Sun Export Corporation, Bombay Vs. The Collector of Customs,
Bombay & ANR  INSC 549 (7 July 1997)
SEN, K. VENKATASWAMI, V.N. KHARE
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.
facts leading to the filing of these appeals are the following:
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
of the Customs Tariff ACT, 1975 read with Item
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
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.
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 Collector (Refunds).
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.
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
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 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.
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.
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:
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.
Organic compounds including antibiotics, Hormones sulpha drugs, Vitamins and
other products specified in Notes 1 and 2 to this chapter.
Vitamins 100% 94% The relevant Exemption Notification 234/82 dated 1.11.82 read
to certain specified goods. In exercise of the powers 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.
Animal feed including compound livestock feed.
Notification was subsequently amended by bringing into new clause (10), which
reads as follows:
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:
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 that there is no dispute that the goods imported were pre- mix of vitamin
AD-3 (feed grade) not for medicinal use.
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
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
preparations in question are used to supplement animal feed.
animal feed or poultry feed is already fortified with these vitamins when sold.
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.
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.
case of the petitioners themselves namely Glaxo Laboratories India Ltd. V. The 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".
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
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.
have carefully gone through the minority and the 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.
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.
we hold that the appellant is entitled to the refund under the relevant
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 appeals are accordingly allowed. There will be no order as to costs.