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TMI Blog1998 (11) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal had held that the goods were classifiable under Heading 29.36 of CETA 1985. Therefore, a reference was made to the third Member who held that the matter may be referred to the Larger Bench. Accordingly, the issue was formulated as "whether preparations of a kind used in animal feeding consisting of one or more vitamins mixed with diluents etc. are classifiable under Heading 29.36 as held in the case of M/s. Ranbaxy Laboratories Limited or under Heading 23.02 as held in the case of M/s. Glaxo Labs (I) Limited and M/s. Roche Products Limited 2. At the outset, the Joint Chief Departmental Representative, Shri B.K. Gupta pointed out that the issue involved in all these matters was decided by the Tribunal in favour of the Revenue in the case of Ranbaxy Laboratories Limited v. CCE; that against the said judgment of the Tribunal, an Appeal has been admitted by the Supreme Court 1998 (99) ELT A231J. The ld. Advocate. Shri V. Lakshmi Kumaran in fact gave of copy of the Order of the Apex Court admitting the Appeal. The Civil Appeal No. is 2284 of 1995 Dated 25.9.95. He objected to the hearings being proceeded with. Having heard both sides, we overruled the objection raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral 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 (J) 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 general use; (h) The following products, diluted to standard standard strengths, for the production of azo dyes; diazonium salts, couplers used for these salts and diazotisable amines and their salts. 2. This Chapter does not cover: (a) Goods of Heading No. 15.01 or glycerol (heading 15.06); (b) Ethyl alcohol: (c) Methane or propane (Chapter 27); (d) The compounds of carbon mentioned in Note 2 of Chapter 28: (e) Urea (Chapter 31); (f) Colouring matter of vegetable or animal origin (heading No. 32.03), synthetic organic colouring matter, synthetic organic products of a kind used as fluorescent brightening agents or as luminophores (heading No. 32.04) or dyes or other colouring matter put up in forms or packings for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reakdown which occurs in the body continuously. Food also provides the constituents and the energy required for body growth, All feeding stuffs are composed of water and organic and mineral matter. Organic matter is composed of proteins, fats, crude fibre an soluble carbohydrates. Besides the above, there are substances known as vitamins which are considered to be essential for the proper nutrition of farm-stock. Of these, the more important ones from the point of view of cattle nutrition, are Vitamins A & D because they have to be supplied to the animals through their feeds; but Vitamin B and C can be synthesized in the ruminant body. The learned Author seems to point out that the ration of an animal may be divided for convenience into two parts; one for maintenance ration which is that portion of the diet which just enables the animal at rest to carry on the essential processes of life such as breathing and circulation of blood without either gain or loss of body weight. As, however, no animal is kept in a farm in a state of non-production, the requirements for maintenance from only a convenient basis for the calculation of rations for productive purposes. Whatever is supplied to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. 12. Animal Feed has been commented upon the Encyclopaedia Brittanica, Volume 9, Page No. 144 as 'Feed Animal are material on which animals are fed differ widely in chemical composition and nutritive value. For convenience they are divided into two general classes: Concentrates and Roughages. Concentrates include a large variety of feeds that have a high value because they are rich in easily digested nutrients, such as starch, fat and protein and are low in fibre or woody material which is not well digested. Roughages have a much lower value because they are relatively high in fibre and contain less of the more digestible nutrients. Good nutrition is necessary if animals are to be able to maintain health and produce satisfactory amounts of milk, eggs, meat, wool or work. Animals require each day food furnishing sufficient amount of protein, energy, vitamins. Plenty of water and air are also needed. Dealing in detail with the role of vitamins in animal feed, the learned authors have pointed out that the numerous scientific discoveries concerning vitamins had a profound effect upon livestock farming by increasing the efficiency of animal production and preventing serious nut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h and infection. Although an ample supply of all vitamin requirements of livestock usually can be made up through the use of common feeds, vitamins are becoming more general as feed additives in commercial feeds. Various kinds of vitamins are added to commercially mixed feeds for poultry, swine and, to a limited extent, for calves, increasing amounts of fat soluble vitamin A are being produced for all types of livestock. This vitamin, which formerly was supplied as a fish liver oil to be fed separately because of the rapid destruction of the vitamin on oxidation, is available in a stabilised form with small particles of the covering of a synthetic wax, gelatin, or other material. 15. This study of animal feed composition and feed supplements brings into clear limelight the fact that in the manufacture of commercially mixed feeds, several feed additives are used and that amongst them are included vitamins A and D. These two vitamins are added as supplements in mixed feeds for cattle, poultry, swine and young calves. 16. The above description shows that a true and correct interpretation of words "cattle--feed' and 'poultry--feed' must include not only that food whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are being adduced only on classification of the products manufactured by the Appellants. 