2006(12)LCX0137

In the Customs, Excise & Service Tax Appellate Tribunal, Chennai

Shri P.G. Chacko, Member (Judicial) and Shri P. Karthikeyan, Member (Technical)

Sunnex Commercial Pvt. Ltd.

Versus

Commissioner of Customs, Chennai

Final Order No. 13/2007 dt. 20.12.2006 certified on 5.2.2007 in Appeal No. C/189/2000

Cases Quoted -

Tetragon Chemie (P) Ltd. 1999 (030) RLT 0366 (CEGAT-LB)-Referred [Para 1]

Sun Export Corporation vs. CC, Bombay & Anr. 1997 (021) RLT 0111 (SC)- Relied on [Paras 2,4]

Advocated By -

Shri C. Srinivasamoorthy, Consultant for Appellant
Shri V. Seshagiri Rao, SDR for Respondent

Per P.G. Chacko :

The appellants had imported goods described as "Thiamine Mono (concentrate extract for animal feed)" and filed two Bills of Entry, one dated 7.6.99 and the other dated 30.6.99, for clearance of the goods under SH 2309.90 of the CTA Schedule without import licence. Goods falling under the said tariff entry were freely importable. It appeared to the assessing authority that the goods were classifiable under SH 2936.22 of the CTA Schedule and ITC EXIM Code 2936 2200 10 and hence could be imported only against specific import licence. The assessee contested this view of the assessing authority by submitting that vitamin mixed with other ingredients had been held to be 'animal feed' classifiable under SH 2309.90 of the CTA Schedule, by this Tribunal in the case of M/s. Tetragon Chemie (P) Ltd. [reported in 1999 (030) RLT 0366 (CEGAT-LB)] Thereupon, provisional clearance of the goods was allowed against execution of test bond and production of Bank Guarantee for differential duty. The department's Chemical Examiner, who tested a sample of the goods covered by Bill of Entry dated 7.6.99, reported thus - "The sample is in the form of off white powder. It is composed of organic compound (Thiamine mononitrate) and additives." With reference to the query as to use of the goods, the test report advised that its actual use be ascertained. After considering the test report and hearing counsel for the assessee, learned Commissioner of Customs classified the goods as "Thiamine mononitrate (Vitamin B1)" under SH 2936.22, an item restricted for import. He, further, held their goods to be liable for confiscation under Section 111 (d) of the Customs Act as it had been imported without specific import licence. The Commissioner imposed a redemption fine of Rs. 2,30,000/- each in lieu of confiscation of the goods covered under the two Bills of Entry. The present appeal is against the Commissioner's order.


2. Heard both sides. It was submitted by learned consultant that, in view of apex court's decision in the case of Sun Export Corporation Vs. Collector of Customs, 1997 (021) RLT 0111 (SC)=1997(07)LCX0044 Eq 1997 (093) ELT 0641 (SC), the subject goods could only be classified as 'animal feed' under SH 2309.90 and hence its import without licence was in accordance with law. Ld. consultant also claimed support from the test report which stated that the goods was composed of Thiamine mononitrate and additives. Reference was also made to the "Certificate of Analysis" received from the supplier's end, which indicated "Thiamine mononitrate' content of 90-92% only. Further, literature received from the supplier's end indicated use of the subject goods as "Animal feed nutrition: Premixes and Compound feeds". On the basis of these data, it was argued, that the goods imported could only be classified under Heading 23.09 as "preparations of a kind used in animal feeding". The presence of additives as reported by the Chemical Examiner was enough to rule out classification of the goods under Heading 29.36. Ld. SDR reiterated the findings of the Commissioner.


3. We have carefully considered the submissions. The dispute is one about the classification of the goods imported by the appellants. The party classified it under Heading 23.09 as "preparation of a kind used in animal feeding". The department wanted to classify it under Heading 29.36 and SH 2936.22 as Vitamin B1 The supplier's invoice produced by the party described the goods as "Thiamine Mono (animal feed grade)". The "Certificate of Analysis" produced along with the invoice provided the following composition:-

According to the above certificate, the vitamin content in the subject goods was 90-91%. The test memo issued by the Asst. Commissioner of Customs to the Chemical Examiner put three queries viz. (1) nature of composition (2) whether it is an animal feed, and (3) whether it is Vitamin Bt which can be used for human consumption. The Chemical Examiner reported that the sample of he subject goods was composed of organic compound (Thiamine mononitrate) and additives. This report was accepted by the Customs authorities as well as by the importer. The Chemical Examiner could not answer the query as to use of the goods. He advised that the actual use be ascertained. It appears from the records that the Customs authorities did not care to ascertain the actual use of the goods. Thus the evidentiary materials available on record are all supportive of the importer's claim. It is not in dispute that the imported goods contained 'Thiamine mononitrate' (Vitamin B1. It is, again, not in dispute that this vitamin is a nutrition for animals. The assessee declared the goods as "Thiamine Mono (concentrate extract for animal feed)". The "Certificate of Analysis" produced by them showed that the goods conformed to the standard of "Thiamine Mono (animal feed grade)." The Chemical Examiner of the department also confirmed the presence of 'Thiamine mononitrate' in the goods. Though he suggested that the actual use be ascertained, the Customs authorities failed to do so. However, the Chemical Examiner's report was accepted. In the circumstances, it is not open to the department to argue that the goods imported by the appellants was not intended to be used as animal feed. The goods can, therefore, be classified only as "a preparation of a kind used in animal feeding". Moreover, we find that the Chemical Examiner's report is enough to rule out classification of the goods under SH 2936.22. This sub-heading covers "Vitamin B1 and its derivatives". The Chemical Examiner found the sample to be composed of Thiamine mononitrate (Vitamin B1) and additives, which indicates that the subject goods was not wholly composed of Vitamin B1 or any of its derivatives. It was rather a mixture of Vitamin B1 and additives. The presence of additives took the goods out of the purview of Chapter 29 inasmuch as this Chapter covers only pure organic chemicals.


4. In the case of Suit Export Corporation (supra), a dispute arose before the apex court as to classification of "Pre-mix of vitamin AD-3 (feed grade)" which was imported by the Corporation. The Customs authorities wanted to classify the item under Chapter 29 for levying countervailing duty. The importer paid the duty but subsequently filed a refund claim by contending that the goods imported by them was an 'animal feed' which was exempt from payment of CVD in terms of Notification No. 234/82-CE dt. 1.11.1982 (as amended). The apex court held that the corporation was entitled to the benefit of the Notification. The ratio of the apex court's decision seems to be supporting the case of the present appellants.


5. In the result, the impugned order is set aside and this appeal is allowed.

Operative part of the order was pronounced in open Court on 20.12.2006.

Equivalent 2007 (079) RLT 0509 (CESTAT-Che.)

Equivalent 2007 (211) ELT 0273 (Tri.- Chennai)