2014 (12) TMI 280 - AT - Central Excise

Intermediate products like Vitamin Premixes and Mineral Premixes - manufacturing infant foods like Lactodoex, Lactodex Starter, Lactodex Follow-up, etc - Denial of the benefit of captive consumption notification No. 67/95-CE dt. 16/03/95 - Classification of goods under Tariff Heading 2936 or chapter heading 1901 - Held that - From the process of manufacture of vitamin premixes it may be concluded that vitamin pre-mix is excluded from Tariff Heading 2936 by virtue of the above chapter note. The process of manufacture shows that to the processed starch, only vitamins and minerals are added. Thus it is a starch based product. The premix so formed is not a simple mixture of vitamins, either natural or synthesized. Further the language of Tariff Heading 2936 is that the vitamins and derivates are used primarily as vitamins. No evidence is placed on record to show that the pre-mix is primarily used as vitamins, its name notwithstanding. In fact it is a starch based product to which vitamins are added. Evidently the chapter heading 1901 is more specific. The Commissioner (Appeals) referred to Larger Bench decision in the case of Tetragen Chemie Vs. Commissioner reported in 1998 (9) TMI 390 - CEGAT, NEW DELHI which was affirmed by Supreme Court in 2001 (7) TMI 127 - SUPREME COURT OF INDIA to rule out classification under CETH 2936. - vitamin pre-mix and mineral pre-mix are mixtures of starch preparations to which nutrients i.e. vitamins and minerals are added and merit classification under CETH 1901 as preparation of starch attracting Nil rate of duty. - Decided against Revenue.

Summary

Issues:
Classification of Vitamin Premix and Mineral Premix under Central Excise Tariff Act, 1985.

Analysis:
1. The case involved an appeal by the Revenue against an order dropping demands and penalties against a company manufacturing infant foods. The dispute was regarding the classification of Vitamin Premix and Mineral Premix under Central Excise Tariff Act, 1985, as duty was demanded on these products.

2. The Tribunal analyzed the manufacturing process of Vitamin Premix and Mineral Premix, concluding that they are mixtures of starch preparations with added nutrients. The process involved adding only vitamins and minerals to processed starch, making the products starch-based. This led to the conclusion that the premixes are not primarily used as vitamins, as required by Tariff Heading 2936, but rather as starch-based products classified under Chapter Heading 1901, attracting a nil rate of duty.

3. The Tribunal referred to relevant tariff entries and chapter notes to support the classification decision. It highlighted that the products did not fall under Tariff Heading 2936, as they were not simple mixtures of vitamins but starch-based mixtures with added nutrients. The decision was further supported by a Larger Bench decision and a Supreme Court affirmation, which ruled out classification under CETH 2936.

4. The Revenue contended that the company sold a similar product as Vitamin Premix to other buyers, but the company clarified that these were animal food supplements classified differently. The Tribunal noted that the Revenue's appeal lacked justification and coherence, indicating uncertainty in the department's case. The arguments regarding the classification of Vitamin Premix were not supported by substantial evidence or legal basis.

5. Similarly, the dispute over the classification of Mineral Premix was addressed by the Tribunal. It was determined that the product was a mixture of minerals added to starch preparations, not separate chemically defined compounds under CETH 2851. The manufacturing process and relevant chapter notes supported the classification of Mineral Premix under Chapter Heading 1901, attracting a nil rate of duty.

6. Ultimately, the Tribunal held that both Vitamin Premix and Mineral Premix were mixtures of starch preparations with added nutrients, classified under Chapter Heading 1901. The products were deemed exempted intermediate products under notification No. 67/95, as they were used in the manufacture of exempted final products. The classification under Chapter 19 attracting a nil rate of duty rendered the issue of the notification unnecessary for further consideration.

7. Consequently, the Revenue's appeals were rejected, and the judgment was pronounced on 8.8.2014 by the Tribunal, settling the classification dispute in favor of the company manufacturing infant foods.