates etc. to make it a complete feed.
96. Preparations of a kind used in animal feeding are preparations which are used in the context of mixed feed of live stock and poultry both of which are reared for production purposes not only domestically but also commercially. Even in its popular sense, that is today, the sense in which people conversant with live stock farming and poultry raising and those dealing in cattle feed and poultry feed would attribute to those words, Ration for production such as feed additives or feed supplements like proteins, minerals, vitamins would truely constitute cattle feed or poultry feed as the case may be. In Aries Agro-Vet Industries Pvt. Limited case, the view of the Tribunal that the word feed meant the food specially for live-stock or a mixture or preparation used for feeding live-stock. According to the Tribunal, the products in question could not be said to be a cattle feed or poultry feed as the case may be. This view of the Tribunal was based on the narrow meaning which it assigned to the word 'feed' which according to it meant, in substance, ration for maintenance. This was not the correct view.
97. Analysis of the technical literature brings out that preparations containing vitamins, proteins, carbohydrates, minerals etc. are feed additives or supplementary feeds for animals.
END USE CERTIFICATES BY EXPERTS AND AFFIDAVITS BY USERS:
98. For identity of the product, we have before us the unrebutted contention of the Assessee that in the labels attached to the preparations, they were declaring that they were for animal use. End use assumes importance in view of the fact that description of the goods under Heading 23.02 of CETA 1985 reads "Preparations of a kind used for animal feeding including Dog and Cat food'. The term used here is very important. For satisfaction of this term, we have to examine as to how the product is used. We have examined the use of the preparation and the label. We also have seen the expert opinion and the affidavits of the Dealers/Users indicating that the product is known as animal feed supplement by the trade who use this preparation or who deal in these preparations. Thus, the labels affixed on the preparations for the purpose of sale, certificates by the Experts and Manufactures' Association and the Affidavits by the Users/Dealers clearly indicate that the preparations are animal feed supplements.
DEFINITION OF ANIMAL FEED SUPPLEMENT:
99. Animal Feed Supplement or Preparations have not been adequately defined in the Schedule to the CETA 1985 or the Rules there under. However, we note that feed supplement and concentrates have been defined under Exemption Notification No. 6/84-CE Dated 15.2.1984 wherein it has been set out "animal feed supplement mean an ingredient or combination of ingredients added to the basic feed mix or parts thereof to fulfil the specific need usually used in micro- quantities and requiring careful handling and mixing." Further, "Animal feed Concentrates" means a feed intended to be diluted with other feed ingredients to produce a complete feed optimum nutrition balance." This definition, though given for the specific purpose, can be only a guide for understanding the meaning of the terms used in the Notification in particular, but can be generally understood to so mean. These preparations are pre-mixes and mixed in feed in small micro-quantities used for feeding the animals. Thus, these definitions, though, cannot be taken as the only guide, however, support the intention indicating that there are certain preparations which are used for feeding the animals and are added to the normal feed of the animal to obtain desired results from the animals.
DESCRIPTION OF PREPARATIONS UNDER HEADING 23.09 OF HSN.
100. We have copiously quoted from the description of preparations provided under Heading 23.09 of HSN. These descriptions clearly bring out that there are feed supplements, feed additives and compounded feed; that these feed supplements/ additives can comprise of vitamins, proteins, carbohydrates, minerals etc. These descriptions under Heading 23.09 of HSN are very relevant which shall have to be given due importance in view of the fact that heading 23.02 of CETA 1985 is pari materia to heading 23.09 of HSN and that the hew CET is based on HSN. They have the maximum persuasive value for deciding the tariff classification of a product as was held by the Apex Court in the case M/s. Woodcrafts cited above.
CLARIFICATIONS CONTAINED IN BOARD'S CIRCULARS CIRCULAR No. 1/90 Dated 1.1.1990.
101. In Circular No. 1/90 dt 1.1.1990, it was clarified that animal feed supplements which are just inter-mixtures of vitamins only without other ingredients except solvents, stabilizers or antioxidents cannot be classified under Heading 23.02 of CETA 1985 even though they are used as animal feed supplement. On examination of this 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-oxidents. 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-CX Dated 26.3.96 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 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 supplementary feeds are known in the trade as premixes. These preparations of compound compositions consisting a number of substances, each type of these substances being present in the premix in varying proportions to serve a particular purpose. Explanatory Notes under Heading 23.09 of HSN (Pages 177-178) further indicate that premixes contained in addition to the active substances (vitamins, amino acids, antibiotics, coccidiostats etc.) and stabilizers, antioxidents, solvents etc' In para 6, the Board clarified "In this view of the matter, it would appear that preparations containing active substances (Vitamins or provitamins, amino-acids, antibiotics, coccidiostats etc.) along with the said carriers would fall under Heading 23.02 of CETA 1985, provided such preparations are of a kind used in animal feeding. It may, however, be noted that Heading 23.09 of HSN excludes products of Chapter 29 and medicaments of Chapter 30.03 or 30.04. Hence, while deciding the classification of products claimed to be animal feed supplements, it may be necessary to ensure that the said animal feed supplements are ordinarily or commonly known in the trade as premixes for use in animal feed". This clarification confirms the fact that if the end use unequivocally shows that the preparation is known in the trade as animal feed supplement, it should be treated as animal feed supplement.
