TaxTMI 
TaxTMI 
2024 (12) TMI 1752
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....ended products (emulsions) from ingredients which, because of fundamental differences in their physical and chemical properties, are immiscible. Details of Manufacturing Process 1.3. Palm oil is the raw material used for the manufacturing of the subject product. Palm oil contains different types of fatty acids. These fatty acids (stearic acid) react with propylene glycol in an esterification reaction. The subject product contains residual mono and di glycerides and glycerol entities. Addition of other constituents 1.4. Thereafter Silicium dioxide, Alpha-tocopherol, and Citric acid are further added for their properties of anticaking, anti-oxidant, acidity regulator and sequestrant. Final Processing 1.5. The physical processes of Distillation, Storage, Filtration, Tube chilling, magnet separation takes place after the chemical reactions are concluded, to get the subject product in its imported form. Composition of Subject Products The composition of subject products is as follows: PARTICULARS GRINDSTED PGMS 86 TECHNICAL FUNCTION [The Food Safety and Standards (Food Products Standards and Food Additives) Regulation, 2011] QUANTITY Pr....
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....tion to separate the monoesters. Structure: Structural formula where R1 and R2 represent one fatty acid moiety and hydrogen in the case of mono-esters and two fatty acid moieties in the case of di-esters 1.10. Propylene Glycol Ester is not a chemically defined compound due to the presence of residual mono- and diglycerides and glycerol. Additionally, there is not a fixed chemical structure of the Propylene Glycol Ester, as "R1 and R2" can be one fatty acid moiety and hydrogen in case of mono-ester and two fatty acid moieties in the case of di-esters. Subject product is waxy in nature 1.11. As per, the JECFA report, Propylene glycol ester of fatty acids is waxy in appearance. Relevant portion of report has been provided below :- Description: White or cream coloured solids of waxy appearance, plastic products or viscous liquids APPLICANT'S ELIGIBLITY FOR ADVANCE RULING 1.12. In order to file an application before the Authority for Advance Ruling, the Applicant must satisfy the conditions prescribed under the Customs Act, 1962 (hereinafter referred to as 'Customs Act'). 1.13. Provisions relating to Advance Ruling are pr....
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....d to the [Principal Commissioner of Customs or Commissioner of Customs]. (2) The Authority may, after examining the application and the records called for, by order, either allow or reject the application : Provided that the Authority shall not allow the application [ * * *] where the question raised in the application is - (a) already pending in the applicant's case before any officer of customs, the Appellate Tribunal, or any Court; (b) the same as in a matter already decided by the Appellate Tribunal or any Court : Provided further that no application shall be rejected under this sub-section unless an opportunity has been given to the applicant of being heard : Provided also that where the application is rejected, reasons for such rejection shall be given in the order." 1.20. Thus, the conditions set out in Section 28I are satisfied as: a. the question raised in the present application regarding classification of GRINDSTED PGMS 86 is not pending in the applicant's own case before any officer of customs, the Appellate Tribunal, or any Court; b. the question raised in the present application regardi....
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.... Separate chemically defined compounds; or. (c) **** 1.27. Additionally, as per Note 5 to Chapter 34, "artificial waxes and prepared waxes" applies to: (a) Chemically produced organic products of waxy character, whether or not water-soluble. (b) *** (c) **** 1.28. Further, the HSN Explanatory Notes to Heading 3404 provide for its applicability as under: This heading covers artificial waxes (sometimes known in industry as "synthetic waxes") and prepared waxes, as defined in Note 5 to this Chapter, which consist of or contain relatively high molecular weight organic substances and which are not separate chemically defined compounds. These waxes are : (A) Chemically produced organic products of a waxy character, whether or not water- soluble. Waxes of heading 27.12, produced synthetically or otherwise (eg., Fischer- Tropsch waxes consisting essentially of hydrocarbons) are however excluded. Water- soluble waxy products having surface-active properties are also excluded (heading 34.02). (B) **** (C) Products of a waxy character with a basis of one or more waxes and containing fats, resins, mineral substances ....
