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TMI Blog2024 (4) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... ms duty will be leviable. The vitamins having the quantity of additives, substrate or coating to render them particularly suitable for a specific use, such as use in animal feeding, remain classified under the scope of heading 2309. However, we make it abundantly clear that test reports stating It is for general use without any reference to the question about its use, has no relevance to the above point. In fact, the learned Commissioner has come to the conclusion that the reports stating It is other than food preparation/premix as indicating of Not fit for human consumption . The impugned goods are classifiable under 2309 9090, as the imported goods at the time of import remain as animal feed preparations called as pre-mixes or additives containing vitamins or pro-vitamins. The factual details and the documents placed as evidence such as Declaration under Rule 9 of Central Excise Rules declared before the jurisdictional Central Excise Department indicate that that the appellants importer is a manufacturer of animal feed supplements, animal feed concentrates and thus the imported goods are being intended for use in such manufacture. Hence, the ratio of the judgement of Hon ble Alla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining vitamins, minerals and other carriers for manufacture of animal feed supplements. The subject goods imported are certified by the manufacturers-supplier abroad such as M/s BASF-South East Asia Pte Ltd., Singapore; M/s Adisseo Asia Pacific Pte. Ltd., Singapore; M/s Synchem International Co. Ltd., China; DSM Nutritional Products Asia Pacific Pte Ltd., Singapore, as feed grade and these are only suitable for consumption by animals/poultry. During the disputed period viz., May, 2015 to November, 2015, the appellants had classified the imported goods under heading 2309 of the First Schedule to the Customs Tariff Act, 1975 by availing the benefit of duty exemption under Sl. No. 106 of Notification No.12/2012-Customs dated 17.03.2012 and Sl. No. 35 of Notification No.21/2012-Customs dated 17.03.2012. 2.2 On the basis of intelligence received from Directorate of Revenue Intelligence, Nhava Sheva Unit dated 28.01.2015, that the goods declared as folic acid feed premix/additives are being cleared by some importers under heading 2309, whereas the goods may not merit classification in heading 2309 and may fall under chapter 29, an alert was inserted in the Customs EDI system to target B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellants were also continued to be assessed provisionally in classifying them under heading 2309, against test bond and B.G. for differential customs duty and the goods were finally assessed on merits on the basis of test reports. 2.3 During the pendency of the above appeal, the imports which were provisionally assessed in respect of 33 B/Es, along with other B/Es which were also provisionally assessed were finalized by the Deputy Commissioner of Customs, Appraising Group I/IA, JNCH, on 05.12.2018 without taking note of the impugned order of the Commissioner of Customs dated 03.10.2017, on the basis of available technical literature, written submission and evidences submitted by the appellants-importer by holding the classification of various products under heading 2309. On the above basis, consequential refund of Rs.1,27,89,915/- being the differential duty paid at higher rate initially, was also granted by Assistant Commissioner of Customs, CRC-I/NS-III, JNCH vide Order dated 29.01.2019. On realizing that that finalization of assessments in respect of 33 B/Es were erroneous and contradictory to the order dated 03.10.2017 passed by the Commissioner of Customs, the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing these as vitamins under heading 2936. 3.2 Learned Advocate submitted that the classification of imported goods declared by the appellants were duly supported by the Harmonized System of Nomenclature (HSN) which provides for coverage of the following types of goods under the heading 23.09 as Preparation of a kind used in animal feeding . Hence, he stated that these goods cover prepared animal feeding stuffs consisting of a mixture of several nutrients designed (i) to provide animal with a rational and balanced daily diet (complete feed); (ii) to achieve a suitably daily diet by supplementing the basic farm produced feed with organic or inorganic substances (supplementary feed) or (iii) for use in making complete or supplementary feed i.e., pre-mixes. Further, under the explanatory notes to HSN, three type of pre-mixes have been specified viz.,(a) those that improve digestion and more generally, ensure that the animal makes good use of the feeds and safeguard its