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TMI Blog1999 (11) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.00 of the Central Excise Tariff attracting nil rate of duty, while the respondent classified the same under sub-heading 2835.00 attracting 16% duty. Such classification according to the petitioner runs counter to several decisions of the Tribunal. Sub-heading 2302.00 falls under Chapter 23, refers to prepared animal fodder and the sub-heading is applicable to preparations of a kind used in animal feed including dog and cat food. The sub-heading 2835.00 comes under Chapter 28 which deals with inorganic chemicals. 5. The controversy as to the classification of DCP has been considered by the Tribunal. In several decisions it has been held that DCP-Animal Feed Grade falls under the classification sub-heading 2302.00, as preparation of a kind used in animal feeding. Such a view had been taken in C.C.E. v. Punjab Bone Mills reported in 1994 (70) E.L.T. 234 wherein it has been held that the expression animal feed would include DCP and it is entitled for exemption in terms of the exemption Notification No. 55/75-C.E., dated 1-3-1975. Such a view has also been taken in C.C.E. v. Raymon Glues Chemicals reported in 1998 (102) E.L.T. 424 and it has been held that DCP is classifiable only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o relies upon the decision of the Gujarat High Court in Indichem v. Union of India reported in 1996 (88) E.L.T. 35 (Guj.) wherein the Gujarat High Court held that the Circular issued by the Central Board of Excise Customs under Section 37B which runs counter to the judicial pronouncement or decisions rendered by High Court or decisions rendered by the Tribunal are not valid and are liable to be quashed. 11. It is contended that the respondent had exceeded the jurisdiction in issuing the impugned circular in purported exercise of power conferred under Section 37B of the Act. It is further contended that the first respondent has no power to issue a clarification with respect to the classification of the DCP Animal Feed Grade and that too contrary to the judicial pronouncements of the Tribunal, High Court and Apex Court. If the decisions are not acceptable, then the only remedy open to the respondent is to move the Appellate Forum or the Supreme Court as the case may be. 12. The impugned circular was the subject matter of challenge before the Gujarat High Court and the Division Bench of the said High Court declared the same as ultra vires of Section 37B by its order dated 17-3-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ures for feeding livestock and DCP cannot be used directly as animal feed. DCP Animal Feed Grade would rest upon the fluorine content of the material and being not more than 0.1% and the said per centage is kept low in order to prevent it from being toxic to livestock. 16. Chapter 2302 includes product of a kind used in animal feed 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. The DCP is a chemical compound i.e. Calcium Hydrogen Orthophosphate which falls under sub-heading 2835 of the tariff as Phosphate. As the DCP is specified under sub-heading 2835.00 of the tariff, it will not come under Chapter 2302 of the Tariff. Hence the Board has issued the impugned order for the purpose of uniformity in the classification of the product Di-Calcium Phosphate for purpose of uniformity in the classification of the Product DCP. 17. It is contended by the respondents that under Section 37B of the Act, the first respondent Board had the power and authority to issue orders f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e exemption Notifications 446/86 and 7/94. It is incorrect to contend that the circular had been issued to get over the decision of the Tribunal and other courts. 22. The respondent also contends that in the decision of the Gujarat High Court in the Indichem v. Union of India [1996 (88) E.L.T. 35 (Guj)], it has been held that the circular issued under Section 37B of the Act runs contrary to the decision rendered by the Tribunal. But the said pronouncement will have no application, nor it is valid as the petitioner's case did not fall within the above ambit as seen from the discussions of the Gujarat High Court. 23. It is contended that Section 37B of the Act empowers the Board not only to give instructions for attaining uniformity in classification but also to issue order or direction for the purpose of uniformity in classification of the excisable goods. It is incorrect to contend that the first respondent Board has no power to issue a classification regarding classification of DCP Animal Feed Grade. Whether DCP is animal feed or not would depend upon the fluorine content in the DCP. Hence, the averments contrary to the above are denied as false and unsustainable. 24. