TaxTMI 
TaxTMI 
2023 (11) TMI 483
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....w Cause Notice No. 22/2015 dated 11.07.2011. 2.1 Brief facts are that the Respondent, M/s. International Flavours & Fragrances India Pvt. Ltd. (the importer) is engaged in the manufacture of various flavours and fragrances which are used in the food and cosmetics industry. The Respondent imports various raw materials and semi-finished goods which are used in their factory in the manufacture of flavours and fragrances. 2.2 The Respondent, M/s. International Flavours and Fragrances India Pvt. Ltd. have filed Bills of Entry Nos. 3685255, 3685345 and 3685451 all dated 22.12.2015 for clearance of goods declared as Cheese Polvaromas / Cheese Parmesan Polvaromas / Butter Cream Polvaromas which were self-assessed. The goods were classified by the Respondent under CTH 33021090. 2.3 Not accepting the classification of the imported goods, an investigation has been initiated and representative samples were drawn and tested vide test report No. 1 to 3 / DSM / 2204.2016 dated 13.06.2016 issued by the Customs lab which stated that the sample is in the form of off - white powder having pleasant odour, that it is composed of complex organic compounds including the cellulose, carbohydrate a....
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....and that they are synthesised through a process of enzyme modification of cheese and hence should be treated as synthetic aromatics. e. The term "synthetic aromatics" used in the context of "odoriferous substances" should refer to only products having a distinct, Strong smell or odour. It is not the contention of the department that the products does not have any odour f. The show cause notice has accepted the Custom House Laboratory report in as much it has placed reliance on the same. g. The products in question should be classified in accordance with the "terms of the heading" or the relevant 'Section or Chapter Notes'. h. They classified the subject goods under the heading 3302 on the basis that they are a mixture of synthetic aromatics in terms of Note 2 to Chapter 33. i. The HSN Explanatory Notes to the heading 3302 covers mixtures of synthetic aromatics provided they are of a kind used as raw materials in the perfumery, food or drink industries, food or drink flavourings or in the industries (e.g., soap making). j. The show cause notice has acknowledged on the basis of test reports submitted that they contained mixture of....
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....our/ olfactory characteristics to the products in which it is used. In addition, they have a very low nutritional value and since nutritional content is an important criteria for any food product, the product in question may not be considered as an edible preparation. s. There is a distinction between cheese and EMC and the cheese polvaroma. t. It can be seen in various patents mixture of acids and ketones are used for preparing nature identical cheese flavourings. EM Care used as a starting material for the products of cheese flavouring mixtures. u. The cheese flavouring mixtures contain a mix of free fatty acids and ketones possessing 'strong aroma'. The synthetic cheese flavouring compositions can thus be prepared from the aromatic free fatty acids, ketones, esters, amines and other organic compounds. v. These acids and ketones have pleasant odour and therefore are to be treated as synthetic aromatics. w. There is no requirement under the HSN classification that the products have to be of vegetable origin to merit classification under CTG 3302. x. Mixture of synthetic aromatics are given as one of the examples under t....
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....e sent to CDFTRI for analysis and the submissions of CFTRI's report, they were required to submit test bond for all clearances of the product in question. After submission of test report the department accepted the classification under CTH 3302. Therefore, the allegation of misrepresentation and suppression of information is not correct. Extended period cannot be invoked in cases of different interpretation on classification of a particular product. gg. Demand itself is not sustainable thus ruling out the question of interest. hh. Impugned goods are not liable for confiscation in absence of any intentional or deliberate wrong declaration or mis declaration. Similarly, penalty either under Section 112a / 114A of the Customs Act, 1962 cannot be imposed. Penalty cannot be imposed on cases involving classification. 2.6 On adjudication, the Commissioner of Customs (Imports) has dropped the proceedings, initiated by the above Show Cause Notice which has been reviewed by the Department on the following grounds:- i) To be classified under CTH 3302 the subject goods namely Cheese Polvaromas should be mixtures of odoriferous substances and mixtures with a ba....
