Marine Feed Mixed With Vegetable Protein Attracts Higher Customs Duty: CESTAT Chennai

On 22 January, the Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that imports of marine feed mixed with vegetable protein attract higher customs duty as they are classifiable as formulated animal feed and not as simple fish or mollusc meal.

A Bench comprising Judicial Member P. Dinesha and Technical Member Vasa Seshagiri Rao upheld the reclassification of imported squid-based feed products under Customs Tariff Heading (CTH) 2309 as preparations for animal feeding. The Tribunal held that the presence of substantial vegetable protein fundamentally altered the character of the goods, removing them from the category of "pure marine meal" which is eligible for concessional duty.

The Bench observed:

“Once the product ceases to be a meal obtained solely from animal/mollusc material and becomes a formulated mixture of animal and vegetable nutrients intended for feeding, it falls outside the scope of Heading 2301 and is squarely classifiable under Heading 2309.”

The dispute arose from M/s. Grobest Feeds Corporation India Pvt. Ltd.'s imports of Squid Liver Powder from Korea, initially declared under CTH 2301 as fish or mollusc meal unfit for human consumption. This allowed the importers to avail concessional basic customs duty and exemption from additional duty. However, a post-clearance verification revealed that the imported product contained approximately 40–50% soyabean meal, a vegetable-origin protein commonly used in compounded animal and aquaculture feeds.

Following this, a show-cause notice was issued to the appellants, proposing reclassification of the goods under CTH 23099090 "preparations of a kind used in animal feeding". The notice also sought recovery of differential duty under Section 28, confiscation under Section 111(m), and imposed penalties under Section 114A of the Customs Act. The adjudicating authority confirmed the proposals, which were upheld by the Commissioner (Appeals).

The Tribunal noted that Heading 2301 applies only to flours and meals obtained solely from animals or animal products without substantive admixture, whereas Heading 2309 covers preparations obtained by processing animal or vegetable materials, including mixtures, for animal feeding. The presence of soybean meal in the imported goods was not incidental but formative, altering the product from simple marine meal to a formulated feed preparation.

The Bench also agreed with the Department that the importers, being engaged in the animal feed industry, were or should have been aware of the classification implications of mixing squid liver paste with soyabean meal. 

The Tribunal emphasised that non-disclosure of 40–50% soyabean content constituted suppression of material facts, and clearance under the Risk Management System (RMS) does not absolve statutory obligations.

Accordingly, the Tribunal held that the imported Squid Powder/Squid Liver Powder was correctly classifiable under CTH 2309 and dismissed all appeals against the impugned orders.

For Appellant: M. Karthikeyan

For Respondent: Anoop Singh