BOLPUR TRADE NOTICE NO. 175/CE/CH. 29/BOL/90 Dated 18.12.90.
102. Circular No. 175/CE/CH. 29/ BOL/90 Dated 18.12.1990 issued by the Bolpur Collectorate which indicated that a doubt has been raised regarding the correct classification of products which consist of only different vitamins in definite proportions and no other ingredients except the solvents or stabilizers or antioxidents; such products are generally used as animal feed supplements. The doubt raised is whether such products which are mixtures of vitamins are classifiable under Chapter heading 23.02 or as medicaments under Chapter heading 30.30 or inter-mixtures of vitamins under Chapter heading 29.36. The Trade Notice clarified that the matter has been examined and it is observed that such animal feed supplements which are just inter-mitures of vitamins only and that there is no other ingredients except, solvents, stabilizeers or antioxidents are especially covered under Chapter Heading 29.36 of Central Excise Tariff as intermixtures of vitamins. Even though they are used as animal feed supplements, they cannot be classified under Chapter Heading 2302 as preparations of a kind used in animal feeding because this is a general heading. Inter-mixtures of vitamins are specified in so many words under Chapter Heading 29.36 and accordingly products of the type referred to above are correctly classified under Chapter Heading 29.36. This clarification further brings out clearly that such preparations that contain only vitamins shall be classifiable under Heading 29.36 even though they are used as animal feed supplements. In the case before us, we find that the preparations contained many other items other than vitamins or mixtures of vitamins. Hence, the clarification given by the Bolpur Collectorate in the above Trade Notice supports the view that preparations containing items other than vitamins and their mixtures are covered by Heading 23.02 of CETA 1985 if they are known in the trade and used in animal feeding.
CASE LAW ON THE SUBJECT:
GLAXO LABORATORIES INDIA LIMITED: (by Hon'ble Gujarat High Court).
103. In this case, the Hon'ble Gujarat High Court had before it the question of classification of 4 products for decision whether on the facts and in the circumstances of the case, viz. Vitablend AD 3 and AD 3 Forte are covered by Entry 21 of Schedule 1 of the Gujarat Sales Tax Act 1969 for the year 1969 and whether on the facts and in the circumstances of the ease, Vitablend AB 2D 3 and Vitablend WM Forte are covered by Entry of Schedule I of the Gujarat Sales Tax Act 1969 for the year 1969. The Hon'ble High Court after examining the technical literature on the subject, observed: 'From what has been stated above, it becomes clear that even in its popular sense, that is to say, the sense in which people conversant with livestock farming and poultry raising and those dealing in cattle-feed or poultry-feed would attribute to those words, ration for production, such as feed additives or supplements like proteins, minerals, vitamins etc., would truly constitute 'cattle feed' or 'poultry feed', as the case may be. In such a context and in view of the setting of the word 'cattle-feed' in the company of the word 'concentrates', it would be difficult to reach the conclusion at which the Tribunal arrived. The Tribunal's decision as to the true scope of the entries in question in the instant case, relying upon its earlier decision, therefore, is obviously not correct in law.
104. It was argued that this decision was distinguishable inasmuch as the nature of entries involved was different; that the ratio of the judgment was specific to the entry and that the vision was in a Sales Tax Act and Sales Tax Act cannot be used for interpreting the Central Excise Tariff. We have perused this decision. We find that the decision is no doubt in a Sales Tax case, but the issue covered is whether feed supplements are covered by the term 'animal feed' or not and the Hon'ble High Court, after examining various technical literature and the other aspects of the issue, came to the conclusion that animal feed supplements are animal feed and, therefore, the application of the ratio is general and not specific provided the facts are similar and in the case before us the facts are similar. GLINDIA LIMITED (Hon'ble Bombay High Court)
105. In this case, the issue before the Hon'ble Bombay High Court was that the Appellants were manufacturing certain preparations containing Vitamins A, B & D and were intended to be used as supplements to either liquid or solid animal feeds. The Hon'ble Bombay High Court relied upon the Hon'ble Gujarat High Court's decision in the case of Glaxo Laboratories Limited, observing that 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 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'. Since the Hon'ble Bombay High Court followed the judgment of the Hon'ble Gujarat High Court which has already been dealt with in the preceding paragraph, we hold that the same argument can be given in support of this judgment and its applicability to the facts of the present case. SUN EXPORT CORPORATION: (Hon'ble Supreme Court)
106. In the case of M/s. Sun Export Corporation, the issue before the Apex Court was that the Appellant Importer had imported 6 consignments of goods (premixes of Vitamin Ad-3 Mix (feed Grade) at Bombay and 7 consignments of similar goods at Calcutta. These consignments were assessed to duty under Heading 29.01/45 (17) of the then Customs Tariff Act, 1975 read with item 68 of the erstwhile Central Excise Tariff. The importer paid the duty and later on claimed refund of duty claiming that the goods imported were classifiable under item 23.01/07 as 'Animal Feed and as per Notification No. 234/82 CE. Dated 1.11.1982, these goods were exempted from levy of duty. Lower authorities rejected the claim. The Apex Court after examining the decision of the Hon'ble Bombay High Court in the case of M/s. Glindia Limited, held "We are in agreement with the above view expressed by the Hon'ble Bombay High Court". The Hon'ble Bombay High Court has relied upon the decision of the Hon'ble Gujarat High Court. It was argued for the Revenue that this decision was on an exemption notification and that the interpretation given in an exemption notification case cannot be directly applied to the case of classification. We Note that Notification No. 234/82 Dated 1.11.1982 as amended by Notification No. 6/84 Dated 15.2.1984 exempted animal feed. Therefore, the issue before the Apex Court was whether animal feed supplement were eligible for that benefit or not. The entry under this notification exempting the goods at SI. 10 was animal feed including compound livestock feed and the Hon'ble Supreme Court ruled that the preparations imported by the Importer were animal feed inanmuch as animal feed was a generic term which includes supplements which are species.