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....onally the JCEFA Report also provides that the subject product is waxy in character III. The product must be chemically produced organic product 1.33. As per the manufacturing process of the subject product, it is manufactured by a chemical reaction of fatty acid (stearic acid) with propylene glycol in an esterification reaction. The resultant product contains a carbon-hydrogen bond, which is characteristic of an organic product. Hence, the subject product is a chemically produced organic product. IV. The product must not be covered within the scope of CTH 2712 1.34. CTH 2712 covers Petroleum Jelly, Paraffin Wax, Microcrystalline Petroleum Wax or other mineral waxes. 1.35. A simple analysis shows that the subject product is not any of these waxes. Hence, the subject product is not covered within the scope of CTH 2712. V. Other conditions 1.36. A mentioned above and on physical examination of the subject product shows that it has a waxy character. 1.37. The Applicant confirms that the subject product has a drop melt temperature of above 40°C. 1.38. The Applicant also confirm that the subject product has a viscosity that does not exceed 10 Pa.s at 10&de....
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.... that as per GRI, descriptions of the goods provided under "-"(single dash) are first to be considered for sub-classification under a heading first, before proceeding to further classify under "- - " (double dash). Articles whose description are preceded by a " --- " (triple dash) or " ---- " (quadruple dash) are sub-classifications of the immediately preceding single dash or double dash, as the case may be. 1.45. Therefore, the classification of the subject goods must be first determined at the single-dash level. In this regard, it is evident that CTH 3404, has been sub-divided into: CTH Description Unit Rate of Duty (1) (2) (3) (4) 34042000 - Of poly (oxyethylene) (polyethylene glycol) Kg 10% 340490 - Other 1.46. The subject product is not made up of Polyethylene glycol (PEG). Accordingly, the subject product will be classified under the residuary entry, i.e., CTSH 3404 90 which reads as "Other". 1.47. Now, upon perusal of the single-dash entry- "Other". The entry is sub-divided into the following: CTH Description Unit Rate of Duty (1) (2) (3) (4) 34090 - Other ....
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....ded to Assessment Group in terms of section 28I (1) of the Customs Act, 1962 for comments and relevant records. In this regard, comments are as follows: Point 3 i). Applicant is eligible in terms of section 28-E (c) of the Customs Act, 1962 to seek advance ruling. Point 3 ii). As per available records in the assessment group, no other application on this subject is pending before any tribunal or Courts. Point 3 iii). The claim of applicant regarding the nature of activity is that the importer is regularly importing the goods in question i.e. Grindsted PGMS 86. Point 3 iv). As stated by the importer in their application the goods i.e. 'Grindsted PGMS 86' is a food emulsifying agent which enable the creation of uniformly blended products (emulsions) from ingredients which due to their differences in physical and chemical properties are immiscible. The goods appear to be classifiable under Chapter 38. The HSN explanatory notes to 38.24 are reproduced below: Subject to the above conditions, the preparations and chemical products falling here include: (11) Mixtures of mono-, di- and tri-, fatty acid esters of glycerol, used as emulsifier....
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....ssioner has stated that the subject product can either be classified under CTH 3404 or CTH 3824 depending on whether it meets the character of artificial waxes or otherwise and that accordingly, the compliance of the subject product to various conditions set forth for classification under CTH 3404 needs to be examined. Technical Details of the Subject Product 4.5. The present application pertains to a brand of food emulsifying agent. An emulsifier enables the creation of uniformly blended products from ingredients which, because of the fundamental differences between each other are immiscible without the presence of the said emulsifiers. 4.6. The subject product, which is used a food emulsifying agent, is pre-dominantly composed of a 'Propylene Glycol Ester'. The Chemical Structure of the subject product is extracted below: 4.7. For ease of reference, the chemical composition and the physical property of the subject product is captured below: Grindsted SSL P 70 Veg PARTICULARS DESCRIPTION QUANTITY Pre-dominant Ingredient Propylene Glycol Ester (E477) Approx 96% Other Ingredients Silicium Dioxide (E551) Approx 4% Alpha-Tocop....