22. It was contended by the ld. Counsels for the Assessees that animal feed' has not been defined in the Tariff or the rules made there under. Therefore, reliance has to be placed on the technical literature on the subject and general understanding of the trade who deal in the goods or who purchase the goods, in addition to the case law on the subject. It was contended that affidavits from experts and their opinions were produced before the lower authorities indicating that the product manufactured by them was known in common parlance as concentrates, premix, feed additives and feed supplement. A reference was made to the decision of the Hon'ble Gujarat High Court in the case of M/s. Glaxo Laboratories (India) Limited 1979 (43) STC 386 wherein the Hon'ble High Court held that feed consists not only of that constituent which is essential for maintenance of life, but also other constituents which provide energy require for production, be it the production of calf or milk or output of work and that vitamins are considered essential for the proper nutrition of livestock and such vita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or growth or fattening and for production purposes. 24. The ld. Jt. CDR. countering the arguments based on the Hon'ble Gujarat High Court and Hon'ble Bombay High Court judgments submitted that these two judgments pertain to Sales Tax matters. It was contended by him that the Sales Tax Act is not the same as the Central Excise Act. The two Acts serve two different purposes and hence the finding under one Act cannot be taken directly as covering the matter precisely under a different Act. He submitted, therefore, that the ratio of the decision of these two judgments does not squarely cover the present cases. It was also contended that judgments in Sales Tax Laws do not apply to an interpretation of Central Excise Laws with which we are concerned. It was also contended that the cases decided by the Hon'ble Gujarat/Bombay High Courts pertained to the period before introduction of new Central Excise Tariff based on HSN; that in the erstwhile CET., there was no heading (Tariff item) corresponding to 23.09 of HSN or 23.02 of CETA 1985; that composition of the product is of material importance for deciding the classification under heading 23.02, 29.36 or 30.03 of CETA 1985; th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of vitamin so as to bring it under Heading 29.36; that Experts/Specialists and Users/Dealers have certified that the goods in question are not vitamins, but only essential supplements required for animal feed; that these experts/specialists/users/dealers categorically stated that if animal feed supplements contain vitamins in a small quantity, even then the product is known and used as animal feed supplements; that for the manufacture of animal feed supplements, no drug licence is necessary. It was contended that the Tribunal in its final order No. 751/98-C Dated 8.9.98, on the question of classification of Ossidos based on protein and carbohydrates and to which minerals such as calcium is added, held that the product is classifiable under Tariff Item 1B of the erstwhile Central Excise Tariff. It was argued for M/s. Tetragon Chemie (P) Ltd. that the ld. Commissioner held that animal feed supplements are not necessary for the bare maintenance of the animals, but only necessary when the daily animal feed is considered insufficient from the nutritional angle. Therefore, any final product to be classifiable under Heading 23.02, must necessarily be sufficient to meet the bare daily sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecific function for him. There is a mental association in the mind of the consumer between the article and the need it supplies in his life. It is the functional character of the article which identifies it in the mind. In the case of a glass mirror, the consumer recalls primarily the reflective function of the article more than anything else. It is a mirror, an article which reflects images. It is referred to as a glass mirror only because the word glass is descriptive of the mirror in that glass has been used as a medium for manufacturing the mirror. The basic or fundamental character of the article lies in its being a mirror. It was observed by this Court in Delhi Cloth and General Mills Co. Ltd. v. State of Rajasthan and Ors. which was a case under the Sales Tax Law: In determining the meaning or connotation of words and expression describing an article or commodity the turnover of which is taxed in a sales tax enactment, if there is one principle fairly well settled it is that the words or expressions must be construed in the sense in which they are understood in the trade, by the dealer and the consumer. It is they who are concerned with it, and it is the sense in which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such processing. It was contended that the products in question are not obtained by processing vegetable or animal material and. therefore, they cannot be classified under this Chapter. It was contended that synthetic products have no place under Chapter 23 and hence they cannot be classified under this Chapter. In support of this argument. Revenue relied on the judgments of this Tribunal in the case of M/s. Ranbaxy laboratories Limited. In this case, this Tribunal held that hence Pentaforte and famitone being admittedly preparations containing a number of vitamins as active ingredients are covered by the entry 29.36 and the fact that some minerals and materials are also present does not make any difference. A reference was made to the case of Aries Agro-Vet Industries Private Limited. In this case, this Tribunal had held that 'We agree that the mineral supplements are indeed part of the animal feed, but these supplements are not by themselves animal feed as one would understand "animal Feed". It was also argued by the ld. Jt. CDR that the Apex Court in the case of EskeyeJ Ltd. v. Collector of Central Excise held: "Here we find that Neftin-200 contain Furazolidon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court. The Hon'ble Bombay High Court had relied on the judgment of the Hon'ble Gujarat High Court who had held: 'It was submitted by the respondents that the subsequent amendment expressly refers to animal feed supplements. This suggests that animal feed supplements were not previously included in the exemption notification. This reasoning must be rejected. The amendment appears to be clarificatory in nature. For example, the amendment now expressly refers to animal feed concentrates which were not expressly referred to earlier. It cannot be said that animal feed concentrates are not animal feed. In the same manner products which supplement animal feed and are generally added to animal feed are also covered by the generic term animal feed.' On the findings of the Apex Court in the case of Eskayef Ltd., the ld. Counsels argued that Central Excise Tariff as it then was did not have a description of goods as it is at present against heading 23.02; that there were no two competing entries, but a residuary entry and that the present goods are not used for treatment and prevention of ailments and the case is clearly distinguishable. 