107. On an analysis of the above case law, we note that the Hon'ble High Courts and the Apex Court examined the goods vis-a-vis the entry in the Sales Tax Act in the case of Glaxo Laboratories Limited, entries of the exemption notification in the case of M/s. Glindia Limited and the entries in the Import Tariff in the case of Sun Export Corporation. We note the during the material period, the present tariff both in Customs side and Central Excise side were not in existence and the decription of the goods was not very elaborate on the Customs side and there was no specific tariff item on Central Excise side as these items were classifiable under the residuary tariff item 68. But the findings of the Apex Court are relevant to the extent the animal feed supplement are species of animal feed. This ratio will be equally applicable to the Central Excise Tariff Act, 1985 as it is today. Today, Chapter 23 CETA 1985 covers preparations of a kind used in animal feeding including Dog and Cat Food.
TRIBUNALS FINDINGS IN THE RANBAXY LABORATORIES CASE.
108. In the case of M/s. Ranbaxy Laboratories Limited, the issue before the Tribunal was that the assessee had claimed classification of Penta Forte and Famitone under Heading 23.02 of CETA 1985. The Asstt. Collector issued a Show Cause Notice to the Assessee asking him to explain as to why the goods should not be classified under Heading 3003.10. The Assessee had contended that the preparations were animal feed supplements that Heading 23.02 provided the most specific description and. therefore, according to Interpretative Rule 3, most specific description is to be preferred to more general description. The Assessee also contended that the products were exclusively used for animal feeding purposes; that the feed supplement is a formulation of a product which is to be added in the food as a supplement to make it a complete food in the final from; that the feed supplements contain certain items which may be added to the animal feed in micro quantities usually in a concentration of parts to achieve a definite purpose like prevention of diseases, improvement in the performance of livestock, increase in production, increases in weight, increase in milk production etc. It was their case that Penta Forte power, apart from vitamins, the preparation also contains Calcium sulphate and magnesium oxide which an: minerals and that the solvent was soyabean oil; that in the case of Famitone. the active ingredient includes, apart from vitamins, Ascorbic acid and Poly Sorbate and also a solubiliser and that the solvent used in Polyethylene Glycol.
109. The Tribunal in this case observed in para 31: 'As such, apart from the characteristic features, the properties and uses, it is necessary to ascertain how the product is obtained and processed or, prepared, for the product must be either in the nature of a residue or waste from the good industries or prepared animal fodder or a preparation derived from or traceable to such a material, in order to attract any of the entries under this Chapter, and the products included under Heading 23.02 by virtue of the Chapter note are also required to be ascertained accordingly.' It was observed that note under Chapter 23 of CETA 1985 reads: 'Heading No. 23.02 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 bye-products of such processing.' It was also observed that the word 'includes' mentioned here has to be understood in the context referred to above. As such it could only be taken to refer to only those preparations used in animal feeding, which were not elsewhere specified or included: and were obtained by processing vegetable or animal material. It was observed by the Tribunal that nowhere there is even an iota of indication or slightest hint of any synthetic material or mixtures thereof or of products made mainly or wholly of or from synthetic material. It was therefore observed that in the above context, the word 'includes' used in the Chapter note cannot be stretched or extended to cover synthetic material and that it can be taken to mean and refer to products obtained by processing of vegetable or animal materials. A reference was also made by the Tribunal to various items under Chapter 23 of HSN and it was concluded that it is significant that even where there is a reference to substances or preparations containing proteins or minerals or vitamins, anti-biotics etc.. the basic material is always derived from the processing of residues or waste from food industry. The Tribunal also observed that the products are evidently not of a type whose; origin could be traced to vegetable or animal material in the nature of residue or waste from the food industries. It was also observed that the argument that they are used as supplement to animal feed does not help the cause of the Appellants and these products are outside the scope of Chapter 23.