health. These are vitamins or pro-vitamins, amino-acids, antibiotics, coccidiostats, trace elements, emulsifiers, flavoring and appetizers; (b) those designed to preserve the feeding stuffs particularly the fatty compone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Commissioner of Customs. He stated that heading 2936 covers Vitamins in any form, regardless of their purity of regardless of the fact that they are mixed with some other material. Further, vitamins of all type, pure or impure, are clearly excluded from the heading 2309. In terms of Note to the Chapter 23, goods of this Chapter are of vegetable origin or natural, whereas all the goods which are subject matter of the present dispute have been synthesized and are not of vegetable origin. Learned AR also contended that the impugned goods do not contain any carrier, but are pure vitamins added with other substances as preservatives. The term carrier is clearly explained in the HSN Explanatory Notes which includes organic nutritive substances such as manioc, soya flour, middlings, yeast, residues of food industries, etc. Hence, the classification of impugned goods as held in the impugned order under heading 2936 is sustainable. 4.2 Learned AR also submitted that the appellants had referred to their declaration in terms of Rule 9 of the Central Excise Rules, 2001 to state that these have been declared before the central excise authorities. In this regard, learned AR pointed out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government. Section 1. Short title, extent and commencement. - (1) This Act may be called the Customs Tariff Act, 1975. (2) It extends to the whole of India. (3) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Section 2. Duties specified in the Schedules to be levied. - The rates at which duties of customs shall be levied under the Customs Act, 1962 (52 of 1962), are specified in the First and Second Schedules. xxx xxx xxx xxx THE FIRST SCHEDULE IMPORT TARIFF (Refer Section 2) THE GENERAL RULES FOR THE INTERPRETATION OF IMPORT TARIFF Classification of goods in this Schedule shall be governed by the following principles: 1. The titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification shall be determined according to the terms of the headings and any relative Section or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akin. 5. In addition to the foregoing provisions, the following rules shall apply in respect of the goods referred to therein: (a) Camera cases, musical instrument cases, gun cases, drawing instrument cases, necklace cases and similar containers, specially shaped or fitted to contain a specific article or set of articles, suitable for long-term use and presented with the articles for which they are intended, shall be classified with such articles when of a kind normally sold therewith. This rule does not, however, apply to containers which give the whole its essential character; (b) Subject to the provisions of (a) above, packing materials and packing containers presented with the goods therein shall be classified with the goods if they are of a kind normally used for packing such goods. However, this provisions does not apply when such packing materials or packing containers are clearly suitable for repetitive use. 6. For legal purposes, the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub headings and any related sub headings Notes and, mutatis mutandis, to the above rules, on the understanding that only sub heading ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to determine the appropriate duties of customs payable on any imported goods, one has to make an assessment of the imported goods for its correct classification under the First Schedule to Customs Tariff Act, 1975 in accordance with the provisions of the Customs Tariff Act by duly following the General Rules for Interpretation (GIR) and the General Explanatory notes (GEN) contained therein. The First Schedule to the Customs Tariff Act, 1975 specifies the various categories of imported goods in a systematic and well-considered manner, in accordance with an international scheme of classification of internationally traded goods, i.e., Harmonized Commodity Description and Coding System (HS). Accordingly, goods are to be classified taking into consideration the scope of headings / sub-headings, related Section Notes, Chapter Notes and the General Rules for the Interpretation (GIR) of the First Schedule to the Customs Tariff Act, 1975. Rule 1 of the GIR provides that the classification of goods shall be determined according to the terms of the headings of the tariff and any relative Section notes or Chapter notes and thus, gives precedence to this while classifying a product. Rules 2 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ): 2309 90 31 ---- Prawn and shrimps