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.... be imported in ready-to-sell packages of polyethylene/aluminium lined paper bags of 25 kgs each. The said product will be used in the food industry as an emulsifying agent. Classification of the Subject Product 4.12. The Applicant proposes to classify the subject product under CTI 3404 90 39 of the Customs Tariff. The relevant tariff entries are extracted below for ready reference: Heading/ Sub- heading/ Tariff Item below for ready reference: Description of Goods Rate of Duty 3404 ARTIFICIAL WAXES AND PREPARED WAXES 3404 20 00 - Of poly (oxyethylene) (polyethylene glycol) 10% 3404 90 - Other: 3404 90 10 --- Sealing wax (including bottle sealing wax) in sticks, cakes or similar forms 10% 3404 90 20 --- Polyethylene wax 10% --- Artificial waxes (including water-soluble waxes) prepared waxes, not emulsified or containing solvents: 34049031 Poly brominated biphenyls 10% 34049032 Poly chlorinated biphenyls 10% 34049033 Poly chlorinated terphenyls 10% 34049039  ....
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....(B) ......... (C) Products of a waxy character with a basis of one or more waxes and containing fats, resins, mineral substances or other materials. Unmixed animal or vegetable waxes, whether or not refined or coloured, are, however, excluded (heading 15.21). Unmixed mineral waxes or mixtures of mineral waxes, whether or not coloured are also excluded (heading 27.12) ......... ....... The waxes of paragraphs (A), and (C) above must have: (1) a dropping point above 40 ℃; and (2) a viscosity, when measured by rotational viscometry, not exceeding 10 Pa.s (or 10,000 cP) at a temperature of 10 degrees C above their dropping point. ....... Apart from the exclusions mentioned above, the heading does not cover : ...... (f) Mixtures of mono-, di- and tri-, fatty acid esters of glycerol, not having the character of waxes (heading 38.24)." 4.16. From a combined perusal of the above-captured extracts, the following essential requirements are required to be fulfilled by a product to be classified under CTH 3404: (a) The product must not be a separate chemically defined compound; (b) The p....
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....n the JECFA Report which describes the subject product as "White or cream coloured solids of waxy appearance, plastic products or viscous liquids" The product must have a drop melt temperature of above 40℃ and viscosity not exceeding 10 Pa.s at 10°C above the drop melting point The subject product has been tested at the Grindsted Plant of Danisco, which is accredited to BRCGS, Global Standard for Food Safety Issue 9 in Denmark. The said test report certifies the following: 1. Dropping Point of the subject product: 48℃ 2. Viscosity: 0.0152 Pa.s when measured by rotational viscometry at a temperature of 10°C above its dropping point 4.18. In light of the above, it is submitted that the subject product fulfils all the conditions set forth by the combined reading of Chapter Note 1(b) and 5(a) to Chapter 34 and the HSN EN to be adequately covered under CTH 3404. 4.19. Further, upon a perusal of the relevant tariff entries extracted hereinabove, it is imperative to outline that out of the two 'single-dash' entries under CTH 3404, which are termed as "Of poly (oxyethylene) (polyethylene glycol)" and "other", the subject product ....
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....e raw material used for the manufacturing of the subject product. Palm oil contains different types of fatty acids. These fatty acids (stearic acid) react with propylene glycol in an esterification reaction. The subject product contains residual mono and di glycerides and glycerol entities. Thereafter Silicium dioxide, Alpha- tocopherol, and Citric acid are further added for their properties of anticaking, anti-oxidant, acidity regulator and sequestrant. The physical processes of Distillation, Storage, Filtration, Tube chilling, magnet separation takes place after the chemical reactions are concluded, to get the subject product in its imported form. 5.1 The composition of subject products is as follows: PARTICULARS GRINDSTED PGMS 86 TECHNICAL FUNCTION QUANTITY Predominant Ingredient Propylene Glycol Ester (E477) Emulsifier Approx. 96% Other Ingredients Silicium dioxide (E551) Anticaking agent Approx. 4% Alpha-tocopherol(E307) Anti-oxidant Mac. 150 ppm Citric acid (E330) (dissolved in propylene glycol) Acidity regulator, Anti-oxidant, Sequestrant Max. 200ppm E numbers: It is a system of codes used within the European Union ....
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....ication 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. 5.4 Given that it has a waxy nature, it may be classified under Chapter 34, which covers, inter-alia, Artificial Waxes and Prepared Waxes. Under Chapter 34, the relevant customs tariff heading ("CTH") that is most relevant to the classification of the subject product is CTH 34.04, which concerns Artificial waxes and prepared waxes. Before examining the classification of the subject product under CTH 3404, it is relevant to visit the Notes to Chapter 34. 5.4.1 As per Note 1 to Chapter 34 "separate chemically defined compounds" are excluded (1) This Chapter does not cover (a) **** (b) Separate chemically defined compounds; or. (c) **** 5.4.2 Additionally, as per Note 5 to Chapter 34, "artificial waxes and....
