2024(10)LCX0111(AAR)

Danisco (India) Pvt Ltd

decided on 10-10-2024

CUSTOMS AUTHORITY FOR ADVANCE RULINGS

O/o THE CHIEF COMMISSIONER OF CUSTOMS

NEW CUSTOM HOUSE, NEAR IGI AIRPORT, NEW DELHI-110037

[Email:cus-advrulings.del@gov.in]

DIN: 20241074OR0000814581

F No. VIII/CAAR/Delhi/Danisco/57/2024

Present

Samar Nanda (Customs Authority for Advance Rulings, New Delhi)

The day of 10^th October, 2024

Order No. CAAR/Del/Danisco/65/2024/1453 to 1460/10/10/2024

 In Application No. 48/2024-Delhi dated 25.06.2024
 

Ruling

A.1.    Danisco India Pvt. Ltd. (hereinafter referred to as the "Applicant") is a private limited company incorporated in the year 1997 under the Companies Act, 1956. The Applicant uses its research and development capabilities to serve the following markets:

i. Food and Beverage

 ii. Home and Personal Care

iii. Health and Wellness

A.2. The Applicant is proposing to import the product `Enviva® Provalen Plus 201 GT’ for the purpose of trading.

About Enviva® Provalen Plus 201 GT

A.3. Enviva® Provalen Plus 201 GT (hereinafter referred to as 'Enviva Provalen') is a probiotic feed additive for poultry diets. It is a multi-strain probiotic which helps to improve litter quality leading to improved performance and reduced environmental impact. The product brochure is enclosed as Exhibit-B. The process of manufacture of Enviva Provalen is enclosed herewith as Exhibit-C.

Composition of Enviva Provalen

A.4.The Composition of Enviva Provalen is as follow:

 The technical datasheet of Enviva Provalen is enclosed as Exhibit-D.

Benefits of using Enviva Provalen

A.5. Enviva Provalen offers the following benefits:

i. Improves litter quality by reducing undigested nutrients in the litter

ii. Biocontrol of microbial populations in the litter through promotion of beneficial bacteria

iii. Improved health, welfare and performance of the animal resulting from reduced undigested nutrients

iv. Reduced environmental impact due to reduced ammonia emissions

A.6. Enviva Provalen has a dual mode of action that inhibits the growth of pathogenic bacteria in the litter and reduces environmental impact. The pictorial description of the said dual mode of action is exhibited below:

A.7. Therefore, Enviva Provalen helps to digest poultry manure, reducing nutrients available for microbial digestion, and promoting the natural drying of the litter. As a result of improved litter quality, the product improves bird health and performance and reduces environmental impact.

Form of packaging and consumption of Enviva Provalen

A.8. Enviva will be imported in ready to sell packages of 25kgs in foil lined paper bags. Applicant will trade the product in the as imported form.

A.9. Enviva Provalen can be used at a rate of 1 lbs/short ton (US) or 0.5 kg/tonne (0.05%) of finished feed, included either directly or via a premix.

Classification by Foreign Supplier

A. 10. The foreign Supplier classifies Enviva Provalen under Heading 23.09 when exporting to all countries.

1. APPLICANT'S ELIGIBLITY FOR ADVANCE RULING

1.1 In order to file an application before the Authority for Advance Ruling, the Applicant must satisfy the conditions prescribed under the Customs Act, 1962 (hereinafter referred to as Customs Act').

1.2 Provisions relating to Advance Ruling are prescribed under Chapter VB of the Customs Act. Clause (c) of Section 28E of the Customs Act defines an "Applicant" as:

In this chapter, unless the context otherwise requires,
(c) "applicant" means-

(i) holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992);

1.3 The Applicant herein has been granted a valid Importer-Exporter Code Number (IEC) under Section 7 of the Foreign Trade (Development and Regulation) Act, 1992. The same is 0599001780.

1.4 Clause (b) of Section 28E of the Customs Act defines 'advance ruling' as:

(b) "advance ruling" means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation;

1.5 The questions on which an application for an advance ruling can be made have been provided under Section 28H of the Customs Act. As per the said Section 28H (2) of the Customs Act, an applicant may make an application for advance ruling in respect of questions relating to:

(a) Classification of goods under the Customs Tariff Act, 1975;

1.6 The present application is being made by the Applicant to confirm classification of Enviva.

1.7 Therefore, it flows that in the present case, the Applicant is satisfying the following conditions required for filing the application for advance ruling, namely:

a. have been granted a valid Importer-Exporter Code Number (IEC) under section 7 of the Foreign Trade (Development and Regulation) Act, 1992;

b. Application for advance ruling is in relation to clause (a) of Section 28H (2) of the Customs Act, 1962.

Non-Applicability of Bar under Section 281

1.8 Section 28l of the Customs Act, 1962 is set out below:

"SECTION 28-1. Procedure on receipt of application. — (1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the [Principal Commissioner of Customs or Commissioner of Customs] and, if necessary, call upon him to furnish the relevant records:

Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the [Principal Commissioner of Customs or Commissioner of Customs].

(2) The Authority may after examining the application and the records called for, by order, either allow or reject the application :

Provided that the Authority shall not allow the application [ * * *] where the question raised in the application is -

(a) already pending in the applicant's case before any officer of customs, the Appellate Tribunal, or any Court;

(b) the same as in a matter already decided by the Appellate Tribunal or any Court

Provided fudher that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard:
Provided also that where the application is rejected, reasons for such rejection shall be given in the order."

1.9 Thus, the conditions set out in Section 28I are satisfied as:

a. the question raised in the present application regarding classification of 'Enviva Provalen' is not pending in the applicant's own case before any officer of customs, the Appellate Tribunal, or any Court;

b. the question raised in the present application regarding classification of 'Enviva Provalen' is not a matter already decided by the Appellate Tribunal or any Court

1.10 Therefore, it flows that in the present case, the Applicant satisfies all the criteria required for filing the application for advance ruling, namely:

(a) The Applicant has been granted a valid Importer-Exporter Code Number (IEC) under section 7 of the Foreign Trade (Development and Regulation) Act, 1992;

(b) The Applicant is filing the Application in respect of goods prior to their importation into India;

(c) The application for advance ruling is in relation to clause (a) of Section 28H (2) of the Customs Act, 1962; and

(d) The application is not barred under Section 28I of the Customs Act, 1962.

