2024(05)LCX0052(AAR)

Haritaki FZC

decided on 16/05/2024

CUSTOMS AUTHORITY FOR ADVANCE RULINGS
O/o THE COMMISSIONER OF CUSTOM
NEW CUSTOM HOUSE, NEAR IGI AIRPORT, NEW DELHI-110037
[E-MAIL: cus-advrulings.del@gov.in]

Present

Samar Nanda (Custom Authority for Advance rulings, New Delhi)

F.No. VIII/CAAR/Delhi/Haritaki/12/2024

The 16^th day of May, 2024
Ruling Nos. CAAR/Del/Haritaki/16/2024/877 to 881

In application No.  07/2024/dated 23.02.2024

Ruling

M/s HARITAKI FZC (hereinafter referred to as “the Applicant”), is a Free Zone Corporation incorporated in Ajman, United Arab Emirates (UAE) with its registered address there itself. The Applicant is engaged in manufacturing and packaging of various spices, spreads, seasonings and condiments. (`applicant’, in short) has filed an application (CAAR- I) dated 23.02.2024 for advance ruling before the Customs Authority for Advance Rulings, New Delhi (CAAR, in short). The said application was received in the secretariat of the CAAR, New Delhi on 23.02.2024 along with its enclosures in terms of Section 28H (I) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant intends to import of “‘Mixed Condiments and Mixed Seasonings’ (hereafter referred to as the “Proposed Product”)” from UAE into India through the port falling under the Pr. Commissioner of Customs, ICD, Tughlakabad, New Delhi— 110073.

2.1. The applicant submits that the firm M/s HARITAKI FZC, is a Free Zone Corporation incorporated in Ajman, United Arab Emirates (UAE) currently engaged in the local trading of pan shop related spices & betel nuts items. The Applicant intends to import the following and seeks ruling of Hon’ble Authority in the matter of classification of the goods which in the opinion of the Applicant are classifiable under chapter heading 2103 9040.

2.2. The Applicant proposes to export one of’ their packaged products namely ‘Mixed Condiments and Mixed Seasonings’ (hereafter referred to as the “Proposed Product”) to India, For ease of reference, the image of the Proposed Product is produced herewith:

2.2.1 The Proposed Product contains various ingredients, in whole and/ or crushed form, each from Table ‘A’ and Table ‘B, as given below. Further, the actual composition of each ingredient in the Proposed Product may vary on the basis the requirement of customers.

LIST OF INGREDIENTS – TABLE ‘A’

LIST OF INGREDEINETS – TABLE ‘B’

2.3 At this juncture, it is pertinent to note that the General section of Explanatory Notes to Chapter 9 specifically provide that the spices i.e., a group of vegetable products (including seeds etc.) may be in whole or crushed or powdered form. in the instant case of the Applicant as well, all ingredients in the Proposed Product are in whole and/or in crushed form as it is widely noted that whole/ crushed form of such ingredients offer better quality and enhances the shelf life of flavor, aroma and pungency of each ingredient.

2.4 The process of manufacturing of the Proposed product has been elaborated in detail as below:

    (1) Raw Material Preparation and Processing:

• Removal of impurities and cleansing of ingredients

• Grading of ingredients according to specific criteria

• Drying the ingredients using controlled methods

• The ingredients undergo a specially designed and mechanized heat treatment process.

• Weight measurements

   (2) Quality Control:

• Stringent quality control measures are implemented, utilizing scientific apparatus and equipment for lab testing and analysis.

   (3) Blending:

• A specially designed mechanized blending process ensures proper mixing up of the ingredients.

  (4) Finalization:

• Inspection and quality check

• Filing, mechanized sealing and packaging of the product

• Marking and labelling of package

(5) Storage and Distribution:

• The finished Proposed Product is stored in optimal conditions and dispatched for distribution.

3. STATEMENT CONTAINING APPLICANT’S INTERPRETATION OF LAW AND/OR FACTS, AS THE CASE MAY BE, IN RESPECT OF THE QUESTION (S) ON WHICH ADVANCE RULING IS REQUIRED

A. APPLICANT’S ELIGIBLITY FOR ADVANCE RULING

  i. 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’).

 ii. Provisions related to Advance Ruling are prescribed under Chapter VB of the Customs Act. Clause (c) of Section 28E of the Customs Act defines an “Applicant” as: –
In this chapter, unless the context otherwise requires, –
(c)”applicant” means-
(i) holding a valid Importer-exporter Code Number granted under section 7 of the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992); or
(ii) exporting any goods 10 India;

iii. The Applicant is proposing to export Proposed Product to India, the same has been produced above for ease of reference.

iv. Clause (b) of Section 28E of the Customs Act defines ‘advance ruling’ as: – (h) “advance ruling” means a written decision on any of the questions referred to in section 2811 raised by the applicant in his application in respect of arty goods prior to its Exportation or exportation;

v. The above definition of ‘advance ruling’ allows the Applicant to seek a question of law or fact for ruling from the Authority in respect of any goods prior to its exportation.

vi. In the present case too, the Application is being filed prior to the exportation of Proposed Product – as mentioned in para 2 of Annexure-I (Statement of Facts).

vii. The questions on which an application for an advance ruling can be made have been provided under Section 281-1 of the Customs Act. As per the said Section 28H (2) of the Customs Act, an applicant may make an application for advance ruling in respect of questions inter-alia relating to:

(a) classification of goods under the Customs Tariff Act, 1975 (51 of 1975);

(b) applicability of a notification issued under sub-section (I) of section 25, having a bearing on the rate of duty;

(c) the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act.

(d) applicability of notifications issued in respect of tax or duties under this Act or the Customs Tariff Act, 1975 (51 of 1975) or any tax or duty chargeable under any other law for the time being in force in the same manner as duty of customs leviable under this Act or the Customs Tariff Act;

(e) determination of origin of the goods in terms of the rules notified under the Customs Tariff Act, 1975 (51 of 1975) and matters relating thereto.

(f) any other matter as the Central Government may, by notification, specify.

viii. The Applicant is filing the present Application for determining the classification and applicability of exemption notification in relation to the Proposed Product.

ix. It flows from the above that in the present case, the Applicant satisfies all the three conditions mandated for filing the application for advance ruling, namely:

(1) The Applicant is exporting goods from UAE to India;
(2) The Applicant is filing the Application in respect of goods prior to their exportation into India;
(3) The application for advance ruling is in relation to clause (a) and clause (b) of Section 281-I (2) of the Customs Act, 1962

Separately, as per Regulation 27 of the Customs Authority for Advance Rulings Regulations, 2021 (`Regulations’), the orders or advance rulings of the Authority may, as the Authority deems fit for publication in any authoritative report or the press, may be released for such publication. Further, it is provided that at the request of the applicant, the Authority may take necessary steps in order to protect commercially confidential information. In this regard, the Applicant hereby requests the Customs Authority of Advance Ruling to not publish the order or advance ruling as may be issued against the instant application, to protect the commercially confidential information.

B.      ISSUES REQUIRING ADVANCE RULING

In light of the aforementioned, the Applicant seeks to enter the following motions for Advance Ruling and its interpretation of the question will be as under:

Question 1: Whether the Proposed Product to be exported by the Applicant to India is classifiable under Tariff Item 2103 90 40 of the First Schedule to the Customs Tariff Act, 1975?