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ructions and directions to the Central Excise Officers as it may deem fit, and such officers and all other persons employed in the execution of this Act shall observe and follow such orders, instructions and directions of the said Board: Provided that no such orders, instructions or directions shall be issued —- (a) so as to require any Central Excise Officer to make a particular assessment or to dispose off a particular case in a particular manner; or (b) so as to interfere with the discretion of the [Commissioner of Central Excise (Appeals)] in the exercise of his appellate functions. The above provision enables the Central Board of Excise and Customs to issue instructions or directions to the Central Excise Officers for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods. However proviso to Section 37B forbids that such instructions or directions shall not require any Central Excise Officer to make a particular assessment or to dispose of a particular case in a particular manner or to interfere with the discretion of the Commissioner of Central Excise (Appeal) in the exercise of appellate functions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e held that agriculture grade zinc sulphate which was used in small quantities for the soil qualified as a fertilizer. His plea is that it is not the quantum which determines whether the goods are to be considered as a feed or not but the nature of its use in the animal feed which should be determining factor. He also pleaded as to what should be considered as feed or fodder was examined by the Honourable High Court of Punjab Haryana in the case of oil cake and they have in the case of M/s. The Punjab Copra Crushing Oil Mills v. The State of Punjab Others (1971 RLR 490) held as under:- The second point argued by the learned counsel for the petitioner is that the Assessing Authority wrongly disallowed the petitioner's claim for exemption under Section 5(2) (a) (i) of the Act in respect of oil-cakes by holding that oil-cakes were not fodder. The petitioner filed affidavits of Shri Gurdas Ram Bedi, President, M.F.G. Jullundhur City, Shri Roshan Lal, General Secretary, M.F.G. Jullunder City, Shri Waryam Singh, owner of dairy farm and member of Market Committee, Jullundur, and Shri Ajudhia Prashad, Attari Bazar in support of its contention that the oil-cakes were nothing but fodde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat additives like chemicals and phosphates were animal feed." In fact the CEGAT had followed the decision of the Gujarat High Court. Hence, it is clear that there has been a judicial adjudication with respect to the classification not only by CEGAT, but also by the High Court of Gujarat. 31. Nextly it is to be considered as to whether the first respondent has the authority or jurisdiction to issue a circular when the point in issue is covered by a judicial precedent ? And whether the first respondent has the authority to issue a circular by way of clarification and set at naught the judicial pronouncements. 32. In Indichem v. Union of India reported in 1996 (88) E.L.T. (Guj.) the very same question was considered by a Division Bench of the Gujarat High Court. B.C. PATEL, J., speaking for the Bench while considering the scope of Section 37B of the Act held thus:- "This Section empowers the Board to issue circulars for the purpose of uniformity in the classification of excisable goods or with respect to levy of duties of excise on such goods. Certainly, this section does not authorise the Board to issue directions which is contrary to the decision rendered by the Tribunal Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the product is not covered by hearing or under any other sub-heading." I am in respectful agreement with the view taken by the Division Bench of the Gujarat High Court on merits as well as to the authority of the first respondent to issue the circular and the said circular had already been quashed by the Division Bench of the Gujarat High Court. While respectfully agreeing with the view taken by the Division Bench, the circular impugned also deserves to be quashed. 34. Incidentally, it is being contended that the decision of the Gujarat High Court or any other High Court will not bind the respondents 2 and 3 herein and therefore the petitioner had approached this Court. If such a contention had been raised by the second respondent or by the third respondent, it would be an unfortunate situation. In this respect the learned Counsel for the writ petitioner rightly relied upon the Division Bench, Judgment of the Bombay High Court in Commissioner of Income-tax Vidharbha v. Godavaridevi Saraf reported in 1978 Vol. 113 page 589. It has been held thus:- "Question then arises what is going to be the effect of a decision of the Madras High Court holding that Section 140A(3) is unco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch of the Bombay High Court had in turn followed the decision of the Apex Court in K.S. Venkataraman Co. P. Ltd. v. State of Madras [1966 (60) ITR 112]. Hence even if the decision is by the CEGAT as the Bench or as that of the Gujarat High Court the respondents 2 and 3 are bound by the said pronouncement. As already held that impugned circular issued by the first respondent deserves to be quashed as one issued in excess of jurisdiction. 35. The scope of Section 37B of the Central Excise Act, 1944 enables the Board to issue directions with respect to classification of excisable goods and with respect to levy of excise duty on such goods. It is equally well settled that the Board has got the powers to issue purely administrative directions or such other directions so long as it does not interfere with the quasi judicial powers of such authorities. The Board has no power to interfere with the quasi judicial powers of the assessing officers under the Act or for that matter the appellate authority under the Act and this is obviously clear from the statutory provisions. The circular that may be issued by the first respondent Board cannot override the Act, nor it could run counter to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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