Holding

Animal feed supplements such as the pre‑mix vitamin AD‑3 (feed grade) are covered by the term ‘animal feed’ in Notification No. 234/82‑CE, especially after its clarificatory amendment, and therefore the appellant is entitled to the exemption and refund.

Summary

The appellant, Mis Sun Export Corporation, imported six consignments of vitamin AD‑3 premix (feed grade) and claimed refund of customs and counter‑vailing duties on the ground that the product was an ‘animal feed’ covered by Notification No. 234/82‑CE, which exempts such goods. The Customs, Excise and Gold (Control) Appellate Tribunal classified the goods under heading 29:01/45(17) of the Customs Tariff Act and held that animal‑feed supplements were not ‘animal feed’ for the purpose of the exemption, denying the refund. The corporation appealed, arguing that the amendment Notification No. 6/84‑CE, which added ‘animal feed supplements’ to the definition of animal feed, made the product eligible for exemption. The Supreme Court examined the statutory language, the clarificatory nature of the amendment, and precedents that favour a construction favourable to the assessee in tax matters. It held that the premix is an animal feed supplement falling within the amended definition of ‘animal feed’ and that a dismissal at the admission stage does not constitute binding precedent. Consequently, the Court allowed the appeals and directed that the refund be granted.

Issues considered

Whether the pre‑mix vitamin AD‑3 (feed grade) qualifies as ‘animal feed’ under Item 23:01/07 and is therefore covered by Notification No. 234/82‑CE.
Whether the amendment Notification No. 6/84‑CE, which adds ‘animal feed supplements’ and ‘animal feed concentrates’, is clarificatory and extends the exemption to such supplements.
Whether a dismissal of a similar view at the admission stage can be treated as a binding precedent.
Whether, in matters of taxation, the interpretation favourable to the assessee must be preferred when two plausible constructions exist.

Legislation cited

Central Excise Act, 1944s. Item 68 of First Schedule, s. Section 3
Central Excise Rules, 1944s. Rule 8, sub‑rule (1)
Customs Tariff Act, 1975s. Heading 29:01/45(17)

Subjects

customs dutyexcise dutyexemption notificationanimal feed supplementstatutory interpretationtax lawprecedentgoods classificationrefund of duty

Judgment

A MIS SUN EXPORT CORPORATION BOMBAY
v.
COLLECTOR OF CUSTOMS, BOMBAY AND ANR.
-
JULY 7, 1997

B [S.C. SEN, K. VENKATASWAMI AND V.N. KHARE, JJ.]

Customs Tariff Act, 1975-Headbtg 29:01145( 17) r/w Item 68 of Central
Excise Tariff Act-Notification 234182-CE dated 1-11-82-Applicabilitf
Animal feed supplement-Wliether would fall under Exemption Notification
C dated 1-11-82--Held, Yes.

Intepretatiun of Statutes-Taxation matters-Rule of intepretation
when two views possible-Held, view favourable to assessee to be prefe"ed.

Precedents-Law of-Dismissal of matter at admission stag~Whether
D can be relied upon as a binding precedent-Held, No.

The appellant Corporation imported consignments of Pre- mix of
Vitamin Ad-3 Mix (feed grade) which were assessed to duty under the
heading29:01/45(17) of the Customs Tariff Act, 1975 r/w Item 68 of Central
E Excise Tariff Act. The Corporation's claim 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 was
rejected. In appeal, the Tribunal held that the goods imported fell under
heading 29:01/45 (17) and that the appellant Corporation was not entitled
to the benefit of the Exemption Notification as the animal feed supple-
F ments by themselves were not 'animal feed' for qualifying exemption under
the notification. These appeals were filed against the order of the Tribunal.

Allowing the appeals, this Court

HELD : 1.1. The goods imported were pre-mix of vitamin AD- 3 (feed
G grade) not for medicinal use. It was an animal feed supplement, therefore
an animal feed. The exemption notification has been amended by another
notification No. 6of1984 as a result of which the item 'animal feed' is now
substituted by 'animal feed, animal feed supplements and animal feed ·
concentrates'. This amendment is clarificatory in nature and products
H which supplement animal feed are also covered by the generic term 'animal
434
SUN EXPO!<T CORPN. v. COLI.ECTOR OF CUSTOMS, BOMBAY [K. VENKATASWAM' J.) 435

feed'. The goods imported by the appellants were eligible for exemption A
under Notification No. 234/82. The appellants were held entitled to the
refund, [439-C; H; 441-D]

1.2. Though the contrary view taken by the Tribunal had been
challenged in this Court which was rejected in limine at the admission
stage. Dismissal at the admission stage cannot be relied upon as a binding B
precedent. [441-A]

2. In matters of taxation, even when there are two views possible, that
one favourable to the assessee has to be preferred. [441-B]

Mafatlal lndustlies Ltd. v. Union of Irdia, (1997) 89 ELT 247 SC, C
relied on.

-- Collector of Central Excise, Chandigarh v. Punjab Bone Mills, (Appeal
No. 615/85-C with E/Cross/64/1988-C) and M/s. Aries Agro-Pet Industries
Pvt. Ltd. v. Collector of Central Excise, Bombay, (1984) 16 ELT 467, referred D
to.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 4897-
4991 of 1990.

From the Judgment and Order dated 11.5.89 of the Customs, Excise E
and Gold (Control), Appellate Tribunal, New Delhi in 0. Nos. 173- 177/89
in Appeal Nos. C/465 to 468/84 and 1474 of 1986-C.

Ramesh Singh, Bina Gupta, Rakhi Ray and T. Sudha for the Appel-
lant.
F
K.N. Bhat, Additional Solicitor General, K.K. Patil and V.K. Verma
for the Respondents.