Question 2: If the answer to the above question is in the positive, whether the exemption from custom duty on the same Tariff Item as per the Custom (Tariff) Notification No. 22/2022 dated 30 April 2022 (`Notification’), issued under sub-section (I) of section 25 of the Customs Act, 1962 be applicable and available to the applicant?

Question 3: If the answer to the question 2 above is positive, whether the Notification would continue to apply in case where the Proposed Product is exported under Tariff Item 2103 90 90 of the First Schedule to the Customs Tariff Act, 1975, since the Tariff Item 2103 90 40 is not available under the HS Classification introduced by the Government of the United Arab Emirates

C. CLASSIFICATION OF MIXED CONDIMENTS AND MIXED SEASONINGS SOUGHT TO BE EXPORTED

C.1 The goods imported into India are to be classified under the applicable Heading of the First Schedule to the Customs Tariff Act, 1975 ('CTA’).

C.2 The classification of the goods under the Customs Tariff is governed by the principles as enumerated in the General Rules of Interpretation (`GRI’) set out in the First Schedule to the CTA.

C.3 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.

C.4 As per General Explanatory Notes, in the First Schedule to the CTA, when the description of a product under a heading is preceded by the said product would be a sub-classification of the description of products covered by the said heading, when the description of a product is preceded by “–“, the said product would be a sub-classification of the immediately preceding description of product under “-“, when the description of a product is preceded by “—” or “—-“, the said product shall be taken to be a sub-classification of the immediately preceding description of “-” or “–“.

C.5 In the instant application, it is imperative to note that the Proposed Product comprises of ingredients which include mixtures of spices covered by HS 0910 91 00 and other Chapters of the First Schedule to the CTA. The relevant details in brief in this regard are as below and explained in detail in ensuing paragraphs:

i. The Proposed Product would inter-alia include multiple ingredients which get classified individually as spices under heading 0910 9100, such as Clove (HS 0907), Cardamom (HS 0908 31), etc. Consequently, the same would be considered as Mixtures referred to in Note 1(b) to Chapter 09, which provide that mixtures of two or more of the products of different headings are to be classified in heading 09109100. As a result, the mixture of ingredients offered by the Applicant under Chapter 09 would seek classification under HS 09109100.

ii. The Proposed Product would also inter-alia include ingredients which are used for flavoring and seasoning substances, which merit classification under Chapters other than Chapter 9 of the First Schedule to the CTA, such as sunflower seeds (I-IS 1206 00 10), oregano (HS 0712 90 50), etc.

C.6 The Notes to Chapter No. 9 of the First Schedule to the CTA provide as follows:

“1. Mixtures of the products of headings 0904 to 0910 are to be classified as follows;

(a) mixtures of two or more of the products of the same heading are be classified in that heading;

(b) mixtures Of two or more of the products of different headings are to he classified in heading 0910.

The addition of other substances to the products of headings 0904 10 0910 for to the mixtures referred to in paragraph (a) or (b) above] shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those heading. Otherwise such mixtures are not classified in this Chapter: those constituting mixed condiments or mixed seasonings are classified in heading 2103.”

C.7 As per the extract reproduced above, Chapter Note 1(b) provides that mixture of two or more products of different headings 0904 to 0910 are to be classified in the heading 0910. Further, the said note also provide that if other substances are added to the products of headings 0904 to 0910 or to their mixtures, the same is to be classified in heading 2103 as mixed condiments and mixed seasonings, provided the resulting mixture does not retain the essential character of the goods classified under headings 0904 to 0910.

C.8 In this regard, the Explanatory Notes to Chapter 9 further provide that “Spices (including mixed spices) containing added substances of other Chapters, but themselves having flavoring or seasoning properties, remain in this Chapter provided the added quantity does not affect the essential character of the mixture as a spice.”

C.9 At this juncture, reference is also drawn towards Para 3 of Circular No. 205/39/96-Central Excise dated 30 Apri11996 which clarified as below: “Condiments/ Seasonings Mixed condiments and mixed seasonings containing spices differ from spices and mixed spices of headings 09.04 to 09.10 in that they also contain one or more flavouring or seasoning substances of Chapters other than Chapter-9, in such proportions that the mixture has no longer the essential character of a spice within the meaning or Chapter-9″

C.10 Given the above, it is inferred that, where other substances are added to the products of headings 0904 to 0910 or to their mixtures, the same would merit classification under the same chapter provided the resulting mixture does not retain the essential character of the goods classified under headings 0904 to 0910. In an event where the resultant mixture loses its essential character, the same would be classified in heading 2103 as mixed condiments and mixed seasonings.

C.11 The above inference is also supported by Explanatory Notes to HS 21 03 which provide as follows:

“Mixed condiments and mixed seasonings containing spices Offer from the spices and mixed spices of headings 09.04 to 09.10 in that they also contain one or more flavoring or seasoning substances of Chapters other than Chapter 9, in such proportions that the mixture has no longer the essential character of a spice within the meaning of Chapter 9”

C.12 In light of the foregoing discussion, the Applicant submits that the Proposed Product does not have the essential character of spices within the meaning of Chapter 9 and therefore, merit classification under HS 21 03 as mixed condiments and mixed seasonings on account of following reasons:

a) The picture of the Proposed Product produced earlier clearly represents that no single ingredient falling under headings 0904 to 0910 dominates the essential character. It is also pertinent to note that in the Proposed Product, the volume of ingredients falling in chapters other than Chapter 09 is clearly significant and their addition plays an essential role in introducing new flavors, aroma and pungency to food preparation, rather than merely enhancing the flavor of spices covered by the headings 0904 to 0919,

b) It may also be noted that the spices coveted by Chapter 09 majorly comprise of ingredients (such as cumin, cardamom, pepper etc.) which are essential for food preparations so much that the food may not be consumable in absence of the said ingredients. However, the said inference may not be squarely applied for mixed condiments and mixed seasonings covered by Chapter 21 which essentially provide a highly spiced character used to add flavor, aroma and pungency to the food. Consequently, it may also be inferred that the mixed condiments and mixed seasonings are flavoring substances which are added over and above the ingredients covered by Chapter 09 while preparing food.

c) The General section of the Explanatory Notes to Chapter 9 provides for cases where addition of specified substances to mixtures covered by the said chapter will not result in loss of essential characteristic of the said mixtures. In this regard, an illustrative list of substances mentioned therein include Diluents, Food Colorings, Synergetic, Salt or Chemical Anti­oxidants.

The relevant extract of the General section is as below:

“As regards the classification of mixtures of products of headings 09.04 to 09.10, see Note 1 to this Chapter. Under the provisions of this Note, the addition of other substances to the products of headings 09.04 to 09.10 (or to the mixtures referred to in paragraph (a) or (b) of the Note) shall not affect their classification provided the resulting mixtures retain the essential character of the goods falling in those headings.

This applies, in particular, to spices and mixed spices containing added :
(a) Diluents (“spreader” bases) added to facilitate measuring out of the spices and their distribution in the food preparation (cereal flour, ground rusk, dextrose, etc.).
(b) Food colorings (e.g., xanthophyll).
(c) Products added to intensify or enhance the flavor of the spices (synergetic), such as sodium glutamate.
(d) Substances such as salt or chemical antioxidants added, usually in small quantity, to preserve the products and prolong their flavoring powers.”