32. For the Assessees, the argum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins and mixtures thereof. 35. On the question of use of the word 'include' in Note to Chapter 23, Revenue contended that the Apex Court in the case of South Gujarat Roof Tiles Manufacturers Assn. and Anr. v. State of Gujarat and Anr., ruled: "We do not think there could be any inflexible rule that the word "include" should be read always as a word of extension without reference to the context. Take for instance entry 19 in the Schedule which also has an Explanation containing the word "includes".' The Apex Court further held that "the use of the word includes in the restrictive sense is not uncommon to the observation of Lord Watson in Dilworth v. Commissioner of Stamps (1899) AC 99 which is usually referred to on the use of the word 'include as a word of extension is followed by these lines: But the word 'includes" is susceptible of another construction which may become imperative, if the context of the Act is sufficient to show that it was not only merely employed for the purpose of adding to the natural significance of the words or expressions defined. It may be equivalent to mean and include' and in that case it may af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amins or provitamins, aminoacids, antibiotics, coccidiostats etc.) along with the said carrier would fall under Heading 23.02 of the CETA provided such preparations are of a kind used for animal feeding. It may however be noted that Heading 23.09 of HSN excludes products of Chapter 29 and medicaments of Heading 30.03 or 30.04. Hence while deciding the classification of the products claimed to be animal feed supplements, it may be necessary to ensure that the said animal feed supplements are ordinarily or commonly known in the trade as products for specific use in animal feeding. 40. The Counsels for the assessees submitted that the above clarification sets all the doubts at rest and the only test of classifying the product under Heading 23.02 is that the said feed supplements are ordinarily or commonly known in the trade as products for animal feeding. The ld. Counsels submitted that the labels attached to the products, the expert opinions, dealer/user certificates clearly indicate the end use of the preparations. Since the end use indicate that the preparation was animal feed, therefore, nothing more remains to be decided and the products merit classification only under Chapter H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts as a carrier. It was argued that in the case of Reckitt & Coleman of India Ltd., this Tribunal held: "Therefore, in the context of the use of the words in the notification it appears to us that preparation as used in said item 14 would have to be a product prepared by addition, mixing or other such similar process to the original commodity in order to derive a new commodity." Product has been defined as 1. A thing produced, 2. A substance obtained from another by chemical change. In the case of M/s. Aries Agro-Vet Industries Private Lid., this Tribunal held: "We agree that the mineral supplements are indeed part of the animal feed, but these supplements are not by themselves animal feed as one would understand 'Animal Feed'. We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements, substances that an animal needs in a balanced food." It was argued for the assessees that the above decision clearly supports their case that the preparations un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, derivatives of pro-vitamins and vitamins used primarily as vitamins and intermixtures of vitamins and provitamins whether or not in any solvent. Thus the emphasis was on 'used primarily as vitamins'. It was submitted for the Assessees that the products in question are not used as vitamins, but are sold as animal feed supplements and. therefore, they cannot be classified under Chapter 29.36 inasmuch as the products in question not only contained vitamins, but contained substances like minerals, carbohydrates etc. It was also submitted that Chapter note 1 of Chapter 29 stipulates that the Chapter applies only to separate chemically defined organic compounds, whether or not containing impurities whereas Chapter note 1(d), 1(e), 1(f) and 1(g) constitute exceptions to this Chapter; that Chapter note 1(d), 1(e), 1(f) and 1(g) specify the permissible other ingredients in the goods covered in this Chapter. The permissible ingredients are not minerals, carbohydrates, proteins etc. It was. therefore, contended by the Assessees that the description of the Heading 29.36 read with that Chapter note does not permit the addition of minerals, carbohydrates, proteins etc. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eading 29.36. Hence this Heading should be preferred. Subjecting the goods to the above test, it was contended that Heading 23.02 was more specific. It was alternatively contended that if the goods in question are treated as vitamins, even in that event, the process of preparation of the product in question does not amount to manufacture and since the starting material or raw materials for the products in question are vitamins themselves and if the final product is also treated as vitamins, then there is no emergence of a new product with a distinct name, character or use. Hence, the process of preparation of the products in question does not amount to manufacture. 