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PETITIONER: M/S SUN EXPORT CORPORATION, BOMBAY

       Vs.

RESPONDENT: THE COLLECTOR OF CUSTOMS, BOMBAY & ANR

DATE OF JUDGMENT:       07/07/1997

BENCH: S.C. SEN, K. VENKATASWAMI, V.N. KHARE

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T K. Venkataswami, J.      The appellant  as well as the question of law is common in all  these appeals.  For that reason. the Customs. Excise and   Gold   (Control)   Appellate   Tribunal.   New   Delhi (hereinafter referred  to as the ’Tribunal’) has disposed of the appeals  by a  common order.  Hence, these  appeals  are disposed of by this common Judgment.      Brief facts  leading to the filing of these appeals are the following:      The appellant-Corporation  imported six consignments of goods (Pre  mix of  vitamin Ad-3  Mix (feed grade, at Bombay and seven  consignments of  similar goods at Calcutta. These consignments  were   assessed  to  duty  under  the  heading 29:01/45(17) of  the Customs Tariff ACT, 1975 read with Item 68 of  Central Excise  Tariff Act.  The Corporation paid the duty. Later  on it  claimed  refund  of  the  duty  paid  as countervailing duty  contending inter  alia that  the  goods imported were  classifiable under  item 23:01/07  as  Animal Feed’ and  as per  Notification 234/82  CE dated    1.11.82, those goods  were exempted  from levy  of duty. Accordingly. Applications were  filed for  refund of  the  countervailing duty/additional duty  Paid on  such imports.  The  concerned Assistant Collector  (Refunds) rejected  the  claim  of  the appellant holding that the goods imported were assessable to duty under  the heading  29.01/45(17) of the then prevailing First Schedule  to the  Customs Tariff Act read with Item 68 of the  Central Excise  Tariff and. therefore, the exemption notification  dated   1.11.82  was   of  no   avail  to  the corporation.      Aggrieved by  The rejection  of refund applications the appellant  preferred   separate  appeals   one  set   before Collector of  Customs (Appeals),  Bombay,  and  another  set before  Collector   of  Customs   (Appeals),  Calcutta.  The appellate authority  at Bombay  accepted the  claim  of  the appellant and  granted the relief holding the goods imported were in  the nature  of ‘Animal  Feed Additives, and as such fall under  the heading  23: 01.07.  However, the  appellate authority at  Calcutta rejected  the claim  of the appellant and dismissed  the appeal  accepting the  view of  Assistant

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Collector (Refunds).      Against  the   order  of  the  appellate  authority  at Calcutta the  appellant preferred  an  appeal  before    the Tribunal and  the   Revenue  preferred  appeals  before  the Tribunal against  the orders  of the  appellate authority at Bombay.      The Tribunal  while unanimously  holding that the goods imported fell  under heading  29.01/45 (17)  Of the  Customs tariff Act  differed on the question of exemption claimed by the appellant.  The minority view was That the appellant was entitled  to   the  benefit  of  exemption  claimed  by  the appellant while the majority held otherwise.      Aggrieved by the common  order Of the Tribunal of these appeals are  preferred. Mr.  Ramesh  Singh  learned  counsel appearing   for the  appellant - corporation, supporting the minority view  of the  Tribunal invited  our attention  to a judgment of  the Bombay High Court in Glindia Ltd. Vs. Union of India- 1988 (36) E.L.T. 479 wherein an identical question arose for consideration  and the learned Single Judge took a view favourable  to the assessee. In other words, the earned Judge held  that animal  feed supplements’  would fall under the purview of Exemption  Notification No.55/75-C.E. similar to the one under consideration.      The learned Additional solicitor General, Mr. K.N. Bhat on the  other hand  supporting  the  majority  view  of  the Tribunal.  submitted  that  a  similar  view  taken  by  the Tribunal was  challenged in  appeal in  this Court which was dismissed in  limine at  the  admission  stage.  He  further submitted that  the view  taken  by  the  majority  was  the correct one.      In order  to appreciate  the rival  submissions, it  is necessary to  set out  the relevant  Tariff Items as well as the relevant portion of the Exemption Notification. They are as follows:      23.01/07  Residues  and   waste  or                food   industries    (for                example, inedible meat or                fish  flour   or   meals,                milling  residues,  waste                from sugar,  brewing  and                distilling   and   starch                industries; oil-cake  and                other residues  from oil-                extraction (except dregs)                products   of   vegetable                origin of a kind used for                animal     food,      not                elsewhere  specified   or                included;       sweetened                forage and other prepared                animal fodder.      29.01/45  Organic         compounds                including    antibiotics,                Hormones  sulpha   drugs,                Vitamins    and     other                products   specified   in                Notes 1  and  2  to  this                chapter.                ..         ..          ..                ..      ..        ..                17. Vitamins  100%  94%      The  relevant  Exemption  Notification    234/82  dated 1.11.82 read as follows:           Exemption to certain specified      goods. In  exercise of  the  powers

