2025 (12) TMI 1018 - AAR - Customs

Imported mineral concentrate held classifiable as food preparation under Heading 2106, not Tariff Items 2835 25 00 or 0404

The authority rejected classification of the imported mineral concentrate under Tariff Item 2835 25 00, holding that the product is neither a separate ... Classification of the product Mineral Concentrate (with Calcium phosphates) having Brand Name VITALARMOR CA M10 - classifiable under Tariff Item 2835 25 00 or not - HELD THAT:- The subject goods are a Milk Mineral Concentrate which is a precipitate of acid whey containing 27% calcium, 13% phosphorus, as well as magnesium, sodium and potassium, and are not a separate chemical element or a separate chemically defined compound and therefore, by virtue of Note 1 to Chapter 28, are not classifiable under Heading 2835 - Since the subject goods are made using acid whey and are used as nutritional supplements, these can be classified under CTH 0404 'Whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included' or CTH 2106 'food preparations not elsewhere specified or included'. Before deciding the correct classification of the subject goods, it is important to understand the scope of both the headings and relevant Chapter Notes, HSN Explanatory Notes etc. The subject goods i.e. VitalArmor® Ca M10, a milk mineral concentrate containing approximately 27% calcium and 13% phosphorus and minor magnesium, sodium and potassium, is obtained by precipitating acid whey to isolate its mineral components. Unlike whey or modified whey (classified under HS 0404), this product no longer represents milk constituents in their natural or recombined balance but rather an isolated mineral fraction intended for use as a nutritional fortifier in foods and beverages. As per applicant's submission, the subject goods fall under category (A) of heading 2106 which states that preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption are covered under the Heading 2106. Further, at the time of hearing, the applicant had stated that the subject goods primarily are health supplements, which further solidifies the classification of the subject goods under Heading 2106. Also, the information available on the website of the manufacturer states that the subject goods can be used in biscuits, cookies etc., therefore the subject goods are also covered under Category (B) of heading 2106 which includes products for incorporation into food preparation. The subject goods i.e. Mineral Concentrates (having brand name VitalArmor Ca M10) merit classification under Heading 2106 and more particularly under Tariff Item 2106 90 99 'Other' of the First Schedule to the Customs Tariff Act, 1975. It is needless to say that the import of the product 'Mineral Concentrate - Vitalarmor CA M10' will be subject to compliance with the provisions of the Food Safety and Standards Act, 2006, and the regulations made thereunder, as well as any other applicable laws, rules, and guidelines prescribed by the Food Safety and Standards Authority of India (FSSAI) and other relevant regulatory authorities. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the product described as 'Mineral Concentrate (with Calcium phosphates) having Brand Name VITALARMOR CA M10' is classifiable under Heading 2835 as 'phosphates', particularly under Tariff Item 2835 25 00 ('calcium hydrogen-orthophosphate (dicalcium phosphate)'). 1.2 If not classifiable under Heading 2835, whether the product can be classified under Heading 0404 as 'whey' or 'products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included'. 1.3 If excluded from Headings 2835 and 0404, whether the product is correctly classifiable under Heading 2106 as 'food preparations not elsewhere specified or included', and more specifically under Tariff Item 2106 90 99. 1.4 Whether the application for advance ruling on classification is maintainable under Sections 28H and 28E of the Customs Act, 1962. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Classification under Heading 2835 (Phosphates) / Tariff Item 2835 25 00 Legal framework 2.1 The product was proposed by the applicant to be classified under Heading 2835 'Phosphinates (hypophosphites), phosphonates (phosphites) and phosphates; polyphosphates, whether or not chemically defined', specifically under Tariff Item 2835 25 00 'calcium hydrogen-orthophosphate ('dicalcium phosphate')'. 2.2 Note 1(a) to Chapter 28 provides that, except where the context otherwise requires, the headings of that Chapter apply only to 'separate chemical elements and separate chemically defined compounds, whether or not containing impurities'. 2.3 The HSN Explanatory Notes to Chapter 28 define a 'separate chemically defined compound' as a substance consisting of one molecular species whose composition is defined by a constant ratio of elements, representable by a definitive structural diagram, and having a stoichiometric composition (allowing only non-intentional quasi-stoichiometric deviations). 