47. In reply to the above contentions, it was argued for the Revenue that only products obtained by processing of animal or vegetable products can be classified under Chapter 23. Therefore, classification of the products in dispute under Chapter 23 is ruled out as no evidence has been brought on record by the Assessees that the ingredients used in the manufacture of the animal feed supplement were obtained by processing vegetable or animal material. It was submitted, therefore, that the only heading available for classi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these mixtures are classifiable under Heading 23.02 as animal feed supplements or under Chapter 30.03 as medicaments or under Chapter 29.36 as vitamins etc. It was clarified that such animal feed supplements which are just intermixtures of vitamins only and there is no other ingredients except solvents, stabilizers or antioxidants, are covered by Heading 29.36. Even though they are used as animal feed supplements, they cannot be classified under Chapter Heading 23.02 as preparations of a kind used in animal feeding. It was contended for the Assessees that this clarification helps their case inasmuch as the preparations in dispute contain minerals, proteins, carbohydrates etc. 51. It was argued by the ld. Counsels that the position has been clarified under Notes on Pages 403 to 404 of HSN Explanatory Notes. It was argued that this clarification issued by the Bolpur Collectorate makes it very clear that mixtures of vitamins consisting other minerals or synthetic materials will not be classified under Heading 29.36. 52. It was argued for the Assessees that in the case of C.C.E. Shillong v. Wood Craft Products Limited, it was held by the Apex Court: The structure of Central Excise T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrought copper. The only question then is whether the third item 'copper waste and scrap' includes brass scrap. Putting Rule 1 in simple language, classification has to be determined according to the description of the articles in the heading and, if the Heading or a Note does not otherwise require, according to the provisions of the other Rules. Notes. In the instant case, the terms of the relevant Heading do not, by themselves, yield an answer to the question whether copper waste and scrap includes brass scrap. But, the particular Heading does not require or provide that the other rules should be excluded while determining the classification of articles under that Heading. That is how Rules 2 to 4 become relevant for deciding the question whether 'copper waste and scrap' includes brass scrap. What is meant by the clause in Rule 1: "and provided such Headings or Notes do not otherwise require" is not that a Heading must require that the provisions contained in the rules following Rule 1 should be applied. What it means is exactly the opposite, namely, that if a Heading does not require the exclusion of the other rules, those other rules must also be appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as to fall under Heading 29.36 directly, they are most akin to mixtures provided under Heading 29.36 inasmuch as the meaning of the word 'akin', according to the dictionary, means 'related by blood or kindred character'; that the word 'kindred' means 'alive or similar in character'. It was submitted by the ld. Jt. CDR that even if the mixtures in the instant case cannot directly be classified under Chapter 29.36, they being akin to mixtures classifiable under 29.36 shall be classified under Heading 29.36 as active ingredients in the products is vitamins or provitamins. 57. It was submitted by the ld. Counsels that the Larger Bench of this Tribunal in the case M/s. Hindustan Packaging Co. Limited 1995 (75) ELT 3131 held that rules of interpretation are invokable only if classification cannot be determined according to the terms of Headings and relative Section or Chapter Notes provided such Headings or Notes did not require otherwise. 58. The ld. Jt. CDR submitted that the Apex Court in the case of Khandewal Metal & Engg. Works v. Union of India cited above, held that Rules of Interpretation can be invoked to determine correct classification of co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 16/77-CUS Dated 22.1.1977. The table appended to the said Notification did not include Niger Seed extractions and rice-bran extractions as an exempted animal feed. The appellants paid export customs duty on all these 8 consignments. Subsequently, they contended that Rice bran extractions and higher seed extractions were exempted, therefore, they submitted 8 refund claims. The Asstt. Collector rejected the claim. In appeal also, the Exporter did not succeed. Hence the Appeal was filed before the Tribunal. The Member who wrote the order after examining the submissions set aside the impugned order and allowed the Appeal. However, the second Member did not agree with the findings of the other Member. The matter was referred to the third Member and hence the case has come before the Larger Bench. 64. The ld. Counsel submitted that the judgment of the Bombay High Court in the case of M/s. Glindia Limited v. Union of India 1988 (36) ELT 479 is distinguishable inasmuch as the nature of entries involved are different because in the Notification interpreted by the Hon'ble Bombay High Court, the entry reads: 'Animal Feed including compound livestock feed' whereas the entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port schedule. These feeds are of different types like feeds for cattle, feeds for poultry, feeds for sheep etc. and are essentially compounded out of oil cakes, meals, rice and wheat bran, fish and meat meal, maize, gluten, molasses, vitamins etc. in varying proportions. As these feeds are compounded materials in which oil cake or meal is only one of the raw materials and these are commercially known as cattle feed, poultry feed, etc. these should be taken as such for assessment. As there is no entry in the Export Tariff for animal feeds, these will not attract any export duty. 65. The ld. Counsel submitted that in Indian Standards IS:9703-1980, in the Foreword Para, it had inter alia been stated "In the field of animal feeds manufacturing industry, a large number of feedingstuffs (ingredients) are utilized, which may be bye-products of other industries and also subjected to certain processing before utilization. It has been observed that different names are attributed to the same feedingstuff in different parts of the country resulting in confusion and misunderstanding amongst different interests. Therefore, with a view to familarizing all interests with correct terms, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case." The Hon'ble Court further held: "I may here add that a similar question arose before the Delhi High Court in the case of The Modern Mills Limited v. Union of India and Ors. 1980 ELT 639. In the said case, the very question arose viz. whether animal feed or animal compound feed fell within the provisions of Section 19 of the Customs Act and/or Item No. 19 of the Indian Customs and Central Excise Tariff. On considering this matter, the said Court, held that although the animal compound feed was made up of different ingredients, a new product had resulted and the identity of the material mixed was lost and the provisions of Section 19 of the Customs Act, 1962 or Item 19 of the Indian Customs and Central Excise Tariff would not be applicable. 