110. We have examined the above observations. We note that the word 'includes" clearly shows that in addition to preparations mentioned under heading 23.02. it 'includes' products of a kind used in animal feeding and by products of such processing. We note that the Tribunal failed to observe the words 'products' in the Note of Chapter 23 of CETA 1985 and 'preparation' under Heading 23.02 of CETA 1985. We have observed elsewhere that 'product' and 'preparation' are not the same thing. They represent 2 different distinct items. In case the word 'include' is interpreted to read as 'means and includes', then, perhaps preparations as described under Heading 23.02 of CETA 1985 will not be included. We have discussed at length the significance of the word 'includes' and have held that 'includes' used in Chapter Note extends the scope and coverage of the Chapter and, therefore, 'preparation' described under Heading 23.02 of CETA 1985 will be covered even if they are not obtained by processing vegetable or animal material. We also note that the Hon'ble Bombay High Court held that animal feed is genre and animal feed supplement is a specie.
111. No doubt in the Ranbaxy Laboratories case, the Tribunal examined the implication of the word 'include' and came to the conclusion that if could only refer to those preparations used in animal feeding which were not elsewhere specified and were obtained by processing vegetable or animal material. The implication of the word 'include' in the context of the words in Chapter 23 like 'products' and 'preparations', were have already held the 'include' used in the Note of Chapter 23 of CETA 1985 should be interpreted to mean the extension of the Heading 23.02 of CETA 1985 to cover the items mentioned n Chapter Note of Chapter 23.
112. Once it is noted that Heading 23.02 of CETA 1985 corresponds to heading 23.09 of HSN. we have to examine the implication thereof. We find that preparations' mentioned under Heading 23.09 of HSN include sweetened forage and other preparations. Other preparations include preparations for supplementing farm-product feed and preparations for use in making the complete feeds. We also note that vitamins or provitamins, amino acids, anti-biotics, coccidiostats, trace elements, emulsifiers, flavourings and appitizers are the ingredients of these preparations. These descriptions clearly show that the preparations may contain synthetic ingredients also and thus, the findings of the Tribunal in the Ranbaxy Laboratories case that synthetic materials are not covered by Chapter note is fallacious. In para 3 of its order, it has been observed: "The heading 23.09 of HSN corresponds to heading 23.02 of the CETA (and the Chapter note 23 of CET relating to tariff heading 23.02 clearly follows Chapter note 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 corpa oil-cake, etc.)
2. Preparations containing cereals, half(?)-sugar mangolds, tallow, straw etc.
3. Preparations from leguminous vegetables, brewing drugs, oilcake, dairy bye-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.)
113. Again in para 38 of Ranbaxy's Order, the Tribunal deserved:
38. In the above illustrations, the nature and type of products are worth noting; and it is significant that even where there is a reference to substances or preparations containing proteins or minerals or vitamins, anti-biotics, etc. the basic material is always derived from the processing of residues or waste from food industry.
114. In the above analysis what has been forgotten is that we are dealing with the additives and supplements and not with the ration. There is no doubt that the preparations with which we are dealing are not rations for daily subsistence of the animal but these preparations are given in addition to (he ration to obtain the desired results. The finding of the Tribunal, therefore, is wrong as it has not taken premixes against item 6 in para 112.
115. In Aries Agro-Vet Industries's case, the question being examined by the Tribunal was that of applicability of exemption notification No. 55/75-CE where animal feed was exempted. This Tribunal while observing, "We agree that the mineral supplements are indeed part of the animal feed but these supplements are not by themselves animal feed as one would understand animal feed. It is a fact that Aries Agro-Vet describe their goods as mineral feed supplements, but we do not think that this by itself should tell against them. We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements and substances that an animal needs in a balanced feed." From the above decision, two things became clear; one is that animal feed termed as ration is a different thing from complete feed or feed supplement and the second thing is that mineral supplements are indeed part of animal feed. Both these things have been ignored by the Tribunal in Ranbaxy Laboratories case.
