Customs, Excise and Gold Tribunal - Delhi
Dabur India Ltd. vs Commissioner Of Central Excise on 14 February, 2005
Equivalent citations: 2005(100)ECC396, 2005(183)ELT432(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. In this Appeal, filed by M/s. Dabur India Ltd., the issue involved is whether the following products manufactured by them are classifiable as 'animal feed supplements' under Heading 23.02 of the Schedule to the Central Excise Tariff Act, as claimed by them or as 'Veterinary Medicament' under Heading 30.3 of the Tariff as confirmed by the Commissioner, Central Excise, in the the impugned order.:
(i) Livfit Premix (Liquid, concentrate)
(ii) Ayucal Premix
(iii) Caldhan suspension.
2.1 Shri B.L. Narasimhan, Learned Advocate mentioned that Heading 23.02 of the Central Excise Tariff covers 'Products of a kind used in animal feeding', that the impugned products are commercially used and bought and sold as feed supplements which is evident from the labels of the products themselves; that the following words are clearly printed on the labels:-
Caldhan - "Animal feed supplement"
"Not for medicinal use"
Livfit Vet - "Poultry Feed Supplement"
"Not for medicinal use"
2.2 He, further, mentioned that the impugned product are not bought and sold as ayurvedic medicaments that the samples of the products were drawn and the CRCL has opined that Ayucal Premix and Livfit can be considered as animal feed supplements; that in respect of Caldhan suspension, the CRCL has opined that the product may be considered as medicament; that ignoring these test reports; the Commissioner has relied upon the reports given by Indian Veterinary Research Institute which has classified the impugned products as Ayurvedic medicaments. He submitted that it is settled legal position that when the CRCL has given its report, Revenue is not to go by opinions given by some other authorities. He relied upon the decision in M.P. Industries v. CCE, [2002 (145) ELT 448 (T)].
3.1 The learned Advocate mentioned that the Commissioner has given the following reasons for classifying the impugned products as veterinary medicaments
(i) Products contain ayurvedic Ingredients
(ii) They are administered as per doses prescribed for a limited period or as prescribed by the Veterinarian.
(iii) They are recommended for substantial therapeutic use.
3.2 He submitted that as per Explanatory Notes of HSN, the word "feed supplement" mean a formulation/product which is added to the feed of animal as supplement and basically covers (i) sweetened forage and (ii) other preparations; that the other preparations includes (a) preparations designed to provide the animal with all the nutrient elements required to ensure a rational and balanced diet; (b) preparations for supplementing farm produced feed; and (c) preparations for use in making the complete feeds or supplementary feeds described in (a) and (b); that the pre-mixes or feed additives are specifically mentioned in H S N Explanatory Notes as preparations for use in the making of animal feed supplement; that the drug or vitamin can be in the form of preparation used in the making of a feed supplement and administered as feed supplement; that the reasoning given in the impugned Order that these products consist of ingredients like Ayurvedic medicine and therefore they are not animal feed supplements is contrary to H S N. Explanatory Notes which clearly show that animal feed supplement can contain antibiotics. He, further, submitted that the uses for which these products are put to also establish the position that these are nothing but feed supplements and not medicaments; that Ayucal Premix is a calcium and phosphorus supplement and it enhances absorption, ensures proper distribution and helps in better utilization; that Ayucal Premix is recommended for calcium and phosphorous deficiency in birds, supplementation during high demand period of high egg production in layers; growth and weight gain in boilers; for better egg strength and to reduce egg breakages: for improving carcass and meat quality; that the impugned order has taken that it is for prevention of rickets, prevention of prolapse, osteoporosis and osteomalacia and therefore it is an ayurvedic Veterinary medicine; that the very approach is incorrect; that Ayucal is added to ensure that the calcium and phosphorus deficiency is take care of and as a result, the impending danger of diseases is taken care of; that this product can not cure or be used as a medicine for any of the diseased mentioned. He mentioned that Caldhan suspension takes care of the deficiency of calcium and phosphorus in respect of cattle and horses, sheep and goats; that Livfit Vet is recommended for chicks, layers/broilers; that it is also recommended for offsetting the damaging effects of aflatoxins, restoring reduced feed intake, improving liver functions, better feed utilization, growth, livability and production; that it is for keeping the liver fit. He also mentioned that the Adjudicating Authority has completely ignored the voluminous evidences adduced by them in the form of export opinion from various doctors, research institutions and end users certifying that the products are animal feed supplement; that the opinion is unanimous in that these products are not used as medicines as it can not cure a disease or prevent the disease as a medicine. He referred to some of such opinion/certificates which are as under:-
(a) Dr. M A Mujeeb Ather, Poultry Pathologist Veterinary Biological Research Institute, Hyderabad.
