By TIOL News Service

NEW DELHI, NOV 19, 2013: THE appellant are manufacturing Niacin on job work basis which is again used captively for manufacture of Niacin Premix. "Niacin feed premix" classifiable under chapter heading 2309 90 90 of Central Excise Tariff Act, 1985 and liable to nil rate of duty and there is no dispute on this. However, since Niacin is used captively in the manufacture of goods which attract Nil rate of duty, revenue demanded duty on Niacin.

It is the contention of the appellant that they are entitled for the benefit of exemption under Notification No 10/96 CE which exempted goods falling under Chapter 23 used captively for manufacture of Animal Feed.

It is the contention of revenue that ‘Niacin feed pre-mix' by itself is not animal feed, but is added to Animal Feed. Hence the benefit of exemption under Notification No 10/96 CE is not admissible.

After hearing both sides, the Tribunal held:

Niacin feed premix is a mixture of chemicals and such ingredient was to be added to animal feed which is not in dispute. The premix per se is not an animal feed what that is normally understood in market. Mandatory requirement of the notification is that niacin should be consumed within the same factory to manufacture animal feed. The premix manufactured by the appellant was a preparation of a kind used in animal feeding and that is covered by the tariff heading 2309 of the Central Excise Tariff Act, 1985. Rules of classification is not decisive for grant of exemption which is governed by the terms of the grant prescribed therein. Essential condition of the notification cannot be given go bye to claim exemption.

There were no technical literature of the product available on record to appreciate that niacin feed premix is same as animal feed. Nothing could be proved by appellant to the effect that niacin feed premix was sold as animal feed in the market. Goods of each kind have its own characteristic, nature and use proving its own identity. Accordingly an ingredient cannot be construed to be same goods that emerge by combination of several ingredients.

Legislature consciously granted duty exemption to the intermediate product if such product is used in the same factory to manufacture the notified finished goods as tabulated under column 3 to the Table under Notification No.10/96-CE dated 23/7/1996. Such exemption being granted at public cost that cannot be liberally construed to grant undue benefit to the appellant. Therefore learned adjudicating authority has rightly denied benefit of duty exemption on niacin following the apex Court decisions stated by him in the adjudication order.

(See 2013-TIOL-1719-CESTAT-DEL)