2007(07)LCX0114

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

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

Commissioner of Customs, Chennai

Versus

Lalchand Bhimraj

Final Order No. 834/2007 dt. 5.7.2007 certified on 26.7.2007 in Appeal No. C/600/2000

Cases Quoted -

Ranbaxy Laboratories Ltd. Vs. CCE, New Delhi 1994 (2) RLT 406 (CEGAT-C) - Relied on [Paras 3,4,5]

Ranbaxy Laboratories Ltd. 2003 (55) RLT F1 (SC- Relied on [Paras 3,4]

Tetragon Chemie P. Ltd. Vs. CCE, Bangalore 1999 (30) RLT 366 (CEGAT-LB) =RLT (LB-CEGAT)-1202-Relied on [Para 4]

CCE, Bangalore vs. Tetragon Chemine P. Ltd, 2001 (46 RLT 369 (SC)-Relied on [Paras 4,5]

Advocated By -

Smt. R. Bhagya Devi, SDR for Appellant
Shri C.V. Srinivasamoorthy, Consultant for Respondent

Per P.G. Chacko :

The respondents had filed Bill of Entry dated 27.9.1999 for clearance of goods declared as 'Vitamin-E 50% Adsorbate' imported from Belgium. The customs authorities allowed provisional release of the goods, pending chemical test results. Accordingly, 80% of the cargo was released against bond. The Chemical Examiner who tested a sample of the goods reported as follows:-

"The sample is in the form of white powder. It is composed of a preparation containing Vitamin-E and inorganic substances (silica). Such compositions are known to find use as feed additive in animal feeds. Percentage of inorganic substance (silica) = 44.6%; percentage of Vitamin-E = balance".

From the test report, it appeared to the customs authorities that the major ingredient was Vitamin-E and that silica was used as filler. On this basis, they took the view that the goods would appropriately be classifiable under CTH 2936.28 attracting basic customs duty @ 35% and under CETH 2936.00 attracting CVD @ 16%. Accordingly, a demand notice was issued for recovery of the differential amount of duty from the importer. This demand was contested by the party. Before the adjudicating authority, the party argued that the item imported by them was only a preparation for animal feed classifiable under CTH 23.09 and that the item was not classifiable under Chapter 29 as it was not a well-defined chemical. The adjudicating authority did not accept this claim. It classified the goods under CTH 29.36 and SH 2936.28 and ordered recovery of appropriate duty, after consulting Hawley's Condensed Chemical Dictionary and HSN Explanatory Notes and considering the supplier's literature on the product. In appeal filed by the aggrieved party, the Commissioner of Customs (Appeals) set aside the decision of the lower authority and held the goods to be classifiable under CTH 23.09 and SH 2309.90. The Department is aggrieved by the decision of the appellate Commissioner. Hence the present appeal.


2. After examining the records and hearing both sides, we note that the only question to be addressed in this case is about the classification of the goods imported by the respondents. It appears from the impugned order that the lower appellate authority obtained certain clarification on the chemical test report, to the effect that the sample, which was in the form of white powder containing Vitamin-E and silica as carrier, was a preparation which would find use specifically for animal feed and was not known to be used for human consumption. Apparently, on the basis of the original test report and subsequent clarification thereon, learned Commissioner (Appeals) took the view that the goods would go out of the scope of Heading 29.36 and would consequently be classifiable under Heading 23.09.


