2017 (12) TMI 374 - AT - Central Excise

Classification of goods - TMQ (kind of bulk drugs) - appellants are claiming the classification of said product under sub heading 2302.00, the Department disputed the same and contended that it is correctly classifiable under heading 2941.30 - whether the product classifiable as Preparation of a kind used in animal feeding, including dog and cat food under CTH 2302 or as Tetracyclines and their derivates Salts thereof under CTH 2941.30? - Held that - Considering the manufacturing process and in-process nature of the material, we are convinced that the issue is covered by the judgment of the Larger Bench in the case of Tetraon Chemie (P) Ltd. Vs. CCE, Bangalore 1998 (9) TMI 390 - CEGAT, NEW DELHI , where it was held that preparation described under Heading 23.02 of CETA 1985 will be covered even if they are not obtained by processing vegetable or animal material - appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of product TMQ under sub heading 2302.00 or heading 2941.30.

Detailed Analysis:
1. The case involved the classification of the product TMQ manufactured by the appellant under sub heading 2302.00 or heading 2941.30 of the Central Excise Tariff Act. The Department disputed the classification and contended that TMQ should be classified under heading 2941.30. Various show cause notices were issued, and demands were confirmed by the Department.

2. The initial orders confirmed the classification of TMQ under heading 2941.30, which was upheld by the Commissioner (Appeals). The matter was remanded by CESTAT for fresh adjudication. Subsequently, demands were confirmed again by the Department, leading to appeals and further adjudication processes.

3. The main contention by the Revenue was that TMQ was identified as Oxytetracycline Salt in the appellant's quality assurance profile, making it a derivative of Tetracyclines and thus classifiable under heading 2941.30. The Revenue argued that TMQ, being an intermediate product, did not constitute animal feed or feed supplement and should be classified accordingly.

4. The appellant, supported by their advocate, referred to a previous judgment by a Larger Bench of the Tribunal in a similar case to support their classification under sub heading 2302.00. The arguments revolved around the manufacturing process of TMQ and its intended use as an additive in animal feed supplements.

5. After considering the arguments and examining the records, the Tribunal found that the issue to be determined was the classification of TMQ. The Tribunal reviewed the cross-examination of the chemical examiner and agreed with the Commissioner (Appeals) that the test report was vague and inconclusive, leading to a lack of reliance on it.

6. The Tribunal analyzed the manufacturing process of TMQ and concluded that as an in-process material used as an additive to animal feed supplements, classifying it as an antibiotic derivative under heading 2941.30 was incorrect. The judgment of a Larger Bench in a similar case was cited to support this conclusion.

7. Ultimately, the Tribunal upheld the decision of the Commissioner (Appeals) to set aside the demands and allowed the appeal of the appellant. The appeal filed by the Revenue was dismissed, and the impugned order was upheld.