116. In the case of Eskayef Ltd. , the Apex Court held: "Here we find that Neftin 50 and Neftin 200 contain Furazolidone which is administered for prevention and treatment of ailments viz. coccidiosis and histomoniasis in poultry. Merely because Neftin 50 and Neftin 200 can also be used for improving egg production and increase in growth rate of broilers would not in any way detract from the fact that the said products are medicines for use in the treatment and prevention of ailments in poultry. Once it is found that Neftin 50 & Neftin 200 are medicines for use for treatment and prevention of ailments in poultry, they have to be regarded as P & P medicines chargeable to excise duty under Item No. 14E and the question whether the said products fall in the residuary entry at Item 68 does not arise." In the case, the Apex Court was called upon to decide whether Neftin 50 and Neftin 200 are P & P medicines chargeable to duty under tariff item 14E of the erstwhile Central Excise Tariff or were exempt under Notification No. 6/84 dated 15.2.84 as animal feed supplement. We note from the above ruling of the Apex Court that during that period there was no tariff item as comparable to heading 23.02 of CETA 1985 but there was a residuary Tariff item 68 which covered all goods not elsewhere specified. Secondly, we find that in that case the dispute was between Tariff Item 14E & Tariff Item 68 for the classification; that there was evidence to prove the Neftin 50 and Neftin 200 contained furazolidone which figured in British Pharmacopea and also prescribed as medicine in U.K. In the instant case, Revenue has not placed any evidence on record to prove that the preparations for decision before us were not used in animal feeding. It was also argued by the Counsels for the Assessees that CETA 1985 is now based on HSN and that in the Compendium of Rulings on HSN. it has been clearly clarified that Animal feed preparations shall be classifiable under Heading 23.09 of HSN.
117. For Revenue. It was argued that since the goods contain vitamins and/or provitamins and mixtures thereof, they were correctly classifiable under Heading 29.36 of CETA 1985. The contention of the Revenue was that the active ingredient in the preparations were vitamins and/or provitamins; that vitamins and provitamins or mixtures thereof are covered by a specific heading 29.36 of CETA 1985; that note to Chapter 23 of CETA 1985 clearly states that only such preparations which are not elsewhere specified or included will qualify for classification under heading 23.02 of CETA 1985: that vitamins/provitamins and mixtures thereof are specifically covered by heading 29.36 of CETA 1985; that mixtures of vitamins or provitamins are specifically mentioned under heading 29.36 of CETA 1985; that mixtures even if they contain other materials can be considered for classification under heading 29.36 of CETA 1985 in terms of Rules of Interpretation: that the Apex Court in the case of M/s. Khandelwal Metal Engineering Works ruled that if a heading does not require the exclusion of other Rules those other Rules must also be applied for determining the classification of the article. Therefore, all the relevant rules of interpretation in the Tariff come into play in the classificatory process. Classification has to be determined both according to the provisions of the rules unless a particular note or heading excludes the application of the rules other than Rule 1. It was agrued for the Revenue that there was no prohibition to go to Rules of Interpretation: that if the rules are applied the product qualifies for classification under heading 29.36 of CETA 1985. It was argued that anything containing synthetic material will disqualify itself from being classified under heading 23.02 of CETA 1985 as Chapter note cannot be violated, it was also argued for the Revenue that everything that is used in animal feeding does not necessarily become classifiable under heading 23.02 of CETA 1985.
118. As against the above contentions, the Assessees contended that for classification under heading 29.36, we have to refer to HSN also; that heading 29.36 of HSN speaks of vitamins, provitamins and intermixtures of foregoing whether or not in any solvent; that the Revenue has placed reliance on intermixtures; that intermixtures have been illustrated as "such as for instance natural concentrates of vitamins A & D in various proportions to which an additional quantity of Vitamin A or D has been added subsequently; that in the preparations in the present cases, we are not considering preparations of vitamins alone, but preparations contain proteins, carbohydrates, minerals etc.; that these preparations cannot be termed intermixtures of vitamins and provitamins: that these preparations are thus excluded from qualifying for classification under heading 29.36 of CETA 1985. It was argued for the assessees that applicability of Rules of Interpretation except Rule 1 is prohibited in view of the Chapter note 1 to Chapter 29 which provides. "1. Except where the context otherwise requires, the headings of the Chapter 'apply only to'....:
that words 'apply only to' restrict the applicability of Rules of Interpretation; that in the present: case the context does not require the applicability of the Rules of Interpretation. It was argued for the Assessees that premixes which the preparations are called do contain synthetic materials like proteins, carbohydrates, minerals etc; that notes under heading 29.36 of HSN lay emphasis on the words 'used primarily as vitamins'; that no evidence has been placed on record by the Revenue that the preparations under consideration are used primarily as vitamins.
119. We have carefully considered the rival submissions. We find that Chapter note 1 to Chapter 29 of CETA excludes the applicability of Rules of Interpretation except Rule 1 inasmuch as the words used in this note are "except where the context otherwise requires, the headings of this Chapter 'apply only to'...." We also note that when heading 29.36 of CETA 1985 is read with notes under heading 29.36 of HSN, we find that the emphasis on each item is 'used primarily as vitamins'. No evidence has been placed on record by Revenue that the preparations in dispute before us are used primarily as vitamins. We further note that the intemixtures contemplated under heading 29.36 of HSN are defined as "for instance, natural concentrates of vitamins A and D in various proportions to which an additional quantity of vitamin A or D has been added subsequently. No evidence has been placed before us by Revenue on this aspect.
