TaxTMI 
TaxTMI 
2025 (1) TMI 1712
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the Applicant: 2.1 Nutricia International Private Limited ("the Applicant"), is a Private Limited company incorporated in the year 2011 under the Companies Act, 1956. The Applicant is part of the internationally renowned Danone group. The Applicant is engaged in the import, manufacturing and marketing of numerous products which serve the following markets: i. Infant Nutrition ii. Adult Nutrition iii. Health and Wellness 2.2 The Applicant is now proposing to import the product '5-HMO mix'. Post import, the same will be used by the Applicant for manufacturing infant formula manufactured by them. 2.3 About 5-HMO Mix: 5-HMO Mix (hereinafter referred to as the 'product') is a mixture of 5 different types of human milk oligosaccharides ('HMOs'). Below is the composition of the product: SI. No. Ingredient % of Total weight Nature of the ingredient 1. 2'-Fucosyllactose 52 %DW (+/- 5 %DW) HMO 2. 3-Fucosyllactose 13 %DW (+/- 3 %DW) HMO 3. Lacto-N-Tetraose 26 %DW (+/- 3 %DW) HMO 4. 3'-Sialyllactose 4 %DW (+/- 1 %DW) HMO 5. 6'-Sialyllactose 5 %DW (+/- 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vel, with the Harmonized System of Nomenclature ('HSN') issued by the World Customs Organization ('WCO'). It has been held by the Hon'ble Supreme Court in the case of Collector of Customs, Bombay Vs. Business Forms - 2002 (142) ELT 18 that the HSN Explanatory Notes aid in the interpretation of the Headings of the Tariff and may be used as a safe guide for the same. 3.2 The classification of the goods imported into India is to be determined based on the General Rules of Interpretation (hereinafter referred to as the "GRI") set out in the Tariff. As per Rule 1 of the GRI, classification of the imported products shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the remaining Rules of the GRI. 3.3 The product in question i.e., 5-HMO Mix is a mixture of 5 different human milk oligosaccharides which are obtained from lactose. Oligosaccharides are specifically covered under Heading 2940. Thus, at the outset classification under Heading 2940 be examined. 3.4 THE PRODUCT CLASSIFICATION UNDER HEADING 2940: Relevant extracts of HSN Explana....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cally synthesised). Thus, HMOs too are nothing but oligosaccharides and are covered under Heading 2940. 3.6 Lactose and carbohydrate present in the imported product are unconverted raw materials/by-products. Thus, they are permissible impurities allowed to be present in the imported product. Relevant extracts from the Chapter Notes to Chapter 29 are as follows: The separate chemically defined compounds of this Chapter may contain impurities (Note 1 (a)). An exception to this rule is created by the wording of heading 29.40 which, with regard to sugars, restricts the scope of the heading to chemically pure sugars. The term "impurities" applies exclusively to substances whose presence in the single chemical compound results solely and directly from the manufacturing process (including purification). These substances may result from any of the factors involved in the process and are principally the following : (a) Unconverted starting materials. (b) Impurities present in the starting materials. (c) Reagents used in the manufacturing process (including purification). (d) By-products. It should be noted, however, that such subst....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er heading No 2940 of the Combined Nomenclature as the salt of a sugar ether. Heading 2940 3.9 Thus, as per international customs practice as well the product is classifiable under Heading 2940. 3.10 THE PRODUCT CLASSIFICATION UNDER HEADING 1702: Sugars obtained from lactose (known as milk sugars) are covered under Heading 1702. Thus, alternatively, the product may be classifiable under Heading 1702. Chapter 17 covers Sugar and Sugar * Confectionery. Relevant portion of Chapter Notes to Chapter 17 are extracted below: "1. This Chapter does not cover: (a) Sugar confectionery containing cocoa (heading 1806); (b) Chemically pure sugars (other than sucrose, lactose, maltose, glucose and fructose) or other products of heading 2940; or (c) Medicaments or other products of Chapter 30." 3.11 Thus, from a perusal of the above it is understood that if the product is not classifiable under Heading 2940, the same can be classified here. If, arguendo, only chemically pure oligosaccharides are covered under Heading 2940 and the presence of lactose and carbohydrates renders the product to fall outside the ambit of Heading 2940, then the product woul....