2022 (7) TMI 1434 - AAR - Customs

Classification of goods intended to be imported - carotenoid products, namely Lucantin Red 10% NXT, Lucantin Yellow 10% NXT and Lucantin Pink - to be classified under heading 3204 of HSN or not? - HELD THAT - The impugned products are a combination of active ingredients and other ingredients such as antioxidants, minerals and stabilisers - These goods consist of active ingredients, preservatives, anti-oxidants and carriers. As per HSN explanatory notes, active ingredients (vitamins, pro vitamins, amino acids, etc) with a suitable carrier along with additives required for preservation and transport is a premix, which is added to the complete animal feed or supplementary animal feed. The Hon'ble Tribunal in RECKITT AND COLMAN OF INDIA LTD., CALCUTTA VERSUS COLLECTOR OF CENTRAL EXCISE, CALCUTTA 1985 (4) TMI 306 - CEGAT NEW DELHI has held that to qualms as a preparation the said product should be prepared by addition, mixing or such other similar process to the original commodity in order to derive a new commodity. From the above, it is clear that the products under consideration are preparations, also known as premixes. It is observed that heading 2309 is an end-use-based heading. In this regard, reliance may be placed on the decision of the large bench of the Hon'ble tribunal in the case of TETRAGON CHEMIE (P) LTD. VERSUS COLLECTOR OF C. EX., BANGALORE 1998 (9) TMI 390 - CEGAT, NEW DELHI , wherein it was held that end-use assumes importance in determining the classification of goods under heading 2302 of CETA, 1985. The same is because the description of the goods under heading 2302 reads as 'Preparations of a kind used for animal feeding including cat and dog food'. The heading specifically states that the preparations must be used for animal feeding. Therefore, heading 2302 is an end-use-based heading. It is to be noted that the active ingredient presents in the impugned goods, i.e., carotenoid, does not exceed 10% by composition (Table 4). Further, it can be observed that heading 3204 pertains to synthetic organic colouring matter or preparations based on synthetic organic colouring matter. However, the impugned goods are not simple colouring matters, rather they are compound preparations used for animal feed as additives having active ingredients such as carotenoids. HSN explanatory notes state that certain of these substances are also used as laboratory reagents or for medical purposes - The impugned products are not used for their dyeing properties. They are specifically used as animal feed for improvement in the quality of eggs and skin due to pigmentation after consumption. Therefore, the said products do not merit classification under heading 3204. The 3 products, i.e., Lucantin Red 10% NXT, Lucantin Yellow 10% NXT and Lucantin Pink are classifiable under heading 2309 and more specifically, under subheading 23099090 of the first schedule to the Customs Tariff Act.

Summary

Issues Involved:
1. Classification of carotenoid products Lucantin Red 10% NXT, Lucantin Yellow 10% NXT, and Lucantin Pink.
2. Determination of appropriate Customs Tariff Act heading for the products.
3. Consideration of the products' specific use in animal feed.

Detailed Analysis:

1. Classification of Carotenoid Products:
M/s BASF India Limited sought advance rulings on the classification of carotenoid products, specifically Lucantin Red 10% NXT, Lucantin Yellow 10% NXT, and Lucantin Pink. These products are used in animal feed to enhance pigmentation in animals and eggs, and they contain active ingredients like canthaxanthin, C-30 ester, and astaxanthin. The applicant argued that these products should be classified under heading 2309 of the Customs Tariff Act, 1975, which pertains to preparations used in animal feeding.

2. Determination of Appropriate Customs Tariff Act Heading:
The applicant provided several supporting documents, including Circular No. 80/54/2018-GST and Circular No. 188/22/95-CX, which clarify the classification of animal feed supplements. The applicant also referred to certificates from the German Government's certifying agency and test reports from Doctors Analytical Laboratories Pvt. Ltd., which confirmed that the products are feed supplements and of animal grade. The applicant suggested an alternative classification under subheading 32042090 if the products were considered synthetic carotenoids.

3. Consideration of the Products' Specific Use in Animal Feed:
The ruling emphasized that the products are used exclusively in animal feed and have no other use. The HSN explanatory notes to heading 2309 describe premixes as compound compositions containing active substances and carriers designed to improve animal health and product quality. The products in question fit this description as they are premixes containing active ingredients, preservatives, antioxidants, and carriers.

The ruling also referenced the decision in Tetragon Chemie (P) Ltd. vs. Commissioner of Central Excise, Bangalore, which highlighted the importance of end-use in determining the classification of goods under heading 2302 of CETA, 1985, akin to heading 2309 of the Customs Tariff Act, 1975. The products were found to be commonly known in the trade as specific use in animal feeding, supported by technical literature, end-use certificates, and Board circulars.

Conclusion:
Based on the detailed analysis and the evidence provided, the ruling concluded that Lucantin Red 10% NXT, Lucantin Yellow 10% NXT, and Lucantin Pink are classifiable under heading 2309 and more specifically, under subheading 23099090 of the Customs Tariff Act. The products did not merit classification under heading 3204, as they are not used for their dyeing properties but as animal feed additives to improve the quality of eggs and skin pigmentation.