1.11 Thus, the present application must be allowed to be proceeded with.

2. CLASSIFICATION OF ENVIVA® PROVALEN PLUS 201 GT (Submission by the applicant)

2.1 The Tariff is aligned, up to the 6-digit level, with the Harmonized System of Nomenclature ("HSN") issued by the World Customs Organization ('WCO'). It has been held by the Hon'ble Supreme Court in the case of Collector of Customs, Bombay Vs. Business Forms - 2002 (142) ELT 18 that the HSN Explanatory Notes aid in the interpretation of the Headings of the Tariff and may be used as a safe guide for the same.

2.2 The classification of the goods imported into India is to be determined based on the General Rules of Interpretation (hereinafter referred to as the "GRI") set out in the Tariff. As per Rule 1 of the GRI, classification of the imported products shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the remaining Rules of the GRI.

2.3 The product in question i.e., Enviva Provalen is a preparation used in animal feed. Such products i.e. preparations for use in animal feeding, are specifically covered under Heading 23.09. Thus, this Heading may be examined at the outset.

Classification under Heading 2309

2.4 The relevant extract of Heading 2309 is extracted hereunder:

2.5 Chapter Note 1 to Chapter 23 is as under -

Heading 23.09 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, other than vegetable waste, vegetable residues and by-products of such processing.

2.6 That the product must be obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, is not an essential condition for classification under Heading 2309. The Chapter Note only states that the Heading includes products so processed, and not that products must essentially be so processed in order to merit classification under Heading 2309. This reasoning is supported by the decision of CESTAT Larger Bench, New Delhi in the matter of Tetragon Chemie Pvt Ltd Vs Collector of C.Ex, Bangalore [2001 (138) ELT 414 (Tri-LB)].

2.7 Thus, in order to be classified under Heading 2309 the following requirements have to be met:

i. It must be of a kind used in animal feeding;

ii. It must not be specified or included elsewhere.

l. Enviva Provalen is a product of a kind used in animal feeding

2.8 Relevant extracts from the HSN explanatory notes to Heading 23.09 is as under -

23.09 - Preparations of a kind used in animal feeding.
            2309.10- Dog or cat food, put up for retail sale
            2309.90 - Other

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.
The heading includes products of a kind used in animal feeding, obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, for example, in the case of products obtained from vegetable materials, those which have been treated to such an extent that the characteristic cellular structure of the original vegetable material is no longer recognisable under a microscope.

(I) SWEETENDED FORAGE

(II) OTHER PREPARATIONS

(A) PREPARATIONS DESIGNED TO PROVIDE THE ANIMAL WITH ALL THE
NUTRIENT ELEMENTS REQUIRED TO ENSURE A RATIONALAND BALANCED
DAILY DIET (COMPLETE FEEDS)

The characteristic feature of these preparations is that they contain products from each of the three groups of nutrients described below:

(1) "Energy" nutrients, consisting of high-carbohydrate (high-calorie) substances such as starch, sugar, cellulose, and fats, which are "burned up" by the animal organism to produce the energy necessary for life and to attain the breeders' aims. Examples of such substances include cereals, half-sugar mangolds, tallow, straw.

(2) "Body-building" protein-rich nutrients or minerals. Unlike energy nutrients, these nutrients are not "burned up" by the animal organism but contribute to the formation of animal tissues and of the various animal products (milk, eggs, etc.). They consist mainly of proteins or minerals. Examples of the protein-rich substances used for this purpose are seeds of leguminous vegetables, brewing dregs, oil-cake, dairy by-products. The minerals serve mainly for building up bones and, in the case of poultry, making egg-shells. The most commonly used contain calcium, phosphorus, chlorine, sodium, potassium, iron, iodine, etc.

(3) "Function" nutrients. These are substances which promote the assimilation of carbohydrates, proteins, and minerals. They include vitamins, trace elements and antibiotics. Lack or deficiency of these nutrients usually causes disorders.

The above three groups of nutrients meet the full food requirements of animals. The mixing and proportions depend upon the animal production in view.

(B) PREPARATIONS FOR SUPPLEMENTING (BALANCING) FARM-PRODUCED
FEED (FEED SUPPLEMENTS)

Farm-produced feed is usually rather low in proteins, minerals, or vitamins. The preparations devised to compensate for these deficiencies, so as to ensure a well-balanced animal diet, consist of proteins, minerals, or vitamins plus additional-energy feeds (carbohydrates) which serve as a carrier for the other ingredients.

Although, quantitatively, these preparations have much the same composition as those described in paragraph 1 (A), they are distinguished by a relatively high content of one particular nutrient.

This group includes:
(1) Fish or marine mammal solubles in liquid or viscous solutions or in paste or dried form, made by concentrating and stabilising the residual water (containing water-soluble elements, viz. proteins, vitamins B, salts, etc.), and derived from the manufacture of fish or marine mammal meal or oil.
(2) Whole green leaf protein concentrate and green fraction leaf protein concentrate, obtained from alfalfa (lucerne) juice by heat treatment.

(C) 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 such as vitamins or provitamins, amino-acids, antibiotics, coccidiostats, trace elements, emulsifiers, flavourings, and appetisers, etc.
(2) Those designed to preserve the feeding stuffs (particularly the fatly components) until consumption by the animal such as stabilisers, anti-oxidants, etc.
(3) Those which serve as carriers and which may consist either of one or more organic nutritive substances (manioc or soya flour or meal, middling's, 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 (1) 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 are generally identifiable by the medicinal nature and much higher concentration of the active substance and are often put up in a different way.

2.9 As seen from the above explanatory notes, Heading 2309 covers Feed Supplements-products added to feed to enhance certain nutrients.

2.10 Enviva Provalen is probiotic feed added to the diets of pig and poultry to improve digestion and health. Thus, it is a feed supplement.

2.11 That it is exclusively intended for use as an animal feed supplement is evident from below:

a. It is a multistrain probiotic feed additive and meant specifically for use as animal feed supplements.

b. It is a tailor-made solution to ensure that health, digestion, and performance of the poultry is improved and maintained.

c. Further the brochure and data sheet (enclosed as Exhibit-B & C) also clearly states that Enviva Provalen is a probiotic feed additive for use in pig and poultry diets. It promotes beneficial bacteria, which enhances gut and immune function i.e., increases digestion and promotes beneficial bacteria.

2.12 In view of the above, it is clear that Enviva Provalen is of a kind used in animal feeding.

//.Products which are not specified or included elsewhere

2.13 Enviva Provalen is a is a multi-strain probiotic of the following two active strains:

a. Bacillus amyloliquefaciens

b. Bacillus licheniformis

2.14 Probiotics as 'cultures of microorganisms' are covered under Heading 3002.The relevant extract from Heading 3002 is reproduced below:

2.15 The relevant part of the HSN explanatory notes to the Heading 3002 is reproduced below for ready reference:

'This heading covers:
(A)....
(B)...
(C)...
(D) Vaccines, toxins, cultures of micro-organisms (excluding yeasts) and 'similar products.

