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TMI Blog1994 (5) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... their submission that these are animal feed supplements and in this connection they would draw attention to explanation II to Notification 234/82-C.E. and the language of the Heading 23.02 of Chapter 23. 6. They would also refer to Rule 3 of the rules for the interpretation of the schedule and submit that the Heading provides the most specific description is to be preferred to Heading providing a more general description. 7. It was also their contention that the products are exclusively used for animal feeding purposes and not for any other purposes. 8. It was their contention that a feed supplement is a formulation of a product which is to be added in the food as a supplement to make it a complete food in the final form. The feed supplements may therefore contain the contents which may be added to the animal feed in micro quantities usually in a concentration of parts per million to achieve a definite purpose like prevention of diseases, improvement in the performance of live stock, increase in production, increases in weight, increase in milk production, etc. 9. Pentaforte is mixed in micro quantities with poultry feed before administration and its concent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the preparation are purified water and Polyethylene glycol. 21. They would also like to draw attention to Chapter note 1 to Chapter 29 which defines the scope of the Headings under Chapter 29 and Heading 2936 covers only specified items and does not cover products containing vitamins. 22. It is not in dispute that the products in question are for a specific purpose and not for general use. 23. It was their submission that the products in question were merely preparations of a kind used in animal feeding classifiable under Heading 23.02. 24. Further, the Collector has relied on Trade Notice 10/90 of Bombay Collectorate without distinguishing the earlier Trade Notice and has not realised that there is no consistency in the opinions so expressed. 25. The learned counsel further stated that they would also like to draw attention to the order of the Tribunal No. 755-756/91-C, dated 7-10-1991 [1992 (60) E.L.T. 124 (Tri.)] and HSN entry relating to Heading 23.09 in support of his contention. 26. The learned DR reiterated the department's view and explained that the active ingredients in both the products were various vitamins although some other compounds have also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d." 30. We have considered the submissions of both the sides (including the case law cited). We observe that Chapter 23 of CET covers "Residues and Wastes from the food industries; prepared animal fodder" 31. As such, apart from the characteristic features, the properties and uses, it is necessary to ascertain how the product is obtained and processed or prepared, for the product must be either in the nature of a residue or waste from the food industries or prepared animal fodder or a preparation derived from or traceable to such a material, in order to attract any of the entries under this chapter; and the products included under Heading 23.02 by virtue of the Chapter note are also required to be ascertained accordingly. The language of the Chapter note which is significant and has a bearing on the controversy reads as follows : "CHAPTER NOTE" "Heading No. 2302 includes products of a kind used in animal feeding not elsewhere specified or included, obtained by processing vegetable or animal material's to such an extent that they have lost the essential characteristics if the original material, other than vegetable waste, vegetable residues and by-products of such pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FORM OF PELLETS, DERIVED FROM THE SIFTING, MILLING OR OTHER WORKING OF CEREALS OR OF LEGUMINOUS PLANTS. 23.03- RESIDUES OF STARCH MANUFACTURE AND SIMILAR RESIDUES BEET, PULP, BAGASSE AND OTHER WASTE OR SUGAR MANUFACTURE, BREWING OR DISTILLING DREGS AND WASTE, WHETHER OR NOT IN THE FORM OF PELLETS. 23.04- OIL-CAKE AND OTHER SOLID RESIDUES, WHETHER OR NOT GROUND OR IN THE FORM OF PELLETS, RESULTING FROM THE EXTRACTION OF SOYABEAN OIL. 23.05- OIL-CAKE AND OTHER SOLID RESIDUES, WHETHER OR NOT GROUND OR IN THE FORM OF PELLETS, RESULTING FROM THE EXTRACTION OF GROUND-NUT OIL. 23.06- OIL-CAKE AND OTHER SOLID RESIDUES, WHETHER OR NOT GROUND OR IN THE FORM OF PELLETS, RESULTING FROM THE EXTRACTION OF VEGETABLE FATS OR OILS, OTHER THAN THOSE OF HEADING NO. 23.04 OR 23.05. 23.07- WINE LEES ; ARGOL 23.08- VEGETABLE MATERIALS AND VEGETABLE WASTE, VEGETABLE RESIDUES AND BY-PRODUCTS WHETHER OR NOT IN THE FORM OF PELLETS, OF A KIND USED IN ANIMAL FEEDING, NOT ELSEWHERE SPECIFIED OR INCLUDED 23.09- PREPARATIONS OF A KIND USED IN ANIMAL FEEDING. 