68. The ld. Counsel also referred to the judgment of the Hon'ble Madras High Court, In para (11), the Hon'ble High Court held: 'At this stage itself, I may say that where the Asstt. Collector, Customs, went wrong is that the exemption under the last of the notifications viz. Notification No. 16 does not specifically mention tapioca chips and therefore by a process of deduction, which I consider as illogical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... planatory Notes of HSN clearly speak of feed additives and feed supplements. According to these Notes, animal feed additives and animal feed supplements are preparations meriting classification under heading 23.09 of HSN which corresponds to Heading 23.02 of the CETA 1985. We further note that this aspect of animal feed additives and feed supplements was noted by the Tribunal in its judgment in the case of Aries Agro-Vet Industries (P) Limited and observed that 'We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements, substances that an animal needs in a balanced feed. 73. We further note that these preparations known in the trade as 'premixes' are generally speaking compound compositions consisting of a number of substances (sometimes called additives) the nature and proportions of which vary according to the animal production required. Then further details are furnished. This clearly shows that in so far as preparations mentioned under heading 23.09 of HS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicated under Heading 23.09 of the HSN are to be meticulously examined to find their scope and ambit. The Notes under Chapter 23 of HSN become very relevant as Heading 23.02 of CETA 1985 speaks of preparations and is pari materia to Heading 23.09 of HSN, and are to be taken into consideration while deciding the classification in terms of Central Excise Tariff Act, 1985 inasmuch as the Central Excise Tariff is now based generally on the HSN nomenclature. This was so held by the Apex Court in the case of CCE, Shillong v. Woodcraft Products Limited cited above. There is no indication in Chapter 23 in CETA 1985 that HSN note under corresponding Heading 23.09 shall be excluded. This becomes all the more relevant inasmuch as Chapter Note under Chapter 23 of CETA 1985 speaks of 'products' and does not speak of 'preparations' whereas the description against Heading 23.02 of CETA 1985 reads 'preparation of a kind used in animal feeding including dog and cat food'. This description corresponds to description given in HSN heading 23.09. Therefore, for understanding the implications and the scope and importance of the term 'preparation', a reference to HSN be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate. We feel so since flour itself is a product obtained by grinding the grain. If. therefore, the grain in the form of flour is itself to be treated as preparation, then the words "preparation with a basis of flour" would appear to be a tautological repetition. Therefore, in the context of the use of the words in the notification, it appears to us that "preparations" as used in the said item 14 would have to be a product prepared by addition, mixing or other such similar process to the original commodity in order to derive a new commodity. In that sense mere grinding of barley grain to prepare barley flour or barley powder (as in the case of Purity Barley) would not appear to us to amount to a preparation.' 79. Having examined the meanings of the words 'product' and 'preparation', we find that these two items are different, therefore, the word 'includes' used in Note under Chapter 23 of CETA which generated a lot of heat in the arguments of both sides not only becomes relevant but assumes significance also. 80. Decisions of the Apex Court in the case of Highland Coffee Works etc., CIT v. Tajmahal Hotel and South Gujarat Roofing Ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 23.09. On an examination of this Heading, we find that Heading 23.09 provides "This heading covers sweetened forage and prepared animal feeding stuffs consisting of a mixture of several nutrients designed: (1) to provide the animal with a rational and balanced daily diet (complete feed); (2) to achieve a suitable daily diet by supplementing the basic farm-produced feed with organic or inorganic substances (supplementary feed); or (3) for use in making complete or supplementary feeds. Further describing the sweetened forage and other preparations, it has been provided in note 'C reading as 'Preparations for use in making the complete feeds or supplementary feeds described in (A) and (B) above.'--These preparations, known in trade as "premixes", are, generally speaking, compound compositions consisting of a number of substances (sometimes called additives) the nature and proportions of which vary according to the animal production required. These substances are of three types: (1) Those which improve digestion and, more generally, ensure that the animal makes good use of the feeds and safeguard its health; vitamins or provitamins, amino-acids, antibioti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, therefore, to be understood according to sense of the thing, as the ordinary man has a right to rely on ordinary words addressed." The Hon'ble Supreme Court has consistently taken the view that, in determining the meaning or connotation of the words and expressions describing an article in a tariff schedule, one principle which is fairly well settled is that those words, and expressions should be construed in the sense in which they are understood in the trade by the dealer and consumer. The reason is that it is they who are concerned with it and it is the sense in which they understand it which constitutes the definitive index of legislative intention. 