Milk product classification turns on essential character, and a tiny flavouring addition does not shift it to a different tariff heading.

Addition of a small quantity of flavouring substance to a milk-based product did not change its essential character for tariff classification purposes. Applying the HSN notes to Chapters 4 and 19, the text explains that heading 19.01 covers preparations with added ingredients not permitted in headings 04.01 to 04.04, or where milk constituents are replaced by other substances, whereas a minuscule flavouring or stabilising ingredient does not take a milk product out of heading 04.04. The product was therefore classifiable under Tariff Item 0404 90 00 and not under Tariff Item 1901 90 90, so the contrary duty demand could not be sustained.

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Issues: Whether the impugned product was classifiable under Tariff Item 0404 90 00 or Tariff Item 1901 90 90 of the Central Excise Tariff Act, 1985.

Analysis: The dispute turned on the effect of addition of a small quantity of flavouring substance to a milk-based product. The applicable HSN notes to Chapters 4 and 19 show that products of heading 19.01 are preparations to which other ingredients not permitted in headings 04.01 to 04.04 have been added, or where milk constituents are replaced by other substances. The reasoning adopted in the earlier decision of the Tribunal, affirmed by the Supreme Court in a similar context, was that the addition of a minuscule quantity of flavouring or stabilising ingredient does not alter the essential nature of a milk product or take it out of heading 04.04.

Conclusion: The impugned product was held classifiable under Tariff Item 0404 90 00 and not under Tariff Item 1901 90 90, and the demand based on the contrary classification could not stand.

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