37. The Heading 23.09 of HSN corresponds to Heading 23.02 of the CET; (And the Chapter Note of Chapter 23 CET relating to Tariff Headin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.36. In spite of the fact that they had claimed only 23.02 in their classification list as apparent from the copy of the classification list effective from 1-3-88 filed by them as also para 1 of the appeal memorandum. 42. It is also interesting to note that in their appeal memorandum filed before the Collector (Appeals) in form EA 2 they had claimed classification under 29.36 CET or under any other appropriate heading as deemed fit. Even in the prayer before the Collector (Appeals) they have stated that "it is respectfully prayed that the impugned order in original 17/89, dated 17-7-1989 wrongly approving the product to be assessable at nil rate of duty under Heading 23.02 of CET may be ordered to be set aside and the correct classification under Chapter Heading 29.36 of CET chargeable to duty at the rate of 15% ad valorem or in any other heading as deemed fit may be ordered". In the appeal memorandum filed before us, on the contrary they have mentioned inter alia at page 9 para (a) "Hence this preparation is not merely an inter-mixture of vitamins under classification 29.36......". Thus these two preparations are correctly classifiable under 23.02". In other words while t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) or (c) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use. (f) The products mentioned in (a), (b), (c), (d) or (e) above with an added stabiliser necessary for their preservation or transport. (g) The products mentioned in (a), (b), (c), (d), (e) or (f) above with an added-anti-dusting agent or a colouring or odoriferous substance added to facilitate their identification or for safety reasons, provided that the additions do not render the product particularly suitable for specific use rather than for general use". The heading entry, read with the above clauses, shows that this entry not only covers the items named therein but also products or preparations made from them or containing them and includes such products dissolved in water/ other solvents and/or with added stabilisers or preservatives etc.; Hence the products in question being admittedly preparations containing a number of vitamins as active ingredients are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including the nature of packing, the indications thereon and the method of use. It is also not in dispute that both the products have apart from vitamins, other elements like minerals, specialised solvents, preservatives, anti-oxidants, chelating agents, promoters of absorption of soluble vitamins, anti-microbial preservatives, binders, etc. It is also admitted that both the products are to be exclusively used as animal feed supplements for vitamin enrichment in the animals. Under these circumstances the classification of the product is to be determined under Heading 23.02 or Heading 29.36. 52. Before a detailed discussion takes place certain facts have to be clarified. In this matter, the original show cause notice issued by the Assistant Collector to the appellants was for classifying these two products under Heading 30.03 as medicaments for animals. The Assistant Collector having been satisfied that the products would not come under Chapter 30, classified them under Heading 23.02 as originally claimed by the appellants. The Collector of Central Excise took up the matter with the Collector of Central Excise (Appeals) under Section 35E(2) and sought classification of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter contained." 53.2 The title of Chapter 23 should not, therefore, influence us to interpret Heading 23.02. This is not to mean that Chapter Note 1 to Chapter 23 should also be ignored. Chapter Note 1 to Chapter 23 reads as under : "Heading No. 23.02 includes products of a kind used in animal feeding not elsewhere specified or included, obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, other than vegetable waste, vegetable residues and by-products of such processing." 53.3 This has been interpreted to mean that Heading 23.02 should be obtained by processing vegetable or any materials and not otherwise. According to me, this chapter note should not be interpreted in this manner. This Chapter note is an inclusive definition and not a specific definition. This Chapter note merely says that Heading 23.02 includes products of a kind used in animal feeding obtained by processing vegetable or animal materials. It does not say that Heading 23.02 would cover only those types of animal feeds which are obtained by processing of vegetable or animal materials. In fact any inclusive de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding natural concentrates), derivatives thereof used primarily as vitamins, and