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....for the products of cheese flavouring mixtures. From the above facts of the products, it can be inferred that the imported goods, Cheese Polvaromas, have their origin from cheese, which is enzyme modified and hence cannot be synthetic aromas. When the subject goods are not synthetic aromas the same cannot be classified under CTH 3302. The Adjudicating authority did not take into account the above facts while passing the present order in original while arriving at the conclusion that they are classifiable under CTH 3302. iv) Further as per Note 2 of Chapter 33, the expression "odoriferous substances" in heading 3302 refers only to the substances of heading 3301 to odoriferous constituents isolated from those substances or to the synthetic aromatics. Since, imported goods are a preparation based on Cheddar Cheese Paste and not synthetic aromas, it cannot be classifiable under the CTH 3302 Explanatory Note to the Heading 2106 specifically covers the flavouring materials and the Tariff Item 21069060 specifically covers the goods of description "Food flavouring material". As the imported goods are derived from Cheddar Cheese paste are rightly classifiable under the hea....
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....te to 2106 specifically covers the flavouring materials and Tariff Item 2106 9060 specifically covers the goods of description "Food Flavouring Materials". He has adverted to the grounds of Review Order by the Department and as the impugned goods are derived from cheddar cheese paste and used for flavouring, they are rightly classifiable under heading 2106 as "Food preparations not elsewhere specified". 4.1.1 The Ld. Advocate Shri R. Srinivasan, Consultant representing the Respondent has stated that the subject goods are imported to be used in the manufacture of their final product viz., "Dry Mix Seasoning" and the impugned product contains various aroma components that have pleasant odour as detailed below:- Component Flavour profile FEMA * No. Butanoic acid Butter, cheese, sour 2221 2 heptonanone Blue cheese, fruit, green nut, spice 2544 Hexanoic acid Cheese oil, pungent, sour 2599 Heptanoic acid Apricot, floral, sour 3348 2 nonanone Fragrant, fruit, green, hot milk 2785 Octanoic acid Cheese, fat, grass, oil 2799 Decanoic acid Dust, fat, grass 2364 4.1.2 It is submitted by the Ld. Consultant that these ....
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....of plant origin. The heading 3302 covers, inter alia, products based on essential oils and synthetic aromatics. When they are based on essential oils, they would be of plant origin. On the other hand, when these products are based on synthetic aromatics, there is no such requirement that the product synthetic aromatic should be of plant origin. 4.2.6 Further, the Ld. Consultant for the Respondent stated that the subject goods are not classifiable under CTH 2106. Heading 2106 covers Food preparations "not elsewhere specified or included". As such, it is a residuary entry. 4.2.7 From a perusal of the HSN Explanatory Notes to CTH 2106 it is seen that the nature of food preparations covered under this Heading are such preparations which are used as food or beverages either as such or after a minimum processing such as dilution or cooking etc. The 'Food Preparation' to be classified under 2106 should satisfy two conditions namely (a) capable of being consumed either directly or after some processing by humans and (b) preparation consisting of foods stuffs either for making beverages or making foods preparations for human consumption. The impugned product does not satisfy any of th....
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....ubstances. 5. We have considered the submissions made by the Revenue and the Respondent. We have perused the records as available in this appeal. 6.1 The main issue involved in the present appeal relates to the proper classification of goods described as 'Cheese Polvaromas / Cheese Parmesan Polvaromas / Butter Cream Polvaromas under the Customs Tariff Act, 1975. Connected issues are the invocation of extended period for demand of differential duty and confusability of the impugned goods besides imposition of penalties. 6.2 We note that the present appeal filed by the Department is directed against the impugned order No. 62031/2018 dated 28.02.2018 passed by Commissioner of Customs (Imports), Chennai holding the classification of subject goods under CTH 3302 1090 and for rejecting the proposal to reclassify the same under CTH 2106 9060. So, it is important to examine relevant Chapter Headings, Chapter Notes and HSN Explanatory Notes. 6.3 For ease of reference, the Chapter Headings 2106 and 3302, are extracted below: - 2106 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR INCLUDED 2106 10 00 - Protein concentrates and tex....
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....r human consumption. (B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38). However, the heading does not cover enzymatic preparations containing foodstuffs (e.g., meat tenderisers consisting of a proteolytic enzyme with added dextrose or other foodstuffs). Such preparations fall in heading 35.07 provided that they are not covered by a more specific heading in the Nomenclature. . . This heading excludes preparations of a kind used for the manufacture of beverages, based on one or more odoriferous substances (heading 33.02)." (Emphasis supplied) 6.6 Similarly, the Chapter Note 2 to Chapter 33 states that: - "The expression "odoriferous substances" in heading 3302 refers only to the substances of head....