88. In para 13 of its judgment, the Apex Court in the case of Union of India v. Garware Nyons Ltd. held: "Stated briefly, we should understand the expression occurring in item 18 of the Act in the sense, in which the persons who deal in such goods understand it normally. 89. In para 6 of its judgment in the case of Frick India Ltd. 1990 (48) ELT 627, the Apex Court held: "It is well settled that the headings prefixed to sections or entries cannot control the plain words of the provisions: they cannot also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade Notice issued by Bholpur Collectorate dated 18.12.1990; (f) Case Law on the subject--(i) the decision of the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (India) Ltd. 1979 (43) STC 386; (ii) Judgment of the Hon'ble Bombay High Court in the case of M/s. Glindia Limited 1988 (36) ELT 479 and (iii) Judgment of the Apex Court in the case of Sun Exports Corporation v. CC: 1997 (93) ELT 641; (g) Findings of the Tribunal in the case of Ranbaxy Laboratories Limited v. CCE. New Delhi 1994 (53) ECR 546, Aries Agro-Vet Industries (Pvt. Ltd.) and Eskayef Ltd.. Technical Literature: Meaning of Feeding Stuffs. 92. The Book on Animal Nutrition for Tropics by Raghbir under heading 'Concentrates' on Page 160, stipulates: 'It is mentioned that for the proper feeding of livestock, a certain portion of ration includes cereals and their bye-products, oil cakes and mineral supplements'. In the Wealth of India (1953 Edition), Feeding Stuffs have been defined as 'Feeding stuffs for dairy cattle may be broadly classified in roughages and concentrates. The roughages consist of succulent feeds (natural grazing cultivated grazes, cultivated fodders and root c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity; and that feed can never be only one or another of the various ingredients, elements, substances, that an animal needs in a balanced feed." Thus, the position has been very clearly examined and brought out in this decisions of the Tribunal, making it clear that animal feed is supplemented by addition of proteins, vitamins, carbohydrates etc. to make it a complete feed. 96. Preparations of a kind used in animal feeding are preparations which are used in the context of mixed feed of live stock and poultry both of which are reared for production purposes not only domestically but also commercially. Even in its popular sense, that is today, the sense in which people conversant with live stock farming and poultry raising and those dealing in cattle feed and poultry feed would attribute to those words, Ration for production such as feed additives or feed supplements like proteins, minerals, vitamins would truely constitute cattle feed or poultry feed as the case may be. In Aries Agro-Vet Industries Pvt. Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h other feed ingredients to produce a complete feed optimum nutrition balance." This definition, though given for the specific purpose, can be only a guide for understanding the meaning of the terms used in the Notification in particular, but can be generally understood to so mean. These preparations are pre-mixes and mixed in feed in small micro-quantities used for feeding the animals. Thus, these definitions, though, cannot be taken as the only guide, however, support the intention indicating that there are certain preparations which are used for feeding the animals and are added to the normal feed of the animal to obtain desired results from the animals. DESCRIPTION OF PREPARATIONS UNDER HEADING 23.09 OF HSN. 100. We have copiously quoted from the description of preparations provided under Heading 23.09 of HSN. These descriptions clearly bring out that there are feed supplements, feed additives and compounded feed; that these feed supplements/additives can comprise of vitamins, proteins, carbohydrates, minerals etc. These descriptions under Heading 23.09 of HSN are very relevant which shall have to be given due importance in view of the fact that heading 23.02 of CETA 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this view of the matter, it would appear that preparations containing active substances (Vitamins or provitamins, amino-acids, antibiotics, coccidiostats etc.) along with the said carriers would fall under Heading 23.02 of CETA 1985, provided such preparations are of a kind used in animal feeding. It may, however, be noted that Heading 23.09 of HSN excludes products of Chapter 29 and medicaments of Chapter 30.03 or 30.04. Hence, while deciding the classification of products claimed to be animal feed supplements, it may be necessary to ensure that the said animal feed supplements are ordinarily or commonly known in the trade as premixes for use in animal feed". This clarification confirms the fact that if the end use unequivocally shows that the preparation is known in the trade as animal feed supplement, it should be treated as animal feed supplement. BOLPUR TRADE NOTICE NO. 175/CE/CH. 29/BOL/90 Dated 18.12.90. 102. Circular No. 175/CE/CH. 29/BOL/90 Dated 18.12.1990 issued by the Bolpur Collectorate which indicated that a doubt has been raised regarding the correct classification of products which consist of only different vitamins in definite proportions and no other ingred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, it becomes clear that even in its popular sense, that is to say, the sense in which people conversant with livestock farming and poultry raising and those dealing in cattle-feed or poultry-feed would attribute to those words, ration for production, such as feed additives or supplements like proteins, minerals, vitamins etc., would truly constitute 'cattle feed' or 'poultry feed', as the case may be. In such a context and in view of the setting of the word 'cattle-feed' in the company of the word 'concentrates', it would be difficult to reach the conclusion at which the Tribunal arrived. The Tribunal's decision as to the true scope of the entries in question in the instant case, relying upon its earlier decision, therefore, is obviously not correct in law. 104. It was argued that this decision was distinguishable inasmuch as the nature of entries involved was different; that the ratio of the judgment was specific to the entry and that the vision was in a Sales Tax Act and Sales Tax Act cannot be used for interpreting the Central Excise Tariff. We have perused this decision. We find that the decision