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e (C6.H12.O6.) is a white crystalline powder. It is used in the food and pharmaceutical industries. Commercial glucose is obtained by hydrolysing starch with acids and/or enzymes. It always contains, in addition to dextrose, a variable proportion of di-, tri- and other polysaccharides (maltose, maltotriose, etc.). It has a reducing sugar content, expressed as dextrose on the dry substance, of not less than 20 %. It is usually in the form of a colourless, more or less viscous liquid (glucose syrup, sec Part (B)) or of lumps or cakes (glucose aggregates) or of an amorphous powder. It is used mainly in the food industry, in brewing, in tobacco fermentation and in pharmacy. (4) Fructose (C6.H12.O6) which is present in large quantities, with glucose, in sweet fruits and in honey. Commercially it is produced from commercial glucose (e.g., corn syrup), from sucrose or by hydrolysis of inulin, a substance found mainly in the tubers of the dahlia and the Jerusalem artichoke. It occurs in the form of a whitish, crystalline powder or as a viscous syrup (see Part (B)): it is sweeter than ordinary sugar (sucrose) and is especially suitable for use by diabetics. This heading co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....teristics (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. 3.16 Therefore, it appears that for products to fall under Heading 2106, such products must be - a. Food preparation b. Such food preparations should not be specified or included elsewhere. In other words, it is a residuary heading and if products are covered or included elsewhere they will not fall under Chapter Heading 2106. 3.17 The product is not a food preparation as contemplated under Heading 2106: From a perusal of the above extract of HSN Explanatory Notes to Heading 2106, it is clear that only two categories of products are covered under Heading 2106. (A) Preparations which are for direct human consumption or consumption after processing; and (B) Preparations which are mixed with foodstuffs and further used for the manufacture of food preparations. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2940 OR 1702, AND NOT UNDER 2106: The product in present case is a mixture of 5 HMOs. The composition is set out in facts. It is relevant here to refer to Rule 2(b) of the GRI, read with Rule 3: "Rule 2(b): Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of Rule 3. Rule 3: When by application of Rule 2 (b) or for any other reason, goods are prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ragraphs, Heading 2106 is a residuary entry which covers food preparations only if not specified elsewhere. Thus, it is clear that Heading 2940 or Heading 1702 are the more specific headings. 3.25 If, arguendo, the classification is not possible even by virtue of Rule 3(a), then reference shall be made to Rule 3(b). 3.26 The product is classifiable under Heading 2940 or alternatively, under Heading 1702 by virtue of Rule 3(b) of GRI as the essential character of the product is imparted by the HMO: In accordance with Rule 3(b) of GRI, the mixtures, composite goods consisting of different materials if cannot be classified by reference to Rule 3(a), then they shall be classified as if they consisted of the material or component which gives them their essential character. 3.27 The HMO content in the product accounts for 90% of the total composition of the product. Out of the same, more than 50% of comprises of 2'-Fucosyllactose HMO. Further, as stated above, carbohydrates and lactose are merely leftover unconverted starting material. HMOs help in building immunity and balancing gut health in infants which is the intended use of the product. And the product is used for manu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al-Uran, Dist: Raigad, Nhava Sheva. Maharashtra - 400 707 on 28.10.2024 calling upon them to furnish the relevant records with comments, if any, in respect of the said application. Further reminders were also issued on 04.12.2024 and 24.12.2024, however, no reply, till date, has been received in this office. The office of Commissioner of Customs (Imports), Air Cargo Complex, Sahar, Mumbai - 400099 vide its letter dated 31.12.2024 replied that Human Milk Oligosaccharides merits classification under heading 2940 in terms of GRI Rule 3(a) as it provides more specific description of HMO Mix than any other heading. 5. Records of Personal Hearing 5.1 A personal hearing was held on 13.11.2024 at 3:00 PM in the office of the CAAR, Mumbai. Shri T. Viswanathan, Shri Srinidhi Ganeshan and Ms. Anaya Bhide, all Advocates appeared for the hearing on behalf of the applicant and reiterated the contention of the applicant filed with the application. They contended that the subject import goods i.e. 5-HMO Mix (Human Milk. Oligosaccharides) to be used in preparation of 'Infant Milk Formula' merit classification under CTI 29400000. They submitted that each component ingredient in pure....
