In re Novus Animal Nutrition (India) Pvt Ltd (CAAR Mumbai)
Customs Authority for Advance Rulings (CAAR), Mumbai, has ruled that the animal feed additive “XYLAMAX,” imported by Novus Animal Nutrition (India) Pvt Ltd, is to be classified under Customs Tariff Heading (CTH) 2309 as a “preparation of a kind used in animal feeding,” and not under CTH 3507 as an enzyme. The decision emphasizes the product’s composition, functional utility, and classification as per binding government instructions.
Novus Animal Nutrition approached the CAAR to determine the correct classification for XYLAMAX, a product used to improve nutrient digestibility in animal feed. The core issue was whether the product should be classified as an enzyme under CTH 3507 or as a feed preparation under the residual entry CTI 2309 90 90.
The authority’s examination focused on the product’s composition and intended use. According to the details submitted, XYLAMAX consists of 10-30% of the active ingredient Xylanase (an enzyme), combined with significant quantities of carriers, namely 70-90% limestone and 5-10% starch. The CAAR noted that these carriers, which serve to provide calcium and energy while ensuring homogeneous mixing, render the product suitable exclusively for use in animal feed and unfit for general use as a simple enzyme.
In its analysis, the CAAR leaned heavily on the Harmonized System of Nomenclature (HSN) Explanatory Notes. The notes for CTH 2309 explicitly cover preparations known as “premixes,” which are compound compositions consisting of active substances (like vitamins, amino acids, and enzymes) mixed with carriers to create supplements for animal feed. The composition of XYLAMAX was found to align perfectly with this description.
The ruling also invoked several key judicial precedents to support its conclusion. It referred to the Supreme Court’s decisions in Atul Glass Industries (Pvt.) Ltd. v. C.C.E. and Commissioner of Central Excise v. Wockhardt Life Sciences Ltd., which established the importance of the “common parlance” and “functional utility” tests in classification. The CAAR concluded that in the commercial world, XYLAMAX is known, marketed, and used as an animal feed product.
A significant precedent cited was the CESTAT Larger Bench decision in Tetragon Chemie (P.) Ltd. v. CCE, which clarified that preparations containing various additives and synthetic ingredients, known as feed supplements or additives, merit classification under the heading for animal feed preparations.
Crucially, the CAAR highlighted recent administrative directives from the Central Board of Indirect Taxes and Customs (CBIC). CBIC Instruction No. 34/2022, issued for ensuring uniformity in classification, refers to a list from the Department of Animal Husbandry and Dairying (DAHD) that specifically includes “Xylanase feed enzyme” as a feed additive/premix for import into India. The authority noted that such instructions, issued under Section 151A of the Customs Act, 1962, are binding on customs officers. An older CBEC Circular from 1996 was also cited, which similarly clarified that preparations containing active substances with carriers, intended for animal feed, should be classified under the corresponding heading.
While HSN notes for CTH 2309 exclude protein substances of Chapter 35 (enzymes), the CAAR determined that XYLAMAX is not merely an enzyme but a composite preparation. The overwhelming presence of carriers and its specific formulation for animal feed means its essential character is that of a feed preparation.
Based on the product’s composition, its specific function, its identity in trade parlance, and alignment with binding circulars and judicial precedents, the CAAR concluded that XYLAMAX is correctly classifiable under CTH 2309, and more specifically under the tariff item CTI 2309 90 90.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, MUMBAI
