Rice-based PONAA Makkolli Strong Rice Beer classified as other fermented beverage under CTH 2206, not CTH 2203

The AAR held that the imported product "PONAA MAKKOLLI STRONG RICE BEER" is not "beer made from malt" under CTH 2203 00 00. The authority found that Heading 2203 is restrictive and applies only to beer produced by fermentation of malted cereals. As the product is made from rice, koji, yeast, carbon dioxide and water, with no malted grain or malt extract and no malting process, it fails the essential criterion "made from malt." Koji was held not analogous to malt. Applying GIR 1, 3(a) and 6, the product was classified under CTH 2206 00 00 as "other fermented beverages."

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether the imported product "PONAA MAKKOLLI STRONG RICE BEER (SPARKLING RICE MAKGEOLLI PONAA)" is classifiable under Heading 2203 00 00 as "beer made from malt" or under Heading 2206 00 00 as "other fermented beverages".

1.2 Whether the use of koji in the production process can be treated as "malt" or "malting" so as to satisfy the condition "made from malt" in Heading 2203.

1.3 Whether definitions and categorizations under Food Safety and Standards (Alcoholic Beverages) Regulations, 2018, State Excise permits/label registrations, and common parlance or trade nomenclature are relevant or determinative for customs tariff classification.

1.4 Whether alcohol content, shelf life and similarity of brewing sequence to beer are relevant criteria for classification between Headings 2203 and 2206.

1.5 How the General Rules for the Interpretation of the Import Tariff and the Harmonized System Explanatory Notes to Headings 2203 and 2206 apply to the classification of rice-based fermented beverages like makgeolli.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Proper tariff classification under Heading 2203 or 2206

Legal framework

2.1 The Court noted that classification under the Customs Tariff Act, 1975 is governed by the General Rules for the Interpretation of the Import Tariff (GRI), with Rule 1 mandating that classification be determined according to the terms of the headings and any relevant Section or Chapter Notes. Competing headings were identified as:

(a) Heading 2203 00 00: "Beer made from malt".

(b) Heading 2206 00 00: "Other fermented beverages (for example, cider, perry, mead, sake); mixtures of fermented beverages and mixtures of fermented beverages and non-alcoholic beverages, not elsewhere specified or included".

2.2 The Harmonized System Explanatory Notes (HSN) to Heading 22.03 describe beer as an alcoholic beverage obtained by fermenting a liquor (wort) prepared from malted cereals (commonly barley or wheat), water and usually hops, allowing limited use of non-malted cereals (e.g. maize or rice) as adjuncts, but retaining malted cereals as the base.

2.3 The HSN Notes to Heading 22.06 state that it covers all fermented beverages other than those of Headings 22.03 to 22.05 and explicitly list, inter alia, sake or rice wine and other non-grape fermented beverages.

Interpretation and reasoning

2.4 The Court treated the phrase "made from malt" in Heading 2203 as restrictive and an essential condition; to fall under 2203, the product must be a beer produced by fermentation of malted cereals, and a beverage made from non-malted cereals stands excluded.

2.5 From the ingredient list and process on record, the product was found to comprise rice (17.709%), koji (3.384%), yeast, carbon dioxide and water, with no malted grain or malt extract present and no steps of steeping, germination and kilning involved. Fermentation was based on rice and koji, not on malted cereals.

2.6 Since the essential condition "made from malt" was not satisfied, the Court held that Heading 2203 could not be applied, even if the product was otherwise described or marketed as "beer".

2.7 The Court emphasized that Heading 2206 is the residual heading covering all fermented beverages not falling under Headings 2203 to 2205 and that the HSN Notes specifically include rice-based fermented beverages such as sake and makgeolli within Heading 2206.

2.8 International practice, including consistent classification of makgeolli under Heading 2206 by other customs administrations, was noted as persuasive and consistent with the HSN Notes, supporting treatment of the impugned product as an "other fermented beverage".

Conclusions

2.9 Applying GRI 1, the Court held that the product cannot be classified under Heading 2203 because it is not "made from malt".

2.10 The product, being a rice-based fermented beverage of the makgeolli type, falls within the scope of Heading 2206 00 00 as "other fermented beverages (for example, cider, perry, mead); mixtures of fermented beverages and non-alcoholic beverages, not elsewhere specified or included".

Issue 2: Whether koji can be treated as "malt" or "malted" grain

Legal framework

2.11 The Court drew on the technical description embedded in the HSN Notes to Heading 22.03 that beer is obtained from malted cereals and the accepted technical meaning of "malting", which involves the germination of cereal grains through steeping, germination and kilning, with enzymes developing within the grain.

Interpretation and reasoning

2.12 The applicant's contention that koji is "malted rice" and functionally equivalent to malt was examined. Koji is produced by inoculating steamed rice with Aspergillus oryzae mold, which generates enzymes externally to break down starches.