(b) Dr. V S Narsapur Head of Department, Bombay Veternary College (Retd) Mumbai.
(c) Dr. Mahesh Kumar Associate Professor, Deptt. of Veterinary Clinics, Govind Ballabh University of Agriculture & Technology, Pantnagar.
(d) Dr. R.K. Joshi, Assistant Professor, Dept. of Veterinary Microbiology Durg, M P.
(e) Hindustan Lever Ltd., Coimbatore
(f) Poshak Feeds Ltd., Hyderabad 3.3 He contended that in these opinions / certificates the experts have conclusively opined that the products have no therapeutic or Prophylactic properties and the goods are used only as feed supplements; that as against these unrebutted evidences, the Revenue has not produced any evidence whatsoever to establish that the products in question has therapeutic or prophylactic properties or that the goods have been brought and sold as medicaments. He referred to Note 2 to Chapter 30 of the Central Excise Tariff according to which "Medicament" means goods (other than foods or beverages such as dietetic, diabetic or fortified foods, tonic beverages) not falling within Heading No. 30.02 or 30.04 which are either-
(a) products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic uses, or
(b) unmixed products suitable for such uses put up in measured doses or in packings for retail sale or for use in hospitals."
3.4 He submitted there is no iota of evidence to show that any of the impugned products is having therapeutic or prophylactic uses and as per the definition of medicament in the Tariff Act, the products in question can not be classified as medicines; that moreover the Appellants also do not hold any drug licence for these products which is a condition precedent for manufacture of medicaments.
4. The learned Advocate mentioned that the impugned order is directly contrary to the decision of the Larger Bench of the tribunal in the case of Tetragon Chemie (P) Ltd v. CCE, Bangalore, 2001 (138) ELT 414 (T-LB) wherein also the some of the disputed products were sought to be classified by the Revenue under Heading No.30.03 as medicaments as they contained vitamins and provitamines in substantial quantities; that the Larger Bench has held these products classifiable under Heading No.23.02 only holding that "analysis of the technical literature brings out that preparations containing vitamins, proteins, carbohydrates, minerals, etc. are feed additives or supplementary feeds for animals." He also mentioned that the Larger bench has held that the "End use assumes importance in view of the fact that description of the goods under Heading 23.02 of Central Excise Tariff Act, 1985 reads 'Preparations of a kind used for animal feeding including Dog and Cast 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 have also 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 Manufacturer's Association and the Affidavit by the Users/Dealers clearly indicate that the preparations are animal feed supplements." He also stated that the Supreme Court has affirmed the decision in CCE, Bangalore v. Tetragon Chemie P. Ltd. [2001 (132) ELT 525 (SC)]. Reliance has also been placed on the decision in the case of CCE, Vadodara v. M J Agro Chemicals, 2000 (118) ELT 116 (T) wherein the products were classified as animal feed supplement and not as medicament under Heading 3003.10 of the Tariff, Litaka Pharmaceuticals v. CCE, Mumbai [2000 (121) ELT 2003(T)] and Cattle Remedies v. CCE, Kanpur [2004 (60) RLT 274 (CESTAT)].
5. Finally, he mentioned that the demand of duty is barred by limitation as the show cause notice has been issued on 25.3.1999 for the period from 1.3.1994 to November, 1997; that they had filed classification lists/declaration duly describing the products and these were approved; that there is no statutory requirement for the Appellants to declare the end use of the products; that thus non-disclosure of an information which is not statutory required to be given can not be a cause for invoking proviso to Section 11 A(1) of the Central Excise Act. Reliance has been placed on the decision in the case of Pearls of Beauty v. CCE, 2001 (130) ELT 495 (T) and Kishan Mital Industries v. CCE, 2003 (159) ELT 329 (T); that at best it is a case of change in the basis of assessment for which Proviso to Section 11A (1) of the Act can not be invoked.