(3) Cultures of Micro-organisms (excluding yeasts).

These include ferments such as lactic ferments used in the preparation of milk derivatives (kephir, yogurt, lactic acid) and acetic ferments for making vinegar; moulds for the manufacture of penicillin and other anti-biotics; and cultures of micro-organisms for technical purposes (e.g. for aiding plant growth).'

2.16 Therefore, probiotics as 'cultures of microorganisms' are covered under Heading 3002.The HSN Explanatory Notes state clearly that cultures of microorganisms for technical uses, like aiding in plant growth, will be classified under Heading 30.02. By extension, the Enviva Provalen, which contains cultures of microorganism for aiding in animal growth, too is classifiable under Heading 3002 as cultures of microorganism.

2.17 However, Chapter Note 1 (a) to Chapter 30 states as follows:

1. This Chapter does not cover:
(a) foods or beverages (such as dietetic, diabetic, or fortified foods, food supplements, tonic beverages, and mineral waters), other than nutritional preparations for intravenous administration (Section IV);

2.18 Thus, food supplements are excluded from Chapter 30. The product in question is an animal feed supplement. These are food supplements for animals. Thus, these too seem to be excluded from the ambit of Chapter 30.

2.19 Further, there is no other Heading that aptly or more specifically covers the product now in question i.e., Enviva Provalen, other than Heading 23.09. Thus, all conditions to be classified under Heading 2309 are met. In view of the above, it is clear that Enviva Provalen is classifiable under Heading 2309, and more specifically under Tariff Item 23099090.

3. ISSUES REQUIRING ADVANCE RULING AND APPLICANT'S UNDERSTANDING

In light of the aforementioned submissions, the Applicant's interpretation of the questions raised will be as under:

a) Question: Whether the product in question in the present application are classifiable under Tariff Item 23099090?
Applicant's Understanding: Yes.

b) Question: If the answer to the above question is in the negative, then what would be the correct classification of the products mentioned above under the Customs Tariff of India?
Applicant's Understanding: Not Applicable.

4. COMMENTS OF THE COMMISSIONERATE

4.1 In this regard comments has been sought, the same are produced pointwise as below:

Point 3 i) Eligibility of the applicant, in terms of section 28-E (c) of the Customs act, 1962 to seek such advance ruling.

-In this regard it is submitted that the importer is holding a valid Importer Exporter code (0599001780)

Point 3 ii) Applicability of proviso (1) of section 28-I (2) of the Customs Act, 1962 regarding the question raised in the application.

As per available records, SCN No. 396/2023-24/Commr/NSI/CAC/JNCH dated 22.05.2023 was issued by the Commissioner of Customs, NS-I, JNCH, to M/s Danisco India Pvt. Ltd., wherein the importer was asked to show cause as to why the import of item Enviva Pro 201 BA under CTH 30029030 be rejected and re-classified under CTH 23099000. It has been checked with the concerned adjudication cell and found that above mentioned SCN has not been adjudicated yet.

Point 3 iii) Specify whether the claim of the applicant regarding the nature of activity, i.e. it is ongoing/ proposed is correct.- No Comments.

Point 3 iv) Comments on the merits of the question raised in the application, along with all materials in support thereof.-No Comments.

5. The Personal Hearing was conducted on 30.09.2024, whereby, the applicant through the authorised representative reiterated the comments shared vide mail and also opposed the fact that the product on which SCN has been issued is different than the product under review.

6. The present submission is being filed pursuant to the Virtual Hearing held on 30.09.2024 for the above-mentioned Advance Ruling Application filed before the Ld. Customs Authority for Advance Ruling, New Delhi. At the outset, Applicant is grateful for the patient hearing granted on 30.09.2024. Applicant prays that the present submissions be treated as an addition to the submissions already made in Application bearing Diary No. 48 of 2024.

A. Response to comments received from Commissioner of Customs, Nhava Sheva on the Application filed:

A. 1 Vide letter dated 23.09.2024, Commissioner of Customs, Nhava Sheva has provided comments on the applicability of proviso (1) of section 28-I (2) of the Customs Act, 1962 (Act). The comment is extracted below:

A.2 Further, it is important to note that on merits, the response of the Respondent is "No Comments". The same is extracted below:

Point 3 ii) Applicability of proviso (1) of section 28-1 (2) of the Customs Act, 1962 regarding the question raised in the application.

- As per available records, SCN No. 396/2023-24/Commr/NS-l/CAC/JNCH dated 22.05.2023 was issued by the Commissioner of Customs. NS-I, JNCH, to M/s Danisco India Pvt. Ltd., wherein the importer was asked to show cause as to why the import of item Enviva Pro 201 BA under CTH 30029030 be rejected and re-classified under CTH 23099000. It has been checked with the concerned adjudication cell and found that above mentioned SCN has not been adjudicated yet.

Point 3 iii) Specify whether the claim of the applicant regarding the nature of activity, i.e. it is ongoing/ proposed is correct.
    - No Comments.

Point 3 iv) Comments on the merits of the question raised in the application, along with all materials in support thereof.
    -No Comments.

    This is issued with the approval of Commissioner (Nhava Sheva-I). JNCH.

A.3 Thus, the Ld. Commissioner seems to be agreeing that the product Enviva Provalen Plus 201 GT is classifiable under Heading 2309. However, regarding maintainability of the application, the Comments seem to indicate that the application is not maintainable as SCN has earlier been issued for the product Enviva Pro 201 BA.

A.4 It is submitted that the comments provided do not act as a bar to the present application, and in fact support the Applicant's stand for classification under Heading 2309 for the following reasons:

a. SCN dated 22.05.2023 (Enclosed herewith as Annexure-1) was issued disputing the classification numerous products including of the product 'Enviva Pro 201 BA'.The SCN was not issued regarding Enviva Provalen Plus.

b. SCN issued contended that Enviva Pro 201 BA is rightly classifiable under Heading 2309 and not under Heading 3002.

Enviva Pro 201A and Enviva Provalen Plus are completely different products

A .5 It is pertinent to note that the product covered by the SCN is completely different from the one covered in the present application. The difference is evident from the table below:

A.6 The product brochure/data sheet of Enviva Pro 201BA is enclosed as Annexure-2.

A.7 From the above table, it is evident that the composition of the product covered in the SCN vis a vis the composition of the product covered in the present application is different. Further, the purposes of the products too are different: while Enviva Pro is for the birds to achieve better nutrition from the feed, Provalen Plus is for improving the quality of the bird litter to ensure that the same is better for environment and the bird health.

