Milk-based mixes remained dairy produce where stabilizers only preserved texture, stability and shelf life, not essential character.

Milk Shake Mix, Soft Serve Mix, Coffee Creamer and packed cream were treated as dairy produce under sub-heading 0404.90 because they consisted of milk or milk powder with added sugar, glucose and stabilizers. Chapter Note 4 to Chapter 4 was read broadly to cover products made from natural milk constituents even with permitted additions, and the stabilizers were regarded as functional ingredients that preserved consistency, emulsion, storage stability and shelf life without altering the essential character of the goods. On that reasoning, the products fell outside sub-heading 1901.19 as food preparations.

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Issues: Whether Milk Shake Mix, Soft Serve Mix, Coffee Creamer and packed cream were classifiable under sub-heading 1901.19 as food preparations or under sub-heading 0404.90 as dairy produce.

Analysis: The products were made from milk and milk powder with added sugar, glucose and stabilizers. The controlling consideration was whether the added stabilizers took the goods outside Chapter 4. Chapter Note 4 to Chapter 4 covers products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter or flavoured, and the expression used in the note is broad enough to include permissible additions. The stabilizers were found to serve only to maintain consistency, uniform emulsion, storage stability and shelf life, and not to change the basic character of the products. The earlier decision in the appellant's own case and the Supreme Court's approval of that view supported classification as dairy produce.

Conclusion: The products were correctly classifiable under sub-heading 0404.90 and not under sub-heading 1901.19. The appeal succeeded and the assessee was entitled to consequential benefits in accordance with law.

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