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Aries Agro-vet Industries Pvt. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(16)ELT467TriDel
AppellantAries Agro-vet Industries Pvt.
RespondentCollector of Central Excise
Excerpt:
.....17-cl-23/79/5239 dt. 16-6-82.2. the appellant produced certain products which are used as animal feed supplements and have been given various names like poultrymin, cattle-min, yolk-o-gold, boon-o-milk. these products are required to be added in small quantities to animal feed to balance and supplement the normal diet of cattle, poultry, pigs and other animals. the appellate collector held that although the products are assessable under item 68 as claimed by the appellants, they should not be given exemption under notification no. 55/75-ce which they also claim. the assistant collector held in his order that yolk-o-gold, boon-o-milk were patent medicines assessable under item 14e but the appellate collector reversed this order and directed their assessments under item 68. the dispute.....
Judgment:
1. This appeal dated 6th October, 1982 has been filed by M/s. Aries Agro-Vet Industries Pvt. Ltd., Bombay against Order-in-Appeal No.A-130A/B1-163/82 (This appeal appears to bear no date although the appellants give it a date of 6th September, 1982). The order of the Appellate Collector arose from the order of the Assistant Collector of Central Excise, Division KI of Bombay Central Excise Order No. V (68) 17-CL-23/79/5239 dt. 16-6-82.

2. The appellant produced certain products which are used as animal feed supplements and have been given various names like Poultrymin, Cattle-min, Yolk-O-Gold, Boon-O-Milk. These products are required to be added in small quantities to animal feed to balance and supplement the normal diet of cattle, poultry, pigs and other animals. The Appellate Collector held that although the products are assessable under item 68 as claimed by the appellants, they should not be given exemption under notification No. 55/75-CE which they also claim. The Assistant Collector held in his order that Yolk-O-Gold, Boon-O-Milk were patent medicines assessable under item 14E but the Appellate Collector reversed this order and directed their assessments under item 68. The dispute before us is only in respect of the refusal by the Appellate Collector to grant to the products the exemption under notification No.55/75-CE. This exemption completely exempts excise duty of item 68 on a number of specified goods, one of which is "animal feed including compounded live-stock feed". The appellants' claim in their appeal that the Appellate Collector was wrong when he denied them the exemption under notification 55/75-CE and was also wrong in rejecting IS specifications on the ground that it was nowhere stated that mineral mixtures which were for supplementing animal feeds will be covered by the term 'animal feed'. He held that the products were meant to supplement animal feed arid were, therefore, not themselves animal feed. Certificates produced from the appellants' customers were rejected by the Appellate Collector wrongly on the ground that they had been obtained after the issue had been raised by the excise department and they were not by way of affidavit. The Collector (Appeals) held that the entry in the notification did not cover animal feed supplements, and, therefore, the question of how the petitioners' products would be consumed would not be material. The appellants argued that were was not a little of evidence to justify the assertion that the notification extends only to animal feed and normally does not include animal feed supplements. They argued that it is common sense that whatever adds to the efficacy of a particular subject matter ought itself to be classified as such subject. Furthermore, it is an accepted normal concept judicially recognised by courts as well as by the IS1 that animal feed supplement is within the purview of animal feed. The Collector (Appeals) failed to appreciate that the petitioners products are supplements because without them the animal feed given to poultry, cattle etc. would be incomplete and inadequate to fulfil the nutritional needs of poultry and cattle for maintenance, production, reproduction, digestion etc. The Collector (Appeals) held that because the entry contained the expression "including compounded live-stock feed" it excludes feed supplements. This line of reasoning is not borne out by any rule of interpretation. In support, M/s Aries Agro-Vet Industries Pvt. Ltd. quoted tariff advice No. 62 of 1979 in which the Govt. of India ruled that di-calcium phosphate of animal feed grade was an animal feed and was entitled to. the exemption under notification No. 55/75-CE. It must be noted that di-calcium phosphate by itself cannot supply all the nutrient requirements of animals and cannot be considered a compounded livestock feed. It is an admitted fact supported by technical literature ISI etc. that mineral mixtures liks these Aries products are essential components in the manufacture of compounded livestock feed as is the case with di-calcium phosphate, ground-nut cake, linseed and rapeseed cake. In one of its standards relating to animal feed the Indian Standards Institution has listed various products which fall within the group 'animal feed'. The appellants referred to Standards 1664 of 1968, 5672 of 1970 and 5470 of 1970 the Indian Standard Institution specifications on poultry and cattle feed report that it is a well-known fact that the process in a living organism depends upon the presence of various mineral sources in proportion. The general rations were deficient in minerals and it was essential that minerals should be provided in adequate quantities and requisite proportion to ensure optimum health and productivity in the animals and birds.

