2024 (4) TMI 1173 - AT - Customs

Classification of imported goods - whether, the same merits classification under Customs Tariff Item (CTI) 2309 9090 as claimed by the appellants; or, is it classifiable under Customs Tariff Heading (CTH) 29.36 as determined by the learned Commissioner of Customs, for deciding on the appropriate levy of customs duty? - whether the confirmation of the demand of erroneous refund of the differential duty which was paid back by the appellants is legally sustainable on the basis of the determination of the classification of impugned goods? HELD THAT - The taxing event for the purpose of customs duty in this case is importation of goods into India, and hence the condition of the imported goods at the time of importing is the relevant factor for determining the proper classification as to under what head the customs duty will be leviable. The vitamins having the quantity of additives, substrate or coating to render them particularly suitable for a specific use, such as use in animal feeding, remain classified under the scope of heading 2309. However, we make it abundantly clear that test reports stating It is for general use without any reference to the question about its use, has no relevance to the above point. In fact, the learned Commissioner has come to the conclusion that the reports stating It is other than food preparation/premix as indicating of Not fit for human consumption . The impugned goods are classifiable under 2309 9090, as the imported goods at the time of import remain as animal feed preparations called as pre-mixes or additives containing vitamins or pro-vitamins. The factual details and the documents placed as evidence such as Declaration under Rule 9 of Central Excise Rules declared before the jurisdictional Central Excise Department indicate that that the appellants importer is a manufacturer of animal feed supplements, animal feed concentrates and thus the imported goods are being intended for use in such manufacture. Hence, the ratio of the judgement of Hon ble Allahabad High Court in in the case of Sonam International 2010 (10) TMI 120 - ALLAHABAD HIGH COURT does not apply to the facts of this case. The impugned goods are classifiable under 2309 9090 of the First Schedule to the Customs Tariff Act, 1975. Accordingly, the impugned order dated 03.10.2017 classifying imported goods under heading 29.36 does not stand the scrutiny of law and therefore is not legally sustainable - the impugned goods are classifiable under 2309 9090 of the First Schedule to the Customs Tariff Act, 1975 and not under heading 29.36 as claimed by Revenue. Both the impugned order dated 03.10.2017 and subsequent impugned order dated 17.07.2020 passed by learned Commissioner of Customs (NS-I), Nhava Sheva cannot be sustained on merits and is set aside - appeal allowed.

Summary

Issues Involved:
1. Classification of imported goods
2. Demand of short-paid customs duty
3. Demand of erroneous refund

Detailed Analysis:

1. Classification of Imported Goods:
The primary issue was whether the imported goods should be classified under Customs Tariff Item (CTI) 2309 9090 as "Preparations of a kind used in animal feeding" or under Customs Tariff Heading (CTH) 2936 as "Vitamins and their derivatives."

- Arguments by Appellants: The appellants argued that the imported goods, which are animal feed additives/premixes containing vitamins and minerals, should be classified under CTI 2309 9090. They contended that the goods are certified as "feed grade" and are labeled "For animal use only; not for medicinal use, not for human use." They cited the Harmonized System of Nomenclature (HSN) and CBEC Circular No. 188/22/96-CX dated 26.03.1996, which supports the classification of such goods under heading 2309.

- Arguments by Revenue: The Revenue argued that the goods should be classified under CTH 2936, which covers vitamins in any form, regardless of their purity or the fact that they are mixed with other materials. They contended that the goods do not contain any carrier but are pure vitamins added with substances for preservation.

- Tribunal's Analysis:
- Test Reports: The test reports indicated that the imported goods contain vitamins and pro-vitamins at varying percentages but did not conclusively state whether these are "separate chemically defined organic compounds" for classification under Chapter 29 or "preparations of a kind used in animal feeding" for classification under Chapter 23.
- HSN Explanatory Notes: The Tribunal referred to the HSN explanatory notes, which describe the scope of headings 2309 and 2936. Heading 2309 includes preparations used in animal feeding, containing vitamins or pro-vitamins, amino-acids, antibiotics, etc., and stabilizers, antioxidants, and carriers. Heading 2936 covers vitamins and pro-vitamins, their derivatives, and intermixtures.
- Precedents: The Tribunal relied on the Larger Bench decision in Tetragon Chemie (P) Ltd., which classified similar goods under heading 2309, and the Supreme Court's decision in Abhi Chemicals & Pharmaceuticals Pvt. Ltd., which upheld the classification of animal feed supplements under heading 2309.

- Conclusion on Classification: The Tribunal concluded that the imported goods are classifiable under CTI 2309 9090 as "animal feed preparations" containing vitamins or pro-vitamins.

2. Demand of Short-Paid Customs Duty:
The original authority had re-classified the imported goods under heading 2936 and confirmed the demand for short-paid customs duty under Section 28 of the Customs Act, 1962, along with interest.

- Tribunal's Decision: The Tribunal set aside the impugned order dated 03.10.2017, which classified the goods under heading 2936 and demanded short-paid customs duty. The Tribunal held that the goods are correctly classifiable under CTI 2309 9090, and therefore, the demand for short-paid customs duty does not stand.

3. Demand of Erroneous Refund:
The subsequent impugned order dated 17.07.2020 confirmed the demand for the erroneous refund of the differential duty, which was paid back by the appellants upon finalization of provisional assessments.

- Tribunal's Decision: The Tribunal set aside the subsequent impugned order dated 17.07.2020, which treated the refund as erroneous based on the classification under heading 2936. Since the Tribunal concluded that the goods are classifiable under CTI 2309 9090, the demand for the erroneous refund is not legally sustainable.

Final Judgment:
The Tribunal set aside both the impugned order dated 03.10.2017 and the subsequent impugned order dated 17.07.2020. The appeals were allowed in favor of the appellants with consequential relief. The imported goods were held to be classifiable under CTI 2309 9090 of the First Schedule to the Customs Tariff Act, 1975.