6. Countering the arguments, Mrs. Neeta Lal Bhutalia, learned Senior Department Representative, submitted that the test report received from C.R.C.L. clearly mentions that Caldhan suspension is a medicament; that Caldhan suspension is marketed as a medicament as it is to be administered "twice daily for 5-7 days or as advised by veterinarian" and is recommended for 'metabolic disorder' and 'prevention of milk fever, prolapse, retention of placenta and infertility due to phosphorous deficiency', etc. that on re-test of the sample on the request of the Appellants, CRCL again confirmed the earlier opinion; that Head of the Department of India Veterinary Research Institute, Bareilly has confirmed that the product 'Caldhan Suspension' falls in the category of medicines. She, further, submitted that Centre of Advanced Studies, Animal Nutrition Division, Indian Veterinary Research Institute, Izatnagar, has opined that Livfit - vet has not been recommended to be mixed in any animal feed and it is used for "protecting and correcting damaging effect of aflatoxins" and for "maintaining and improving liver functions"; that Animal Nutritional Institute, jaipur has opined that has mentioned in its letter dated 20.9.2001 that the sample of Livfit vet liquid/concentrate and Caldhan do not fall in the category of animal feed.
7. The learned Senior Departmental Representative also reiterated the findings contained in the impugned order and emphasised that the impugned products contain herbs and are recommended for substantial therapeutic use and administered as per does prescribed for a limited period or as prescribed by veterinarian, that Ayucal premix is also to be administered by mixing uniformly in feed for 7/10 days or as advised by Veterinarian and prevents rickets, prolapse, osteoporosis and osteomalacia. She also emphasised that on some of the samples, the words "Physician's Sample" were mentioned which goes to show that the impugned goods are medicaments; that it has been held in the case of Shree Baidynath Ayurved Bhawan Ltd. v. CCE, Nagpur, 1996 (83) ELT 497 (S.C.) that medicine is ordinarily prescribed by medical practitioner and it is used for limited time and not every day unless it is so prescribed to deal with a specific disease. Finally, the learned Senior Departmental representative submitted that the larger period of limitation is invocable for demanding duty in as much as the Appellants have suppressed and not disclosed material facts namely use of products as medicine which is vital factor for determining the classification of a product.
8.1 We have considered the submissions of both the sides. The rival tariff Headings of the Central Excise Tariff read as under:
23.02 Preparations of a kind used in animal feeding, including dog and cat food.
30.03 Medicaments (including veterinary medicaments) 8.2 It is the contention of the learned Advocate that the impugned products are sold and bought as feed supplement for managing calcium balance/for offsetting the damaging effects of aflatoxins, restoring reduced feed intake, improving liver functions, etc., and that these products have no therapeutic or prophylactic properties. On the other hand Revenue has submitted that as these products are recommended for substantial therapeutic use and are administered as per doses prescribed for a limited period or as prescribed by the Veterinarian, these are medicaments. We observe that the Explanatory Notes of HSN below Heading No.23.09 (Corresponding to Heading No.23.02 of the Central Excise Tariff) mentions that "Heading covers sweetened forage and prepared animal feeding stuffs consisting of a mixture of several nutrients designed
(i) to provide the animal with a rational and balanced daily diet (complete food);
(ii) to achieve a suitable daily diet by supplementing the basic form produced feed with organic or inorganic substances (supplementary feed); or
(iii) for use in making complete or supplementary feeds.
