2024(12)LCX0313(AAR)

Danisco (India) Pvt Ltd

decided on 30-12-2024

CUSTOMS AUTHORITY FOR ADVANCE RULINGS
O/o THE CHIEF COMMISSIONER OF CUSTOMS
NEW CUSTOM HOUSE, NEAR IGI AIRPORT, NEW DELHI-110037

[Email:cus-advrulings.del@gov.in]
DIN: 20241274OR00000333BD3
Present

Samar Nanda (Customs Authority for Advance Rulings, New Delhi)

F. No. VIII/CAAR/Delhi/ Danisco India/143/2024

The day of 30^th December 2024

Ruling No. CAAR/Del/ Danisco/121/2024 /2152 to 2158/30/12/2024

Application no: -126/2024 dated 24.09.2024

RULING

    Danisco India Pvt. Ltd. (hereinafter referred to as the "Applicant") is a private limited company incorporated in the year 1997 under the Companies Act, 1956. The Applicant is a leader in several sectors and also uses its research and development capabilities to serve the following markets:

i. Food and Beverage

ii. Home and Personal Care

iii. Health and Wellness

1.1. The Applicant is importing the products Grindsted PGE 55-M' for the purpose of trading.

About Grindsted PGE 55-M

1.2 Grindsted PGE 55-M (hereinafter referred to as 'subject product') is a food emulsifying agent. An emulsifier enables the creation of uniformly blended products (emulsions) from ingredients which, because of fundamental differences in their physical and chemical properties are immiscible. The chemical name of the subject product is polyglycerol ester (E475).

1.3 The Subject product is 100% Polyglycerol Ester (E475). For ease of reference the description of the subject products is produced below:

1.4 E numbers: It is a system of codes used within the European Union (EU) to identify food additives. The "E" stands for "Europe" and these numbers were established by the European Food Safety Authority (EFSA) and the European Commission. E400-E499 (thickeners, stabilisers, emulsifiers)

1.5 INS Number: It stands for "International Numbering System," are used by the Codex Alimentarius Commission. The Codex Alimentarius is a joint program of the Food and Agriculture Organization (FAQ) and the World Health Organization (WHO), established to develop food standards, guidelines, and related text.

1.6 In the instant case both E number and INS number are same for the subject product that is E475/INS475.

Physical properties of subject product

1.7 The subject product offers the following benefits:

• Ensures good aeration of cake batters
• Improves crumb structure in cakes
• Facilitates use of all-in procedures
• Is an aerating agent in confectionary systems containing fat/oil
• Secures a high overrun in confectionary

Details of Manufacturing Process

1.8 Palm oil is the raw material used for the manufacturing of the subject product. Palm oil acts as a rich source of fatty acids. These fatty acids (stearic acid) react with Polyglycerol in an esterification reaction. The subject product contains minor amounts of mono-, di-, and triglycerides, free glycerol and polyglycerols, free fatty acids, etc.
 

1.9 After the above-mentioned reaction, physical processes of Distillation, Storage, Filtration, Tube chilling, magnet separation takes place to get the subject product in its imported form.

Form of packaging

1.10 The subject product will be imported in ready to sell packages of 25kg polyethylene/aluminium lined paper bags.

Subject product is not a separately defined chemical compound

1.11 In 35^th Joint FAO/WHO Expert Committee on Food Additive ("JECFA Report") report published in FNP 49 (1990) and in FNP 52 (1992) has analysed Polygiycerol esters of fatty acids INS No. 475. Relevant portions of JECFA Report has been extracted below.

Definition:

Mixed partial esters formed by reacting polymerized glycerols with edible fats, oils, or fatty acids; minor amounts of mono-, di-, and triglycerides, free glycerol and polyglycerols, free fatty acids, and sodium salts of fatty acids may be present; degree of polymerization varies, and is specified by a number (such as tri-) that is related to the average number of glycerol residues per polyglycerol molecule. A specified polyglycerol consists of a distribution of molecular species characteristic of its nominal degree of polymerization. By varying the proportions as well as the nature of the fats or fatty acids to be reacted with the polyglycerols, a large and diverse class of products may be obtained.

The article of commerce may be further specified as to saponification value, solidification
point of the free fatty acids, iodine value, hydroxyl value and ash content.