3. A judgment of the Gujarat High Court in Glaxo Laboratories v. State of Gujarat was also quoted in favour of their case by the appellants before the Appellate Collector. However, the Appellate Collector held that the judgment could not be applied to central excise notification on the ground that the entry in the sales-tax law included concentrate which, however, was absent in the central excise entry. The judgment of the High Court rested not on the presence of the word 'concentrate' in the sales-tax entry, but on the interpretation of the normal meaning of the description 'animal feed'. The Appellate Collector rejected certificates produced from M/s. Akbarallys, Onkar Agencies and others on the ground that they have been obtained after the issue had been raised by the department and that they were not affidavits. The certificates were by people who were experts in their field and should not have been rejected without very strong reasons. The Appellate Collector did not at any time demand from the petitioners affidavits to substantiate what is certified by the certificates. The appellant say they would have easily obtained the required affidavits. Furthermore, the Appellate Collector does not refer to the opinion expressed by an authority on the subject one Dr. D.S. Jadhav, Head of the Department of Animal Nutrition, Bombay Veterinary College, given in his letter dt.

7th July, 1982. The Appellate Collector also does not refer to the Government's tariff rulings about di-cal-cium phosphate already alluded to earlier.

4. All the above arguments were presented at the hearing before this Tribunal on 6-10-83 by Mr. M. Venkataraman, learned counsel for the appellants. He argued that whatever conduces to the maintenance, health, well-being and productivity of the animal or bird when fed as food or part of its food must be accepted as a feed for that animal or bird. The latest advance made in scientific feeding of domestic animals whether for private purposes or for commercial exploitation lays emphasis on a scientific, balanced and proportioned diet to achieve the best results whether the aim is meat or milk or egg. It is no longer enough to allow the animal to fend for themselves. When this is the case, the results are never satisfactory because of the low nutrition through improper or inadequate food consumption. The animals or birds fall prey to diseases and in the long run may prove to be liabilities rather than sources of profits to their owners. All the authorities on the subject are agreed that everything that contributes to a good balanced diet is a normal feed whether it is a seed cake or an additive or a supplement to the food to make it balanced. All authorities are agreed that mineral supplements and additives add to the nutrition value of the feed and, therefore, are themselves animal feed. The Gujarat High Court has given a very categorical judgment in a sales-tax case when it ruled that the vitamins manufactured by Glaxo Laboratories for cattle and poultry are in truth themselves cattle feed even though they are only to be mixed and added with other feeds.

5. The learned counsel for the department argued strongly against the appeal. He pointed out the fact that the Indian Standard 9703 of 1980 described additives for animal feeds as being used usually in micro quantities and that they require careful handling and mixing. They are an ingredient or combination of ingredients added to the basic feed mix or parts thereof to fulfil a specific need. The same standard describes how a balanced animal feed is understood. It is applied to a diet, ration or feed having all known required nutrients in proper amount and proportion based upon recommendations of recognised authorities in the field of animal nutrition for a given set of physiological requirements of animals It even specifies for the species for which it is intended and the functions which are aimed at such as maintenance and production. The standard describes complete feed as a nutritionally adequate feed for animals by specific formula compounded to be fed as the sole ration and which is capable of maintaining life and or promoting production without any additional substance being consumed except water. He also refers to a publication Encyclopaedia of Chemical Technology Second Edition by Kirk-Othomer. This book has tried to describe the word 'animal feed' ; this is a term that is used to designate the plant and animal products availabls for livestock consumption. This is in contrast with food which is the usual word applied to products used for human consumption. Animal feed consists largely of plant products ; nearly all pasture and forage are fed to livestock. Whole ground cereals form a substantial portion of the rations of animal and birds. From this it will be understood that a feed must be substantial and as complete as possible. The learned counsel for the department referred to the fact that all authorities are agreed that the supplements or additives are required in minute quantities and generally in admixture with the main feed. These supplements and additives can never form a full meal by themselves. The Indian Standard 2052 of 1979 for recommended feed formulae will show that the recommended mix had tiny proportions of mineral mixtures and common salt forming part of the feed. The mineral mixture formed only about 1% of the total feed content. Other recommended rations for layers and dairy cattle show that the mineral contents comes to only about 2 kgs. for every 100 kgs. of weight of feed for layers and about 1% for dairy cattle. In Papsrs advertising their products, Aries Agro-Vet Industries describe their goods as mineral feed supplements.

