Essential character test applied to chilli vinegar; product classified as vinegar substitute under heading 22.03.

Chilli vinegar made from dilute acetic acid with the addition of a green chilli was treated as an aqueous dilution of acetic acid and an undisputed substitute for vinegar. The addition of one green chilli did not alter its essential character, and the product's intended marketing as vinegar, together with the HSN Explanatory Notes on vinegar flavoured with spices, supported classification under heading 22.03. Applying the essential character test, the product was not regarded as a preparation of green chilli or other plant parts under heading 20.01. The Revenue's classification under heading 22.03 was accepted.

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Issues: Whether chilli vinegar, prepared from dilute acetic acid with addition of a green chilli, was classifiable under heading 22.03 as vinegar or substitutes for vinegar, or under heading 20.01 as a preparation of vegetables or other plant parts.

Analysis: The product was an aqueous dilution of acetic acid and was undisputedly a substitute for vinegar. The addition of one green chilli did not change its essential character. The assessee itself intended to market the product as vinegar. The HSN Explanatory Notes also supported the position that vinegar flavoured with spices would remain under heading 22.03. On these facts, the product could not be treated as a preparation of green chilli, and classification had to be determined by its essential character under the interpretative rule.

Conclusion: The product was classifiable under heading 22.03. The Revenue's challenge succeeded and the assessee's classification under heading 20.01 was not accepted.

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