is no doubt in a Sales Tax case, but the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sifiable under item 23.01/07 as 'Animal Feed and as per Notification No. 234/82 CE. Dated 1.11.1982, these goods were exempted from levy of duty. Lower authorities rejected the claim. The Apex Court after examining the decision of the Hon'ble Bombay High Court in the case of M/s. Glindia Limited, held "We are in agreement with the above view expressed by the Hon'ble Bombay High Court". The Hon'ble Bombay High Court has relied upon the decision of the Hon'ble Gujarat High Court. It was argued for the Revenue that this decision was on an exemption notification and that the interpretation given in an exemption notification case cannot be directly applied to the case of classification. We Note that Notification No. 234/82 Dated 1.11.1982 as amended by Notification No. 6/84 Dated 15.2.1984 exempted animal feed. Therefore, the issue before the Apex Court was whether animal feed supplement were eligible for that benefit or not. The entry under this notification exempting the goods at SI. 10 was animal feed including compound livestock feed and the Hon'ble Supreme Court ruled that the preparations imported by the Importer were animal feed inasmuch as anima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o contains Calcium sulphate and magnesium oxide which an: minerals and that the solvent was soyabean oil; that in the case of Famitone. the active ingredient includes, apart from vitamins, Ascorbic acid and Poly Sorbate and also a solubiliser and that the solvent used in Polyethylene Glycol. 109. The Tribunal in this case observed in para 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 good 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.' It was observed that note under Chapter 23 of CETA 1985 reads: '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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded. We have discussed at length the significance of the word 'includes' and have held that 'includes' used in Chapter Note extends the scope and coverage of the Chapter and, therefore, 'preparation' described under Heading 23.02 of CETA 1985 will be covered even if they are not obtained by processing vegetable or animal material. We also note that the Hon'ble Bombay High Court held that animal feed is genre and animal feed supplement is a specie. 111. No doubt in the Ranbaxy Laboratories case, the Tribunal examined the implication of the word 'include' and came to the conclusion that if could only refer to those preparations used in animal feeding which were not elsewhere specified and were obtained by processing vegetable or animal material. The implication of the word 'include' in the context of the words in Chapter 23 like 'products' and 'preparations', were have already held the 'include' used in the Note of Chapter 23 of CETA 1985 should be interpreted to mean the extension of the Heading 23.02 of CETA 1985 to cover the items mentioned n Chapter Note of Chapter 23. 112. Once it is noted that Heading 23.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with which we are dealing are not rations for daily subsistence of the animal but these preparations are given in addition to (he ration to obtain the desired results. The finding of the Tribunal, therefore, is wrong as it has not taken premixes against item 6 in para 112. 115. In Aries Agro-Vet Industries's case, the question being examined by the Tribunal was that of applicability of exemption notification No. 55/75-CE where animal feed was exempted. This Tribunal while observing, "We agree that the mineral supplements are indeed part of the animal feed but these supplements are not by themselves animal feed as one would understand animal feed. It is a fact that Aries Agro-Vet describe their goods as mineral feed supplements, but we do not think that this by itself should tell against them. We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity and that feed can never be only one or another of the various ingredients, elements and substances that an animal needs in a balanced feed." From the above decision, two things became clear; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssifiable under Heading 29.36 of CETA 1985. The contention of the Revenue was that the active ingredient in the preparations were vitamins and/or provitamins; that vitamins and provitamins or mixtures thereof are covered by a specific heading 29.36 of CETA 1985; that note to Chapter 23 of CETA 1985 clearly states that only such preparations which are not elsewhere specified or included will qualify for classification under heading 23.02 of CETA 1985: that vitamins/provitamins and mixtures thereof are specifically covered by heading 29.36 of CETA 1985; that mixtures of vitamins or provitamins are specifically mentioned under heading 29.36 of CETA 1985; that mixtures even if they contain other materials can be considered for classification under heading 29.36 of CETA 1985 in terms of Rules of Interpretation: that the Apex Court in the case of M/s. Khandelwal Metal Engineering Works ruled that if a heading does not require the exclusion of other Rules those other Rules must also be applied for determining the classification of the article. Therefore, all the relevant rules of interpretation in the Tariff come into play in the classificatory process. Classification has to be determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly as vitamins. 119. We have carefully considered the rival submissions. We find that Chapter note 1 to Chapter 29 of CETA excludes the applicability of Rules of Interpretation except Rule 1 inasmuch as the words used in this note are "except where the context otherwise requires, the headings of this Chapter 'apply only to'...." We also note that when heading 29.36 of CETA 1985 is read with notes under heading 29.36 of HSN, we find that the emphasis on each item is 'used primarily as vitamins'. No evidence has been placed on record by Revenue that the preparations in dispute before us are used primarily as vitamins. We further note that the intemixtures contemplated under heading 29.36 of HSN are defined as "for instance, natural concentrates of vitamins A and D in various proportions to which an additional quantity of vitamin A or D has been added subsequently. No evidence has been placed before us by Revenue on this aspect. 