2.13 The Court held that malting is a biological germination process where enzymes develop endogenously within the cereal grain; by contrast, koji involves external enzymatic activity on already cooked rice. The two are biochemically and procedurally distinct.

2.14 The Court rejected the attempt to equate koji with malt on the basis of functional similarity in saccharification, holding that the tariff term "made from malt" refers to products derived from cereals actually subjected to malting, not to any external enzymatic conversion process, however similar in effect.

Conclusions

2.15 Koji is not "malt" and the use of rice with koji does not satisfy the "made from malt" requirement of Heading 2203.

2.16 The product, produced without malted cereals, cannot be brought within Heading 2203 by characterizing koji as "malted rice" or functionally equivalent to malt.

Issue 3: Relevance of FSSAI definitions, State Excise documents and common parlance/trade nomenclature

Interpretation and reasoning

2.17 The applicant relied on the Food Safety and Standards (Alcoholic Beverages) Regulations, 2018, under which "beer" is defined as a fermented alcoholic beverage made from barley malt or other malted grains, sometimes with adjuncts like rice, and on State Excise export permits, transit passes and label registration certificates describing the product as "beer".

2.18 The Court held that such food safety definitions and excise labelling/permits operate in separate statutory domains and are framed for regulatory, safety and licensing purposes; they do not govern, nor can they override, the specific criteria for customs tariff classification under the Customs Tariff Act, 1975.

2.19 The terminology "beer" used in such instruments and in trade parlance was found to reflect commercial or licensing convenience, not the technical tariff requirement of being "made from malt" under Heading 2203.

2.20 On the applicant's invocation of the common-parlance test, the Court held that where a tariff expression-here "beer made from malt"-is clear and technically defined within the Harmonized System, there is no ambiguity warranting recourse to popular or trade understanding. Technical meaning prevails over common parlance in such cases.

Conclusions

2.21 Definitions in Food Safety and Standards regulations, State Excise permits/labels and the description of the product as "beer" in trade or common parlance are not determinative of customs tariff classification.

2.22 Given the precise technical requirement "made from malt", common parlance and trade nomenclature cannot be relied upon to classify the product under Heading 2203.

Issue 4: Relevance of alcohol content, shelf life and similarity of process to beer brewing

Interpretation and reasoning

2.23 The applicant argued that the product's alcohol content of about 7.98% ABV, its 15-month shelf life, and its brewing sequence (mashing, fermentation, maturation, carbonation, filtration and pasteurization) align it with beer rather than wine or sake.

2.24 The Court held that tariff classification between Headings 2203 and 2206 turns on the nature of raw materials (presence of malted cereals) and the essential production process (malting versus other fermentation methods), not on alcohol strength or shelf-life parameters.

2.25 It further observed that the brewing steps described-mashing, fermentation, carbonation-are generic to many fermented alcoholic beverages, including rice-based drinks like sake and makgeolli, and are not unique determinants of beer made from malt.

Conclusions

2.26 Alcohol content within the typical beer range and finite shelf life do not, by themselves, confer classification as "beer made from malt" when malt is absent.

2.27 Similarity in broad brewing steps does not override the decisive absence of malting and does not justify classification of the product under Heading 2203.

Issue 5: Application of GRIs and HSN Explanatory Notes to rice-based fermented beverages like makgeolli

Legal framework

2.28 The Court applied GRI 1, requiring classification to be based on the terms of headings and relevant notes. It also considered GRI 3(a) and GRI 6 for resolving competition between headings and for subheading-level classification, alongside the HSN Explanatory Notes to Headings 22.03 and 22.06.

Interpretation and reasoning

2.29 Under GRI 1, Heading 2203 was ruled out because the product does not meet the express condition "made from malt"; therefore, the competing-specific description test under GRI 3(a) did not arise in favour of Heading 2203.

2.30 Heading 2206, by its wording and as clarified in the HSN Notes, was found to be the appropriate residual heading encompassing "all fermented beverages other than those in headings 22.03 to 22.05" and explicitly including rice-based beverages such as sake and makgeolli.

2.31 The Court noted that the impugned product shares the essential characteristics of makgeolli-a traditional Korean rice-based alcoholic beverage-and thus squarely falls within the category of "other fermented beverages" under Heading 2206.

2.32 Applying GRI 6, the Court concluded that the same reasoning at heading level carries through to the subheading level, leading to subheading 2206 00 00.

Conclusions

2.33 On application of GRI 1 and the HSN Explanatory Notes, the product cannot be classified under Heading 2203 due to the absence of malt and the lack of a malting process.

2.34 Heading 2206 00 00 is the correct and only applicable tariff entry for the product as an "other fermented beverage", specifically of the makgeolli/sake-type rice-based category.

2.35 The Court accordingly held that the impugned goods are classifiable under Heading 2206 00 00 of the First Schedule to the Customs Tariff Act, 1975, and not under Heading 2203 00 00.

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