Customs, Excise and Gold Tribunal - Delhi
Collector Of Central Excise vs Punjab Bone Mills on 13 June, 1988
Equivalent citations: 1989(19)ECC17, 1988(18)ECR570(TRI.-DELHI), 1988(38)ELT389(TRI-DEL)
ORDER V.P. Gulati, Member (T)
1. This is an appeal filed by Collector of Central Excise, Chandigarh against the order of Collector of Central Excise (Appeals), New Delhi. The brief facts of the case are that the respondents manufacture Di-Calcium Phosphate of animal feed grade assessable under TI-68. They, however, filed'refund claim in respect of the clearances made during the period Feb. 78 to July 79 claiming the benefit of Notification No. 55/75-CE under which animal feed has been exempted from payment of duty. The original authority rejected their claim for refund. The Collector (Appeals) however allowed their claim. His findings for convenience of reference are reproduced below :-
Para-6:
"I find that while rejecting the refund claim of the appellants, the ACCE, had observed that the product of the appellant is mixed upto 1 to 2 per cent and is a component of compound live stock feed although she accepted the contention of the appellant that their product could be fed directly to the animals. Exemption under Notification No. 55/75-CE, as amended, is available to 'animal feed including compound live stock feed' (SI. No. 9 of the Schedule to the said Notification). From the reasoning given by the ACCE, it is not established that the product of the appellant falls outside the scope of the said serial number. I also find that the appellant have contended that the mixture of their product is not 1 to 2 per cent but in the ratio of 1:2 parts, that is, it consitutes one-third of the mixture."
Para-7:
"Having regard to all the facts and circumstances of the case, I accept the appeal on merits and set aside the impugned order."
The Collector of Central Excise, Chandigarh has filed the appeal against the above findings of Collector (Appeals) on the following grounds :-
"The product namely Di-Calcium Phosphate manufactured by the appellant is mainly used in the manufacture of animal feed and poultry feed. This is one of the components of compound live stock feed which is mixed in the animal/poultry feed upto 1 to 2%. Thus for the purpose of eligibility for exemption in terms of Notification No. 55/75-CE dated 01.03.1975 which was in force during the material time, it was necessary that the goods must qualify to be known in the trade and general parlance as animal feed, whereas Di-Calcium Phosphate was only used in a small percentage and considering this a very fact it can not be called that the product itself was animal feed. The views expressed by the Collector (Appeals) that the product under reference was rightly covered under the exemption Notification referred to above are not correct. At the relevant time this notification covered animal feed and compound live stock feed only. Animal feed supplement and animal feed concentrate were exempted only with effect from 15.02.1984 when Notification No. 6/84-CE dated 15.02.1984 was issued. Di-Calcium Phosphate which is an animal feed supplement and not animal feed or compound live stock feed was not exempt from duty prior to 15.02.1984."
"In addition to the aforesaid points which shows the incorrectness of the order of the Collector (Appeals) on merits. It is also appropriate to mention that the appellants had paid duty on Di-Calcium Phosphate without availing the exemption in term of Notification No. 55/75-CE between the period from February 1978 to July 1979 whereas they filed refund claim on 28.03.1980 with the proper officer i.e., after the expiry of 6 months as contemplated under Rule 11 of Central Excise Rules, 1944 which provisions were in force at that time. Thus the claim was otherwise time-barred."
2. The Learned J.D.R. for the department, Miss Renuka Mann, read out the brief facts of the case and the grounds of appeal. She drew our attention to the findings of the Collector in Para-6 regarding the proportion in which the Di-Calcium Phosphate was mixed in the feeds and she stated that the observations of the Collector in this regard were not based on any facts.
3. The Ld. Advocate for the respondents, Shri V.K. Aggarwal pleaded that the respondents had effected the clearances of the goods during Feb. 78 to July '79 on provisional bbasis. He stated that inasmuch as the assessment had been provisional, the question of time bar, as pleaded by Collector in the grounds of appeal, would not arise. In this connection, he drew our attention to the letter of Superintendent dated 30.6.1980 under which they were informed that the assessments done earlier should be treated as finalised. The relevant portion of this letter is reproduced below for proper appreciation of the facts :-
"Please refer to RT-12 Return from Feb'78 to July'79 of above unit. The assessment for Di-Calcium Phosphate animal feed grade made provisionally, may please be treated as finalised, as the decision from the higher authorities has been received that Di-Calcium Phosphate of animal feed grade would fall under TI-68 and gets exemption under Notification No. 55/75-CE as amended from time to time."