intermixtures of the foregoing, whether or not in any solvent." (emphasis supplied). A plain reading of Heading 29.36 would indicate that the Heading would cover vitamins, provitamins and derivatives thereof used as vitamins and intermixtures of the foregoing only. In other words if these vitamins, provitamins and their derivatives are mixed with other substances, such mixtures are not to be classified under Heading 29.36. Any attempt to classify products which are mixtures of vitamins, provitamins, their derivatives with other substances like minerals, anti-oxidants, stabilisers, appetisers, etc., by use of Interpretative Rule 2(b) would result in classifying certain products under Heading 29.36 which are not to be classified therein. In other words we would be doing violence to the words used in the Heading. The purpose of expression "intermixtures of the foregoing" would be completely lost in such a situation. In this connection, Rule 1 of the Interpretative Rules as extracted above would make it clear that where there is a prohibition of the use of Interpretative Rules in the wordings of a Hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for general use." In fact Note 1(e) clarifies all the doubts on the point viz. that when products of Heading 29.36 are dissolved in other solvents (other than water) such products would still come under Heading 29.36 provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transportation and that the solvent does not render the product particularly suitable for specific use rather than for general use. In the instant case, for example in the product, Famitone, the solvent used is water as also polyethylene glycol. While water will dissolve the vitamin C (ascorbic acid) vitamins A, D & E are not dissolvable in water but are dissolvable in polyethylene glycol and polyethylene glycol would appear to be used specifically in this case to render the product to be used ultimately as an animal feed supplement and not as sale of vitamins. In fact, Hawley's Condensed Chemical Dictionary, 11th Edition at page 936 describes the uses of polyethylene glycol (among others) as permissible additives to foods and animal feed. Thus applying Note 1(e) of Chapter 29 it can be clearly seen that the solvents specially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E VSP 10.00 mg Calcium Sulphate USNP quivalent to Calcium 185.00 mg Magnesium Oxide (Light) quivalent to Magnesium Other 30.00 mg Purified Water IP 18.0 Granulating Fluid Sodium Benzoate IP 0.15 Antimicrobial Preservative Methyl Paraben Sodium IP 0.15 Antimicrobial Preservative Starch Maize IP 3.0 Binder Butylated Nydroxyanisole IP 0.1 Antioxidant Butylated Hydroxytohien IP 0.1 Antioxidant Soyabean Oil VSP 7. 1.0 Solvent Composition of Famitone Liquid is as under :- FAMITONE LIQUID Active Ingredients Each 5 ml to contain Vitamin D3 IP 25,000 10 Vitamin A Palitate IP 2,50,000 10 Vitamin E Acetate IP 150 10 Ascorbic Acid IP 500 mg Poly Sorbate 80 IP 1.82 Gm (1) Promoter of absorption of fat soluble vitamins (Vitamin A, Vitamin E, Vitamin D3) (2) Solubiliser Others Sisodium Edetate IP 0.08% Chelating agent Butylated Nydroxyanisole IP 0.02 x Antioxidant Butylated Hydroxytohien IP 0.02% Antioxidant Methyl Paraben IP 0.1% Antimicrobial Preservative. He referred to page 3 of the appeal memo. Shri Lakshmi Kumaran, the learned advocate argued that the appellants claim assessment under Heading 2302.00 of the Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Tribunal in the case of Roche Products Ltd. v. Collector of Central Excise vide Order No. 1101/90-C. He argued that the earlier order of the Tribunal in the case of Roche Products Ltd. v. Collector of Central Excise is in favour of the assessee and argued that the correct classification is under Heading 23.02. He also referred to the decision in the case of Glaxo Laboratory (India) Ltd v. Collector of Central Excise vide Order No. 755 and 756, dated 7-10-1991 [1992 (60) E.L.T. 124 (Tri.)]. He pleaded that the product is the same. Only trade name is different. He also referred to another judgment in the case of Punjab Bone Mills and M/s. Protinkem v. Collector of Central Excise, Chandigarh vide Order No. 105 and 106/92-C, dated 23rd March, 1992. He also referred to another decision in the case of Collector of Central Excise, Chandigarh v. M/s. Protinkem vide Order No. 238 and 239/92-C, dated 3rd August, 1992. Shri Lakshmi Kumaran, the learned advocate argued that Chapter 29 covers only vitamins and pro-vitamins. Shri Lakshmi Kumaran in support of his argument referred to para No. 53 of the order passed by the Member Judicial and pleaded that she had dealt at length the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s "animal feeding" and not "animal feed". The first phrase is a verb, whereas the second one is a noun. If the term had been "animal feed', then very