Essential character and import-stage condition govern customs classification of composite products; importer's classification was upheld.
Customs classification must be determined on the condition of the goods at the time of import, and composite preparations are classified by their essential character under the General Rules for Interpretation. Imported bulk products Tendofit and Mobilee were held to fall under Chapter 39 because the department did not prove they were edible food preparations at import stage, and expert material supported classification by the dominant polymer components. GG Orosoluble was treated as a probiotic culture of Lactobacillus rhamnosus GG under Chapter 30, since it was imported as raw material requiring further processing and the excipients served only stability purposes. The importer's classification was upheld and the contrary customs demand, interest, and penalties could not survive.
Issues: (i) Whether Tendofit, imported in bulk as a composite preparation, was classifiable under Chapter 21 as a food preparation or under Chapter 39 as a natural polymer; (ii) Whether Mobilee, imported in bulk as a composite preparation, was classifiable under Chapter 21 as a food preparation or under Chapter 39 as a natural polymer; (iii) Whether GG Orosoluble was classifiable under Chapter 21 as a food preparation or under Chapter 30 as a probiotic / culture of micro-organisms.
Issue (i): Whether Tendofit, imported in bulk as a composite preparation, was classifiable under Chapter 21 as a food preparation or under Chapter 39 as a natural polymer.
Analysis: Classification was required to be determined on the condition of the goods at the time of import. Tendofit was imported in bulk and was not shown to be edible in the form imported. The department led no chemical test or other reliable evidence to establish that it was a food preparation at import stage. Applying the General Rules for Interpretation, the composite product had to be classified by its essential character. On the evidence, the mucopolysaccharide / chondroitin sulphate component imparted the essential character, and the material was supported by expert opinion and persuasive foreign tariff rulings.
Conclusion: Tendofit was correctly classifiable under Chapter 39 and not under Chapter 21.
Issue (ii): Whether Mobilee, imported in bulk as a composite preparation, was classifiable under Chapter 21 as a food preparation or under Chapter 39 as a natural polymer.
Analysis: Mobilee was imported in bulk and was required to be formulated before it became suitable for consumption. Its composition showed sodium hyaluronate as the dominant component, with polysaccharides and collagen also present. The department did not discharge the burden of proving that the imported goods were edible at the time of import or that Chapter 21 was attracted. On application of the rule of essential character, sodium hyaluronate was held to be the component giving the product its character, and the expert opinion on record supported the classification under Chapter 39.
Conclusion: Mobilee was correctly classifiable under Chapter 39 and not under Chapter 21.
Issue (iii): Whether GG Orosoluble was classifiable under Chapter 21 as a food preparation or under Chapter 30 as a probiotic / culture of micro-organisms.
Analysis: GG Orosoluble was shown to be a probiotic culture of Lactobacillus rhamnosus GG imported as raw material grade product requiring further processing before becoming fit for consumption. The excipients were for stability during storage and transport, not to convert it into a food preparation. No contrary technical or chemical evidence was produced by the department to displace the expert opinion relied upon by the importer. The record supported treatment of the product as a culture of micro-organisms rather than as an edible preparation under Chapter 21.
Conclusion: GG Orosoluble was correctly classifiable under Chapter 30 and not under Chapter 21.
Final Conclusion: The classification adopted by the importer was upheld for all the disputed goods, and the customs demand, interest, and penalties based on the contrary classification could not survive.
Ratio Decidendi: Customs classification must be determined from the condition of the goods at the time of import, and where a composite product is involved, the classification turns on its essential character; the revenue bears the burden of proving a rival classification with convincing evidence.
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