"There is no change in the assessment figure."
4. Regarding the availability of the exemption in the above letter, it was pointed out to him that while in the first para, the Supdt. informed them that the goods were exempt, the last sentence showed that there was no change in the assessment. He while conceding that there was apparent contradiction pleaded that the fact remains that they had been informed that the benefit of Notification No. 55/75-CE was available in respect of Di-Calcium Phosphate of animal feed grade manufactured by them. He pleaded having informed the respondents so, the authorities should have given refund of the duty earlier paid by them, suo-moto. He pleaded that in any case they filed an application for refund of duty earlier paid by them. He further pleaded that while the Assistant Collector took note of the question regarding time-bar and also gave them time to make submissions in this regard, he has given no findings in regard to their submissions in the matter in his order. He pleaded that they had pointed out to the Assistant Collector that duty on their product had been paid provisionally. He further pleaded that presumption should be that their plea in this regard had been accepted and the order was based only on merits. He pleaded that they had filed the refund claim on 28.03.1980 and inasmuch the communication regarding the finalisation of the assessment was received on 30.6.1980, the claim was within time. In support of the pleas on time-bar, he cited the following case laws :-
(i) Siemens India v. C.C.E., Kanpur -1986 (25) E.LT.821.
(ii) C.C.E., Bangalore v. Guest Keen Williams Ltd.-1985 (21) E.L.T. 182.
5. He pleaded that inasmuch as the Asstt. Collector had ordered finalisation of the assessments with the benefit of exemption under Notification No. 55/75, the matter could not be reviewed by the asstt. Collector by giving different findings as given in the Order-in-Original. On the merits of the case, he pleaded that under Notification 55/75, animal feed including complex compound feeds were exempt at the relevant time. He pleaded the word 'including' should be taken only to mean that the scope of the term animal feed had been enlarged by including animal feed which was compound in nature and this in no way, restricted the scope of the term animal feed for the purpose of the exemption notification. He pleaded that the term animal feed should be given a natural meaning as the same had not been defined in the notification. He pleaded that the Hon'ble High Court of Gujarat in the case of . Glaxo Laboratories (India) Ltd. v. State of Gujarat [1979(43) STC 386] had examined the scope of term cattle feed and poultry feed in the context of whether vitamin blends could be considered as animal feed or poultary feed. He pleaded that the Hon'ble High Court after examining the literature and also taking into account the definition of the term in Britannica Encyclopedia and other literature has observed as under :-
"The foregoing discussion would show that on a true and correct interpretation of the words "cattle-feed' and "poultry-feed", those terms 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, wool or feathers and, in the case of animals, also for efficient output of work. 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 digested nutrients and feed supplement. Amongst the feeds which are considered essential for the proper nutrition of animals and birds, which are to be kept in a state of efficient production, are included vitamins and, more particularly, vitamins A & D, which have been found to have a profound effect upon live-stock farming by increasing the efficiency of animal production and preventing serious nutritional disease. Vitamin-A, which is required for growth, reproduction, production and even for maintenance and Vitamin D, which is needed to enable the animal to assimilate and use other important elements of its feed, are most apt to be lacking in natural live-stock feeds and that they are included as additives in mixed feeds so as to make good the deficiency."
"Against this background, let us now turn to the products in question and as- certain what their properties are. At serial Nos. (1) and (2) are items of cattle-feed. According to the literature pertaining to those products, which is on record, Vitablend AD 3 [serial No. (1)] consists of Vitamins A and D3 enveloped in a protective gelatin-glucose matrix as uniform beadlets. It is used in cattle breeding programme for cows and buffaloes. It is also used to preserve the reproductive efficacy of the bulls and as essential feed for calves. Vitablend AD 3 Forte [SI.No.(1)] is the same thing as Vitablend AD 3, but in more concentrated form. Products Nos. (3) and (4) are items of poultry feed. According to the literature pertaining to these products, which is on record, Vitablend AB 2D 3 consists of Vitamins A, B2 and D3 enveloped in a gelatin-glucose matrix in the form of minute beadlets and it is used as a carefully blended and properly balanced feed for growth of healthy profitable birds. It has to be mixed in the feeds, either mechanically or manually and thereupon the granules will disperse easily and evenly. Vitablend WM Forte is the liquid feed supplement of Vitamin A. It is mixed with drinking water for increasing resistance through better nutrition, improved health, increased production and to avoid production slumps and blood spots in the eggs. It consits of Vitamin A only in a concentrated form. In our opinion, having regard to the meaning which we have assigned to the words "cattle-feed" and "poultry-feed", these products would necessarily fall within the coverage of the concerned appropriate term."