A.8 Thus, as both products are different in terms of composition as well as use, the bar under Section 28-I (2) will not apply.

A.9 The Relevant extract form the Customs Act is as follows:

SECTION 28-I. Procedure on receipt of application. -

(1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the
1 [Principal Commissioner of Customs or] Commissioner of Customs and, if necessary, call upon him to
furnish the relevant records :

Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned to the 1(Principal Commissioner of Customs or] Commissioner of Customs.

(2) The Authority may, after examining the application and the records called for, by order, either allow
or reject the application :

Provided that the Authority shall not allow the application where the question raised in the application is

(a) already pending in the applicant's case before any officer of customs, the Appellate Tribunal or any Court;

A. 10 The question raised in present application is for classification of "Enviva Provalen Plus 201 GT", whereas the SCN is dealing with classification of the product "Enviva Pro 201 BA", which is a altogether different product. Thus, the question raised now is definition not pending in Applicant's own case. Thus, the bar will not apply.

Present classification

A.11 The SCN dated 22.05.2023, was issued contending that Enviva Pro 201 BA is classifiable under Heading 2309 and not under Heading 3002. In this regard, it is also submitted that consequent to such SCN disputing the classification of the product Enviva Pro 201 BA, the Applicant had started importing the same by adopting classification under Heading 2309. The illustrative copy of Bill of Entry for the product Enviva Pro 201 BA is enclosed as Annexure-3.

1. https://www.chemunique.co.za/wp-content/uploads/2012/06/Poultry-Bulletin-Jun-12.pdf

2 https://animalnutrition.iff.com/enviva-provalen-plus
 

A. 12 It is also essential to note that the Applicant has commenced importing the product Enviva Provalen Plus by classifying the same under Heading 2309 and more specifically under Tariff Item 23099090. Illustrative copies of the Bills of Entry for the same is enclosed as Annexure-4.

B. Submissions on merits: Enviva Provalen Plus is rightly classifiable under Heading 2309

B.l. The product Enviva Provalen Plus is a probiotic feed additive for poultry diets. It is a multi-strain probiotic (containing Bacillus amyloliquefaciens and Bacillus licheniformis) which helps to improve litter quality leading to improved performance and reduced environmental impact.

B.2 In this regard, the book 'Probiotics in Animal Nutrition [Production, impact and regulation]"3, has defined probiotics and also listed out microorganisms used as probiotics in animal diets. The relevant extracts from the book are as follows:

Probiotics: definition and classification

DEFINITION

The term 'probiotics' was first used by Lilly and Stillwell (1965) to designate unknown growth promoting substances produced by a ciliate protozoan that stimulated the growth of another ciliate. The term now covers a much broader group of organisms. Parker (1974) defined probiotics as "organisms and substances which contribute to intestinal microbial balance" thus including both living organisms and non-living substances. Fuller (1989) was critical of the inclusion of the word 'substances' and redefined probiotics as "a live micro-bial feed supplement which beneficially affects the host animal by improving its intestinal microbial balance".
The joint Food and Agriculture Organization of the United Nations (FAO) and World Health Organization (WHO) Working Group defined probiotics as "live micro-organisms which when administered in adequate amounts confer a health benefit on the host" (FAO/ WHO, 2001). This definition is widely accepted and adopted by the International Scientific Association for Probiotics and Prebiotics (Hill era/., 2014).

Probiotic application in different livestock production systems

PROBIOTICS IN POULTRY NUTRITION

Poultry are the cheapest source of animal protein, contributing significantly to supplying the growing demand for animal food products around the world (Farrell, 2013). The consumption and trade in poultry products is increasing rapidly as the human population increases, making it the second largest source of meat after pork (FA0, 2014).
    Probiotics can improve broiler chicken growth rates (Afsharmanesh and Sadaghi, 2014; Mookiah era/., 2014; Zhang and Kim, 2014; Lei ef a/., 2015) and control or prevent enteric diseases, including; salmonellosis (Haghighi ef a/.. 2008; Tellez ef al., 2012. Biloni ef al., 2013). necrotic enteritis (Jayaraman ef al.. 2013) and coccidiosis (Dalloul ef al.. 2003). However the outcomes from probiotic use are not consistent.

B.3 From the above, it is evident that probiotics, and in particular, even Bacillus amyloliquefaciens and Bacillus licheniformis, are widely and commonly used in poultry feed, as an additive/supplement.

B.4 Further, the meaning and benefits of feed additives has also been elaborated by Author D.V. Reddy in his book titled "Principles of Animal Nutrition and Feed Technology"4, wherein Mr. Reddy has provided an insight on the use and importance of feed additives in livestock and poultry feeding. The relevant portion of the book is extracted below:

3 Probiotics in Animal Nutrition [Production, impact and regulation], by Yadav S. Bajagai, Athol V Klicve, Peter J Dart, and Wayne L Bryden

Advantages of use of Feed Additives

1. Increase feed quality and feed palatability:
Emulsificrs, pelleting agents are used to meet the demands of feed manufacturers while antioxidants, fungistatic agents and fermentation inhibitors ensure proper shelflife of feed.

2. Improve animal performance:
Feed additives are mixed with feeds in nontherapeuric quantities for the purpose of promoting animal growth, lowering feed consumption, protecting the animal against alt sorts of harmful environmental influences (stresses).

3. Improve the final product:
Addition of antioxidants to diets produce grades of meat in which the fat does not rancidify or does so more slowly. The use of additives also makes end products more homogenous and of better quality.

4. Economise the cost of animal protein:
Low levels of additives, mainly of antibiotics or other growth promoters and related compounds in animal feed contribute to increased production of animal proteins for human consumption. Feeding antibiotics and other additives lower the cost of meat, milk and egg production.

B.5 As elaborated in the application filed, the product in question is fed to the animals and the same helps improve their digestion, which in turn will improve the quality of the litter.

Why is litter quality important?

B.6 Digestion and poultry litter management are connected as bird digestion affects the manure composition. The necessity of keeping litter dry is a critical part of overall management on every poultry farm. Litter conditions influence bird performance, which in turn affects profits of growers and integrators. Dry litter helps control ammonia levels, provides a healthy flock environment, and reduces condemnations due to hock and footpad burns and breast blisters.