120. The Counsels for the Assessees also submitted, as alternative plea, that in case the preparations manufactured by them are considered as classfiable under heading 29.36, then no manufacture is involved inasmuch as they pruchase vitamins from outside and the final product shall also be vitamins. Revenue, however, submitted that the goods will be treated intermixtures. On careful consideration of the pleas submitted by both sides, we observe that there is force in the arguments adduced by the Counsels for the Assessees.
121. Another question that has been referred to for determination before us was whether Niger Extractions and Rice Bran Extractions are classifiable as animal feeds for purposes of levy of export duty under entry 21 of the Second Schedule (Export Tariff), The first issue that was argued as indicated in the preceding paragraphs was whether these items are feeds at all. The Assessees claimed that they are not animal feeds but ingredients of animal feeds whereas the Department held that they were animal feeds. He also attempted to distinguish Glindia & Glaxo Laboratories on the ground that these judgments dealt with feed supplements and not with complete animal feed. This argument in our view is not correct as discussed hereafter.
121. (a) It was argued that certain extractions of specific oil seeds are mentioned specifically in the 2nd Schedule, therefore, Id. Counsel argued that these being extractions of specific oil seeds, were covered and since the oil seed extractions of Rice Bran and Niger Seeds are not covered. Therefore, they are out of the second schedule. We have considered these arguments also, and we find that they support the view of the department that they are ingredients of animal feed. We have also perused 2 judgments of the Tribunal cited by the Id. Counsel namely (a) CCE v. Surinder Cotton Mills & Fert. Ltd. T and (b) Schokhi Industries Put. Ltd. v. CC . These judgments also do not help the assessee in view of the High Courts and Supreme Court's judgments discussed herein. We note that the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (I) Limited, after detailed examination of the technical literature on the subject and other evidence, observed: "Cattle-feed" and "Poultry-feed", however, are words which are used in the context of the mixed feed of live-stock and poultry, both of which are reared for production purposes not only domestically, but also commercially. From what has been stated above, it becomes clear that even in its popular sense, that is to say, the sense in which people conversant with live-stock farming and poultry raising and those dealing in cattle-feed or poultry-feed would attribute to those words, ration for production, such as feed additives or supplements like proteins, minerals, vitamins etc. would truly constitute "cattle-feed" or "poultry-feed", as the case may be." Similar view was expressed by the Hon'ble Bombay High Court in the case of Glindia Limited v. Union of India, when examining certain items for purposes of levy and collection of sales tax. described as cattle feed and pultry feed. The Hon'ble Bombay High Court, relying on the judgment of the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (I) Ltd., quoted the following lines from their judgment of the Gujarat High Court: 'The Gujarat High Court has held that the terms 'Cattle-feed' and poultry-feed' must include not only that feed 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, 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".
122. The Apex Court in the case of Sun Exports Corporation v. CC, Bombay, after examining the various entries, technical literature, quoted with approval the decision of the Hon'ble Bombay High Court holding:
13. Now, the question whether the 'animal feed supplement' would fall under the Exemption Notification dated 1.11.1982. As noticed earlier, similar question was considered by the Bombay High Court and the learned Judge expressed the view as follows: The preparations in question are used to supplement animal feed. Sometimes animal feed or pultry feed is already fortified with these vitamins when sold. Sometimes, however, farmers prefer to add the vitamins either to animal feed or to 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 are 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 animal feed supplements and they are sold by the suppliers of animal feed It is next contended by the respondent that even if the two products fall under Tariff item 68 the benefit of the exemption Notification No. 55 of 1975 cannot be given to these products because these products are not animal feeds. They are merely animal feed supplements. This exemption notification has been amended by another Notification No. 6 of 1984, dated 15th February 1984 as a result of which the item 'animal feed including compound livestock feed' is now substituted by 'animal feed including compound livestock feed, animal feed supplements and animal feed concentrates'. After coming into force of this notification, the petitioners have been given the benefit of full exemption. The only question is whether prior to this notification, the petitioners are entitled to exemption under the original notification No. 55 of 1975.
In the case of the petitioners themselves namely Glaxo Laboratories (India) Limited v. The State of Gujarat reported in 1979 43 Sales Tax Cases, page 386, the Gujarat High Court was required to consider whether certain vitamin products including Vitablend WM Forte which were 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 the 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 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'.
It was submitted by the respondents that the subsequent amendment expressly refers to 'animal feed supplements'. This suggests that animal feed supplements were not previously included in the exemption notification. 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'." We are in agreement with the above view expressed by the Bombay High Court. No doubt it was contended on behalf of the Revenue that the contrary view taken by the Tribunal has been challenged in this Court which was rejected in limine at the admission stage. We do not think that dismissal at the admission stage can be relied upon as a binding precedent. Even assuming that there are two views possible, it is well settled, that one favourable to the assessee in matters of taxation has to be preferred.