It is important to note that none of the ingredients falling outside Chapter 9 in the Proposed Product of the Applicant is a diluent, food coloring, salt or chemical antioxidant, which are added generally in very insignificant quantity. While, in the proposed product, the proportion of the ingredients of other than chapter 09, is highly significant unlike diluents, food coloring, salt or chemical antioxidant. Further, such ingredients of other than chapter 09, will not qualify as synergetic as well since the inclusion of same does not enhance the flavor of spices covered by Chapter 9, rather, as discussed earlier, results in introduction of new flavors, aromas and pungency to the dishes. Therefore, the Proposed Product can only merit classification as mixed condiments and mixed seasonings.

d) Once mixed, the ingredients classified tinder headings 0904 to 0910 lose their individual identity and thus, are not marketable in their own name. For instance, the instant product cannot be marketed solely as black pepper or cardamom or mixture of the two spices. The other ingredients such as sunflower seeds and oregano are equally essential and evident in the Proposed Product; thus, the trade acknowledges the product only as mixed condiments and mixed seasonings.

C.13 Therefore, the combined reading of chapter note one and supplementary note 3 read with HSN explanatory notes, it is evident that the Proposed Product is classifiable under HS 21039040 as the mixture does not retain the essential character of spices within the meaning of chapter 09. ‘ The relevant sub-headings and tariff items under Heading 2103 are as given below:

D. APPLICANT’S INTERPRETATION WITH RESPECT TO ELIGIBILITY OF EXEMPTION NOTIFICATION:

D.1 It is noted that Notification No. 22/2022 dated 30 April 2022 (`Notification’) was issued by the Government of India to exempt goods specified therein from part or whole of the customs duty leviable on the same when imported into Republic of India from the United Arab Emirates, subject to the provisions and conditions mentioned therein Further, it is provided that the exemption shall be available only if importer proves that the goods in respect of which the benefit of this exemption is claimed are of the origin of The United Arab Emirates, in terms of rules as may be notified by the Government. A copy of the said Notification is annexed herewith as Annexure A.

D.2 In this regard, the Government had notified the Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic Partnership Agreement between India and the United Arab Emirates) Rules, 2022 (hereinafter referred to as “Country of Origin Rules”), notified vide Notification No. 39/2022-Customs (N.T.) dated 30 April 2022. A copy of the said Notification is annexed herewith as Annexure B.

D.3 On perusal of the Notification, it is observed that vide entries 1249 to 1253 of Table Ito the said Notification, all goods covered by HS 210390 finds coverage therein. Further, the HS 21030 9040 is covered by entry no. 1252 therein.

D.4 Therefore, in an event where the Applicant succeeds in classifying the product under HS 21039040, it is submitted that the Applicant would be eligible to claim exemption of the Notification, provided all other conditions of the Notification are complied.

D.5 However, at this juncture, it is important to note that the Proposed Product would be exported from the United Arab Emirates and the HS Classification schedule of the said country do not recognize HS 21039040 as a valid entry. The relevant extract of the same is produced below and also attached as Annexure C:

D.6 Given the above, it is pertinent that HS 21039040 do not find existence in the above schedule of the United Arab Emirates. Further, it is important to note that although the classification up to 6 digits in line with the schedule of the CTA, the classification at 8-digit level does not specifically recognize mixed condiments and mixed seasonings. Consequently, the schedule of the United Arab Emirates would require exporters of mixed condiments and mixed seasonings to classify the same under “HS 21039090 — Others”.

D.7 As a result of differential treatment of above, any certificate of origin issued in terms of Annexure-E of the Certificate of Origin Rules would bear the HS 21039090 instead of 21039040. Consequently, in an event where the Applicant applies the HS 21039040 in terms of the First Schedule to CTA, the same would differ from the HS 21039090 which would be mentioned in the certificate of origin issued by the United Arab Emirates. Consequently, although the Notification provides for exemption to all goods falling under HS 2103 90 of the First Schedule to CTA (including HS 2103 9090), there exists a possibility that the validity of claim of exemption under the Notification by the Applicant may be questioned on account of above variation.

D.8 At this juncture, it is important to understand the background of variance in HS classification at 8-digit level in custom schedules of the Republic of India and United Arab Emirates. In this regard, it may be noted that any classification beyond the 6-digit level is termed as “Tariff Line Level” in global trade parlance and the countries may introduce a variable Tariff Line Level considering their commercial requirements.

D.9 In this regard, attention is invited towards the Glossary made available by Trade Map, a tool of the International Trade Centre (ITC), in collaboration with the European Union and the United Nations Conference on Trade and Development and the World Trade Organization. The said Glossary provides for the definition of Tariff Line Level as below:

“The tariff line level refers to the classification codes of goods, applied by individual countries, that are longer than the 6-digit level of the Harmonized System (HS). Tariff line codes and the corresponding product descriptions define the products at the most detailed level in the country. This detailed level can differ from one country to another since countries are free to introduce national distinctions for tariffs and many other purposes.”

D.10 Given the above, it is pertinent that the classification of goods at 8-digit level or bey and are likely to vary across countries and the same cannot be treated as an anomaly preventing the rightful claim of exemption for the Applicant.

D.11 Further, it is imperative to note that the above issue of differential HS classification is also recognized by the various Export Promotion Councils (EPCs) in India. On perusal of the clarifications issued by the said EPCs, the exporters have been advised to use appropriate HS classification as per the UAE Tariff Schedule. The relevant extracts of the circular bearing reference no. HO/SG/R&PA/2022 dated 15/06/2022 issued by the Apparel EPC is as below:

“2. Subsequent to the implementation of CEPA from May 1, 2022, various queries/requests are being received are being received for assistance related to the shipments to the UAE under the CEPA One of the common issues that is being faced is the issue of differences in the HS codes at 8-digit level leading to non-applicability of the preferential duty, rates. this is largely on account of the difference in product classification in the Tariff Books of respective countries al the HS-8 level.

3. To resolve this issue, the Department of Commerce has advised to inform the exporters to use appropriate matching HS-8 Code from the UAE schedule of tariff commitments for availing applicable tariff concessions under CEPA.

4. The members may access the Tariff Commitments of both India and UAE under CEPA in easily accessible excel spreadsheet format for reference and comparison purposes (The requisite link is provided below).

5. This is issued for the information of the trade.”
In line with the above, similar circulars have also been issued by the Carpet EPC and Synthetics & Rayon Textiles EPC. A copy of all such circulars issued by the EPCs are annexed herewith as Annexure E, Annexure F and Annexure G respectively.

D.12 However, it is important to note that the above recommendation by the EPCs to classify the Mixed Condiments and Mixed Seasonings as per HS 2103 90 90 may falsely represent the same as goods falling under the residual category of HS classification provided under the First Schedule to CTA, which may not be appropriate if the HS Classification 2103 90 40 is held as correct.

D.13 However, it is reiterated that both the headings 2103 90 40 and 2103 90 90 are entitled for the exemption as per the Notification and therefore, on the conjoint reading of both the headings and the above circulars released by various EPCs on the same issue, it is understood that both the headings 2103 90 40 and 2103 90 90 can be used interchangeably, since they do not cause any loss to the revenue of the Government.

E. APPLICANT’S UNDERSTANDING

In the light of aforementioned, the Applicant seeks to ask the following questions for Advance Ruling and its interpretation of the question will be as under: –

Question 1: Whether “MIXED CONDIMENTS AND MIXED SEASONINGS” proposed to be exported to India by the Applicant is classifiable under Tariff Item 2103 90 40 of the First Schedule to the CTA, 1975?