clearly the preparation used as parts in "animal feed" would be covered by Chapter 23.02, but this is not so in the present case. It is an admitted fact that both the products (Pentaforte and Famitone) are supplements in the sense that they enhance the function of the main animal feed. It is not a supplement which is a foodstuff by itself which can be consumed directly. It is not a dietary supplement. It is only a supplement to the main animal feed. Therefore, components or ingredients of animal feeds which are not capable of direct administration or feeding to animals to use the phrase of the Tariff itself are not covered by Chapter 23.02. He also referred to a decision of the Tribunal in the case of Hoechst Pharmaceuticals Ltd. v. Collector of Central Excise reported in 1988 (38) E.L.T. 304 (Tribunal) and laid special emphasis on paras 8 to 11. He argued that the correct classification is under Heading 29.36 of the Central Excise Tariff. Shri Kak, the learned Joint CDR argued that Rule 2(b) of the Interpretative Rules is applicable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agro-Vet Industries Pvt. Ltd., Bombay v. Collector of Central Excise, Bombay reported in 1984 (16) E.L.T. 467 has been upheld vide Civil Appeal No. 17 of 1984. He also referred to S.P. Sarkar's Words and Phrases. He also referred to the judgment in the case of Metro Satellite Ltd. v. Collector of Central Excise reported in 1990 (45) E.L.T. 697 (Tribunal). He referred to para No. 4 of the said decision. Shri Kak, the learned Joint CDR argued that it does not fall under Heading 23.02 since the item is of synthetic origin neither vegetable nor animal origin and Heading 29.36 applies. He referred to Rule 2(b) read with Explanatory Notes 11 and 12 of HSN. He refers to the Rules of Interpretation Rule 2(b) and 3(c). He refers to paras No. 43 to 47 of the order passed by Shri S.K. Bhatnagar, Vice President. He pleaded that the order passed by the Vice President, Shri S.K. Bhatnagar, is correct and the same should be accepted. 59. Shri V. Lakshmi Kumaran, the learned advocate in reply referred to HSN 23.09 at page 177. He again referred to the decision in the case of Collector of Central Excise, Chandigarh v. Punjab Bone Mills, reported in 1988 (38) E.L.T. 389 (Tribunal) and referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral elements or compounds as would be evident from the composition indicated by the appellants in their appeal memo. I have already reproduced the composition in para No. 57 of my order above. This means the wording of the Chapter Note 1 "not elsewhere specified or included" is very relevant. This means Chapter Note 1 clearly lays down that if the product is specified in any other heading, the product would fall in that heading. The Tribunal in the case of Saurashtra Chemicals, Porbandar v. Collector of Customs, Bombay reported in 1986 (23) E.L.T. 283 (Tribunal) in para No. 7 has held as under :- * * * * * * * Hon'ble Supreme Court in the case of Khandelwal Metal & Engineering Works and Another etc. reported in 1985 (20) E.L.T. 222 (SC) in para No. 28 had held as under :- * * * * * * * Hon'ble Justice Higgins of the High Court of Australia had observed that : "for identification of the imported goods (a) the actual intention of an importer as to the use to which he intends to put the imported goods is irrelevant, (b) one ought to look simply at the article as it is and (c) consider the purpose of the goods only so far as it indicates its character." (Extract taken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Tribunal was upheld by the Hon'ble Supreme Court vide Civil Appeal No. 17/1984. The Tribunal in the case of Collector of Central Excise v. Roha Dye Chem Pvt. Ltd. reported in 1989 (41) E.L.T. 667 (Tribunal) had held as under :- "12. Though it is true that Chapter titles by virtue of the Rules for the interpretation of the Central Excise Tariff Schedule are provided for an ease of reference only and, for legal purposes, classification shall be determined according to the terms of headings and any relative section or Chapter notes, they do provide a broad indication of the goods sought to be covered within the respective chapters. Chapter 21 is entitled "Miscellaneous edible preparations" and Chapter 32 "Tanning and Dyeing Extracts; Tannins and their Derivatives; Dyes, Colours, Paints and Varnishes; Putty, Fillers and other Mastics; Inks". Broadly speaking, therefore, edible preparations must find classification under one or the other of the heading in Chapter 21 in preference to Chapter 32. We have already referred to the Supreme Court's observations with reference to food colours in relation to the Sales Tax entry "dyes and colours and compositions thereof". The Department ..... X X X X Extracts X X X X X X X X Extracts X X X X
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