X X X X Extracts X X X X
X X X X Extracts X X X X
....carbohydrates ≤ 10 %Area Leftover unconverted starting material 7. Lactose ≤ 3 % DW Leftover unconverted starting material 6.4. The HMOs in the 5 HMO Mix (2'-Fucosyllactose, 3-Fucosyllactose, 3'-Sialyllactose, 6'-Sialyllactose, and Lacto-N-tetraose) are individually synthesized from a carbon source (e.g. sucrose, glucose or glycerol) and lactose as precursor using individual production strains and are secreted into the fermentation medium. The fermentation medium is separated from the microbial biomass using filtration. The HMOs are further purified from the resulting solution using ion exchange resins and additional purification steps. The final HMO concentrates are eventually spray-dried and blended to produce a solid white 5 HMO Mix powder. A flow scheme showing the production process is given below: 6.5. Each HMO is a chemically defined product. The statement provided by the Supplier regarding the chemical structures of each of the HMOs is depicted below: 6.6. The Total HMO content constitutes more than 90% of the product, with majority of it being 2'Fucosyllactose. The Lactose and Carbohydrates are leftover unconverted starting ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s permitted. 6.8 The product is classifiable under Heading 2940: It is submitted that the product in question is a mixture of 5 different HMOs. Each human milk oligosaccharide is a type of oligosaccharide. Oligosaccharides are "a type of carbohydrate chain made up of three to 10 simple sugars, which are also known as monosaccharides". Each Oligosaccharide present in the 5 HMO mix is in turn made of 5 monosaccharides [glucose (Glc), galactose (Gal), N- ethylglucosamine (GlcNAc), fucose (Fuc) and sialic acid (SA)] . Thus, each HMO is clearly an oligosaccharide and thus is specifically covered under Heading 2940 as visible from the HSN Explanatory Notes to Heading 2940. Thus, it is submitted that a mixture of 5 oligosaccharides should also be covered under Heading 2940. Further, there are various BTI Rulings in support of the classification of HMO under Heading 2940. Further, the HMOs are chemically synthesized will not affect their classification, as the classification under Heading 2940 is determined based on the chemical formulas of the product concerned and not based on its source. Within Heading 2940 itself numerous products mentioned in HSN Explanatory Notes are chemically....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework. 7.2 "The applicant has sought advance ruling in respect of the following questions: a) Question: Whether the product in question in the present application is classifiable under Tariff Item 2940 0000? b) Question: If the answer to the above question is in the negative, then whether the product in question in the present application is classifiable under Tariff Item 1702 9090? c) Question: If the answer to the above questions is in the negative, what would be the correct classification of the products mentioned above under the Customs Tariff of India? 7.3 At the outset, I find that the issue raised at the Sr. No. 08 in the CAAR-1 form is squarely covered under Section 28H(2) of the Customs Act, 1962 being a matter related to the classification of goods. 7.4 The applicant submitted that the subject goods i.e. '5-HMO Mix' is a mixture of 5 different types of human milk oligosaccharides ('HMOs') which would be used by the applicant for manufacturing "Aptamil Gold Stage 1 Infant Formula with Prebiotic" which is a baby for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....estible sugar found in human breast milk and has beneficial prebiotic properties. 2'-Fucosyllactose is chemically pure in its isolated form, meaning it can be precisely synthesized or extracted and purified from biological sources, making it distinct from simple sugars like glucose or lactose. Therefore, 2'-Fucosyllactose satisfies the criterion mentioned in the Heading description of CTH 2940 as it is a chemically pure sugar other than common sugars like Sucrose, Lactose, Maltose, Glucose and Fructose. 7.9.2 3' Fucosyllactose (3' FL) have 13% DW of total weight in the 5-HMO Mix. I find that 3'-FL is a type of fucosylated oligosaccharide composed of lactose (a disaccharide of glucose and galactose) and fucose (a monosaccharide). In 3'-FL, the fucose molecule is linked to the galactose unit of lactose via a glycosidic bond at the 3' position of the galactose. Like 2'- Fucosyllactose, 3'-FL is a chemically pure oligosaccharide that can be isolated and purified. It is a specific combination of sugars in a defined structure, making it chemically pure. Therefore, 3'-Fucosyllactose satisfies the criterion mentioned in the Heading description of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e form. It has a specific molecular structure and can be produced in isolated or purified forms for use in nutrition and research. Therefore, 6' Sialyllactose satisfies the criterion mentioned in the Heading description of CTH 2940 as it is a chemically pure sugar other than common sugars like Sucrose, Lactose, Maltose, Glucose and Fructose. 7.10 Further, in the Exhibit B submitted with the application, it is mentioned that the individual HMO powders i.e. 2' FL, 3' FL, LNT, 3' SL and 6' SL are used in a wet-blending process to generate the product '5-HMO Mix'. I further find that The wet blending process is a manufacturing technique commonly used to create a homogeneous mixture of ingredients, including oligosaccharides like 2'-Fucosyllactose, 3'-Fucosyllactose, Lacto-N-Tetraose, 6'- Sialyllactose, and 3'-Sialyllactose and it does not chemically alter the oligosaccharides. It ensures a uniform mixture suitable for further processing, such as spray drying or incorporation into products like infant formula. 7.11 From the above, I find that the constituent oligosaccharides of 5-HMO mix individually can be classified under CTH 2940 and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the case of Western India Plywoods Ltd. Versus Collector of Customs, Cochin [2005 (188) E.L.T. 365 (S.c.)], it was held that application of residuary entry to be made with extreme caution, being attracted only when no other provision expressly or by necessary implication applies to goods in question. 7.15 I find that the product i.e. '5-HMO Mix' cannot be classified under the Heading 2106 which covers "Other food preparations, not elsewhere specified" as it is not a food preparation but an intermediary product which would further used in manufacturing of final product. 7.16 I observe that the Heading 1901 covers "malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included". This heading is used for classification of Infant Formulas put up for retails sale, since the subject goods i.e. '5-HMO Mix' are inter....