Applicant’s understanding: Yes

Question 2: If the answer to the above question is in the positive, whether the exemption from custom duty on the same Tariff Item as per the Custom (Tariff) Notification No. 22/2022 dated 30 April 2022, issued under sub-section (I) of section 25 of the Customs Act, 1962 be applicable and available to ‘the applicant?

Applicant’s understanding: Applicable

Question 3: If the answer to the question 2 above is positive, whether the Custom (Tariff) Notification No. 22/2022 dated 30 April 2022, would continue to apply in case where the Proposed Product is exported under Tariff Item 2103 90 90 of the First Schedule to the Customs Tariff Act, 1975, since the Tariff Item ?101 00 40 is not available under the 11S Classification introduced by the Government of the United Arab Emirates

Applicant’s understanding: Applicable

4. Comments on the application for advance rulings have been received from the concerned Commissionerate of ICD Tughlakabad, New Delhi — 110073 wherein the claim of the applicant has been opposed and submitted as under: –

(i) In the regard, the requisite comments against the said application are as follows:-

Para 3(i): The applicant is Exporter from U.A.E. and the status of activity as per the application is proposed to be exported to India. As a result, the applicant is eligible for advance ruling under Section 28-E (ii) of the Customs Act, 1962.

Para 3(ii): As per the record of this office, the matter is neither pending before this office, the Appellate Tribunal or any Court nor the same appears to have been decided by the Appellate Tribunal or any Court.

Para 3(iii): According to the importer’s submission, the activity is proposed.

Para 3(iv): On perusal of the application filed by M/s Haritaki FZC, it is observed that the applicant has sought Advance Ruling in respect of the following questions:

i. Whether the proposed product to be exported by the applicant to India is classifiable under Tariff item 21039040 of the first schedule to the Customs Tariff Act, 1975?

ii. If the answer to the above question is in the positive, whether the exemption from Customs duty on the same tariff item as per the Customs (tariff) Notification no. 22/2022 dated 30.04.2022 (“Notification”) issued under subsection (1) of section 25 of the Customs Act, 1962 be applicable and available to the applicant?

iii. If the answer to the question 2 above is positive, whether the notification would continue to apply in case where the proposed product is exported under tariff. item 21039090 of the First Schedule to the Customs Tariff Act, 1975 since the tariff item 21039040 is not available under the HS classification introduced by the Government of the United Arab Emirates?

4.1 As per the applicant, the proposed product is Mixed Condiments and Mixed Seasonings. According to the applicant, the Proposed Product contains various ingredients, in whole and/or crushed form, from Table ‘A’ and Table ‘B’, as given in the application.

4.2 It is observed that under Table A, the products of chapter 9 such as pepper, cinnamon, cloves, cardamoms, ginger, saffron, turmeric, etc. are given, whereas in Table B, the products of chapters other than chapter 9 such as mustard seeds (1207), sesamum seeds (1207), oregano (0712), basil (1211), etc. are given. The applicant submits that the Proposed Product contains any two or more ingredients mentioned at Sr. No. 1 to 7 of TABLE ‘A’, and any one or more ingredients mentioned at Sr. No. Ito 6 of TABLE ‘B’. Further, the actual composition of each ingredient from TABLE ‘A’ and TABLE ‘B’ in the Proposed Product may vary on the basis of the requirement of customers. The applicant further submits that in the instant case, all ingredients in the Proposed Product are in whole and/or in crushed form, for better quality control and enhancing the shelf life of flavour, aroma and pungency of each ingredient of the proposed product.

4.3 It is observed that spices are specifically covered under Chapter 9 of the first schedule to the Customs Tariff Act, 1975. As per supplementary note 2 of Chapter 9, “spice” means a group of vegetable products (including seeds, etc.), rich in essential oils and aromatic principles, and which, because of their characteristic taste. are mainly used as condiments. These products may be whole or in crushed or powdered form.

4.4 Further, Note 1 to chapter 9 provides that the Mixtures of the products of headings 0904 to 0910 are to be classified as follows:
“(a) mixtures of two or more of the products of the same heading are to be classified in that heading;
(b) mixtures of two or more of the products q f different headings are to be classified in heading 0910.
The addition of other substances to the products of headings 0904 to 0910 for to the mixtures referred to in paragraph (a) or (b) above] shall not affect their classification provided the resulting mixtures retain the essential character of the goods of those heading. Otherwise, such mixtures are not classified in this Chapter; those constituting mixed condiments or mixed seasonings are classified in heading 2103.”

4.5 Further, it is also provided under HSN explanatory notes to chapter 9 that Spices (including mixed spices) containing added substances of other Chapters, but themselves having flavouring or seasoning properties, remain in this Chapter provided the added quantity does not affect the essential character of the mixture as a spice.

4.6 As per the applicant’s submission, the proposed product would inter-alia include multiple Ingredients which get classified individually as spices under heading 0910 9100, such as Clove (HS 0907), Cardamom (HS 090831), etc. The proposed product would also inter-alia include ingredients which are used for flavouring and seasoning substances, which merit classification under chapters other than Chapter 9 of the First Schedule to the CTA such as sunflower seeds (HS 1206 0010), oregano (HS 0712 90 50), etc.

4.7 Further, under HSN Explanatory notes to chapter 21 (heading 21.03), it is provided that “Mixed condiments and mixed seasonings containing spices differ from the spices and mixed spices of headings 09.04 to 09.10 in that they also contain one or more flavouring or seasoning substances of Chapters other than Chapter 9, in such proportions that the mixture has no longer the essential character of a spice within the meaning of Chapter 9 (see the General Explanatory Note to that Chapter).”

4.8 While the Explanatory Notes in HSN distinguish between spices on the one hand and mixed condiments and mixed seasoning on the other, the English Dictionary meanings and statutory bodies dealing in quality specifications of spices, condiments and seasonings often use these words interchangeably. What is however emphasized in the literature on the subject is that the essential character of these substances is in their function, viz., to add flavour, aroma and pungency to various food preparations.

4.9 Consequently, products which are predominantly mixtures of spices/condiments/seasonings and which are used as such or in the making of food preparations mainly for their aromatic, flavouring or seasoning properties would merit classification under the specific heading in Chapter 9 or Heading 21.03 of Customs Tariff Act, 1962 (CTA, 1962), depending on whether they retain the essential character of the products of chapter 9 or otherwise, which will further depend on the added quantity and their proportions as envisaged under HSN Explanatory notes to chapter 9 and chapter 2I discussed above. (para 5.2 and 6)

4.10 The Applicant submits that the Proposed Product does not have the essential character of spices within the meaning of Chapter 9. To support his contention, the applicant further submits that the picture of the Proposed Product produced in the application clearly represents that no single ingredient falling under headings 0904 to 0910 dominates the essential character. It is also submitted by the applicant that in the Proposed Product, the volume of ingredients falling in chapters other than Chapter 09 is clearly significant and their addition plays an essential role in introducing new Flavor, aroma and pungency to food preparation rather than merely enhancing the flavour of spices covered by the heading 0904 to 0910.

4.11 from the above, it is observed that the main basis for classification of the proposed product is the essential character of the product. I f the essential character of the products of the chapter 9 (heading 0904 to 0910) is retained even by mixing them with the goods of other chapters such as sunflower seeds, oregano etc., the product would be classified tinder chapter 9 itself. However, if the essential character is not retained, the same would be classified under heading 2103. It cannot be decided on the basis of a photograph (which is also not clear) whether the ingredients falling under headings 0904 to 0910 dominates or otherwise. Moreover, the applicant has also submitted in their application that the actual composition of each ingredient from TABLE ‘A’ and ‘VAB1 ‘B’ in the Proposed Product may vary on the basis of the requirement of customers. Therefore, it appears that the question of essential character can only be decided on case-to-case basis.

