2005 (9) TMI 368 - AT - Central Excise

Summary

Issues:
Classification of Choline Chloride under Tariff sub-heading 2302.00 versus Chapter heading 29.23 for duty rate determination.

Analysis:
The issue in this case revolves around the classification of Choline Chloride manufactured by the appellants. The appellants argue that the product should be classified under Tariff sub-heading 2302.00, which attracts a nil rate of duty at the relevant time. On the other hand, the Department contends that the correct classification is under Chapter heading 29.23, specifically under "Quaternary ammonium salts and hydroxides; lecithins and other phosphoaminolipids." The Department's argument is based on the specific mention of Choline and its derivatives under this chapter heading. Additionally, the Department asserts that the product does not qualify under Chapter 23, which covers preparations used in animal feed, as the product is synthetic and not derived from vegetable or animal materials.

Upon hearing both sides, the learned Advocate for the appellants challenges the lower authorities' interpretation of the chapter note. He cites a previous ruling by the Larger Bench of the Tribunal in the case of Tetragon Chemie (P) Ltd. v. CCE, Bangalore, which held that preparations used in animal feeding, even if containing synthetic material, should be classified under Heading 23.02. The Tribunal's interpretation extended the scope of the chapter to cover products obtained from processing vegetable or animal material. The Advocate also references Hawley's Condensed Chemical Dictionary, which describes Choline Chloride as an animal feed additive derived either from agricultural waste or made synthetically. Based on these arguments and the precedent set by the Larger Bench, the appeal is allowed, and the Commissioner's order is overturned.

In conclusion, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the order of the Commissioner (Appeals). The decision was based on the interpretation of the chapter note, the nature of the product, and the precedent established by previous rulings regarding the classification of products used in animal feed.