Collector
of Customs & Central Excise, Guntur Vs. M/S. Surendra Cotton Oil Mills
& Fert. Co [2000] INSC 669 (15 December 2000)
Appeal (civil) 3762-3774 of 1989 Appeal (civil) 1685-1691 of
1997
British
Kumar, U.C.Banerjee
L.I.T.J
BANERJEE,J.
This
batch of appeals against the order of Customs, Excise and Gold (Control)
Appellate Tribunal (CEGAT) pertain to classification of de-oiled rice bran
extraction, niger seed extraction of topioca chips
and sesame seed extractions as animal feed falling under Tariff Heading No.21
of the Second Schedule to the Customs Tariff Act, 1975. The core question thus
relates to the factum of export duty being leviable thereon during the relevant
period CEGAT has answered that since these products are only ingredients of
animal feed and not animal feed by themselves, the same would not come within
the ambit of the term animal feed as detailed in the statute. Shri Mukul Rohtagi,
the learned Additional Solicitor General, appearing for the appellant, very
strongly contended that differentiation, there might be as regards the product,
but the factum of the product being an ingredient or a supplement to the animal
feed would definitely bring it within the scope of Heading 21 of the Customs
Tariff Act Heading 21 does not, in fact, differentiate between the ingredients
of animal feed and an animal feed neither the entire Tariff Act introduced such
a differentiation but the factum of the same being a part of the whole, the
same cannot escape the export duty.
Admittedly.
the contextual facts depict that these are ingredients of animal feed and it is
on this score the Tribunal came to the conclusion that the ingredient does not
by themselves become an animal feed unless the same is mixed with some other
elements and since the statutory requirement for levy of duty is animal feed,
in order to have the export duty attributed thereto, question of the same being
not within the ambit of the item does not and cannot arise. Be it recorded that
the term animal feed has not been defined in the Tariff Act and as such we are
left with no alternative excepting noting the ordinary dictionary meaning of
the word or the user and understanding of the word in common parlance. In IS
9703-1980 it is found in para 0.2 as below:- In the field of animal feeds
manufacturing industry a large number of feeding stuffs (ingredients) are utilised,
which may be by- products of other industries and also subjected to certain
processing before utilisation.
IS
9703 thus recognises a distinction between the feeding stuffs (ingredients) and
animal feed. The understanding of the Indian Standard Institution, as referred
in IS 9703, thus goes to suggest that ingredients by themselves cannot be
termed to be animal feed - It may be a component or ingredient or a basic
stuff, but it cannot be termed to be animal feed. A very common example on this
score remains that of oil cakes whereas oil cakes are used as protein
supplement in livestock food stuffs and mixed with the animal feed, oil cakes
by themselves cannot be termed to be an animal feed, since animal feed not only
consists of its ingredients but the total bulk in form, shape and size which
would feed an animal. Animal feed thus cannot be an ingredient or a part of the
feed but in its entirety and as a whole taken together with even vitamins and
calcium mix.
The
whole substance thus is the mix and not any specific item as such. Reference
has been made to the decision of this Court in Sun Export Corporation, Bombay v.
Collector
of Customs, Bombay & Anr. [1997 (6) SCC 564] wherein this Court recorded
with concurrence the observations of the Gujarat High Court in the case of Glaxo
Laboratories (India) Ltd. v. State of Gujarat [1979 (43) STC 386 Gujarat] to
the affect that it cannot be said that animal feed concentrates are not animal
feed. In the same manner products which supplement animal feed and which
generally added to animal feed are also covered by the generic term animal
feed. The situation however, is not the same in the instant matter. In the case
of Sun Exports Corporation (supra), it was animal feed and animal feed
supplements and by reason of the exemption notification for animal feed, this
Court came to a definite conclusion that animal feed includes animal feed
supplements and as such M/s Sun Exports Corporation was declared to be entitled
to refund under the relevant exemption notification. The brief facts as appears
from the decision (at page 565) leading to these appeals are as follows: 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 the Central
Excise Tariff Act, 1985. 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 No.234/82-CE dated 1.11.1982, 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 Assistant Collector (Refunds)
concerned 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 1.11.1982 was of
no avail to the Corporation.
3.
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 that 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).
It is
on this factual backdrop this Court in paragraph 14 of the report observed as
below: 14. We 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 CCE v.
Punjab Bone Mills (1988) 38 ELT 389 (Trib) (Appeal No.615/85-C with
E/Cros/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 the minority view and, therefore, the exemption claimed by the
appellant was denied. The majority view, it appears, was influenced by the fact
that a decision of the Tribunal in Aries Agro-Vet Industries (P) Ltd. v. CCE
(1984) 16 ELT 467(Trib) taking a similar view, was challenged by filing Civil
Appeal No.17 of 1984 and that was dismissed at the admission stage. It must be
noted that presumably the amendment to Exemption Notification No.234/82 by a
subsequent Notification No.6/84-C.E. dated 15.2.1984 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 Glindia Ltd. case [(1988) 36
ELT 479 (Bom)]. Since we have already extracted in extenso the decision of the
Bombay High Court, we do not think it necessary to repeat the same.
While
it is true that the decision in Sun Exports Corporations case (supra) delved
into animal feed but by reason of the factual situation as noticed above, the
same is clearly distinguishable and, in fact, does not lend any assistance in
the matter in issue.
It is
on this perspective it can not but be held that the oil cakes and rice bran as
exported by the respondents cannot thus be termed to be animal feed warranting
invocation of Heading 21 of the export tariff under the Customs Act. The
Judgment of the Tribunal cannot be faulted in any way. This batch of appeals
therefore fail and are dismissed without however any order as to costs.
Back
