2005 (2) TMI 196 - AT - Central Excise

Issues Involved:

1. Classification of products as 'animal feed supplements' under Heading 23.02 or as 'Veterinary Medicaments' under Heading 30.03 of the Central Excise Tariff.
2. Validity of test reports and expert opinions.
3. Applicability of extended period of limitation for demanding duty.

Issue 1: Classification of Products

In this appeal, the primary issue is whether the products manufactured by the appellant are classifiable as 'animal feed supplements' under Heading 23.02 or as 'Veterinary Medicaments' under Heading 30.03 of the Central Excise Tariff Act. The products in question are Livfit Premix (Liquid, concentrate), Ayucal Premix, and Caldhan suspension.

The appellant argued that the products are commercially used and bought as feed supplements, which is evident from the labels stating "Animal feed supplement" and "Not for medicinal use". They contended that the products are not sold as Ayurvedic medicaments and cited test reports from CRCL supporting their claim that Ayucal Premix and Livfit can be considered as animal feed supplements. However, the Commissioner relied on reports from the Indian Veterinary Research Institute, classifying the products as Ayurvedic medicaments.

The Commissioner classified the products as veterinary medicaments based on the presence of Ayurvedic ingredients, prescribed doses for limited periods, and therapeutic use. The appellant countered this by referring to the Explanatory Notes of HSN, which define 'feed supplements' and include preparations designed to provide animals with nutrient elements for a balanced diet. They argued that the products are used to address nutrient deficiencies and improve overall health, not to cure diseases.

The Tribunal observed that the Explanatory Notes of HSN under Heading 23.02 cover products used to ensure a balanced diet for animals, which can include preparations containing vitamins, proteins, and minerals. The Tribunal noted that the products' uses, such as promoting growth and improving liver functions, do not indicate therapeutic or prophylactic properties required for classification as medicaments.

Issue 2: Validity of Test Reports and Expert Opinions

The appellant presented several certificates from experts and users, stating that the products do not have therapeutic or prophylactic properties and are used only as feed supplements. These opinions were supported by various professionals and institutions, including the Tamil Nadu Veterinary & Animal Science University and Hindustan Lever Ltd., which confirmed the products' use as feed supplements without medicinal value.

The Tribunal considered the CRCL's report, which classified Caldhan suspension as a medicament based on its marketing and dosage instructions. However, the Tribunal found this reasoning insufficient, as the report did not provide evidence of therapeutic or prophylactic properties. The Tribunal emphasized that specifying dosages or veterinarian recommendations alone does not make a product a medicament.

Issue 3: Applicability of Extended Period of Limitation for Demanding Duty

The appellant argued that the demand for duty is barred by limitation, as the show cause notice was issued on 25-3-1999 for the period from 1-3-1994 to November 1997. They had filed classification lists/declarations describing the products, which were approved, and there was no statutory requirement to declare the end use of the products. The Tribunal agreed, noting that non-disclosure of non-statutory information does not justify invoking the extended period of limitation.

The Tribunal referenced previous decisions, including Pearls of Beauty v. CCE and Kishan Metal Industries v. CCE, which held that non-declaration of use does not amount to suppression of facts. Therefore, the extended period of limitation was not applicable.

Conclusion

The Tribunal concluded that the products in question are not Ayurvedic Medicaments under Heading 30.03 but are animal feed supplements under Heading 23.02. The impugned order was set aside, and the appeal was allowed.

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