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    conferred by  sub-rule (I) Of  rule      of the  Central Excise Rules, 1944,      and   in    supersession   of   the      notification of  the Government  of      India in  the Ministry  of  Finance      (Department of Revenue) NO. 104/82-      Central  Excise,   dated  the  28th      February,   1982,    the    central      Government hereby  exempts goods of      the description  specified  in  the      Schedule hereto annexed and falling      under item  No.68  of    the  First      Schedule to the Central Excises and      salt Act,  1944 (I  of 1944 ), from      the whole  of the  duty  of  excise      leviable thereon under section 3 of      the said  Act.      ...                ...          ...           10.  Animal   feed   including                compound livestock feed.      This  Notification was subsequently amended by bringing into new clause (10), which reads as follows:           "In  exercise  of  the  powers      conferred by sub-rule (I) of rule 8      of the  Central Excise  Rules, 1944      the central Government hereby makes      the following further amendments in      the Notification  of the Government      of India in the Ministry of Finance      (Department of  Revenue No. 234/82-      Central   Excises,   dated the  1st      November,  1982, namely:-      In the said notification:-           (a)    in  the  schedule,  for      serial  No.   10  and   the   entry      relating  thereto,   the  following      serial  No.   and  entry  shall  be      substituted, namely:           "10.  Animal   feed  including      compound live  stock feed,   animal      feed supplements  and animal;  feed      concentrates. "           (b) The  Explanation shall  be      number ed  as Explanation  I,   and      after Explanation I as so numbered,      the following  Explanation shall be      inserted, namely :-           " Explanation  II --  For  the      purpose of  this notification,  the      expression-   (i)    "animal   feed      supplements means  an ingredient or      combination of  ingredients,  added      to the  basic   feed mix  or  parts      thereof to fulfil a  specific need,      usually   used    in   the    micro      quantities  and  requiring  careful      handling and  mixing; (ii)  "animal      feed concentrates  " means  a  feed      intended to  be diluted  with other      feed   ingredients    to    produce      complete  feed  optimum    nutrient      balance.           (Notification  No.   6/84-C.E.      dated 15.2.84)      Before proceeding  further. it  is necessary  to  state

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that there  is no  dispute that the goods imported were pre- mix of  vitamin AD-3  (feed grade)  not for  medicinal  use. Again there  is no  dispute that the said pre-mix of vitamin AD-3 (feed  grade) is  an animal  feed supplement.  Even the majority view of the Tribunal proceeded on that footing. But they  took   the  view   that  animal  feed  supplements  by themselves are  not animal  feeds’ for  qualifying exemption under the notification dated 1.11.82.      Now,  the    question  is  whether  the  ’animal  feed’ supplement would fall under the Exemption Notification dated 1.11.82. As  noticed earlier similar question was considered by the Bombay High Court and the learned Judge Expressed the View as follows :           "The preparations  in question      are used to supplement animal feed.      Sometimes animal  feed  or  poultry      feed  is   already  fortified  with      these    vitamins     when    sold.      Sometimes, however,  farmers prefer      to  add   the  vitamins  either  to      animal feed  or  toe  poultry  feed      separately.       These    products      strengthen the  nutritional quality      of’  animal’   feeds.   Thus,   for      example, items  like  Bournvita  or      Complan  also   acid  nutrients  to      milk. But   they  are not  for that      reason, medicines.   In  a  general      sense  every  kind  of  nourishment      strengthens   the    body   against      ailment.     But  such  nourishment      cannot be  considered as a medicine      or a  drug.   The two  products are      also   known in the trade as animal      feed  supplements and they are sold      by the suppliers of animal feed.           It is  next contended  by  the      respondent that  even  if  the  two      products fall  under Tariff item 68      the  benefit   of   the   exemption      notification no.55  of 1975  cannot      be given  to these products because      these  products   are  not   animal      feeds.  They are merely animal feed      supplements.       This   exemption      notification has  been  amended  by      another notification  No.6 of  1984      dated 15th  February 1984 as result      of  which   the  item  animal  feed      including compound live stock feed"      is now  substituted by "animal feed      including compound live stock feed,      animal feed  supplements and animal      feed   concentrates."   After   the      coming   into    force   of    this      notification,  the petitioners have      been  given  the  benefit  of  full      exemption.  The  only  question  is      whether prior to this notification,      the  petitioners  are  entitled  to      exemption  under     the   original      notification No.55 of 1975.           In the case of the petitioners      themselves       namely       Glaxo      Laboratories India    Ltd.  V.  The