4.12 Therefore-

i) As regards the classification of the proposed product, the same would be classified as under:

a) If the proposed product or the resulting mixture retains the essential character of the goods of chapter 9 (heading 0904 to 0910), whereby the added quantity of substances of other Chapters does not affect the essential character of the mixture as a CUS/SIIB/MISC/217/2024-SIIB-0/o Pr.Commr-Cus-ICD-TKD-Imp-Delhi 1/1955819/ 2024 spice, the same would be classified under heading 0910 or any one of the headings from 0904 to 0910 as per note 1 to chapter 9.

b) If the proposed product or the resulting mixture does not retain the essential character of the goods of chapter 9 (heading 0904 to 0910), whereby it also contains one or more flavouring or seasoning substances of Chapters other than Chapter 9, in such proportions that the mixture has no longer the essential character of a spice, the same would be classified under HS Code 21039040.

ii) As regards the benefit of the Notification No. 22/2022 dated 30.04.2022, it is submitted that the same is extendable strictly as per Notification.

iii) Further, as regards the applicant’s contention that the proposed product is exported under CTH 21039090 as CTH 21039040 is not available under HS classification introduced by the Government of UAE, it is submitted that “mixed condiments and mixed seasonings” finds a specific entry under CTH 21039040, whereas CTH 21039090 is a residual entry classifying `other’. Further, both the entries (CTH 21039040 and 21039090) are similarly exempted from duties under the notification no. 22/20222-Cus dated 30.04.2022, attracting zero per cent duty after exemption (Sr. No. 1252 and 1253 respectively). Since items to be included for FTA benefit are as per mutual agreement between the two countries i.e. Govt. of India and UAE and regarding tariff entry 21039040 not figuring in UAE Customs Tariff, the requisite comments in this regard can only be given by the FTA Cell and therefore, the matter may be taken up with them, if deemed fit.

ADDITIONAL SUBMISSIONS BY THE APPLICANT

5. The applicant was provided the comments received from the jurisdictional Commissionerate. The applicant vide email dated 09.05.2024 submitted their counter reply on the comments of the concerned Commissionerate, wherein the applicant relied upon some rulings pronounced earlier on the identical issues and submitted at under: –

5.1 The primary issues involved in the above application are:

a) Customs Tariff classification for the proposed export of Mixed Condiments and Mixed Seasonings (“Proposed Product”) to India under the Tariff item 2103 90 40 of the First Schedule to Customs Tariff Act (“CIA”), 1975;

b) Eligibility of Customs (Tariff) Notification No, 22/2022 dated 30 April 2022 (the Exemption Notification”) for the export of Proposed Product by the Applicant, in case the same is classifiable under the Tariff item mentioned in point a);

c) Eligibility of the Exemption Notification in case the Proposed Product is exported under the Tariff item 2103 90 90 of the First Schedule to CTA, 1975 since the Tariff item 2103 90 40 is not available under the I-IS Classification introduced by the Government of the United Arab Emirates.

5.2 For the sake of brevity, the entire facts of the application are not reiterated, and the Applicant crave leave to refer and rely upon the statement of facts and the grounds raised in the application giving justification for the classification and admissibility of the Exemption Notification as per point 2 above. The same may be treated as part and parcel of these submissions as well.

5.3 The Jurisdictional office have offered their comments on the advance ruling application filed by the Applicant. It is the case of the jurisdictional office that —

(i) The main basis for classification of the Proposed Product is the essential character of the product. If the essential character of the products of the Chapter 09 (heading 0904 to 0910) of the First Schedule to CTA, 1975 retains even by adding them with the goods of other chapters such as sunflower seeds, oregano etc., the product would be classified under Chapter 09 itself. However, if the essential character is not retained, the same would be classified under Customs Tariff Heading (“CTH”) 2103. It cannot be decided based on the photograph submitted by the Applicant whether the ingredients falling under headings 0904 to 0910 dominate the composition of Proposed Product or not, i.e., whether the Proposed Product retains the essential character of ingredients falling under CTH 0904 to 0910 or not (hereafter referred to as the “essential character test”)

(ii) The benefit of the Exemption Notification is extendable strictly as per the Notification.

(iii) As regards the Applicant’s contention regarding the eligibility of Exemption Notification in case the Proposed Product is to be exported under CTH 2103 90 90 as CTH 2103 90 40 is not available under HS classification introduced by the Government of UAE, the requisite comments in this regard can only be given by the FTA cell and therefore, the matter may be taken up with them, if deemed fit.

5.4 Applicant craves leave to file the following additional submissions, in rebuttal to the submissions made by the jurisdictional office which may be taken on record.

6. SUBMISSIONS

A. The view of the jurisdictional office that the photograph submitted by the Applicant cannot be the basis for deciding whether the Proposed Product qualifies the essential character test is not proper

It is reiterated that as part of the application, the Applicant had relied upon various grounds to build strength non-fulfilment of essential character test to merit classification under Chapter 09. Therefore, the photographs submitted by the Applicant was intended to serve the purpose of ease in understanding of the product and therefore, did not intend to be the sole ground for determining the non-fulfilment of such test.

B. The expression “essential character” is not defined under the statute

The Applicant submits that the expression “essential character” in itself is nowhere defined under the Customs Act, 1962, Customs Tariff Act, 1975, General Rules of Interpretation (“GRI”) and the HSN Explanatory Notes. Thus, the contention of the jurisdictional office by solely relying on the dominant ingredients factor is not based on any legal provision or international guideline. Thus, restricting the test of essential character to any one parameter would not be proper. On the contrary, CBIC in para 3.2 of its circular dated 30.04.96, has categorically stated that the essential character of these substances is in their function, viz., to add flavor, aroma and pungency to various food preparations. Further, it is to be stated that by virtue of section 151 A of Gusto t, 1962, such circular issued by CBIC is binding on officers of Customs. Therefore, in the present case, the essential character is to be determined by the factors like addition of flavor, aroma and pungency, as per said CBIC circular.

C. Chapter Notes, Explanatory Notes and Circulars issued by the Ch IC (earlier `CBEC) strengthen the classification) proposed by the Applicant

i. The Explanatory Notes to CTH-1 21.03 (A) provide as follows:

“Mixed condiments and mixed seasonings containing spices differ from the spices and mixed spices of headings 09.04 to 09.10 in that they also contain one or more flavouring or seasoning substances of Chapters other than Chapter 9, in such proportions that the mixture has no longer the essential character of a spice within the meaning of Chapter 9"

The term ‘spices’ within the meaning of Chapter 09 is as below:

“Spices, i.e., a group of vegetable products (including seeds, etc.), rich in essential oils and aromatic principles, and which, because of their characteristic taste, are mainly used as condiments.”

The relevant extract of Explanatory Notes to Chapter 09 is produced as below:

“As regards the classification of mixtures of products of headings 09.04 to 09.10. see Note 1 to this Chapter. Under the provisions of this Note, the addition of other substances to the products of headings 09.04 to 09.10 (or to the mixtures referred to in paragraph (a) or (b) of the Note) shall not affect their classification provided the resulting mixtures retain the essential character of the goods falling in those headings.

