Flavoured milk classification turns on tariff notes and HSN guidance, placing milk-based beverages under Chapter 22.

Flavoured milk made by standardising milk and adding sugar, flavour and colouring is not classifiable as milk under Chapter 4 of the Customs Tariff Act, 1975. Applying the tariff schedule, section notes, chapter notes and HSN explanatory notes, the product was treated as a milk-based beverage because Chapter 4 covers milk in its defined form, while the explanatory notes exclude flavoured milk beverages from that chapter and place milk-based beverages under Chapter 22. Earlier rulings on skimmed or partially skimmed milk were held inapplicable because they concerned different products and classification issues. The product was therefore correctly classified under Tariff Item 2202 99 30.

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Issues: Whether flavoured milk, prepared by standardising milk and adding sugar, flavour and colouring, is classifiable under Chapter 4 of the Customs Tariff Act, 1975 as milk, or under Tariff Item 2202 99 30 as a beverage containing milk.

Analysis: Classification under GST is to be made in accordance with the Customs Tariff Act, 1975 and the HSN, including the section notes, chapter notes and explanatory notes. Chapter 4 covers milk as defined in Note 1, meaning full cream milk or partially or completely skimmed milk, while the HSN explanatory notes specifically exclude beverages consisting of milk flavoured with cocoa or other substances from Chapter 4. The product in question was found to be standardized or toned milk with added sugar, flavour and colouring, and therefore not the same as the milk contemplated by Chapter 4. The explanatory notes to Chapter 22 include beverages with a basis of milk, and the product was also treated as a dairy-based beverage in relevant market and industry material. The relied-upon precedents concerning skimmed or partially skimmed milk were held to be inapplicable because they dealt with different products and different classification questions.

Conclusion: Flavoured milk is not classifiable under Chapter 4 and is correctly classifiable under Tariff Item 2202 99 30 as a beverage containing milk.

Ratio Decidendi: Where the tariff entry and HSN explanatory notes specifically exclude milk-based flavoured beverages from the milk chapter and place them under the beverages chapter, classification must follow that specific tariff description rather than the general description of milk.

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