feed Kg. 30% - 2309 90 32 ---- Fish feed in powdered form Kg. 30% - 2309 90 39 ---- Other Kg. 30% - 2309 90 90 --- Other Kg. 30% - And CHAPTER 29 Organic chemicals NOTES : 1. Except where the context otherwise requires, the headings of this Chapter apply only to : (a) separate chemically defined organic compounds, whether or not containing impurities; (b) mixtures of two or more isomers of the same organic compound (whether or not containing impurities), except mixtures of acyclic hydrocarbon isomers (other than stereoisomers), whether or not saturated (Chapter 27); (c) the products of headings 2936 to 2939 or the sugar ethers, sugar acetals and sugar esters, and their salts, of heading 2940, or the products of heading 2941, whether or not chemically defined; (d) the products mentioned in (a), (b) or (c) above dissolved in water; (e) the products mentioned in (a), (b) 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 2936 29 10 ---Folic acid (Vitamin B9 ) Kg. 10% 10% 2936 29 20 --- Nicotinic acid and nicotinamide (niacinamide or niacine) Kg. 10% 10% 2936 29 30 --- Vitamin K (menaphthonum BP) Kg. 10% 10% 2936 29 40 --- Vitamin D Kg. 10% 10% 2936 29 50 --- Vitamin H (Biotin) Kg. 10% 10% 2936 29 90 --- Other Kg. 10% 10% 2936 90 00 - Other, including natural concentrates Kg. 10% 10% 8.1 It could be seen that by applying the GIR 1, the position is made clear that Chapter Heading 29.36 covers within its scope and ambit, mainly of four broad categories of goods: (i) first one i.e., Pro-vitamins and vitamins, whether natural or reproduced by synthesis, and derivatives thereof used primarily as vitamins ; (ii) the second one i.e., Concentrates of natural vitamins ; (iii) the third one i.e., inter-mixtures of vitamins, of pro-vitamins or of concentrates; and (iv) the fourth one i.e., all the above products diluted in any solvent. As there is no specific sub-heading or tariff item proposed in SCN and identified for classification of the impugned goods by the learned Commissioner in the impugned order, and that the categorization of the goods in the heading is not on the basis of specific vitamins, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No Date Composition of goods Other observations of test report 2398454 28.08.2015 Biotin 2.7%; Balance 97.3% is carrier It is medicament. It is other than food preparation/premix 2943914 16.10.2015 Vitamin A 9,80,900 Iu/gm Vitamin D3 2,12,919 Iu/gm It is mixture of pure vitamins along with additives for the purpose of preservation/ transport. This is for general use. It is other than food preparation/premix 9896914 15.07.2015 Menadione Nicotinamide Bisulphite 100%; it is a form of Vitamin K3 It is other than food preparation/ premix 9492153 08.06.2015 Vitamin B2 80.4% and Balance 19.6% is Polysaccharide It is pure vitamin B2 with additives for the purpose of preservation/ transport. It is for general use. It is other than food preparation/premix 9279171 19.05.2015 Carrier 42.3%; Vitamin E Balance 57.7% and sample is medicament. It is mentioned as medical preparation in USP Vitamin E preparation Vol.3 pg. No.3867:2009. It is other than food preparation/premix The above test report results indicate that imported goods contain vitamins and pro-vitamins at varying percentages. But test reports do not conclusively state that whether these are separate chemically defined organic compound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the importer also supports this view. Therefore, the issue that remains to be decided is the vitamins, either by themselves or as mixtures, when the intended for use in animal feed supplements. From the above findings in the impugned order, we find that classification of imported goods under heading 3003 has been rejected by original authority and therefore there is no need to examine this aspect in this appeal before us. 10. We find that the two contending classification i.e., one under CTI 2309 90 90 Other as claimed by the appellants, and the other heading 2936, without specifying any specific tariff item, both in the impugned order as well as in the SCN, does not provide sufficient ground for comparative analysis, at the level of the terms of headings , to apply GIR-1 to come to the conclusion as to which of these two classification is more appropriate for classification of impugned goods. Therefore, we need to examine the specific customs tariff entries under the two contending headings, the scope of coverage of goods under the specific tariff entries, in order to arrive at appropriate classification of imported goods. 