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    State of  Gujarat reported  in 1979      43 sales  Tax Cases,  page 386  the      Gujarat High  Court was required to      consider  whether  certain  vitamin      products  including   Vitablend  WM      Forte   which    were   used    for      supplementing  cattle  and  poultry      feed  should   be   classified   as      ’cattle feed" within the meaning Of      Entry  21   Of  Schedule    of  the      Gujarat  Entry  tax  Act.  1569  or      "poultry feed"  within the  meaning      of Entry  22 Of  the Schedule  1 of      that Act  . The  Gujarat High Court      has  held  that  the  terms  cattle      feed"  and   "poultry  feed"   must      include not only that food which is      supplied  to  domestic  animals  or      birds   as an essential  ration for      the maintenance   of  life but also      that feed  which is  supplied  over      and   above    the      maintenance      requirements    for    growth    or      fattening and  or        production      purposes  such  as  for  production      purposes such  as for reproduction,      for production   of  milk,    eggs,      meat,   etc.   or  for    efficient      output   of work The same reasoning      would apply  to  the  present  case      also.  These products are  also fed      to animals  or poultry to give them      better nourishment.    They  would,      therefore,     quality  as  "animal      feeds".           It  was   submitted   by   the      respondents  that   the  subsequent      amendment   expressly   refers   to      animal  feed   supplements".   This      suggests    that     animal    feed      supplements  were   not  previously      included    in     The    exemption      notification.. This  reasoning must      be rejected.  The amendment appears      to be classificatory in nature. For      example,    the    amendment    now      expressly  refers  also  to  animal      feed concentrates  which were   not      expressly referred  to earlier.  It      cannot be  said  that  animal  feed      concentrates are  not animal   feed      and are  generally added  to animal      feed and  are  generally  added  to      animal fed  are also covered by the      generic terms "animal feed".      We are  in agreement  with the  above view expressed by the Bombay  High Court.  NO doubt it was contended on behalf of the Revenue that the contrary view taken by  the Tribunal has been  challenged in  this Court  which was  rejected  in limine at  the admission  stage.  we  do  not    think  that dismissal at  the admission  stage can  be relied  upon as a binding precedent.  Even assuming  that there  are two views possible, it  is well  settled, that  one favourable  to the assessee in matters of taxation has to be preferred.      we have  carefully gone  through the  minority and  the

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majority views  of the  Tribunal. We find that shri K. Gopal Hegde who  has dealt  with the  issue in  extenso, has taken note of  the ratio  laid down by the Bombay and Gujarat High Courts as  well as  a subsequent  decision of  the  Tribunal itself in  collector  of  central)  Excise,  Chandigarh  vs. Punjab Bone Mills (Appeal No. 615/85-C with E/Cross/64/1988- C for  coming to a conclusion that the goods imported by the appellants are eligible for exemption under Notification NO. 234/82. However, this view was minority view and, therefore, the exemption  claimed by  the  appellant  was  denied.  The majority view,  appears, was  influenced by  the fact that a decision of  the Tribunal  in M/s. tries Aqro-Pet Industries pvt. ltd.,  VS. Collector  of central  Excise, Bombay,  1984 (16) ELT 467 taking a similar view, was challenged by filing civil Appeal  NO.  17/84  and  that  was  dismissed  at  the admission stage.   It  must be  noted   that presumably  the admission stage.  It  must  be  noted  that  presumably  the amendment to  exemption  Notification 234/82 by a subsequent notification No.  6/84-C.E. dated 15.2.84 was not before the court for   consideration.  The majority view also failed to take note  of the subsequent amendment to the main exemption Notification as  well as  the   effect of  the amendment  as noticed by  the Bombay   High Court in M/s.  Glindia Limited case.  Since  we  have  already  extracted  in  extenso  the decision of  the Bombay  High Court,  We do  not   think  it necessary to repeat the same.      Accordingly, we  hold that the appellant is entitled to the refund  under  the  relevant  Exemption    Notification. However,  it is for  the concerned authority to further look into the refund applications and pass orders in the light of the ratio  laid down  bu this  court in  Mafatlal Industries Ltd. Vs.  Union of  India -  1997 (89) E.L.T. 247 (SC).  The appeals are  accordingly allowed. There will be no order  as to costs.