The Judgment of the Court was delivered by

K. VENKATASWAMI, J. The appellant as well as the question of G
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 : H
436 SUPREME COURT REPORTS (1997] SUPP. 1 S.C.R.

A 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
B 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' a~d .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
C 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.
-
D 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
E 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).

Against the order of the appellate authority at Calcutta the appellant
preferred an appeal before the Tribunal and the Revenue preferred ap-
F peals 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
G 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, these appeals are
preferred. Mr. Ramesh Singh, learned counsel appearing for the appellant-
H corporation, supporting the minority view of the Tribunal invited our
SUN EXPORTCORPN. v. COLLECTOR OF CUSTOMS, BOMBAY[K. VENKATASWAM~J.J 437

, attention to a judgment of the Bombay High Court in Glindia Ltd. v. Union 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 learned Judge held that 'animal feed
-1
supplements' would fall under the purview of Exemption Notification No.
55175-C.E. similar to the one under consideration.
B
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
1I
which was dismissed in limine at the admission stage. He further submitted
that the view taken by the majority was the correct one. C

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 of food industries (for
D
example, inedible meat or fish flour or meal),
milling residues, waste from sugar, brewing and
distilling and starch industries; oil-cake and other 60%
residues from oil-extraction (except dregs)
products of vegetable origin of a kind used for E
animal food, not elsewhere specified or included;
sweetened forage and other prepared animal
fodder.
20.01/45 Organic compounds including antibiotics,
Hormones sulpha drugs, Vitamins and other F
products specified in Notes 1 and 2 to this
Chapter.

G

17. Vitamins 100% 94%

Th.e relevant Exemption Notifications 234/82 dated 1.11.82 read as
~~: H
438 SUPREME COURT REPORTS (1997] SUPP. 1 S.C.R.

A Exemption to certain specified goods.- In exercise of the
powers conferred by sub-rule (I) of rule 8 of the Central Excise
Rules, 1944, and in supersession of the notification of the Govern-
ment 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
B 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.

c
10. Animal feed including compound live-stock feed.

This Notification was subsequently amended by bringing into new
clause (10), which reads as follows:
D
"In exercise of the powers conferred by sub-rule (1) 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,
E 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,
F namely:

"10. Animal feed including compound live stock feed, animal
feed supplements and animal feed concentrates."

(b) the Explanation shall be numbered as Explanation I, and
G
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
H combination of ingredients, added to the basic feed mix or parts
SUN EXPORT CORPN. v. COLLECTOR OF CUSTOMS, BOMBAY [K. VENKATASWAML J.J 439

thereof to fulfil a specific need, usually used in the micro quantities A
and requiring careful handling and mixing; (ii) "animal feed con-
centrates" 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)
B
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. 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 C
the view that animal feed supplements by themselves are not 'animal feed's
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 D
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 E
to add the vitamins either lo animal feed or to poultry feed
separately. These products strengthen the nutritional quality of
animal feeds. Thus, for example, items like Bournvita or Complan
also add 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 F
be considered as a medicine or a drug. The two products are also
known in the trade as animal feed supplements and they arc 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 G
notification no. 55 of 1975 cannot be given to thes~ 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 a result of which the item "animal feed including compound H
440 SUPREME COURT REPORTS [1997] SUPP. 1 S.C.R.

A live stock feed" is now substituted by "animal feed including com-
pound 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.
B
In the 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 re-
quired to consider whether certain vitamin products including
c 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 I of the Gujarat Sales Tax Act,
1969 or "poultry feed" within the ·meaning of Entry 22 of the
Schedule I of that Act. The Gujarat High Court has held that the
D 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 for production purposes such as for reproduction,
for production of milk, eggs, meat, etc. or for efficient output of
E ·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, qualify as "animal
feeds".

F
"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 in-
cluded in the exemption notification. This reasoning must be
rejected. The amendment appears to be clarificatory in nature. For
G 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. In the
same manner products which supplement animal feed and are
generally added to animal feed are also covered by the generic
H term "animal feed".
SUN EXPORTCORPN. v. COLLECTOR OF CUSTOMS, BOMBAY{K. VENKATASWAMLJ.J 441

We are in agreement with the above view expressed by the Bombay A
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
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 B
preferred.

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 C
Gujarat High Courts as well as a subsequent decision of the Tribunal itself
in Collector of Central Excise, Chandigarh v. Punjab Bone Mills (Appeal No.
615185-C with EICross/6411988-C) for coming to a conclusion that the
goods imported by the appellants are eligible for exemption under Notifica-
tion No. 234182. However, this view was minority view and, therefore, the
exemption claimed by the appellant was denied. The majority view, it D
appears, was influenced by the fact that a decision of the Tribunal in Mis.
Aries Agro-Pet Industries Pvt. Ltd. v. Collector of Central Excise, Bombay,
(1984) 16 ELT 467 taking a similar view, was challenged by filing Civil
Appeal No. 17184 and that was dismissed at the admission stage. It must
be noted that presumably the amendment to exemption Notification 234182 E
by a subsequent Notification No. 6184-C.E. dated 15.2.84 was not before
the Court for consideration. The majority~iew also failed to take note of
the subsequent amendment to the main ~xemption notification as well as
the effect of the amendment as noticed by the Bombay High Court in Mis.
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 F
the same.

Accordingly, we hold that the appellant is entitled to the refund
under the relevant Exemption Notification. However, it is for the con-
cerned authority to further look into the refund applications and pass
orders in the light of the ratio laid down by this Court in Mafatlal Industries G
Ltd. v. Union of India, (1997) 89 E.L.T. 247 (SC). The appeals are accord-
ingly allowed. There will be no order as to costs.

R.A. Appeals allowed.