B.7 In order to summarize, proper management of poultry litter is necessary for the following reasons:

a. Reduces ammonia production and bacterial challenge
b. Footpad quality improvement
c. Increases litter amendment activity
d. Increases fuel efficiency during preheating and brooding
e. Maintains healthy floor moisture
f. Reduces health risk
g. Compliance with nutrient management guidelines
h. Reduces environmental impact

Premix under Heading 2309

B.8 As elaborated in the present application dated 25.06.2024, Heading 2309 covers three kinds of preparations:

i. complete feeds (Para (II) (A) of the Explanatory Notes)
j. Feed supplements (Para (II) (B) of the Explanatory Notes) and
k. Preparations (i.e. premixes) for use in making the complete feed or
feed supplements. (Para (II) (C) of the Explanatory Notes)

B.9 Relevant extracts from HSN Explanatory Notes pertaining to the Premix category is as follows:

"(C) PREPARATIONS FOR USE IN MAKING THE COMPLETE FEEDS OR SUPPLEMNTARY 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, antibiotics, coccidiostats, trace elements, emulsifiers, flavourings and appetisers, etc.

(2) Those designed to preserve the feeding stuffs (particularly the fatty components) until consumption by the animal: stabilisers, anti-oxidants, etc.

(3) Those which serve as carriers and which may consist either of one or more organic nutritive substances (manioc or soya flour or meal, middlings, 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, homogenous 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.

Preparations consisting of an active substance of the type described in (I) 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".

B. 10 Thus, a preparation containing active ingredient for improving digestion, with a carrier is covered under Heading 2309.

Why is premix necessary?

B.11 As per Author D.V. Reddy in his book titled "Principles of Animal Nutrition and Feed Technology", micro-ingredients i.e. nutritional adducts, are added to feed at very low levels, and the dispersion of such low concentrations of active ingredients poses a challenge to the manufacturers. The relevant portion of the book is extracted below:

Microingredient Premixing

Microingredients

Microingredients are nutritional adducts or drugs that are added to the feed at very low levels. Dispersion of such low concentrations of active ingredients presents a challenge to the manufacturers of the compound feed. This challenge can be met by the premix-the dilution of an active component with a suitable carrier.

    Physical characteristics of microingredients such as particle size, particle shape, specific weight, hygroscopicity, susceptibility to electrostatic charges, adhesiveness of the particles due to physical properties, such as rough surfaces or additions of adhesives such as oils influence mixing them with the other feed ingredients. Microingredients have a very small particle size and high density compared to other feed ingredients. A significant uptake of moisture by a microingredient can seriously hamper its ability to distribute and mix well. A hygroscopic ingredient can affect the chemical stability of any moisture sensitive component. This problem may be dealt with during formulations by complexation or through a coating that acts as a moisture barrier.

    During intensive grinding to reduce particle size, a pure crystalline compound frequently develops a static charge and hence the individual particles repel one another which may affect its distribution in the premix and in the feed mixture. An antistatic agent such as an unsaturated vegetable oil is suggested.

B.12 From a perusal of the above, it is evident that direct administration of micro-ingredients (like bacillus) or direct mixing of micro-ingredients in the final feed is not recommended for the following reasons:

i. Micro-ingredients are added to feed in at very low levels. It is essential that the quantum added must be within the recommended limits.

ii. It is difficult to ensure homogenous dispersion of micro-ingredient of such low quantity in a big batch of complete feed.

iii. Micro-ingredients are prone to uptake of moisture. This further hampers its ability to distribute and mix uniformly in the feed.

iv. During mixing and grinding, the particles of micro-ingredients may develop a static charge and the individual particles repel one another, thereby affecting the distribution of the micro-ingredient in the feed mixture. Thus, an anti-static agent is needed to be added to the micro-ingredient.

B.13 The solution to the above problems is the creation of premix, as elaborated further in Mr. D. V. Reddy's book.7

Premix

Premixes are formulations of one or more microingredients, such as vitamins, minerals, or drugs mixed with diluent and/or carrier ingredient. Diluent and carrier should be inert and inactive. Premixes are used to facilitate uniform mixing of the microingredients in the complete feed or concentrate mixture.

    Diluent is an edible substance used to mix with and reduce the concentration of nutrients and/or additives to make them more acceptable to animals, safer to- use and more capable of being mixed uniformly in feed. The mixing properties of the original ingredients are not drastically altered. Carrier is an edible material to which ingredients are added to facilitate uniform incorporation of the latter into feeds. The active principles are absorbed, impregnated or coated into the edible material in such a way as to physically carry the active ingredient. When a carrier is used with a microingredient the mixing properties are drastically altered.

B.14 Reference is also made to the European Feed Manufacturers' Federation(FEFAC)'s article titled 'What is a premix?' which states that in order to ensure that micro-ingredients are mixed with macro-ingredients (in a homogeneous way), an intermediate dilution step is required via a 'premix'. The relevant portion is extracted below:

What is a premix?

Premixes are complex mixtures of vitamins, minerals, trace elements and other feed additives that are incorporated at levels between 0.2 and 0.5% in the compound feed.

Adequate nutrition requires feed compositions consisting of macro ingredients and micro ingredients, sometimes incorporated at ppm levels (e.g. vitamins). To secure that these micro-ingredients are mixed with macro-ingredients in an homogeneous way, an intermediate dilution step is required via a so-called premixture. Premixtures are legally defined as mixtures of feed additives or mixtures of one or more feed additives with feed materials or water used as carriers, not intended for direct feeding to animals (Regulation (EC) No 1831/2003). This premixture is incorporated at levels typically between 0.2 to 0.5% in the compound feed. The manufacturing of premixtures requires a specific technology and is often performed by specialized companies.

B.15 From the above extracts, it is evident that for undertaking such supplements for poultry litter management, the micro-ingredients like bacillus are first prepared into the form of premix, and the premix is then added to animal feed. Thus, such supplementation is necessarily done through a two-step process: 1) preparing of the premixes and 2) addition of premix to animal feed. Thus, "premixes" are an essential and an indispensable necessity for mixing micronutrients in animal feed. Premixes are formulations of one or more micro-ingredients mixed with diluent and carrier. As per D. V. Reddy, a carrier is an edible material to which ingredients are added to facilitate uniform incorporation of such ingredients into feeds. The relevant portion of the book is extracted below:

Premix
Premixes are formulations of one or more microingredients, such as vitamins, minerals, or drugs mixed with diluent and/or carrier ingredient. Diluent and carrier should be inert and inactive. Premixes are used to facilitate uniform mixing of the microingredients in the complete feed or concentrate mixture.

    Diluent is an edible substance used to mix with and reduce the concentration of nutrients and/or additives to make them more acceptable to animals, safer to use and more capable of being mixed uniformly in feed. The mixing properties of the original ingredients are not drastically altered. Carrier is an edible material to which ingredients are added to facilitate uniform incorporation of the latter into feeds. The active principles are absorbed, impregnated or coated into the edible material in such a way as to physically carry the active ingredient. When a carrier is used with a microingredient the mixing properties are drastically altered.