123. The counsel for the Appellants had contended that the ISI Specification furnished a clear evidence of common trade usage or parlance, but we find that technical literature on the subject as discussed by the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (I) Limited is supported by judicial authorities. We find further that other authorities of the Hon'ble Supreme Court as well as High Courts have placed reliance on the meaning of certain terms as given in the Encyclopedia Brittanica as well as the dictionary meaning of the terms. We cannot ignore the reliance placed by the judicial authorities on technical literature as there cannot be very hard and fast rule on the subject. Moreover, there are a number of reported cases of the Apex Court as well as High Courts having placed reliance on standard works and Dictionaries such as Websters Dictionary, Encyclopedia Brittanica and guidelines in this regard. We feel that the rule in this regard should be that the words should be construed in the popular sense is a qualified rule and should apply if the statute contains language which is capable of being construed in a popular sense.
124. Looking to the various aspects of the matter, the technical literature on the subject and judicial pronouncements made, we hold that higher seed/rice bran extractions are animal feed and correctly classifiable under heading 21 of 2nd Schedule (Export Tariff).
125. In para 36 Of its judgment in the case of Dunlop India Limited and Madras Rubber Factory Ltd. v. UOI and Ors. , the Apex Court ruled that: "It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry." In the instant case, we find that the preparations are known in the trade as preparations used in animal feeding. They are known to the users as preparations of a kind used for animal feeding and are so described and. therefore, they are classifiable, according to this ruling of the Apex Court under Heading 23.02 of CETA 1985. The Apex Court further, in para 37, held that: "When an article has, by all standards, a reasonable claim to be classified under an enumerated item in the Tariff Schedule, it will be against the very principle of classification to deny it the parentage and consign it to an orphanage of the residuary clause. The question of competition between two rival classifications will, however, stand on a different footing." In the instant case, we find that there are certain preparations containing not only vitamins but other ingredients also. Having regard to the end use of the product, the composition thereof, the product becomes specific for classification under Heading 23.02 of CETA 1985.
126. The Apex Court in the case of Plasmac Machine Mfg. Co. Pvt. Ltd. v. CCE went on to hold in para 13 that: "...How is the product identified by the class or section of people dealing with or using the product is also a test when the statute itself does not contain any definition and commercial parlance would assume importance when the goods are marketable as was held in Atul Glass Industries (Pvt) Ltd. v. CCE. ". Similar view was taken by the Apex Court in the case of Asian Paints India Limited v. CCE , wherein in Para 5, it was held: "It is well settled that the commercial meaning has to be given to the expressions in Tariff items. Where definition of a word has not been given, it must be construed in its popular sense. Popular sense means that sense which people conversant with the subject-matter with which the Statute is dealing, would attribute to it." This proposition was further followed by the Apex Court in its judgment in the case of Navopan India Ltd. v. CCE, Hyderabad . We note that this ruling of the Apex Court is most apt for application to the facts of the present case in support of the contention of the Assessees. In the case before us, a number of Certificates of Experts were produced that the product is a preparation of a kind used in animal feeding; affidavits of Users/ Dealers were also produced to show that the preparations are bought and sold as preparations of a kind used fin animal feeding.
127. In the case of Colgate Palmolive (India) Limited v. Union of India and Ors. , the Hon'ble Bombay High Court in para 15 of its judgment, quoting from a decision of the same Court in the case of Sandoz (India) Limited v. UOI and Ors. in Spl. Civil Application No. 2829 of 1974 Dated 5.7.1979), held: "It is settled law that in a case of taxation, the burden of proving that the necessary ingredients prescribed by the taxing provision are satisfied is entirely upon the taxing authority. It was primarily, therefore, for the taxing authority to satisfy the Court that the formulation of the Foron Pigment in the form of Foron liquid is an entirely distinct commodity having entirely a distinct name, character and use as compared with the pigment itself...." In the instant case, a lot of evidence was placed by the Assessees in support of their contention that the preparations were of a kind used in animal feeding, necessitating classification thereof under Heading 23.02 of CETA 1985. However, Revenue contested it. but did not produce any evidence in this regard as to how the product was primarily used as vitamins as was required for its classification under Heading 29.36.
128. The Hon'ble Bombay High Court in the case of Garware Nylons Ltd. v. Union of India and Ors. , in Para 14. held: "There is. however, sufficient material on record which goes to show that nylon twine manufactured by the petitioners has been treated as a kind of nylon yarn by the people in the trade. It is commonly considered as yarn. Hence it can be classified under item 18." In the instant case, we note that a lot of evidence has been led by the Assessees in support of their contention that the goods in question are preparations of a kind used in animal feeding and, therefore, they will be classifiable under Heading 23.02 of CETA 1985. No evidence to the contrary has been led by the Revenue to rebut or disprove this evidence.
129. In the case of Leukoplast (India) Ltd. v. State of Goa . the Hon'ble Bombay high Court held: "It is clear that while construing entries in the Schedule to determine whether they are taxable or not, resort must be had to the Items/entries as ordinarily understood by Traders and Consumers and in the absence of technical definition of the entries in the Act itself, it is not possible to construe entries by assigning them scientific meaning.