The judgment quoted by the learned counsel for Aries Agro-Vet Industries concerns a matter that arose under the Sales-tax Act and involves interpretation of entries and a law totally dissimilar from the central excise law and tariff' and therefore inapplicable here.

6. It is agreed by both sides that the product marketed by Aries Agro-Vet Industries are only mineral additives or mixtures to be added to ordinary feed. It is true that the addition of the products enrich feed given to animals (in which we include catties and poultry etc.) to ensure a balanced diet. Most animals can find their food ; poultry especially are good at foraging and usually will root around looking for sustenance and at the end of the day would have found enough. But the concept of proper upkeep and rearing of animals has undergone vast changes and no one who plans to rear animals especially for commercial exploitation can leave the feeding to the animals alone. The owner has to take a hand to see that the animals are not only fully fed but are also in receipt of the proper kind of feed that will contribute to optimum growth, health and yield be it meat, milk, leather, hair, eggs or feathers. Every one knows the truism that a properly fed animal is the best profit yielding animal, the profit being in large measure proportionate to the scientific feeding that has gone into the upkeep of the animal.

7. For its proper growth and health, an animal needs various nutrients like the minerals we are talking about. It needs vitamins which are organic compounds; it needs proteins, fats, carbohydrates, calcium, metals; it even needs roughages. The last are largely indigestible fibres whose purpose is as propeljants of refuse or rejected waste matter from the body, a function essential to good body rythm cycle and therefore health. The feed as we have seen from the authorities must not be merely health giving and nutritive, it must also be hunger satisfying. For this, the feed must contain sufficient bulk. Bulk is useful not merely to satisfy and quell the pangs of hunger but also to produce enough sediment or refuse which, when expelled by the peristalsis of the alimentary tract, carry with them the toxins and other harmful substances which the body does not accept ; they enable the digestive organ s, the alimentary passages or tubes to grasp them and to propel them along till they are excreted from the body. Fibres which are generally termed roughage are a vital aid in this process which is to a large extent a purificatory one. It must also be borne in mind that all animals need common salt in varying degrees for a proper maintenance of health. It is believed that salt slightly stimulates the digestive process because it adds to the flavour of the food and hence encourages an animal in its feeding. We must, of course, not forget water, without which the best feed would be wasted because then elimination of much waste products that poison the animal system would become impossible. But no one is going to suggest that water can be an animal feed any more than fibres or minerals can by themselves. This is the danger of identifying any one substance with a feed for an animal, when we know from the research and studies that have been made by experts in the field that a well-fed animal is one whose feed has been treated scientifically by man to give it all the ingredients necessary for its optimum nourishment.

8. It has been argued on behalf of Aries Agro-Vet Industries that their mineral mixtures can be fed directly to animals without being mixed with any other substance. In our view this cannot qualify the mineral mixtures to be called an animal feed, any more than a vitamin which a man takes by itself unmixed with food, can qualify to be a food for a man even though we all know the beneficial effects that vitamins have for human metabolism. In fact, there is hardly any body today who docs not know that lack of vitamins can lead to serious deficiency diseases and in some cases to serious and even fatal consequences. For all that, no man can live on vitamin tablets alone ; he needs a complete hunger-satisfying and belly filling meal if the urge of hunger is to be satisfied. So it is with animals. We cannot agree that mineral supplements, health giving and beneficial as they are, by any measure of interpretation can qualify as animal feed. By animal feed we understand a feed that not merely supplies all that the animal body needs for its sustenance and nourishment for health or for production, such as fats, carbohydrates, proteins, vitamins and minerals, but we include in the term the bulk, the fibre, the roughage etc. etc. that form the total feed which an animal must feed upon, if it is to be satisfied. From this it is easy to see that for a substance to be an animal feed it is not enough for it to be beneficial in one or more aspects because it may supply a mineral deficiency or a vitamin deficiency or protein deficiency or any other kind of deficiency.