This applies, in particular, to spices and mixed spices containing added:

(a) Diluents (“spreader” bases) added to facilitate measuring out of the spices and their distribution in the food preparation (cereal flour, ground rusk, dextrose, etc.).

(b) Food colourings (e.g., xanthophyll).

(c) Products added to intense or enhance the flavour of the spices (synergetics), such as sodium glutamate.

(d) Substances such as salt or chemical antioxidants added, usually in small quantity, to preserve the products and prolong their flavouring prayers.”

On combined reading of the above explanatory notes, it may be inferred that the mixed condiments and mixed seasonings essentially contain one or more flavouring or seasoning substances in such proportion that the resultant mixture loses the essential character of spice within the meaning of Chapter 9. At this juncture, it is pertinent to note that the expression `such proportion’ may refer to any quantum (whether significant or not) which enables the mixture to lose the essential character of ingredients covered by Chapter 9.

Further, emphasis is to be given to the expression ‘This applies, in particular, to spices and mixed spices containing added:’ which refers to diluents, food colorings, flavor enhancer and salt/ chemical antioxidants. In the case of Applicant, none of the ingredients falling outside Chapter 9 in the Proposed Product of the Applicant is a diluent, food coloring, salt or chemical antioxidant, which are added generally in very insignificant quantity to enhance the existing flavor, colour and preserve the shelf-life of the food. It is also important to note that such substances (i.e., diluent, food coloring, salt or chemical antioxidant) do not introduce any new flavor, aroma or pungency to food preparations, as required by the said CBIC circular. While, in the Proposed Product, the proportion of the ingredients of other than chapter 09, is highly significant and clearly results in introduction of new flavors, new aromas and new pungency to the dishes; thus, critically influence the end-use as well.

C2. Further, without prejudice to above, even if it is considered that the quantum of ingredients falling outside chapter 09 would be essential to determine the essential character test, there should be no dispute in accepting that, by merely looking at the appearance of the Proposed Product, the quantum of such ingredients therein is significant. Further, the exact quantum of such ingredients are in the nature of trade secrets and therefore, although the quantum varies from customer to customer, the same cannot he disclosed.

However, basis practical trading experiences, it is observed that the proportion of ingredients other than Chapter 09 in the Proposed Product is minimum of 20%,

C3. Reference is also drawn towards Para 3 of Circular No. 205/39/96-Central Excise dated 30 April 1996 which produced as below:

C4. “Condiments/ Seasonings

i. Mixed condiments and mixed seasonings containing spices differ from spices and mixed spices of headings 09.04 to 09.10 in that they also contain one or more flavouring or seasoning substances of Chapters other than Chapter-9, in such proportions that the mixture has no longer the essential character of a spice within the meaning or Chapter-9

ii. 3.2 While the Explanatory Notes in HSN distinguish between spices on the one hand and mixed condiments and mixed seasonings on the other, the English Dictionary meanings and statutory bodies dealing in quality specifications of spices, condiments and seasonings often use these words interchangeably. What is however emphasised in the literature on the subject is that the essential character of these substances is in their function, viz., to add flavour, aroma and pungency to various food preparations.”

The above Circular reinstates the inception drawn from Explanatory Notes to CTH 21.03 (A) as mentioned in point A.1. It also emphasizes that the essential character of the spices, mixed condiments and mixed seasonings is determined by their function, i.e., to add flavour, aroma and pungency to various food preparations. It shall be noted that the Proposed Product adds such unique flavour and aroma to food preparations that differs from that or spices/mixed spices falling under the Chapter 09.

iii. Given the above, the Applicant submits that the Proposed Product in the present case does not retain the essential character of the ingredients falling in Chapter 09 as it has a new flavour and aroma resulting from the addition of ingredients other than Chapter 09.

D. The view of the jurisdictional office that the comments regarding the regarding the eligibility of Exemption Notification can only be provided by the FTA cell of the Central Board of Indirect Taxes (CB1C) is not proper

D.1. Section 28H of the Customs Act, 1962 inter-alia enables the Applicant to seek advance ruling in relation to applicability of a notification issued under sub-section (1) of section 25, having a bearing on the rate of duty. Consequently, the Applicants question on applicability of Notification No. 22/2022 dated 30 April 2022 (`Notification’) remains valid and the said fact has also not been disputed by the jurisdictional office.

D.2. In this regard, it is reiterated that the Applicant wishes to export the Proposed Product from the United Arab Emirates (`UAE’) to the Republic of India., however, the HS Classification schedule of the UAE does not recognize HS 21039040 as a valid entry. Further, it is important to note that although the classification up to 6 digits is in line with the schedule of the Indian CTA, IJAF, HS classification and WCO Explanatory Notes, the classification at 8-digit level does not specifically recognize mixed condiments and mixed seasonings under specific entry by UAE HS classification but classifies the same under residual entry of 21039090 [screenshot of website of Ministry of Economy, UAE (https://tradestafto.moec.gov.ae/superset/dashboard/India Tariff/?native filters key=svcB8wEzbg o Gv6Molt4DjF6Z9KhSWym3hSjXc.lGRT1XWh1YTplTdJtf5bby2Ej7c) and sample domestic invoices issued in UAE attached]. Consequently, the schedule of the United Arab Emirates would require exporters of mixed condiments and mixed seasonings to classify the same under “HS 21039090 —Others”.

As a result of differential treatment of above, any certificate of origin issued in terms of Annexure-E of the Certificate of Origin Rules would hear the HS 21039090 instead of 21039040. Consequently, although the Notification provides for exemption to all goods falling tinder HS 2103 90 of the First Schedule to CIA (including HS 2103 9090), there exists a possibility that the validity of claim of exemption under the Notification by the Applicant may be questioned on account of above variation.

D.3. In this regard, it is observed that the jurisdictional office has failed to take note of the Applicant’s submission in relation to the definition of Tariff Line Level, as provided in the Glossary made available by Trade Map, a tool of the International Trade Centre (ITC), in collaboration with the European Union and the United Nations Conference on Trade and Development and the World Trade Organization. The said Glossary provides for the definition of Tariff Line Level as below:

    “The tariff line level refers to the classification codes o f goods, applied by individual countries. that are longer than the 6-digit level of the Harmonized System (HS). Tariff line codes and the corresponding product descriptions define the products at the most detailed level in the country. This detailed level can differ from one country to another since countries are free to introduce national distinctions for tariffs and many other purposes.”

Given the above, it is pertinent that the classification of goods at 8 -digit level or beyond are likely to vary across countries and the same cannot be treated as an anomaly preventing the rightful claim of exemption for the Applicant.

D.4. Further, the jurisdictional office has also failed to take note of the fact that the above issue of differential HS classification is also recognized by the various Export Promotion Councils (EPCs) in India and the said EPCs have advised the exporters to use appropriate HS classification as per the UAE Tariff Schedule. For the sake of brevity, the said submissions have not been reiterated in detail here.

D.5. Nevertheless, it is reiterated that both the headings 2103 90 40 and 2103 90 90 are entitled for the exemption as per the Notification and therefore, on the conjoint reading of both the headings as per India and UAE and the advisory issued by the EPCs on the same issue, it is understood that both the headings 2103 90 40 and 2103 90 90 can be used interchangeably, since they do not cause any loss to the revenue of the Government.

    Therefore, in the opinion of the Applicant, there exist no reason which prevents the Advance Ruling Authority to clarify the applicability of Notification in the instant case.