B.16 The product in question is a combination of active ingredients i.e., Bacillus amyloliquefaciens and Bacillus licheniformis with a carrier i.e., Calcium carbonate. This is evident from the very inception of the product, as the carriers are added in it for the specific end use in mind and for the reason of ensuring homogenous dispersion and mixing of the complete animal feeds. The benefits of the calcium carbonate as carriers is as follows:

a. It is non-reactive and helps in uniformly distributing the additives

b. Good absorbency, reducing dust and moisture

c. Supports animal health

d. Maintains the optimal pH of the feed

B.17 A carrier is usually an inactive accessory substance (vehicle) or a substance (such as a catalyst) by whose agency some element or group is transferred from one compound to another.9
B.18 Therefore, the carrier absorbs or coats the micro-ingredient in order to physically carry the micro-ingredient, thereby facilitating the uniform mixing of the product into the feed.

B.19 Thus, the preparing of "premix" is not just for convenience, but is an essential necessity to ensure that the active strains/probiotics are uniformly mixed in the final feed, so that each animal gets uniform and appropriate level of the ingredient to achieve the desired benefit. In the final feed, the bacillus amyloliquefaciens and Bacillus licheniformis will be blended at the rate of 01% to 05%, thereby forming very miniscule quantity of the complete feed.

B.20 Calcium Carbonate is a renowned carrier for animal feed. It not only acts as a carrier for supplying the essential nutrient / active ingredient, but also acts as a calcium source for the animals.10

B.21 In view of the above, it is evident that the product in question as a premix i.e., being combination of active ingredients with carrier is essential to be added to the poultry feed and the same are appropriately classifiable under Heading 2309.

C. Numerous circulars and instructions issued by the CBIC and Department of Animal Husbandry support classification of the products under Heading 2309

C.1 As evident from the above, use of such carrier does not alter the nature of the product as an animal feed supplement. Therefore, it is clear that the product in question is classifiable under Heading 2309. In this regard, numerous circulars and instructions have been issued by the CBIC and Department of Animal Husbandry in support of classification of the products under Heading 2309. The same are elaborated below:

i. Circular No.188/22/95-CX dated 26.03.1996 - According to the Board, the preparation containing active ingredient used for animal feeding, is classifiable under heading 2309. The Board has also clarified that while deciding the classification of the products claimed to be animal feed supplements, it is necessary to ensure that the said animal feed supplements are ordinarily or commonly known in the trade as products for a specific use in animal feeding. The relevant portion of the Circular is reproduced hereunder:

    "6. In 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 CETprovided 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 ensure that the said animal feed supplements are ordinarily or commonly known in the trade as products for a specific use in animal feeding."

ii. Circular No. 80/54/2018/GST dated 31.12.2018 - The Board clarified that as per the Explanatory Notes, the Tariff Heading 2309, inter alia, covers vitamins and pro vitamins which improve digestion and more generally ensure that the animal makes good use of the feeds and safeguards its health. It has also been stated in the said Circular that to claim products as animal feed supplements, it is necessary to ensure that such products are commonly known to trade as products for a specific use in animal feeding. The relevant portion of the circular is reproduced herein as under -

    "5. Applicable GST rate on Animal Feed Supplements/feed additives from drugs:

    5.1 Representations have been received seeking clarification regarding GST rate applicable on Animal Feed Supplements/feed additives from drugs. The dispute is in classification of Animal Feed Supplements/feed additives from drugs between tariff heading 2309 and 2936.

    5.4 Thus 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 to the trade as products for a specific use in animal feeding.

    5.5 A product deserves classification chapter 29 (equally applicable to heading 2936), if it is an item of general use, e.g., if a product is of specific use, say dietary supplement for human being product particularly suitable for a specific use rather than for general use. Vitamins and provitamins are normally covered under code heading 2936, but if they're prepared as food supplements in the form of tablets, etc. they would not be classifiable under this heading as the way they are presented, they are suitable for a specific use. Heading 2309 would cover items like feed supplements for animals that contain vitamins and other ingredients - such as cereals and proteins. These are covered in chapter 23 under heading code 2309, or antibiotic preparations used in animal feeding

- for example a dried antibiotic mass on a carrier like cereal middling. The antibiotic content in these items is usually between 8% and 16%. Thus, HS code 2309 would cover only such product, which in the form supplied, are capable of specific use as food supplement for animals and not capable of any general use."

iii. M.F. (D.R.) Instruction No. 34/2022-Cus., dated 30-12-2022 - The instruction set out consolidated list of animal feed additive/supplement permitted for import into India. The products in question squarely fall under the ambit of the list. The products covered under the consolidated list and the products in the Application in question are as below:

C.2 Thus, from the foregoing, it is evident that for products to be classified under the Heading 2309, the following has to be satisfied -

(a) The product is an animal feed/supplement/additive.

(b) The products should be used in animal feeding purposes.

(c) It is known in the trade as products for use in animal feeding.
 

C.3 The product in question satisfy all the above conditions and the same is also evident from the composition of the same. Therefore, the product is rightly classifiable under Heading 2309.

7. I have gone through the submissions made in detail during the filing of the application, and also during the hearing and as additional inputs after the hearing, the comments of the Port Commissionerate and proceed to examine the details and issue the Ruling accordingly.

7.1 Enviva® Provalen Plus 201 GT is a probiotic feed additive for poultry diets. It is a multi-strain probiotic which helps to improve litter quality leading to improved performance and reduced environmental impact. The composition of Enviva Provalen is as follows:

7.2 Enviva Provalen offers the following benefits:

i. Improves litter quality by reducing undigested nutrients in the litter

ii. Biocontrol of microbial populations in the litter through promotion of beneficial bacteria

iii. Improved health, welfare and performance of the animal resulting from reduced undigested nutrients

iv. Reduced environmental impact due to reduced ammonia emissions

7.3 Enviva Provalen has a dual mode of action that inhibits the growth of pathogenic bacteria in the litter and reduces environmental impact. Therefore, Enviva Provalen helps to digest poultry manure, reducing nutrients available for microbial digestion, and promoting the natural drying of the litter. As a result of improved litter quality, the product improves bird health and performance and reduces environmental impact.