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....bject product is not a separate chemically defined compound 5.6.1 The term separate chemically defined compounds has been defined in the Explanatory Notes to the Harmonized System of Nomenclature published by the World Customs Organization (hereinafter to be referred to as "Explanatory Notes") for Chapter 29 (Organic Chemicals). For ease of reference the relevant definition is reproduced below: (A) Chemically defined compounds (Chapter Note 1): A separate chemically defined compound is a substance which consists of one molecular species (e.g., covalent or ionic) whose composition is defined by a constant ratio of elements and can be represented by a definitive structural diagram. In a crystal lattice, the molecular species corresponds to the repeating unit cell. As already mentioned, JECFA Report provides that the subject product is not a chemically defined compound due to the presence of residual mono- and diglycerides and glycerol. II. Subject product is waxy in nature 5.6.2 Additionally the JCEFA Report also provides that the subject product is waxy in character III. The product must be chemically produced organic product 5.6.3 As per the manu....
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....ntioned in Note 1(b), and Note 5 to the Chapter 34, the subject product merits classification under CTH 3404. Now, coming to the 6 digit and 8-digit classification, reliance must be placed on GRI Rule 6 which states that "the classification of goods in the sub-headings of a heading shall be determined according to the terms of those sub-headings and any related sub-heading Notes and, mutatis mutandis, to the above rules, on the understanding that only sub-headings at the same level are comparable. For the purposes of this rule the relative Section and Chapter Notes also apply, unless the context otherwise requires". Therefore, upon application of GRI Rule 6 read with GRI Rule 1, the classification of subject products must be determined according to the terms of sub-headings. In view of the above, reference must be made to the description mentioned at sub-heading level. It is also pertinent to mention that as per GRI, descriptions of the goods provided under "-"(single dash) are first to be considered for sub-classification under a heading first, before proceeding to further classify under "- - " (double dash). Articles whose description are preceded by a " ---- " (tripl....
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....; form contains neither bromine nor any chlorine. Thus, the subject product is not classifiable under CTIs 34049031, 34049032 or 34049033. Hence, the subject product merits classification under CTI 3404 90 39. 5.9 Vide letter dated 02.12.2024, the Port Commissionerate has stated that the subject product can either be classified under CTH 3404 or CTH 3824 depending on whether it meets the character of artificial waxes or otherwise and that accordingly, the compliance of the subject product to various conditions set forth for classification under CTH 3404 needs to be examined. 5.10 Considering the subject product is pre-dominantly composed of Propylene Glycol Ester and has a waxy nature it shall be classified under Chapter 34, which covers, inter alia, "Artificial Waxes and Prepared Waxes" under Customs Tariff Heading (hereinafter referred to as "CTH") 3404. Further, relevant Chapter Notes and Harmonised System of Nomenclature Explanatory Notes (hereinafter referred to as "HSN EN") which have been held to be a safe guide for the determination of the correct classification in a catena of judgments, are extracted below for ready reference: "Chapter Note 1 This C....
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.... from the scope of the definition of a Separate Chemically Defined Compound as prescribed under HSN EN to Chapter 29. The subject product does not have a definitive structure as the 'R1' and 'R2' as captured in the structural diagram hereinabove represent one fatty acid moiety and hydrogen in the case of mono- esters and two fatty acid moieties in the case of di-esters. The same is outline in the JECFA Report The product must be chemically produced organic product As distilled hereinabove, the manufacturing process of the subject product involves a chemical reaction i.e. esterification reaction of fatty acid with propylene glycol. The resultant product contains a carbon-hydrogen bond, which is a characteristic of that product being an organic product. Reliance in this regard is placed on the definition of an "organic compound" as outlined by Britannica Technical Dictionary which is extracted below: "organic compound, any of a large class of chemical compounds in which one or more atoms of carbon are covalently linked to atoms of other elements, most commonly hydrogen, oxygen, or nitrogen." The product must not be CTH 2712 covers "Petrol....