     The Applicant humbly prays that the above submissions may be treated as part and parcel of our advance ruling application. It is prayed that a ruling may be given in line with the interpretation canvassed by the Applicant in this Advance Ruling Application.

7. A personal hearing in the matter was conducted on 10.05.2024. During the personal hearing, the authorized representative / Advocate representing the applicant explained in brief the reasons for filing the application and referred to a few earlier rulings of CAAR, Mumbai on the similar question of classification for goods in question. He reiterated the submissions given in their application for advance ruling.

Finding, Discussion and Conclusion

8. I have taken into consideration of all the materials placed on record in respect of the subject goods including the submissions made by the applicant during the course of personal hearing. I have gone through the response from the Customs Port Commissionerate. I proceed to decide the present application regarding classification of ‘Mixed Condiments and Mixed Seasonings’ to India on the basis of the information on record as well as the existing legal framework having bearing on the classification of the ‘Mixed Condiments and Mixed Seasonings’ to India under the Tariff item 2103 90 40 under the first schedule of the Customs Tariff Act, 1975.

8.1 The applicant has answered the queries raised by the Port Commissionerate. It is reiterated that:

(i) The view of the jurisdictional office that the photograph submitted by the Applicant cannot be the basis for deciding whether the Proposed Product qualifies the essential character Meter test is not proper.

The photographs submitted by the Applicant was intended to serve the purpose of ease in understanding of the product and therefore, did not intend to be the sole ground for determining the on-fullilment of such test. Further, during the course of the hearing, the said products in sample packs were produced before the authority. Thus, the contention that the products are merely presented through a photograph negating the essentiality test is nullified.

(ii)   The ex cession “essential character” is not defined under the statute

    The Applicant submits that the expression “essential character” in itself is nowhere defined under the Customs Act, 1962, Customs Tariff Act, 1975, General Rules of Interpretation (“GRI ) and the HSN Explanatory Notes, On the contrary, CBIC in para Para 3.2 of Circular No. 205/39/96-Central Excise dated 30.04.1996, has categorically stated that the essential character of these substances is in their function, viz., to add flavor, aroma and pungency to various food preparations. Therefore, in the present case, the essential character is to be determined by the factors like addition of flavor, aroma and pungency, as per said CB1C circular.

(iii) Chapter Notes, Explanatory Notes and Circulars issued by the CBIC earlier `CBEC’) strengthen the classification proposed by the Applicant

(a) The Explanatory Notes to CTH 21.03 (A) provide as follows:

“Mixed condiments and mixed seasonings containing spices differ from the spices and mixed spices of headings 09.04 to 09.10 in that they also contain one or more flavouring or seasoning substances of Chapters other than Chapter 9, in such proportions that the mixture has no longer the essential character of a spice within the meaning of Chapter 9”

(b) The term ‘spices’ within the meaning of Chapter 09 is as below:

“Spices, i.e., a group of vegetable products (including seeds, etc), rich in essential oils and aromatic principles, and which, because of their characteristic taste, are mainly used as condiments.”

(c) The relevant extract of Explanatory Notes to Chapter 09 is produced as below:

“As regards the classification of mixtures of products of headings 09.04 to 09.10, see Note 1 to this Chapter. Under the provisions of this Note, the addition of other substances to the products of headings 09.04 to 09.10 (or to the mixtures referred to in paragraph (a) or (b) of the Note) shall not affect their classification provided the resulting mixtures retain the essential character of the goods falling in those headings.

This applies, in particular, to spices and mixed spices containing added:

(a) Diluents (“spreader” bases) added to facilitate measuring out of the spices and their distribution in the food preparation (cereal flour, ground rusk, dextrose, etc.).

(b) Food colourings (e.g., xanthophyll).

(c) Products added to intensify or enhance the flavour of the spices (synergetics), such as sodium glutamate.

(d) Substances such as salt or chemical antioxidants added, usually in small quantity, to preserve the products and prolong their flavouring powers.”

On combined reading of the above explanatory notes, it may be inferred that the mixed condiments and mixed seasonings essentially contain one or more flavouring or seasoning substances in such proportion that the resultant mixture loses the essential character of spice within the meaning of Chapter 9. At this juncture, it is pertinent to note that the expression ‘such proportion’ may refer to any quantum (whether significant or not) which enables the mixture to lose the essential character of ingredients covered by Chapter 9. Further, emphasis is to be given to the compression ‘This applies, in particular, to spices and mixed spices containing added' Which refers to diluents, food colorings, flavor enhancer and salt/ chemical antioxidants. While, in the Proposed Product, the proportion of the ingredients of other than chapter 09, is highly significant and clearly results in introduction of new flavors, new aromas and new pungency to the dishes’, thus, critically influence the end-use as well. Given the above, the applicant has submitted that the Proposed Product in the present case does not retain the essential character of the ingredients falling in Chapter 09 as it has a new flavour and aroma resulting from the addition of ingredients other than Chapter 09.

iv. The view of the jurisdictional office that the comments regarding the regarding the eligibility of Exemption Notification can only be provided by the FTA cell of the Central Board of Indirect Taxes (CB1C) is not proper:

a) Section 281-1 of the Customs Act, 1962 inter-alia enables the Applicant to seek advance ruling in relation to applicability of a notification issued under sub-section ( 1 ) of section 25, having a bearing on the rate of duty. Consequently, the Applicants question on applicability of Notification No. 22/2022 dated 30 April 2022 (`Notification’) remains valid and the said fact has also not been disputed by the jurisdictional office.

b) In this regard, it is reiterated that the Applicant wishes to export the Proposed Product from the United Arab Emirates (`UAE’) to the Republic of India; however, the HS Classification schedule of the UAE does not recognize HS 21039040 as a valid entry. Further, it is Important to note that although the classification up to 6 digits is in line with the schedule of the Indian CTA, UAE HS classification and WCO Explanatory Notes, the classification at 8-digit level does not specifically recognize mixed condiments and mixed seasonings under specific entry by UAE HS classification but classifies the same under residual entry of 21039090. Consequently, the schedule of the United Arab Emirates would require exporters of mixed condiments and mixed seasonings to classify the same under “HS 21039090 — Others”.

c) In this regard, it is observed that the jurisdictional office has failed to take note of the Applicant’s submission in relation to the definition of Tariff Line Level, as provided in the Glossary made available by Trade Map, a tool of the International Trade Centre (ITC), in collaboration with the European Union and the United Nations Conference on Trade and Development and the World Trade Organization. The said Glossary provides for the definition of Tariff Line Level as below:

“The tariff line level refers to the classification codes of goods, applied by individual countries, that are longer than the 6-digit level of the Harmonized System (HS). Tariff line codes and the corresponding product descriptions define the products at the most detailed level in the country. This detailed level can differ from one country to another since countries are free to introduce national distinctions for tariffs and many other purposes.”

Given the above, it is pertinent that the classification of goods at 8-digit level or beyond are likely to vary across countries and the same cannot be treated as an anomaly preventing the rightful claim of exemption for the Applicant.

d) Further, the jurisdictional office has also failed to take note of the fact that the above issue of differential HS classification is also recognized by the various Export Promotion Councils (EPCs) in India and the said EPCs have advised the exporters to use appropriate HS classification as per the UAE Tariff Schedule.

e) Nevertheless, it is reiterated that both the headings 2103 9040 and 2103 9090 are entitled for the exemption as per the Notification and therefore, on the conjoint reading of both the headings as per India and UAE and the advisory issued by the EPCs on the same issue.