Understood in its modern sense an animal feed must be as complete as possible in all respects. For the same reason, a feed which supplies only bulk and merely fills the belly of the animal but lacks nourishment value or does not supply the animals' need for vitamins and minerals and so on and which in the immediate present may satisfy the hunger of the animal, can, by its deficiency, induce in the animal a proneness to diseasess or a susceptibility to infections which may eventually cost the owner dearly.

9. The appellants have referred to a number of authorities such as the ISI 1664 of 1968 which is a standard for mineral mixtures for supplementing cattle feeds. Then there are Standard 1713 of 1960 for decorticated groundnut oil cake or as livestock feed; Indian Standard 5470 of 1969 for di-calcium phosphate animal feed grade. But there is nothing in any of these Indian Standards Institution publication which will substantiate the claim that the mineral mixtures are themselves animal feeds. We have already stated above that the mineral mixtures are certainly to be fed to the animals as part of their nourishment and to this extent are animal feed; but this is to be understood only in the very restricted sense that the minerals are to be fed to animals, not that it is a feed, that is to say, a complete feed by itself.

Common salt is sometimes given to cattle but nobody would dream of calling salt an animal feed. We have not been able to understand the controversy about the words "including compounded livestock feed". All the words mean is that compounded livestock feed should also be understood to mean animal feed; it means neither more nor less than that.

10. The Appellate Collector was wrong when he said that the notification extends the exemption only to animal feed which normally does not include animal feed supplement. But we understand animal feed to include everything including the additives, minerals and supplements but not any single one to the exclusion of others; that is, we do not consider that a protein additive or an iron additive or a vitamin additive to be an animal feed. The danger in adopting the interpretation given by Aries Agro-Vet is that while useful adjuncts to everyday animal feed, additives can also have a prescriptive clinical utility as when vitamin deficiency is detected in a cow. When that happens, the vitamin deficiency may be made up for by large doses of vitamin being fed to that cow until the deficiency is restored. It would be a serious mistake to say that during that time the massive doses of vitamins became animal feed for that cow. After all there have been cases of hyper vitamindoses which have to be treated and reversed.

Uninformed or uneducated addition of nutrients like vitamins and minerals can, instead of benefiting the animal, produce undesirable results. Unregulated administration of trace elements like minerals can upset body balance or at best have negative results due to lack of proper absorption as when conditions for the proper absorption of that mineral have not been created in the body of the animal such as happens in deficiency disorders. It is not for nothing that the additives and supplements to the animal diet which contain minerals and vitamins are as a rule given in the daily feed because, when the animal feeds as it should feed, the best conditions are created in its daily system for the absorption of the minerals and vitamins. We are unable to accept the restricted meaning that the appellants give to the words "animal feed" when they say that anything that is fed to the animal for its growth, sustenance, production, yield is an animal feed. We agree that the mineral supplements are indeed part of the animal feed but these supplements are not by themselves animal feed as one would understand "animal feed". It is a fact that Aries Agro-Vet describe their goods as mineral feed supplements, but we do not think that this by itself should tell against them. We think, however, that the right direction is the one in which an animal feed is understood to be a complete feed or as complete a feed as such feeds can be made to be by human ingenuity; and that feed can never be only one or another of the various ingredients, elements, substances, that an animal needs in a balanced feed.

11. We agree with the Appellate Collector and with the learned counsel for the department that the judgment of the Gujarat High Court is a judgment involving the sales-tax law and, therefore, does not apply to an interpretation of the central excise laws with which we are concerned here. The opinions and certificates which the Appellate Collector rejected because they were obtained after the issue was raised by the department have been seen. These certificates do not say anything that would induce us to change our minds. Whether the minerals are fed directly or mixed with other feed will make no difference to the proposition we have set out above, namely, that these are not by themselves animal feed, and cannot be given the assessment claimed by the Aries Agro-Vet Industries.

12. We are, therefore, of the opinion that the appeal should be dismissed as the orders of the lower authorities are correct. We order accordingly.


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