The Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Mifex Oral Suspension, Sancal Vert Forete are classifiable under head of products of a kind used in animal feeding.
Emil Pharmaceutical Industries Pvt. Ltd, the appellant was engaged in the manufacture of excisable goods viz. pharmaceutical products falling under Heading No. 3003 and animal feed supplements falling under Heading No. 2309 of First Schedule to Central Excise Tariff Act, 1985. The animal feed supplements manufactured by the appellant are having various names such as Mifex Oral Suspension, Sancal Vert Forete, Sancal Pet 200 ml, Gold Boost Tonic, Vetoliv etc.
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Appellant is clearing animal feed supplements by classifying the same under Heading 2309 of Central Excise Tariff Act, 1985. Chapter note of Chapter 23 reads “Heading 2309 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 byproducts of such processing.”
During the period of dispute, effective rate of duty for goods falling under Heading 2309 was nil. It appeared to Revenue that from the composition of the animal feed supplements which contains ingredients such as calcium, magnesium, phosphorus, vitamin B12 and vitamin D3, the same should get classified under Heading 3003 or 3004 of Schedule to Central Excise Tariff Act, 1985 depending on whether put up in major doses for retail sale or otherwise and shall attract appropriate central excise duty.
A show cause notice was issued to the appellant stating that the goods under question are prima facie classifiable under Heading 2309 and 3003 or 3004 and, therefore, by applying General Rules for Interpretation of First Schedule to Central Excise Tariff Act, 1985, they should be classified under Heading 3003 or 3004 and through the said show cause notice, central excise duty applicable to Heading 3003/3004 of Rs.1,66,27,016/- was demanded by invoking extended period of limitation provided under the provisions to sub-section (1) of Section 11A of Central Excise Act, 1944 for the period upto 07.04.2011 and for the period after 08.04.2011 by invoking subsection (4) of Section 11A of Central Excise Act, 1944.
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Appellant submitted before the original authority that medicaments require drug licence issued by FAD under Drugs and Cosmetics Act, 1940 and such licences are to be displayed on the labels of the manufactured medicaments and the said case is not with the animal feed supplements manufactured by them and, therefore, the goods in question were not medicaments classifiable under Heading 3003 or 3004 of the said Schedule.
Appellant also relied on CBEC circular No. 188/22/96-CX dated 23.06.1996 and stated that the product even if contains vitamins and minerals, the same would fall under Chapter Heading 2302 if such vitamins and minerals help in homogenous dispersion and mixing of the active substances in the compound feed.
Original authority through the impugned order has held that the appellant had relied on the decision in Dabur India Ltd. but the facts in the case of Dabur India Ltd. and the present case are different because in the case of Dabur India Ltd. the classification was sought on the basis of CRCL report and in the present case no such report exists.
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He further stated that the labels of the products indicate that they are to be administered in measured doses and, therefore, he has held the same to be classifiable under Chapter Heading 3004 of First Schedule to Central Excise Tariff Act, 1985 and confirmed the demand raised and imposed equal penalty.
It was noted that the subject goods have nutrient supplements, which do not find any mention in British Pharmacopoeia or Indian Pharmacopoeia and which are not prescribed by veterinary doctors for cure of any ailment and that though the doses are prescribed, that does not mean that they are medicaments. The Tribunal observed that Supreme Court in the case of Puma Ayurvedic Herbal (P) Ltd. had held that the burden to show correct classification lies on Revenue and here the Revenue has not discharged such burden.
A two member bench of Dr. Suvendu Kumar Pati, Member (Judicial) and Mr. Anil G. Shakkarwar, Member (Technical) held that the classification adopted by the appellant under Heading 2309 and under Tariff Item No.23099090 is appropriate classification for animal feed supplements. The court set aside the impugned order and allowed the appeal.
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