8.3 The Explanatory Notes further mentions that "farm - produced feed is usually rather law in proteins, minerals or vitamins. The preparation devised to compensate for these deficiencies, so as to ensure a well balanced animal diet, consist of proteins, minerals or vitamins plus additional energy feeds (carbohydrates) which serve as a carrier for the other ingredients." Further, these preparations have the same composition as 'Complete feeds' with a distinction that they have a relatively high content of one particular nutrient. The characteristic feature of the Complete Feeds, as per Explanatory Notes, is that they contain products from each of the three groups of nutrients, namely (a) "Engergy" nutrients, (b) "Body-Building" nutrients and (c) "Function" nutrients. Explanatory Notes, while dealing with "Body-building nutrients", mentions that "The minerals serve mainly for building up bones and, in the case of poultry, making egg-shells. The most commonly used contain calcium, phosphorus, chlorine, sodium, potassium, iron, iodine, etc." Heading also covers preparations, known in trade as "pre-mixes" which are generally speaking, compound composition consisting of a number of substances (sometimes called additives). These substances are of three types-
(1) Those which improve digestion;
(2) Those designed to preserve the feeding stuffs;
(3) Those which serve as carriers, 8.4 The Larger Bench of the Tribunal has the occasion to examine the scope of Heading 23.02 in Tetragon Chemie (P) Ltd. v. CCE (2001 (138) ELT (T-LB). The Larger Bench has held after analyzing the technical literature, that "preparations containing vitamins, proteins, carbohydrates, minerals, etc. are feed additives or supplementary feeds for animals." The Larger Bench has also held that for the purpose of satisfying the term "preparations of a kind used for animal feeding", "We have to examine as to how the product is used."
9.1 The Adjudicating Authority has referred to the uses of the products, given on the packing thereof in Para 18.1 of the impugned order. A perusal of the packing material reveals that the Product Livfit Vet (Concentrate Premix) has been recommended for growth promotion in broilers, layer chicks and growers, protecting and correcting damaging effect of Aflatoxins, maintaining and improving lever functions and improving FCR and livability. A quarterly 500 gms is to be added in one Ton of feed. The product Ayucal has been recommended for calcium and phosphorus deficiency; supplementation during high demand periods of high egg production in layers, and growth and weight gain in broilers; better egg shell strength and to reduce egg breakage; Improving carcass and meat quality and prevention of their shelled eggs and shell less eggs, rickets and lameness due to mineral deficiency, prolapse, cannibalism, cage layer fatigue, osteoporosis and osteomalecia. It is to be administered by mixing uniformly in feed for 7-10 days or as advised by veterinarian. The Caldhan suspension is recommended for metabolic disorders due to deficiency of calcium and phosphorus; extra supplementation during pregnancy and after calving; Prevention of milk fever, prolapse, retention of placenta and infertility due to phosphorus deficiency; better growth and tonicity of muscles and high milk yield in lactating animals. This is to be administered twice daily for 5-7 days or as advised by veterinarian.
9.2 We also observe that, as emphasised by the learned Advocate, all the products packing material bears the word "NOT FOR MEDICINAL USE" No drug licence also seems to have been issued the Appellants for the manufacture of these products by the Drug Authority. In Cattle Remedies Case, the Tribunal has held the products to be animal feed supplement as the goods had not been listed as drugs in the Drug Licence issued to the assesse by the Drug Authority. In Cattle Remedies case, the Tribunal has held the products to be animal feed supplement as the goods had not been listed as drugs in the Drug Licence issued to the assesse by the Drug Control Authority and the goods had never been marketed as medicines but only cattle feed supplement. Revenue has not brought on record any such licence. A perusal of all the recommended uses suggests that the impugned products are used to promote growth, maintaining and improving liver functions, for removing calcium and phosphorus deficiency for supplementation during pregnancy etc. and for preventing rickets, prolapse, milk fever, etc. These uses in our opinion do not show that the impugned products are meant for therapeutic or prophylactic uses. These uses, as reflected from the packing materials, are duly covered by the Explanatory Notes of HSN i.e. to ensure the safeguard of health and acts as body building nutrients. For any product to be classified as a medicament, it is pre-requisite that the product is for therapeutic or prophylactic uses. This requirement is not satisfied in respect of the impugned products.