11. On the other hand, the Revenue s contention is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lings, yeast, various residues of the food industries, etc.) or of inorganic substances (e.g., magnesite, chalk, kaolin, salt, phosphates). The concentration of the substances described in (1) above and the nature of the carrier are determined so as to ensure, in particular, homogeneous dispersion and mixing of these substances in the compound feeds to which the preparations are added. Provided they are of a kind used in animal feeding, this group also includes : (a) Preparations consisting of several mineral substances. (b) Preparations consisting of an active substance of the type described in (l) above with a carrier, for example products of the antibiotics manufacturing process obtained by simply drying the mass, i.e. the entire contents of the fermentation vessel (essentially mycelium, the culture medium and the antibiotic). The resulting dry substance, whether or not standardised by adding organic or inorganic substances, has an antibiotic content ranging generally between 8 % and 16 % and is used as basic material in preparing, in particular, premixes . The preparations of this group should not, however, be confused with certain preparations for veterinary uses. The latter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olation of the vitamin (c) intermissions of vitamins, of pro-vitamins or of concentrates (d) all the above products of (a) to (c) diluted in any solvent. As explained in the preceding paragraph, the taxing event for the purpose of customs duty in this case is importation of goods into India, and hence the condition of the imported goods at the time of importing is the relevant factor for determining the proper classification as to under what head the customs duty will be leviable. We are therefore not considering the use of the imported goods in various forms, as given above, for the purpose of determining its classification. For the said reason, the explanation given in HSN explanatory notes for use of the concentrates of natural vitamins, either as such by adding to animal feeding stuffs or by working upon them in isolation of the vitamins for item above at (b), is not taken as a basis for considering the classification of the imported goods. 12.3 From the plain reading of HSN explanatory notes to heading 2309, it is understood that heading 2309 covers under its scope, all preparations of a kind used in animal feeding. In terms of the constituent material, it is explained that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned goods are classifiable under 2309 9090, as the imported goods at the time of import remain as animal feed preparations called as pre-mixes or additives containing vitamins or pro-vitamins. 13. We also find that our such view on the aspect of classification of imported goods under heading 2309 has also been supported by the clarification issued by the Ministry of Finance in CBEC Circular dated 26.03.1996. The said circular is extracted and given below: Circular No. 188/22/96-CX dated 26/3/96 F. No. 23/1/94-CX.I Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs, New Delhi Subject: Classification of Animal Feed supplements under Sub-heading No. 23.02 or 29.36 or Chapter 30 - Instructions - regarding. It has been brought to the notice of the Board that a large number of products with different compositions are being cleared as animal feed supplements / additives/ premixes etc. but are benign classified either under heading 23.02 or heading 29.36 or under Chapter 30 of the Central Excise Tariff in various Commissionerates. 2. It would be recalled that in its Circular No. 1/90 dated 1.1.1990, issued from F.No. 15/20/89-CX.I, Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tes are added. 6. It this view of the matter, it would appear that preparations containing the active substances (vitamins or provitamins, amino-acids, antibiotics, coccidiostats etc.) along with the said carriers would fall under Heading 23.02 of the CET provided such preparations are of a kind used in animal feeding. It may however be noted that Heading 23.09 of the 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 ensured that the said animal feed supplements are ordinarily or commonly known to the trade as products for a specific use in animal feeding. 7. In view of the foregoing discussions, the classification of each product being claimed as animal feed supplements may be decided on merits in the light of the above in accordance with the explanatory notes to Heading 23.09 of the HSN read with Chapter Note 1 of Chapter 23 of the CET. 8. Board s Circular No. 1/90 dated 1.1.1990 stands modified to the extent indicated above. 