6. He pleaded that the Di-Calcium Phosphate manufactured by appellants was only of animal feed grade and there are separate IS specifications for this product vide IS-5470 -1969. He stated that as held by the Hon'ble Gujarat High Court, the products manufactured by them, on the same logic qualified to be considered as animal feed. He pleaded that a point had been made in the grounds of appeal that the quantum of Di-Cal-cium Phosphate added to the total feed was very small and therefore, this could not be considered as animal feed. He pleaded that just because of small or micro quantities of the materials added, these would not get disqualified for being considered as animal feed. In this context, he referred to the judgment of the Tribunal in the case of Radhika Vitamin v. C.C.E. Meerut (1985 21 ELT 920) where the question for consideration was whether zinc sulphate used in micro quantities could be considered as a fertilizer. He pleaded that the Tribunal in that case held that agriculture grade zinc sulphate which was used in small quantities for the soil qualified as a fertilizer. His plea is that it is not the quantum which determines whether the goods are to be considered as a feed or not but the nature of its use in the animal feed which should be the determining factor. He also pleaded as to what should be considered as feed or fodder was examined by the Hon'ble High Court of Punjab & Haryana in the case of oil cake and they have in the case of The Punjab Copra Crushing Oil Mills v. The State of Punjab and Ors. (1971 RLR 490) held as under :-
The second point argued by the Ld. Counsel for the Petitioner is that the Assessing Authority wrongly disallowed the petitioner's claim for exemption under Section 5(2) (a) (i) of the Act in respect of oil-cakes by holding that oil-cakes were not fodder. The petitionerfiled affidavits of Shri Gurdas Ram Bedi, President, M.F.G. Jullundhur City, Shri Roshan Lal, General Secretary, M.F.G. Jullundur City, Shri Waryam Singh, owner of dairy farm and member of Market Committee, Jullundur, and Shri Ajudhia Prashad, Attari Bazar in support of its contention that the oil-cakes were nothing but fodder and that in common parlance Khal (oil-cakes) is known to be fodder and is used as food for milch as well as non-milch animals. The Assessing Authority said :-
"Oil-cakes are used as stimulant for fodder and in that case this stimulant does not lose its identity. Khal as such keeps its identity and by virtue of this it is a separate commodity which itself is marketable not as fodder, but as stimulant to fodder for getting better yield of milk."
"Frankly speaking, I have not been able to understand the logic employed by the Assessing Authority. It has not been mentioned by him that oil-cakes are used for any other purpose. He has drawn a distinction between a fodder and a stimulant for fodder. I have not been able to understand on what authority did he say that oil-cakes are not fodder but stimulant for fodder. Oil cakes are used as a part of fodder and are given to the milch animals alongwith the fodder in order to get a better yield of milk from them. They are, therefore, used as fodder and nothing else. The finding of a fact, therefore, arrived at by the Assessing Authority is clearly erroneous in law. The affidavits filed by the petitioner firm clearly stated that Khal (oil-cakes) was known to be fodder and was used as fodder for milch as well as non-milch animals. This assertion has not been denied by the Assessing Authority nor has he said that there is any other use of the oil-cakes. At the hearing, the Ld. Counsel for the respondents stated that oil-cakes are also used as manure for mulberry trees which means that another use of oil-cakes is a fertilizer and even fertilizers are exempt from the payment of sales-tax."
7. He pleaded no doubt in 1984 by amending Notification, a specific exemption was given with respect to animal feed supplement, but this did not mean that such supplements could not be considered as animal feed before this amendment. He pleaded that this amendment to the notification to cover animal feed supplements could be taken only as clarificatory in nature. He pleaded that notwithstanding the fact that Di-Calcium Phosphate was added in small quantity in the total feed of the animal, this by itself was also animal feed. His plea is that animal feed comprises of a number of items and each constitute should be considered as animal feed. He pleaded the Encyclopedia as also Macropadia - Farming and Agricultural Technology showed that additives like chemicals and phosphates were animal feed.