2.4 The HSN Explanatory Notes set out specific exceptions - certain products which remain classifiable in Chapter 28 even when not separate chemical elements or separate chemically defined compounds. Under Heading 2835, only 'polyphosphates' appear in this exception list. Interpretation and reasoning 2.5 On facts, the product is a 'milk mineral concentrate' derived from acid whey by precipitation, separation, spray drying, sieving and micronisation, yielding a fine powder (~10 µm) consisting of approximately 27% calcium, 13% phosphorus and minor quantities of magnesium, sodium and potassium. 2.6 The technical data sheet and manufacturer's literature describe the product as a mineral concentrate rich in milk calcium in the form of calcium phosphates, used for calcium fortification of dairy products, biscuits, ice creams and for senior/clinical and sports nutrition. 2.7 From this composition and origin, the Court inferred that the product is not a single, separate chemically defined compound, but a mixture of various mineral constituents precipitated from acid whey. 2.8 Applying Note 1(a) to Chapter 28 and the HSN definition, the Court found that the product does not have a constant, specific stoichiometric ratio corresponding to one molecular species and cannot be treated as a separate chemically defined compound such as 'calcium hydrogen-orthophosphate (dicalcium phosphate)'. 2.9 Referring to the HSN list of exceptions, the Court observed that for Heading 2835, only 'polyphosphates' are exempted from the strict requirement of being a separate chemical element or separate chemically defined compound. 'Phosphates' (other than polyphosphates) in Heading 2835 must still satisfy Note 1 to Chapter 28. 2.10 Since the product is neither a separate chemical element nor a separate chemically defined phosphate compound, and does not fall within the limited exception for polyphosphates, it cannot be brought under Heading 2835, much less under Tariff Item 2835 25 00 which is confined to 'calcium hydrogen-orthophosphate (dicalcium phosphate)' as a specific chemical compound. Conclusion 2.11 The product 'Mineral Concentrate (VITALARMOR CA M10)' is not classifiable under Heading 2835, including Tariff Item 2835 25 00 'calcium hydrogen-orthophosphate (dicalcium phosphate)', as it is not a separate chemically defined compound within the meaning of Note 1 to Chapter 28 and the HSN Explanatory Notes. Issue 2 - Possible classification under Heading 0404 (Whey and products consisting of natural milk constituents) Legal framework 2.12 Heading 0404 covers 'whey, whether or not concentrated or containing added sugar or other sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included'. 2.13 Subheading Note 1 to Chapter 04 defines 'modified whey' for subheading 0404 10 as products consisting of whey constituents (whey from which one or more of lactose, proteins or minerals have been removed; whey to which natural whey constituents have been added; or products obtained by mixing natural whey constituents). 2.14 The HSN Explanatory Notes to Heading 0404 clarify that the heading covers whey and modified whey, in various forms, and 'products consisting of milk constituents' that do not have the same composition as the natural product, provided they remain essentially natural milk constituents and are not more specifically covered elsewhere. Products that have lost the character of milk constituents (e.g., individual separated fractions like lactose and whey proteins) are classified under other headings (e.g., 1702, 3502). Interpretation and reasoning 2.15 The Court noted that the product originates from acid whey, but is manufactured through processes (heat treatment, precipitation, separation, spray drying and micronisation) that specifically isolate the mineral fraction (calcium phosphates and other minerals), while substantially removing proteins and lactose. 2.16 Owing to this selective isolation, the final product is a concentrated mineral fraction and no longer represents whey or a recombined mixture of its natural constituents in their original or modified balance. 2.17 On this basis, the Court determined that the product does not fall within the definition of 'modified whey' under Subheading Note 1, since it is not a product 'consisting of whey constituents' but rather of extracted minerals separated from the other whey components. 2.18 By analogy with other separated milk fractions (e.g., isolated lactose under Heading 1702 and whey protein concentrates under Heading 3502), the Court reasoned that an isolated mineral concentrate derived from whey is similarly excluded from Heading 0404. 