14. We further find that the learned Commissioner in arriving at the conclusion for classification of the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but Vitamin B3, merits classification under CTH 29.36, even though it is of feed grade and intended for use by animals. xx xx xx xx xx 28 I am still cognizant of the fact that this is an issue of classification where a long standing contrary practice appears to have been in existence and also where a sufficient body of case laws exist which could have been resulted in a doubt in the mind of any person, and therefore, any malafide intention on part of the importer is not proved. Therefore, I am neither inclined to pass any orders with respect to confiscation of the imported goods, nor inclined to impose any penalty. I also take not of the fact that the impugned notice has been issued under the provisions of Section 28(1), and therefore, there was no justification in proposing penalty under Section 114A. 30. In view of the foregoing, I hold that the classification of goods listed in Annexure A and B to the impugned show cause notice under CTH 29.36 and order recovery of differential duty of Rs. 1,27,89,915/- under the provisions of Section 28(1) of the Customs Act, 1962 alongwith interest calculated at the appropriate rate under Section 28AA of the Act. I do not confiscate the subje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N Company GMBH (Germany) by which M/s. Anivet Industries, Nepal, have imported Vitamin-E into Nepal from Germany, contains the indication made by German Supplier in four digit HSN Code as 2936. 20. Copy of other invoice No. 03SIN1846 dated 16-4-2003 of M/s. Synchem International Company Limited, China, by which M/s. Anivet Industries, Nepal have imported Vitamin-E into Nepal from China, contains the indication of Chinese supplier in four digit HSN Code as 2936. xx xx xx xx xx 129 .Nothing has been brought on record by the respondent to establish that there are animal feed supplement containing vitamin-E to the extent of 45-50%. Rather from the evidence on record, it appears that the goods seized was sold to the industries in Maharashtra for preparation of animal feed supplement. On the factual matrix of the present case before us, there are no such grounds to state that the ratio of the Sonam International (supra) can be applied. The factual details and the documents placed as evidence such as Declaration under Rule 9 of Central Excise Rules declared before the jurisdictional Central Excise Department indicate that that the appellants importer is a manufacturer of animal feed suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, any such clinching evidence of common trade understanding has been placed on record so as to put the matter beyond all possible doubt and justify the respondents contention for ignoring any type of reference to technical literature. On a commulative reading of the record, we reply in the affirmative. We certainly also take into consideration the principles laid down by the Hon ble Supreme Court in the Sun Exports Corporation s case. There is a treasure of valuable wealth placed on record by the Appellants to support the view that preparations in dispute are preparations squarely falling in those preparations given under Heading 23.09 of HSN which corresponds to Heading 23.02 of CETA 1985. We feel that Explanatory notes to the HSN are as representative and symbolic of the common trade parlance and these notes particularly those under Heading 23.09 also throw light on the question that pre-mixes including those containing mineral substances and vitamins or provitamins, trace elements, appetisers, soya flour or meal, yeast, etc. are covered by it. We think that the test laid down by Hon ble Bombay High Court in the case of Chemical Fibres [1982 E.L.T. 917] is a safer and reliable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntermixtures of vitamins and, therefore, it is correctly classifiable under Chapter Sub-heading 2936.00. Before proceeding further in considering the submission made by learned senior Counsel for the appellant, it is better to reproduce both the entries. Heading No. Subheading No. Description of goods Rate of duty (1) (2) (3) (4) 23.01 2301.00 Residues and waste from the food industries, including bagasse, other waste of sugar manufacture and oil cakes 12% 23.02 2302.00 Preparations of a kind used in animal feeding, including dog and cat food Nil XI PROVITAMINS, VITAMINS AND HORMONES 29.36 2936.00 Provitamins and vitamins, natural or reproduced by synthesis (including natural concentrates), derivatives thereof used primarily as vitamins, and intermixtures of the foregoing, whether or not in any solvent 15% xx xx xx xx xx 14. The order passed by the Larger Bench of the CEGAT dated 13-11-1998 was also placed before us. We have gone through the same and we approve the classification laid down by the CEGAT in regard to the subject-matter of controversy and the principles laid down therein. In fact, the said order of the Larger Bench was challenged before this Court. This Court in Colle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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