3. Heard both sides. Relying on the Chemical Examiner's report and taking aid from Hawley's Condensed Chemical Dictionary, learned SDR submitted that the item imported by the respondents was Tocopherol (Vitamin-E) adsorbed on silica. She pointed out that silica was an anti-caking agent used as a stabilizer for Vitamin-E for the purpose of its preservation or transport. On these facts, she relied on Note 1 (f) in Chapter 29 [Organic Chemicals] of the CTA Schedule. This note says that the Headings of Chapter 29 apply to "the products mentioned in (a), (b), (c), (d), (e) and (f) above with an added stabilizer (including anti-caking agent) necessary for their preservation or transport". The products mentioned in clause (c) of Note 1 include products of Heading Nos. 29.36 to 29.39, whether or not chemically defined. Learned SDR pointed out that vitamins and derivatives thereof used primarily as vitamins, whether or not in any solvent, were covered by Heading 29.36 and, therefore, in terms of Chapter Note 1 (c) & (f), the Vitamin-E adsorbed on silica (anti-caking agent) for the purpose of its preservation/ transport should be held classifiable under SH 2936.28. She submitted that Chapter 23 excludes products of a kind used in animal feeding elsewhere specified or included. The subject goods, having been specifically covered under SH 2936.28, was not liable to be classified under Heading 23.09 as a 'preparation of a kind used in animal feeding' as claimed by the respondents. Learned SDR further relied on HSN Explanatory Notes under Heading 29.36. According to these Notes, the products of Heading 29.36 may be stabilized for the purpose of preservation or transport by adding anti-caking agent or by adsorbing on appropriate substances like Silicic acid, provided that the quantity added or the processing in no case exceeds that necessary for their preservation or transport and that the addition or processing does not alter the character of the basic product and render it particularly suitable for specific use rather than for general use. Learned consultant, on the other hand, pointed out that the Tribunal's decision in Ranbaxy Laboratories Ltd. Vs. Collector - 1994 (2) RLT 406 (CEGAT-C)=1994 (72) ELT 197 (Tribunal) relied on by the appellant had been set aside by the Supreme Court as per judgment dated 17.12.2002 in Civil Appeal No. 2284/95 vide 2003 (55) RLT F1 (SC)=2003 (152) ELT A92 (SC). He submitted that the lower appellate authority had correctly classified the item under SH 2309.90 on the basis of its end-use. He pointed out that the Chemical Examiner's report certified the end-use viz. additive in animal feeds. He submitted that the appellant also had not disputed the fact that the imported item was a product of a kind used in animal feeding.


4. After giving careful consideration to the submissions, we find that the challenge in the present appeal is not sustainable. The appellant says that the product has been prepared by mixing Vitamin-E with silica which has adsorption property and that, since the product retains Vitamin-E character, the adsorbate is classifiable under Chapter 29. It is also submitted that silica (anti-caking agent) was used as stabilizer for Vitamin-E and therefore, in terms of Chapter Note 1 (f) in Chapter 29, it can only be classified in this Chapter. Apparently, the appellant has ignored the intended use of the imported goods. In fact, they have conceded that vitamins are essential for the proper functioning and harmonious development of the animal and vegetable organisms as indicated in Sub-Chapter XI (PROVITAMINS, VITAMINS AND HORMONES). The Chemical Examiner's report also confirms that the item is a preparation containing Vitamin-E and silica and that such compositions are known to find use as additives in animal feeds. The Chemical Examiner, in his subsequent clarification, appears to have confirmed that silica was used as a carrier for the vitamin. The appellant has no case that the goods imported by the respondents was used in any manner other than as an animal feed additive. For these reasons, learned Commissioner (Appeals) has rightly classified the goods under Heading 23.09 and SH 2309.90. In the case of Ranbaxy Laboratories (supra), the Tribunal had classified synthetic preparations containing mixtures of vitamins under Heading 29.36 of the Schedule to the CETA despite the presence of some minerals and materials therein. This decision of the Tribunal has been relied on by the appellant. But, as rightly pointed out by the consultant, the said decision was set aside by the apex court vide 2003 (152) ELT A92 (SC). The apex court classified the above synthetic preparations under Heading 23.02 of the CETA Schedule. It is also noticed that a Larger Bench of the Tribunal in the case of Tetragon Chemie P. Ltd. Vs. Collector of Central Excise, Bangalore - 1999 (30) RLT 366 (CEGAT-LB) =RLT (LB-CEGAT)-1202=2001 (138) ELT 414 (Tri.-LB) classified animal feed supplements under Heading 23.02 of the CETA Schedule after rejecting the Department's claim for classification as vitamins under Heading 29.36. The item considered in that case was a preparation containing vitamins mixed with dilutants and, which was used as an additive to the main feed for livestock. We find that the Tribunal's decision was upheld by the Supreme Court in Collector Vs. Tetragon Chemie P. Ltd. - 2001 (46 RLT 369 (SC)=2001 (132) ELT 525 (SC).


5. It thus appears that the appellate Commissioner's order impugned in the present appeal is supported by the apex court's decision in the cases of Ranbaxy Laboratories (supra) and Tetragon Chemie (supra).

In the result, the Revenue's appeal gets dismissed.

Operative portion of the order was pronounced in open Court on 5.7.2007.

Equivalent 2007 (082) RLT 0985 (CESTAT-Che.)

Equivalent 2007 (220) ELT 0189 (Tri. - Chennai)