120. The Counsels for the Assessees also submitted, as alternative plea, that in case the preparations manufactured by them are considered as classifiable under heading 29.36, then no manufacture is involved inasmuch as they pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... live-stock farming and poultry raising and those dealing in cattle-feed or poultry-feed would attribute to those words, ration for production, such as feed additives or supplements like proteins, minerals, vitamins etc. would truly constitute "cattle-feed" or "poultry-feed", as the case may be." Similar view was expressed by the Hon'ble Bombay High Court in the case of Glindia Limited v. Union of India, when examining certain items for purposes of levy and collection of sales tax. described as cattle feed and poultry feed. The Hon'ble Bombay High Court, relying on the judgment of the Hon'ble Gujarat High Court in the case of Glaxo Laboratories (I) Ltd., quoted the following lines from their judgment of the Gujarat High Court: 'The Gujarat High Court has held that the terms 'Cattle-feed' and poultry-feed' must include not only that feed which is supplied to domestic animals or birds as an essential ration for the maintenance of life but also that feed which is supplied over and above the maintenance requirements for growth or fattening and for production purposes such as for reproduction, for production of milk, eggs, meat etc. o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 1979 43 Sales Tax Cases, page 386, the Gujarat High Court was required to consider whether certain vitamin products including Vitablend WM Forte which were used for supplementing cattle and poultry feed should be classified as 'cattle feed' within the meaning of entry 21 of Schedule I of the Gujarat Sales Tax Act. 1969 or 'poultry-feed' within the meaning of entry 22 of the Schedule I of that Act. The Gujarat High Court has held that the terms "cattle feed' and 'poultry-feed' must include not only that food which is supplied to domestic animals or birds as an essential ration for the maintenance of life but also that feed which is supplied over and above the maintenance requirements for growth or fattening and for production purposes such as for reproduction, for production of milk. eggs, meat etc. or for efficient output of work. The same reasoning would apply to the present case also. These products are also fed to animals or poultry to give them better nourishment. They would, therefore, qualify as animal feeds'. It was submitted by the respondents that the subsequent amendment expressly refers to 'animal feed supplements'. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nimal feed and correctly classifiable under heading 21 of 2nd Schedule (Export Tariff). 125. In para 36 Of its judgment in the case of Dunlop India Limited and Madras Rubber Factory Ltd. v. UOI and Ors., the Apex Court ruled that: "It is clear that meanings given to articles in a fiscal statute must be as people in trade and commerce conversant with the subject, generally treat and understand them in the usual course. But once an article is classified and put under a distinct entry, the basis of the classification is not open to question. Technical and scientific tests offer guidance only within limits. Once the articles are in circulation and come to be described and known in common parlance, we then see no difficulty for statutory classification under a particular entry." In the instant case, we find that the preparations are known in the trade as preparations used in animal feeding. They are known to the users as preparations of a kind used for animal feeding and are so described and. therefore, they are classifiable, according to this ruling of the Apex Court under Heading 23.02 of CETA 1985. The Apex Court further, in para 37, held that: "When an article has, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s settled law that in a case of taxation, the burden of proving that the necessary ingredients prescribed by the taxing provision are satisfied is entirely upon the taxing authority. It was primarily, therefore, for the taxing authority to satisfy the Court that the formulation of the Foron Pigment in the form of Foron liquid is an entirely distinct commodity having entirely a distinct name, character and use as compared with the pigment itself...." In the instant case, a lot of evidence was placed by the Assessees in support of their contention that the preparations were of a kind used in animal feeding, necessitating classification thereof under Heading 23.02 of CETA 1985. However, Revenue contested it. but did not produce any evidence in this regard as to how the product was primarily used as vitamins as was required for its classification under Heading 29.36. 128. The Hon'ble Bombay High Court in the case of Garware Nylons Ltd. v. Union of India and Ors., in Para 14. held: "There is. however, sufficient material on record which goes to show that nylon twine manufactured by the petitioners has been treated as a kind of nylon yarn by the people in the trade. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the affidavits filed by persons dealing with the subject matter, a heavy burden lay upon the revenue to disprove the said materials by adducing proper evidence. Unfortunately, no such attempt was made. As stated, the evidence led in this case conclusively goes to show that nylon twine manufactured by the assessees has been treated as a kind of nylon yarn by the people conversant with the trade. It is commonly considered as nylon yarn. Hence, it is to be classified under item 18 of the Act. The Revenue has failed to establish the contrary. We would do well to remember the guidelines laid down by this Court in Dunlop India Ltd. 132. In para 5 of their Judgment in the case of CC v. Bhor Industries Limited. the Apex Court held: "5. It is well settled in these matters how a good is known in the trade and treated in the trade literature is relevant and significant and often decisive factor." The Apex Court in this case had before it the classification of a product under Customs Tariff. This ratio squarely covers the case before us in favour of the Assessees. 133. In para 7 of their judgment in the case of CCE v. Fenoplast (P) Limited, the Apex Court held: "....If any t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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