8.2 In the case of Commissioner of Central Excise Vs M/s Wockhardt Life Sciences Ltd reported in 2012 (277)11:1′ 299 (SC); the Hon’ble Supreme Court, inter a I ia, laid down the following principles for the classification of goods;

“There is no ,fixed test for classification of a taxable commodity, This is probably the reason why the ‘common parlance test’ or the ‘commercial usage test ‘ is ,the most common. Whether a particular article will fall within a particular Tariff heading or not has to be decided on the basis of the tangible material or evidence 10 determine how such an article is understood in ‘common parlance’ or in ‘commercial world’ or in ‘trade circle’ or in its popular sense meaning. It is they who are concerned with it and it is the sense in which they understand it that constitutes the definitive index of the legislative intention, when the statute was enacted.

... ... ..

The combined factor that requires to be taken note of the purpose of the classification of the goods are the composition, the product literature, the label, the character of the product and the use to which the product is put”

8.3 Attention is drawn to the Circular No. 205/39/96-Central Excise dated 30.04.1996, whereas the difference between spices and condiments/seasonings has been provided. The para 3, 3.2, 3.3 & 4 are given as follows:

“3. The matter has been examined. Spices are specifically covered under Chapter 9 of Central Excise Tariff and mixed condiments and mixed seasonings under heading 21.03 of Central Excise Tariff. Heading 21.08 of CET on the other hand is a residuary entry which refers to “edible preparations not a elsewhere specified or included”. While there are no definitions available for spices and mixed condiments and mixed seasonings in the Central Excise Tariff, the Explanatory Notes to the HSN give the following description of these products.

Spices +

Spices i.e. a group of vegetable products (including seeds etc.), rich in essential oils and aromatic principles and which because of their characteristic taste are mainly used as condiments. Spices (including mixed spices) containing added substances of other Chapters, but themselves having flavouring or seasoning properties, remain in this Chapter provided the added quantity does not affect the essential character of the mixture as a spice, (Vol. 1 Page 61)

Condiments /Seasonings

Mixed condiments and mixed seasonings containing spices differ from spices and mixed spices of headings 09.04 to 09.10 in that they also contain one or more flavouring or seasoning substances of Chapters other than Chapter-9, in such proportions that the mixture has no longer the essential character of a spice within the meaning or Chapter-9 (Val. 1 Page 158).

3.2 While the Explanatory Notes in HSN distinguish between spices on the one hand and mixed condiments and mixed seasonings on the other, the English Dictionary meanings and statutory bodies dealing in quality specifications of spices, condiments and seasonings often use these words interchangeably. What is however emphasised in the literature on the subject is that the essential character of these substances is in their function, viz., to add flavour, aroma and pungency to various food preparations.

3.3 Chapter Notes 9(b) and 9(c) of Chapter 21 CET no doubt give an indication of type of preparations which are intended to be included in Heading 21.08 of CET, However, it must he remembered that Heading 21.08 is a residuary entry in Chapter 21 and the Rules for the interpretation oldie Schedule require that the heading which provides most specific description shall he preferred to headings providing a more general description further. Heading 21 in HSN excludes spices of Chapter-9

4. Consequently, products which are predominantly mixtures of spices / condiments/ seasonings and which are used as such or in the making of /nod preparations mainly fir their aromatic, flavouring or seasoning properties would merit classification wider the specific entry of spices in Chapter 9 or Heading 21.03 of CET, However, products which in addition to spices, .flavouring and seasoning substances also contain, other foodstuffs in such quantity that the products as such or after processing are capable of being used as food preparations for human consumption in their own right will go Out of Chapter 9 or heading 21.03 of CET and merit classification in the residuary heading 21.08 provided they are not covered or included in any other heading of CET.”

8.4 Accordingly, applying the principles of Rule 3 of the General Rules of Interpretation of the First Schedule to the Customs Tariff Act, 1975; the ratio of the above referred judgment of the Hon’ble Supreme Court of India and clarification of the Board Circular dated 30.04.1996 extracted above; the point-wise response submitted by the applicant to the questions raised by, the Port Commissionerate, the product under reference merit classification under Custom Tariff Heading 2103, specifically under Sub-heading 21039040 of the First Schedule of the Customs Tariff Act, 1975. RULING 9. The primary issues involved in the above application are: Question 1: Whether the Proposed Product to be exported by the Applicant to India is classifiable under tariff Item 2103 90 40 of the First Schedule to the Customs Tariff Act, 1975?

Ruling:

9. The primary issues involved in the above application are;

Question 1: Whether the Proposed Product to be exported by the Applicant to India is classifiable under Tariff Item 2103 90 40 of the first Schedule to the Customs Tariff Act. 1975?

Ruling: Yes, the product merits classification in Tariff Head 2103 90 and more specifically under 2103 90 40 of the First Schedule to the Customs Tariff Act, 1975.

Question 2: If the answer to the above question is in the positive, whether the exemption from custom duty on the same Tariff Item as per the Custom (Tariff) Notification No. 22/2022 dated 30 April 2022 (`Notification’), issued under sub-section (1) of section 25 of the Customs Act, 1962 be applicable and available to the applicant?

Ruling: Yes, the exemption from custom duty on the same Tariff Item as per the Custom (Tariff) Notification No. 22/2022 dated 30 April 2022 (‘Notification’), issued under sub-section (1) of section 25 of the Customs Act, 1962 be applicable and available to the applicant, as the import under the Tariff Item 2103 90 40 of the First Schedule to the Customs Tariff Act, 1975 is clearly covered under the SI.No.1251 of the said Notification.

Question 3: If the answer to the question 2 above is positive, whether the Notification would continue to apply in case where the Proposed Product is exported under Tariff Item 2103 90 90 of the First Schedule to the Customs Tariff Act, 1975, since the Tariff Item 2103 90 40 is not available under the HS Classification introduced by the Government of the United Arab Emirates?

Ruling: As mentioned at point 1 and 2 above, the product merits classification in Tariff Head 2103 90 and more specifically under 2103 90 40 of the First Schedule to the Customs Tariff Act, 1975 and shall be eligible for the exemption from custom duty as per the Custom (Tariff) Notification No. 22/2022 dated 30 April 2022 (‘Notification’), issued under sub-section (1) of section 25 of the Customs Act, 1962.

I rule accordingly.

(SAMAR NANDA)
Custom Authority for Advance Rulings
New Delhi

This copy is certified 10 be a true copy of ruling and is sent to: -

1. M/s Harilaki FZC, Warehouse - GI - 70.date-1-Warehouse G5. Ajman Free Zone, Sheikh Rashid Bin Saeed, AI Maktoum Street, Ajman. U.A.E.

2. The Principal Commissioner of Customs. ICD. Tughlakabad, New Delhi - 110020.

3 The Customs Authority for Advance Ridings, Mumbai. New Custom House, Ballard Estate,Mumbai-400001.

4. The Chief Commissioner (AR), Customs Excise & Service Tax Appellate Tribunal (CESTAT), West Block-2, Wing-2. R.K. Puram, New Delhi-110066.

5.  The Chief Commissioner of Customs, Delhi Customs Zone, New Custom House, IGI airport Complex, New Delhi-110037

6. Guard file.

7 Webmaster.

(Anamika Singh)
Secretary.
Customs Authority for Advance Rulings, New Delhi