7.4 Provisions relating to Advance Ruling are prescribed under Chapter VB of the Customs Act. The present application is being made by the Applicant to confirm classification of Enviva. The Applicant is satisfying the following conditions required for filing the application for advance ruling, namely: a) have been granted a valid Importer-Exporter Code Number (IEC) under section 7 of the Foreign Trade (Development and Regulation) Act, 1992; b) Application for advance ruling is in relation to clause (a) of Section 28H (2) of the Customs Act 1962. Further, the conditions set out in Section 28I are satisfied as: a) the question raised in the present application is not pending in the applicant's own case before any officer of customs, the Appellate Tribunal, or any Court; b)the question raised in the present application is not a matter already decided by the Appellate Tribunal or any Court.

7.5 The Tariff is aligned, up to the 6-digit level, with the Harmonized System of Nomenclature ("HSN") issued by the World Customs Organization ('WCO'). It has been held by the Hon'ble Supreme Court in the case of Collector of Customs, Bombay Vs. Business Forms - 2002 (142) ELT 18 that the HSN Explanatory Notes aid in the interpretation of the Headings of the Tariff and may be used as a safe guide for the same. The classification of the goods imported into India is to be determined based on the General Rules of Interpretation (hereinafter referred to as the "GRI") set out in the Tariff. As per Rule 1 of the GRI, classification of the imported products shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the remaining Rules of the GRI.

7.6 The product in question i.e., Enviva Provalen Plus 201 GT is a preparation used in animal feed. Such products are specifically covered under Heading 23.09. Thus, this Heading may be examined at the outset.

Classification under Heading 2309

7.7 Chapter Note 1 to Chapter 23 is as under -

Heading 23.09 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, other than vegetable waste, vegetable residues and by-products of such processing.

7.8 That the product must be obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, is not an essential condition for classification under Heading 2309. The Chapter Note only states that the Heading includes products so processed, and not that products must essentially be so processed in order to merit classification under Heading 2309. This reasoning is supported by the decision of CESTAT Larger Bench, New Delhi in the matter of Tetragon Chemie Pvt Ltd Vs Collector of CEx, Bangalore [2001 (138) ELT 414 (Tri-LB)].

7.9 Thus, in order to be classified under Heading 2309 the following requirements have to be met:

iii. It must be of a kind used in animal feeding;

iv. It must not be specified or included elsewhere.

7.10 Relevant extracts from the HSN explanatory notes to Heading 23.09 is as under-

23.09 - Preparations of a kind used in animal feeding.
            2309.10 - Dog or cat food, put up for retail sale
            2309.90-Other
 

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.
The heading includes products of a kind used in animal feeding, obtained by processing vegetable or animal materials to such an extent that they have lost the essential characteristics of the original material, for example, in the case of products obtained from vegetable materials, those which have been treated to such an extent that the characteristic cellular structure of the original vegetable material is no longer recognisable under a microscope.

XXXXXXXXXXXXXXXXX

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 (1) 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 are generally identifiable by the medicinal nature and much higher concentration of the active substance and are often put up in a different way.

7.11 As seen from the above explanatory notes, Heading 2309 covers Feed Supplements-products added to feed to enhance certain nutrients. Enviva Provalen is probiotic feed added to the diets of pig and poultry to improve digestion and health. Thus, it is a feed supplement. That it is exclusively intended for use as an animal feed supplement is evident from: a) It is a multi-strain probiotic feed additive and meant specifically for use as animal feed supplements; b) It is a tailor-made solution to ensure that health, digestion, and performance of the poultry is improved and maintained; c) Further the brochure and data sheet also clearly states that Enviva Provalen is a probiotic feed additive for use in pig and poultry diets. It promotes beneficial bacteria, which enhances gut and immune function i.e., increases digestion and promotes beneficial bacteria.

7.12 Enviva Provalen is a is a multi-strain probiotic of the following two active strains:

a. Bacillus amyloliquefaciens

b. Bacillus licheniformis

7.13 Probiotics as 'cultures of microorganisms' are covered under Heading 3002.The relevant extract from Heading 3002 is reproduced below:

7.14 The relevant part of the HSN explanatory notes to the Heading 3002 is reproduced below for ready reference:

' This heading covers:

(A)....

(B)...

(C)...

(D) Vaccines, toxins, cultures of micro-organisms (excluding yeasts) and ^similar products.

(3) Cultures of Micro-organisms (excluding yeasts).

These include ferments such as lactic ferments used in the preparation of milk derivatives (kephir, yogurt, lactic acid) and acetic ferments for making vinegar; moulds for the manufacture of penicillin and other anti-biotics; and cultures of micro-organisms for technical purposes (e.g. for aiding plant growth).'

7.15 Therefore, probiotics as 'cultures of microorganisms' are covered under Heading 3002.The HSN Explanatory Notes state clearly that cultures of microorganisms for technical uses,like aiding in plant growth, will be classified under Heading 30.02. By extension, the Enviva Provalen, which contains cultures of microorganism for aiding in animal growth, too is classifiable under Heading 3002 as cultures of microorganism.

7.16 However, Chapter Note 1 (a) to Chapter 30 states as follows:

1. This Chapter does not cover:

(a) foods or beverages (such as dietetic, diabetic, or fortified foods, food supplements, tonic beverages, and mineral waters), other than nutritional preparations for intravenous administration (Section IV);

7.17 Thus, food supplements are excluded from Chapter 30. The product in question is an animal feed supplement. These are food supplements for animals. Thus, these too seem to be excluded from the ambit of Chapter 30. Further, there is no other Heading that aptly or more specifically covers the product now in question i.e., Enviva Provalen, other than Heading 23.09. Thus, all conditions to be classified under Heading 2309 are met. In view of the above, it is clear that Enviva Provalen is classifiable under Heading 2309, and more specifically under Tariff Item 23099090.

7.18 Further, it is important to note that on merits, the response of the Port Commissionerate is only on the issue of Show Cause Notice on one of the products of the entity, but not on the product Enviva Provalen Plus, which is classifiable under Heading 2309. However, regarding maintainability of the application, it is submitted that the comments provided do not act as a bar to the present application, SCN dated 22.05.2023 was issued disputing the classification numerous products including of the product 'Enviva Pro 201 BA'. The SCN was not issued regarding Enviva Provalen Plus.

7.19 It is pertinent to note that the product covered by the SCN is completely different from the one covered in the present application. The difference is evident from the table below:

7.20 From the above table, it is evident that the composition of the product covered in the SCN vis a vis the composition of the product covered in the present application is different. Further, the purposes of the products too are different: while Enviva Pro is for the birds to achieve better nutrition from the feed, Provalen Plus is for improving the quality of the bird litter to ensure that the same is better for environment and the bird health.

7.21 Further, the SCN dated 22.05.2023, was issued contending that Enviva Pro 201 BA is classifiable under Heading 2309 and not under Heading 3002. In this regard, the applicant has submitted that consequent to such SCN disputing the classification of the product Enviva Pro 201 BA, the Applicant had started importing the same by adopting classification under Heading 2309.