10. Now coming to the test reports and opinions brought on record by both the sides, we observe that the CRCL has opined that the Livfit Vet is not described in authoritative books for ayurvedic medicines and it can be considered as animal fed supplement. CRCL has also opined in respect of Ayucal Premix to be animal feed supplement. The Centre of Advance Studies, Izatnagar refrained itself from giving a clear finding in respect of Livfit Vet and suggested that the Department can decide the product on the basis of governing Rules and difference between 'annual feed supplement' and 'medicaments'. The Office of Animal Nutritional Institute, Jaipur has mentioned that at the institute, they only make proximate analyses of the animal food and the samples of the Livfit Vet Liquid/concentrate and Caldhan do not fall in the category of animal food. It is not the case of Appellants that these products are animal food as these are feed supplement. On the other hand, the appellants have produced a number of Certificates from experts in the field and users of these products that none of these products are medicaments. Tamil Nadu Veterinary & Animal Science University has opined that aflatoxicosis occurs in poultry due to feeding them with feed or feed ingredients contaminated with Mycotoxins and the treatment of aflatoxicoisis is the immediate withdrawal of the contanminated feed and Livfit Vet concentrate may be useful as a feed additive in poultry to improve liver functioning during recovery phase and may aid in early recovery. College of Veterinary Science and A.H. Indira Gandhi agricultural University, Durg has also opined that Livfit Vet is a general tonic used for improving the overall physiological condition of the body. Dr. R.K. Joshi, Asstt. Professor of Department of Veterinary Microbiology has opined that "In aflatoxicosis it may not be directly involved in correction of damage done by the toxin instead it help only by improving overall Health Condition birds" Hindustan Lever Ltd. has mentioned in their Certificate that they are using Livfit Vet concentrate in their Poultry feed as a feed supplement; it does not have any therapeutic value; it only supports to the major metabolic organs of the birds. Similarly M/s. Poshak Feeds Ltd. have mentioned that they use Livfit Vet Concentrate as a feed supplement and they do not claim any medicinal value of livfit vet concentrate for treatment purpose through their feed. The CRCL report has opined that Caldhan Suspension may be treated as a P an P medicament only on the ground that the product is marketed as a medicament because the label specifies the dosage or to be administered as advised by Veterinarian. No other reasoning has been advanced by the Chemical Examiner to treat the product as medicament. There is nothing mentioned in the report as to the product's therapeutic or prophylactic properties. Mere specification of dosages or the opinion of Veterinarian for its use would not make a product a medicament. It should have either therauptic or prophylactic properties. The Judgment of the Supreme Court in Shree Baidynath ayurved Bhawan Ltd. v. CCE, 1996 (83) ELT 492 does not lay down the law that wherever a product is prescribed by a medical practitioner and the same is used for limited time and not everyday, it becomes a medicine. A physician may recommend use of Vitamins, a particular food, consumption of egg or use of a particular shampoo, etc. for a limited period. Such recommendation will not make all these products a medicament. The learned Advocate has referred to the opinion of Dr. Mahesh Kumar, Associate Professor of G.B. Pant University of Agriculture & Technology. Dr. Mahesh Kumar has opined that caldhan can be recognized as a tonic or feed supplement only which provides low levels of calcium or phosphate to the animals and thereby helps in maintaining tonicity of muscles; caldhan can not be used for therapy of milk fever as it provides only 325 mg calcium per 20 ml whereas for the therapeutic management of milk fever, a minimum of 100-150 g calcium should be given intravenously as 20-30% solution. The chemical Examiner has also not commented on the words "NOT FOR MEDICINAL USE" printed on the label. The revenue, thus has not succeeded in proving that any of the impugned product is having therapeutic or prophylatic properties. Accordingly, these products are not Ayurvedic Medicament falling under Heading 30.03 of the Central Excise Tariff.
11. We also agree with the learned Advocate that the extended period of limitation for demanding duty is not invocable as the Appellants had filed classification list/Declaration as required under Rule 173-B of the Central Excise Rule claiming classification under Heading 23.02. Non declaration of use of the goods does not amount to suppression of facts as held by the Tribunal in Kishan Metal industries v. CCE, Delhi II. Further as held by the Tribunal in Pearls of Beauty v. CCE, New Delhi (2001 (130) ELT 495 (T), if the Department entertained some doubt about the classification list, it should have asked the Appellants to indicate its use. The Tribunal has held that merely because they have not indicated the use of the impugned goods in their classification lists, would not amount to suppression of facts. Thus the extended period of limitation is not invocable. We, therefore, set aside the impugned Order and allow the Appeal.