2023 (6) TMI 960 - AT - Customs

Classification of imported goods - squid liver powder - classifiable under CTH 2309 as Preparations of a kind used in animal feeding as finalized by Revenue, or under CTH 2301 as Flours, meals and pellets, of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption; greaves, claimed by the appellants? HELD THAT - CTH 230120 preferred by the appellants covers flours, meals and pellets, of fish or of crustaceans, molluscs or other aquatic invertebrates . The heading does not cover products containing ingredients of plant origin. Since squid liver powder contains a mix of ingredients both of molluscs and plant origin, from a plain reading of the heading, squid liver powder does not fall under the heading. The heading 230990 covers preparations for used in making the complete feed or supplementary feed and need not be an end product in themselves. As per the notes this heading covers sweetened forage and prepared animal feeding stuffs consisting of a mixture of several nutrients designed for use in making complete or supplementary feeds . Further as stated by the appellants squid liver powder contains certain proteins, peptides and amino acids in it. They are in line with the HSN description, as being composed consisting of a number of substances, sometimes called additives, the nature and proportion of which vary according to the animal production requirement. As stated by appellants, squid liver powder is used in shrimp feed formulation as an attractant. It is common knowledge that feeding is the main way for fish to obtain nutrition for the survival, growth and reproduction of fish/ shrimp etc. Attractants are added to the feed to improve not only the feed palatability thereby reducing wastage but also to increase feed intake resulting in fish growth, and are mainly used in captive fish farms. It hence ensures that the fish/shrimp make good use of the feeds and safeguard its health - apart from a plain reading of the Customs Tariff the classification of squid liver powder under 2309 also satisfies the relevant notes (A) and (C) of II Other Preparations given in the HSN. Hence squid liver powder merit classification under the CTH 2309. Since the product is described as being a high-quality feed ingredient for aqua feed and all type diet for animals, the product which is not for exclusive use for fish, prawn etc. has been correctly classified under CTH 23099090. Also, Revenue has discharged this duty effectively and that the discussions made in the impugned orders show the correct classification of goods under CTH 2309. Thus, the classification of the Squid Liver Powder has been correctly done under CTH 23099090 and hence the impugned orders are upheld. The appeals stand rejected.

Summary

Issues Involved:
1. Classification of 'Squid Liver Powder' under the Customs Tariff Heading (CTH).

Summary:

1. Classification Dispute:
The primary issue is the classification of 'Squid Liver Powder,' a raw material used in shrimp feed formulation. The appellants classified it under CTH 2301 2011, while the department reclassified it under CTH 2309 9090, leading to a demand for duties. The appellants contested the reclassification before the Commissioner (Appeals), who upheld the department's decision. Aggrieved, the appellants approached the Tribunal.

2. Appellant's Argument (M/s. Avanti Feeds Ltd.):
The appellant argued that the department relied on a test report not pertaining to them, violating natural justice principles. They detailed the manufacturing process of squid liver powder, emphasizing its use as a raw material for prawn/shrimp feed and not as a complete feed or for human consumption. They claimed the product is correctly classifiable under CTH 2301 2011, based on its composition and essential characteristics.

3. Appellant's Argument (M/s. Godrej Agrovet Ltd.):
The appellant stated that squid liver powder, obtained from squid's internal organs and mixed with soybean meal, is used as an attractant in shrimp feed due to its protein, peptide, and amino acid content. They argued that the product should be classified under CTH 2301, as it is not a premix or supplementary feed but an ingredient for shrimp feed.

4. Department's Argument:
The department contended that CTH 2301 covers flours, meals, and pellets obtained from whole animals or animal products without plant-origin ingredients. Since squid liver powder contains plant-origin ingredients (soybean meal), it should be classified under CTH 2309, which includes preparations used in animal feeding.

5. Tribunal's Analysis:
The Tribunal examined the Customs Tariff entries and HSN Explanatory Notes. It found that CTH 2309 covers preparations used in making complete or supplementary feeds, including feed ingredients. Squid liver powder, being a mixture of animal and plant-origin ingredients, fits this category. The Tribunal discarded the disputed test report and relied on the factual description of the imported products.

6. Legal Precedents and Case Laws:
The Tribunal referred to various legal precedents, emphasizing that wrong decisions cannot be binding precedents and that earlier assessment practices cannot bar rectifying a wrong classification. It also noted that the appellants had previously classified similar consignments under CTH 23099010.

7. Final Decision:
The Tribunal upheld the classification of 'Squid Liver Powder' under CTH 23099090, rejecting the appeals. The decision was based on a plain reading of the Customs Tariff, HSN Explanatory Notes, and the product's composition and use in animal feeding.

Conclusion:
The Tribunal concluded that 'Squid Liver Powder' is correctly classified under CTH 23099090 as preparations used in animal feeding, upholding the impugned orders and rejecting the appeals.