8. In this connection, he also drew our attention to Macropaedia - farming and Agricultural Technology and Britannica Encylbpedia under which the scope of the term animal feed has been covered. He drew our attention to the heading Basic types of feeds as given in the Macropaedia. The relevant portion of the same is reproduced below for convenience of reference -
"Animal feeds are classified as follows :-
(1) Concentrates high in energy value, including (a) ceral gains and their by products (barely corn maize) eats, rye, wheat (b) high protein oil meals or cakes (soyabean, cotton, seed, peanut (groundnut) (c) by products from processing of sugar beets, sugercane and (d) animal and fish by products (2) roughages, including (a) pasture grasses (b) bays (c) silage (d) root crops and (e) straw stover (stalks)".
9. The learned Departmental Representative Ms. Renuka Mann stated that the exemption notification should be strictly construed. She cited the case of Inder Singh v. Sales-tax Officer, Jodhpur (Raj) (12 STC 557). She pleaded that in the case of the notifica-tions, the principle of beneficial construction was not available. As regards the plea of limitation, she pleaded that she had no information with her in this regard.
10. We observe that it is not in dispute that Di-Calcium Phosphate manufactured by the respondents is of animal feed grade and is given in the small quantities mixed in the total feed given to the animals. The point that falls for consideration is whether the product as such can be considered as animal feed. We observe from the evidence produced before us from the technical books that feed of animal comprises of a number of constituents which are generally mixed together. The elements that are added for constituting the total feed of the animal, depend upon the requirements of a particular class of animals, as pointed out by the learned Advocate for the respondents. The Hon'ble High Court of Gujarat in the case of Glaxo Laboratories v. State of Gujarat (43 STC 386) examined the scope of the term animal feed and after examining the etymological scope of the word feed, have observed that the word cattle feed has acquired the precise meaning in the field of animal feed. After examining as to how the word animal feed is understood in the technical literature in the Macropaedia and Encyclopedia as abstracted in the earlier paragraphs, have held that in the modern times cattle feed and poultery feed have a large variety of constituents of a high energy value because they are easily digested nutrients and feed supplements which are considered essential for the proper nutrition of animals and birds which are to be kept in a state of efficient production. We observe in this case the issue before the Hon'ble High Court was as to whether vitamin blends could be considered as animal feed. As brought out in the earlier paragraphs in the arguments of the learned Advocate for the respondents, the Hon'ble High Court after going through the meaning of the term animal feed and poultry feed based on the technical literature placed before them, including the meaning given in the dictionary held that the additives like vitamins are animal feed.
11. We observe that di-calcium phosphate is also to meet the mineral needs of the animals and it has been conceded by the Department that it is a supplement which is required to be added to the feed. The only objection of the Revenue is that being a supplement, it could not be considered as animal feed itself. As observed above, the Hon'ble High Court of Gujarat has gone into the issue as to whether additives and supplements like vitamin blends could be considered as animal feed and have held, as seen from the extracts of the judgments reproduced in the earlier paragraphs, that these are in the nature of animal feed. No contrary judgment of any other High Court has been brought to our notice by the learned Departmental Representative for the Department. The learned Departmental Representative placed a lot of stress on the point that animal feed supplements were added as an item in the exemption notification later and this showed that the earlier entry which covered only animal feeds was not intended to cover animal feed supplements. We observe that in as much as the Hon'ble High Court of Gujarat has held that the supplements and additives are in the nature of animal feed, the addition of the item of animal feed supplements to the exemption notification later can only be held clartficatory in nature.
12. In view of this therefore, all that we can say is that later amendment of the notification was only clarificatory in nature and it does not make any difference for the purpose of the exemption notification as the term animal feed used earlier was wide enough to cover the goods in question. Following with respect the ratio of the judgment of Hon'ble Gujarat High Court referred to supra, we hold that Di-Calcium Phosphate animal feed grade is covered by the item Animal Feed in the Exemption Notification No. 55/75. We, therefore, find no merit in the plea of the appellants and dismiss the same. So far as the plea of time bar is concerned, evidence produced shows that the assessments earlier done were not final in nature and there is no rebuttal from Revenue of the plea that the earlier assessments were provisional in nature. We, therefore, hold that the claim was not hit by time bar.
In view of this, we find no merits in the appeal of the Revenue and dismiss the same.