2.19 The Court emphasised that the scope of Heading 0404 is confined to whey and products consisting of natural milk constituents, as such, and does not extend to isolated mineral concentrates that no longer possess the essential character of whey. Conclusion 2.20 The product 'Mineral Concentrate (VITALARMOR CA M10)' does not merit classification under Heading 0404, as it is not whey, modified whey, or a product consisting of natural milk constituents in their natural or recombined balance, but an isolated mineral fraction obtained from acid whey. Issue 3 - Classification under Heading 2106 (Food preparations not elsewhere specified or included) / Tariff Item 2106 90 99 Legal framework 2.21 Heading 2106 covers 'food preparations not elsewhere specified or included'. The HSN Explanatory Notes provide that, subject to exclusion by a more specific heading, this heading includes: * (A) Preparations for use, directly or after processing (e.g., dissolving in water or milk), for human consumption. * (B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations, including mixtures of chemicals (e.g., calcium salts) with foodstuffs for incorporation in foods as ingredients or to improve certain characteristics. 2.22 Entry (16) of the HSN Explanatory Notes to Heading 2106 specifically includes 'preparations, often referred to as food supplements or dietary supplements, consisting of, or based on, one or more vitamins, minerals, amino acids, concentrates, extracts, isolates or the like of substances found within foods, or synthetic versions of such substances, put up as a supplement to the normal diet', subject to the caveat that they do not contain sufficient active ingredients to produce therapeutic or prophylactic effects warranting classification under Chapter 30. 2.23 Within Heading 2106, Tariff Item 2106 90 99 is the residual entry 'Other' under 'Food preparations not elsewhere specified or included - Other'. Interpretation and reasoning 2.24 The Court found that the product is a fine, white to off-white milk mineral powder (10-micron size), rich in calcium (about 27%) and phosphorus (about 13%), containing additional minerals such as magnesium, sodium and potassium, derived from acid whey. 2.25 The technical documentation and the manufacturer's website describe the product as a mineral concentrate designed for nutritional reformulation and calcium enrichment of drinks, yoghurts, dessert creams, biscuits, ice creams and nutritional milks, with key application segments in dairy, senior/clinical nutrition and sports nutrition. 2.26 The applicant's own submissions characterize the product as a nutrient supplement premix to support bone health, suitable for use in nutraceuticals, sports nutrition, geriatric nutrition and as a health supplement, to be consumed by mixing with water, milk or health drinks. 2.27 At the personal hearing, the applicant explicitly admitted that the product is used as a 'health supplement'. The Court considered this self-description as consistent with the intended dietary supplement function described in the technical and marketing material. 2.28 Having excluded the product from Chapters 28 and 04, and noting that it is intended for human consumption as a source of minerals for nutritional fortification, the Court regarded it as a food preparation not elsewhere specified or included, fitting within categories (A) and (B) of Heading 2106 as per the HSN Notes. 2.29 Specifically, the Court held that the product matches the description in entry (16) of the HSN Explanatory Notes to Heading 2106 as a dietary/food supplement consisting of or based on minerals (calcium, phosphorus, etc.), used to supplement the normal diet for bone health and general nutrition. 2.30 There was no indication that the product contains active ingredients in quantities sufficient to confer a therapeutic or prophylactic effect against specific diseases warranting classification as a medicament under Chapter 30. Its function is nutritional, not pharmaceutical. 2.31 Since no more specific subheading description exists for this mineral-based dietary supplement within Heading 2106, the Court concluded that the product appropriately falls under the residual subheading 2106 90 and, more precisely, under Tariff Item 2106 90 99 'Other'. Conclusion 2.32 The product 'Mineral Concentrate (VITALARMOR CA M10)' is classifiable under Heading 2106 as 'food preparations not elsewhere specified or included', and more specifically under Tariff Item 2106 90 99 'Other'. Its import is subject to compliance with the Food Safety and Standards Act, 2006 and applicable regulations and guidelines of FSSAI and other competent authorities. Issue 4 - Maintainability of the application for advance ruling Legal framework 2.33 Section 28H(1) of the Customs Act, 1962 allows an applicant to seek an advance ruling on specified questions, including classification of goods. Section 28H(2) restricts the scope to matters listed therein. Section 28E(c) defines 'applicant' to include a person holding an Importer Exporter Code (IEC). Interpretation and reasoning 2.34 The question raised in the application related to the classification of the product under the Customs Tariff Act, which is expressly covered under Section 28H(2) as a permissible subject matter for advance ruling. 2.35 The applicant holds a valid IEC and, therefore, falls within the definition of 'applicant' under Section 28E(c), entitled to seek an advance ruling under Section 28H. Conclusion 2.36 The application seeking an advance ruling on classification of the product was maintainable under Sections 28H and 28E of the Customs Act, 1962, and the Customs Authority for Advance Rulings had jurisdiction to issue the ruling.