7.22 The product Enviva Provalen Plus is a probiotic feed additive for poultry diets. It is a multi-strain probiotic (containing Bacillus amyloliquefaciens and Bacillus licheniformis) which helps to improve litter quality leading to improved performance and reduced environmental impact. In this regard, the book 'Probiotics in Animal Nutrition [Production, impact and regulation]"3, has defined probiotics and also listed out microorganisms used as probiotics in animal diets. From the above, it is evident that probiotics, and in particular, even Bacillus amyloliquefaciens and Bacillus licheniformis, are widely and commonly used in poultry feed,as an additive/supplement. As elaborated in the application filed, the product in question is fed to the animals and the same helps improve their digestion, which in turn will improve the quality of the litter.

7.23 As elaborated in the present application dated 25.06.2024, Heading 2309 covers three kinds of preparations:

a. complete feeds (Para (II) (A) of the Explanatory Notes)

b. Feed supplements (Para (II) (B) of the Explanatory Notes) and

c. Preparations (i.e. premixes) for use in making the complete feed or feed supplements. (Para (II) (C) of the Explanatory Notes)

7.24 Relevant extracts from HSN Explanatory Notes pertaining to the Premix category is
as follows:

"(C) PREPARATIONS FOR USE IN MAKING THE COMPLETE FEEDS OR SUPPLEMNTARY 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, antibiotics, coccidiostats, trace elements, emulsifiers, flavourings and appetisers, etc.

The concentration of the substances described in (1) above and the nature of the carrier are determined so as to ensure, in particular, homogenous 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.

Preparations consisting of an active substance of the type described in (I) 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".

7.25 Reference is also made to the European Feed Manufacturers' Federation (FEFAC)'s article titled 'What is a premix?' which states that in order to ensure that micro-ingredients are mixed with macro-ingredients (in a homogeneous way), an intermediate dilution step is required via a 'premix'. From the above extracts, it is evident that for undertaking such supplements for poultry litter management, the micro-ingredients like bacillus are first prepared into the form of premix, and the premix is then added to animal feed. Thus, such supplementation is necessarily done through a two-step process: 1) preparing of the premixes and 2) addition of premix to animal feed. Thus, "premixes" are an essential and an indispensable necessity for mixing micronutrients in animal feed. Premixes are formulations of one or more micro-ingredients mixed with diluent and carrier.

    The product in question is a combination of active ingredients i.e., Bacillus amyloliquefaciens and Bacillus licheniformis with a carrier i.e., Calcium carbonate. This is evident from the very inception of the product, as the carriers are added in it for the specific end use in mind and for the reason of ensuring homogenous dispersion and mixing of the complete animal feeds.

7.26 Thus, the preparing of "premix" is not just for convenience, but is an essential necessity to ensure that the active strains/probiotics are uniformly mixed in the final feed, so that each animal gets uniform and appropriate level of the ingredient to achieve the desired benefit. In the final feed, the bacillus amyloliquefaciens and Bacillus licheniformis will be blended at the rate of 01% to 05%, thereby forming very miniscule quantity of the complete feed. In view of the above, it is evident that the product in question as a premix i.e., being combination of active ingredients with carrier is essential to be added to the poultry feed and the same are appropriately classifiable under Heading 2309.

7.27 As evident from the above, use of such carrier does not alter the nature of the product as an animal feed supplement. Therefore, it is clear that the product in question is classifiable under Heading 2309. In this regard, numerous circulars and instructions have been issued by the CBIC and Department of Animal Husbandry in support of classification of the products under Heading 2309. The same are elaborated below:

i. Circular No.188/22/95-CX dated 26.03.1996 - According to the Board, the preparation containing active ingredient used for animal feeding, is classifiable under heading 2309. The Board has also clarified that while deciding the classification of the products claimed to be animal feed supplements, it is necessary to ensure that the said animal feed supplements are ordinarily or commonly known in the trade as products for a specific use in animal feeding. The relevant portion of the Circular is reproduced hereunder:

    "6. In 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 CETprovided 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 ensure that the said animal feed supplements are ordinarily or commonly known in the trade as products for a specific use in animal feeding."

ii. Circular No. 80/54/2018/GST dated 31.12.2018 - The Board clarified that as per the Explanatory Notes, the Tariff Heading 2309, inter alia, covers vitamins and pro vitamins which improve digestion and more generally ensure that the animal makes good use of the feeds and safeguards its health. It has also been stated in the said Circular that to claim products as animal feed supplements, it is necessary to ensure that such products are commonly known to trade as products for a specific use in animal feeding.

iii. M.F. (D.R.) Instruction No. 34/2022-Cus., dated 30-12-2022 - The instruction set out consolidated list of animal feed additive/supplement permitted for import into India. The products in question squarely fall under the ambit of the list.

7.28 In view of the above, it is evident that the product in question as a premix i.e., being combination of probiotics namely, 'Bacillus amyloliquefaciens and Bacilluslicheniforms' are appropriately classifiable under Heading 2309. Thus, from the foregoing, it is evident that for products to be classified under the Heading 2309, the following has to be satisfied - a) The product is an animal feed/supplement/additive; b) The products should be used in animal feeding purposes; c) It is known in the trade as products for use in animal feeding.

7.29 Thus product in question satisfy all the above conditions and the same is also evident from the composition of the same and therefore, is rightly classifiable under Heading 2309, and more precisely under Tariff Item 23099090.

8. I rule accordingly

(Samar Nanda)
 Customs Authority for Advance Rulings
Delhi

F. No. VIII/CAAR/Delhi/Danisco/57/2024                                   Dated: 10.10.2024

This copy is certified to be true copy of the ruling and is sent to: -

1. M/s Danisco India Pvt. Ltd., N-145A, 2nd Floor, Greater Kailash-1, New Delhi-110048.

2. The Principal Commissioner of Customs, JNCH, Nhava Sheva-I, Raigad, Maharashtra-400707.

3. The Customs Authority for Advance Rulings, Mumbai, New Custom House, Ballard Estate, Mumbai-400001.

4. The Chief Commissioner (AR), Customs Excise & Service Tax Appellate Tribunal (CESTAT), West Block-2, Wing-2, R.K. Puram, New Delhi-110066.

5. The Chief Commissioner of Customs, Delhi Customs Zone, New Custom House, IGI Airport Complex, New Delhi-110037.

6. Guard file.

7. Webmaster.

(Bharti Sharma)
Additional Commissioner & Secretary,
Customs Authority for Advance Rulings Delhi