2007 (8) TMI 220 - AT - Central Excise

Feed supplements classifiable u/SH 2302.00 Assessee produced evidence of trade parlance & certificate from various dealers to certify that impugned goods are none other than Feed Supplement Classification can t be challenged by dept. on basis of non-production of statement of proprietor

Issues Involved:
1. Classification of products as feed supplements and prophylactic in nature.
2. Ambiguity of the Chemical Examiner's Reports.
3. Eligibility for SSI exemption.
4. Classification of specific products under Central Excise Tariff.
5. Validity of the penalties imposed.

Issue-wise Detailed Analysis:

1. Classification of Products as Feed Supplements and Prophylactic in Nature:
The assessees contended that the products they manufactured were feed supplements and prophylactic in nature, classifiable under CSH 2302.00 of CET. They produced extensive literature, labels, and evidence of trade parlance to support their claim. The Commissioner (Appeals) examined the issue thoroughly and accepted the assessees' contentions, noting that the Chemical Examiner's reports were ambiguous and did not provide clear findings on the nature of the products.

2. Ambiguity of the Chemical Examiner's Reports:
The Chemical Examiner's reports dated 2-5-2000 and 4-8-2000 were found to be ambiguous regarding certain products. The Commissioner (Appeals) noted that the reports did not provide clear findings for eight products, which were claimed to be feed supplements. The reports listed some products as preparations used in animal feeding but did not clarify others. The Commissioner accepted the evidence provided by the assessees, including trade parlance and labels, indicating that the products were feed supplements.

3. Eligibility for SSI Exemption:
The assessees, being an SSI unit, were eligible for exemption up to an aggregate value of clearances of Rs. 30 lakhs for the years 1996-1997 and 1997-1998, and Rs. 50 lakhs for the years 1998-1999 and 1999-2000, under the relevant exemption notifications. The dispute pertained to the years 1997-1998, 1998-1999, and 1999-2000. The Commissioner (Appeals) found that the values of clearances claimed by the assessees were correct and should be accepted, reducing the aggregate value of dutiable goods.

4. Classification of Specific Products under Central Excise Tariff:
The Commissioner (Appeals) found that products like Deevogard, Giltonik, Pearispot, Microbite-20, Microbite, Protein-Gel, and Vermicide Forte were classified as feed supplements and growth promoters, meant for use in aquaculture. The Chemical Examiner's reports were not clear, and the labels indicated these products were feed supplements. Therefore, these products were classified under Chapter Heading 2302.00, attracting "nil" rate of duty. Additionally, Vermicide Forte was classified as a generic veterinary medicine under Chapter sub-heading 3003.32, attracting "nil" rate of duty, rather than as an organic compound.

5. Validity of the Penalties Imposed:
The Commissioner (Appeals) held that no duty liability arose, and consequently, no interest under Section 11 AB of the Central Excise Act, 1944, was applicable. Since the assessees' claims regarding the exempted products were legal and proper, and there was no evasion of duty, the penalties imposed on the assessees' unit and its proprietor were not maintainable in law and were set aside.

Separate Judgments:
The Revenue contended that the Chemical Examiner's Reports should be accepted and argued that mere printing of "feed supplement" on the labels was insufficient for classification. They relied on the ruling of Jalani Enterprises v. CCE, Jaipur. However, the assessees provided evidence of trade parlance and how the goods were understood and marketed. The Commissioner (Appeals) accepted the assessees' explanation and evidence, finding no merit in the Revenue's appeal.

Conclusion:
The appeal filed by the assessees was allowed, and the Order-in-Original was set aside with consequential relief. The Revenue's appeal was rejected, as they failed to provide counter evidence to rebut the findings of the Commissioner (Appeals).

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