2014 (10) TMI 119 - AT - Customs

Classification of High Protein Poultry Mash (HPPM) - Classification under Heading No. 2301 or under Heading No. 2302 and 2309 - Held that - Sub Heading 2301.00 of CETA covers all residues and waste from food industries which includes bagasse and other waste of sugar manufacture and oil cakes. From the very nature of the description provided under sub-heading 2301.00 of CETA, it is abundantly clear that the goods classifiable under this heading are only residues and wastes arising from food industries. Whereas heading 2302.00 of CETA covers preparations of a kind used in animal feeding including Dog & Cat food - it is evident that the product cleared by the appellant is neither a Residue nor a waste from food industry. As seen from the series of process as explained above, the resultant product emerged is distinct from the mere poultry waste. The very fact that the appellants themselves described in their own invoices as High Protein Poultry Mash confirms the view. Added to that the appellants described the HPPM in the invoice documents as Poultry feed supplement and cleared to DTA. The appellants who are fully aware of the new product and its usage and on their own given a specific name and description as HPPM as poultry feed supplement . Product HPPM is fully satisfies the description given under chapter note of heading 23 of CTA and chapter note of chapter 23 of CETA. Therefore, the product cannot be classifiable under Ch. 2301 of CETA, as a waste as claimed by the appellants. The product of a kind used in animal feeding cannot be covered under Ch. 2301 of CETA. By virtue of chapter note of chapter 23 of CETA read with Explanatory Note to sub-heading 2309 of HSN, we are of the considered view that the product HPPM is rightly classifiable under Ch. 2302 of CETA and Ch. 2309 of CTA. chapter heading 2301 includes the animal wastes such as meat and meat offals only other than bones and other materials. Whereas, as seen from the process, as explained by the appellants themselves before the lower authorities, it is very clear that the poultry wastes used by the appellants for preparation and manufacture of HPPM are intestines, feathers, heads, legs, blood and other offals. Poultry waste of heads, legs contains bones and other materials. It cannot be called as only meat and meat offals, as claimed by the appellants. Therefore, the product HPPM cannot be classifiable under chapter 2301 of CETA. Impugned product HPPM is rightly classifiable under chapter 2302 of CETA and 2309 of CTA and not under chapter 2301 of CETA. - Decided against assessee.

Summary

Issues Involved:
1. Classification of High Protein Poultry Mash (HPPM) under the Central Excise Tariff Act (CETA).
2. Applicability of Notification No. 23/2003-CE dated 31.03.2003.
3. Determination of whether HPPM is a waste product or a preparation used in animal feeding.

Detailed Analysis:

1. Classification of High Protein Poultry Mash (HPPM) under the Central Excise Tariff Act (CETA):
The appellants, a 100% Export Oriented Unit (EOU), manufacture Processed Frozen Whole Chicken Meat and by-products like HPPM. The appellants classified HPPM under Heading No. 23.01 of CETA, claiming it as a waste product. However, the Revenue classified it under Heading No. 23.02 of CETA and Heading 2309 of the Customs Tariff Act (CTA), as a preparation used in animal feeding. The adjudicating authority confirmed the classification under Heading No. 2302.00 of CETA. The appellants argued that HPPM, derived from waste materials like intestines, feathers, and blood, should be classified as waste under Heading No. 23.01. The Revenue countered that the process altered the waste materials into a new product, HPPM, which is commercially known as a poultry feed supplement and should be classified under Heading No. 23.02 of CETA.

2. Applicability of Notification No. 23/2003-CE dated 31.03.2003:
The appellants claimed exemption from duty under Notification No. 23/2003-CE, which applies to waste from food industries. This exemption was claimed under Sl. No. 21 of the notification, which provides a NIL rate of duty for waste from food industries. The Revenue argued that since HPPM is a new product and not merely a waste, it does not qualify for this exemption. The Tribunal, after examining the process and nature of HPPM, concluded that it does not fall under the category of waste as intended by the notification.

3. Determination of whether HPPM is a waste product or a preparation used in animal feeding:
The Tribunal analyzed the process involved in the manufacture of HPPM, which includes cooking waste materials at high temperatures and converting them into a powder form. The appellants described HPPM in their invoices as a poultry feed supplement, indicating its use in animal feeding. The Tribunal referred to the Harmonized System of Nomenclature (HSN) Explanatory Notes and relevant case laws to determine the classification. It was noted that products under Heading No. 23.02 of CETA include those obtained by processing animal materials to the extent that they lose their original characteristics. The Tribunal concluded that HPPM, being a distinct product used in animal feeding, fits this description and should be classified under Heading No. 23.02 of CETA and Heading 2309 of CTA.

Conclusion:
The Tribunal upheld the classification of HPPM under Heading No. 23.02 of CETA and Heading 2309 of CTA, rejecting the appellants' claim for classification under Heading No. 23.01 of CETA. Consequently, the appellants' claim for exemption under Notification No. 23/2003-CE was also rejected. The appeals were dismissed, and the impugned orders were upheld.