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....h are used as raw materials in the perfumery, food or drink industries. 6.9 We note that the Respondent's submission is that the subject goods -consist of various odoriferous substances and are of synthetic origin, which make them classifiable under CTH 3302 1090. Whereas, the Department has relied on Chapter Note 2 to Chapter 33 of the Customs Tariff Act, 1975, which states that "odoriferous substances" in Chapter Heading 3302 refers only to substances of Chapter Heading 3301 to odoriferous constituents isolated from those substances or to synthetic aromatics, and also referred to the HSN, which states that the goods which qualify for classification under Chapter Heading 3302 should be mixtures, whether or not combined with a diluent or carrier or containing alcohol, of products of other Chapters (e.g., spices) with one or more odoriferous substances (essential oils, resinoids, extracted oleoresins or synthetic aromatics), provided these substances form the basis of the mixture. But, in this case, the odoriferous substances can be of synthetic origin. 6.10 We find that there is no dispute and it is an admitted fact that the impugned products cannot be directly used by the en....
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....ing under CTH 3302 as determined by the Original Adjudicating Authority vide order dated 28.02.2018. Relevant findings are extracted below:- "11. Thus from the above, it becomes clear that the impugned product is a mixture of synthetic aroma compounds and are combined with the carrier namely maltodextrin and that they are used in the food stuffs. 12. Having known the nature of the impugned products it has now to be seen the appropriate classification. The rival headings are 3302 and 2106. 13. The chapter 33 covers "essential oils and resinoids; perfumery, cosmetic or toilet preparations". The entry against the heading 3302 reads as follows:: "Mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind used as raw materials in industry; other preparations based on odoriferous substances, of a kind used for the manufacture of beverages." This heading has got two single dash sub headings. One is 3302 10 (of a kind used in the food or drink industries) and the second one 3302.90 (other). It has been seen above that the impugned products are a mixture of synthetic ....
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....inst the CTH 3302 10 90 should be taken as appropriate duty. In this regard, reference is drawn to the "Classification Decisions Taken By the Harmonized System Committee from the 1st to 26th Sessions (1988- 2000) 2002 in Sl. No. 168(relevant document 35.700 E/4 35 100 F/1 34.732 and decision (HSC/4) has decided that beverage bases- mixtures of esters (ethyl acetate, amylacetage, ethyl butyrate, isoamylbutyrate and others) as flavours and artificial colour in ethanol (52% v/v) and higher alcohol under the heading 33.02 treating them as a product described in the latter part of heading 33.02 which specially referred to mixtures with a basis of odoriferous substances of a kind used as a raw materials in industry. 16. Having held that the CTH 3302 1090 is appropriate for the impugned goods, it obviates the necessity to find out the applicability of the heading 21.06 as contended in the show cause notice. However, the same is also being taken up for a discussion. 17. The entry against the heading 21.06 reads as "food preparations not elsewhere specified or included". The entries under this heading are extracted below: 2106 10 00 - Protein concentrates....
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....106) for the impugned goods, the alternative heading 3302 gets deemed as the appropriate heading by default." 8. In view of the above discussions, we hold that the impugned goods are classifiable under CTH 3302 1090 of the Customs Tariff Act and there is no merit in the appeal filed by the Department. Accordingly, the appeal is rejected. The cross objections filed by the Respondent thus, are disposed of. (Order pronounced in open court on 09.10.2023) ============= Document 1 iff Where science & creativity meet NOTE ON CHEESE POLVAROMAS The product viz. Cheese Polvaromas contains aliphatic saturated acids and ketones which impart cheese flavour and have olfactory / organoleptic profiles. These are spray dried with Maltodextrin and Gum Arabic to encapsulate the flavouring materials to preserve the flavoring materials / flavour characteristics, The supplier, IFF Netherland has provided details of composition of Cheese Polvaromas with Chemical Abstracts Service (CAS) Registry number, Flavour Extract Manufacturers Association (FEMA) number, Flavour profile and Tariff heading for each of Aliphatic saturated acid and ketones in the tabular co....