130. The Apex Court in the case of Frick India Ltd. v. Union of India 1990 (48) ELT 627 SC in para 6, held: "6. It is well settled that the headings prefixed to sections or entries cannot control the plain words of the provision; they cannot also be referred to for the purpose of construing the provision when the words used in the provision are clear and unambiguous; nor can they be used for cutting down the plain meaning of the words in the provision. Only in the case of ambiguity or doubt the heading or sub-heading may be referred to as an aid in construing the provision but even in such a case it could not be used for cutting down the wide application of the clear words used in the provision." In the case before us, the description of the goods in heading 23.02 of CETA 1985 is 'Preparations of a kind used for animal feeding'. Ample evidence was produced by the Assessees to prove that the product was a preparation of a kind used in animal feeding. Obviously, the meaning of the words was clear, unambiguous and, therefore, there should be no dispute for accepting the goods as classifiable under Heading 23.02 of CETA 1985.
131. In para 15 of their judgment in the case of Union of India v. Garware Nylons Limited , the Apex Court ruled:...."It is for the Taxing Authority to lay evidence in that behalf even before the first adjudicating authority. Especially in a case as this, where the claim of the assessee is borne out by the trade enquiries received by them and also the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence. Unfortunately, no such attempt was made. As stated, the evidence led in this case conclusively goes to show that nylon twine manufactured by the assessees has been treated as a kind of nylon yarn by the people conversant with the trade. It is commonly considered as nylon yarn. Hence, it is to be classified under item 18 of the Act. The Revenue has failed to establish the contrary. We would do well to remember the guidelines laid down by this Court in Dunlop India Ltd.
132. In para 5 of their Judgment in the case of CC v. Bhor Industries Limited . the Apex Court held: "5. It Is well settled in these matters how a good is known in the trade and treated in the trade literature is relevant and significant and often decisive factor." The Apex Court in this case had before it the classification of a product under Customs Tariff. This ratio squarely covers the case before us in favour of the Assessees.
133. In para 7 of their judgment in the case of CCE v. Fenoplast (P) Limited , the Apex Court held: "....If any term or expression has been defined in the enactment then it must be understood in the sense in which it is defined but in the absence of any definition being given in the enactment, the meaning of the term in common parlance or commercial parlance has to be adopted." This judgment of the Apex Court on all fours applies to the facts of the case of the Assessees in the case before us to support their contention that the preparations are classifiable under Heading 23.02 of CETA 1985.
134. In the case of CCE v. Lekhraj Jessumal & Sons , the Apex Court in para 4 of its judgment held: "4. We do not think that we can put it better. Progress cannot be stiffled by an over-rigid interpretation of Import Policy or Customs Tariff. Both must be read as they stand on the date of importation and whatever is reasonably covered thereby must be allowed to be imported regardless of the fact that it was not in existence or even contemplated when the policy or tariff was formulated. With the advancement of technology, better methods have developed for preparing different products and goods and, therefore, a rigid attitude cannot be adopted while determining classification of a particular product under CETA 1985." Viewed in this perspective, we have no doubt in our minds to hold that the goods for classification before us are preparations of a kind used in animal feeding.
135. Having regard to the discussions in the preceding paragraphs, what has to be seen is as to whether, in this case before us, any such clinching evidence of common trade understanding has been placed on record so as to put the matter beyond all possible doubt and justify the respondents contention for ignoring any type of reference to technical literature. On a cumulative reading of the record, we reply in the affirmative. We certainly also take into consideration the principles laid down by the Hon'ble Supreme Court in the Sun Exports Corporation's case. There is a treasure of valuable wealth placed on record by the Appellants to support the view that preparations in dispute are preparations squarely falling in those preparations given under heading 23.09 of HSN which corresponds to heading 23.02 of CETA 1985. We feel that Explanatory notes to the HSN are as representative and symbolic of the common trade parlance and these notes particularly those under heading 23.09 also throw light on the question that pre-mixes including those containing mineral substances and vitamins or provitamins, trace elements, appetisers, soya flour or meal, yeast, etc. are covered by it. We think that the test laid down by Hon'ble Bombay High Court in the case of Chemical Fibres 1982 ELT 917 is a safer and reliable test that where the evidence of trade usage is not beyond doubt, then a reference to technical literature cannot be precluded. In regard to Niger Seed/Rice Bran extractions, we held that they are animal feed.
136. We must now turn to the questions which have been referred to us. On the basis of the aforesaid reasoning the question has been answered in favour of the assessees in so far as reference in Tetragon case & allied cases are concerned. However, in so far as export of Niger Seed/Rice Bran extractions are concerned, we have held that the goods are animal feed for purpose of classification under heading 21 of the 2nd Schedule of the Customs Tariff (Export). The files should now go to the respective Benches for passing appropriate orders after considering other issues, if any, also.