Structure:

Structural formula
 

where the average value of n is about 3 and R₁, R₂ and R₃ each may be a fatty acid moiety or hydrogen

1.12 In light of the above, it can be understood Polyglycerol Ester is not a chemically defined compound due to the presence of minor amounts of mono-, di-, and triglycerides, free glycerol and polyglycerol, free fatty acids etc., Further, by varying the proportions of fatty acids that is to be reacted with polyglycerol, many different products can be manufactured.

1.13 Additionally, there is not a fixed chemical structure of the Polyglycerol Ester, as "R1, R2, and R3 " can be different fatty acid moiety or hydrogen. Also, value of "n" can range from 1, 2 and 3.

1.14 In light of the above discussion and JCEFA Report, it can be said that the subject product is not a chemically defined compound.

Subject Product is waxy in nature

1.15 As per, the JECFA report Polyglycerol Ester of fatty acids is waxy in appearance. Relevant portion
of report has been provided below.

Description: Light yellow to amber oily to very viscous liquids: light tan to medium brown, plastic or soft solids: and light tan to brown, hard, waxy solids.

APPLICANT'S ELIGIBLITY FOR ADVANCE RULING

1.16 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').

1.17 Provisions relating 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);

1.18 The Applicant herein has been granted a valid Importer-Exporter Code Number (IEC) under Section 7 of
the Foreign Trade (Development and Regulation) Act, 1992. The same is 0599001780.

1.19 Clause (b) of Section 28E of the Customs Act defines advance ruling' as:

(b) "advance ruling" means a written decision on any of the questions referred to in section 28H raised by the applicant in his application in respect of any goods prior to its importation or exportation:

1.20 The questions on which an application for an advance ruling can be made have been provided under Section 28H 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 relating to:

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

1.21 The present application is being made by the Applicant to confirm classification of the subject product.

1.22 Therefore, it flows that in the present case, the Applicant is satisfying the following conditions required for filing the application for advance ruling, namely:

a. have been granted a valid Importer-Exporter Code Number (IEC) under section 7 of the Foreign Trade (Development and Regulation) Act, 1992;

b. Application for advance ruling is in relation to clause (a) of Section 28H (2) of the Customs Act,1962.

Non-Applicability of Bar under Section 281

1.23 Section 28I of the Customs Act, 1962 is set out below:

"SECTION 28-1. Procedure on receipt of application. — (1) On receipt of an application, the Authority shall cause a copy thereof to be forwarded to the [Principal Commissioner of Customs or Commissioner of Customs] and, if necessary, call upon him to furnish the relevant records:

Provided that where any records have been called for by the Authority in any case, such records shall, as soon as possible, be returned 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."

1.24 Thus, the conditions set out in Section 28I are satisfied as:

a. the question raised in the present application regarding classification of Grindsted PGE 55-M 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 regarding classification of Grindsted PGE 55-M is not a matter already decided by the Appellate Tribunal or any Court.

1.25 Therefore, it flows that in the present case, the Applicant satisfies all the criteria required for filing
the application for advance ruling, namely:

(a) The Applicant has been granted a valid Importer-Exporter Code Number (IEC) under section 7 of the Foreign Trade (Development and Regulation) Act. 1992;
(b) The Applicant is filing the Application in respect of goods prior to their importation into India;
(c) The application for advance ruling is in relation to clause (a) of Section 28H (2) of the Customs Act, 1962; and
(d) The application is not barred under Section 28I of the Customs Act, 1962.

1.26 Thus, the present application must be allowed to be proceeded with.

1. CLASSIFICATION OF GRINDSTED PGE 55-M

1.27 The Tariff is aligned, up to the 6-digit level, 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.

1.28 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.

1.29 The product in question i.e., Grindsted PGE 55-M is food emulsifying agent. It is is a polyglycerol ester made from edible, refined vegetable fatty acids and in which the polyglycerol moiety is mainly di-, tri-. and tetraglycerol.

1.30 Given that it has a wax character, 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.

1.31 Before examining the classification of the subject product under CTH 3404, it is relevant to visit the Notes to Chapter 34.

1.32 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) ***

1.33 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) ****

1.34 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) ****

The waxes of paragraphs (A), and (C) above must have:

(1) a dropping point above 40 °C, 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.

1.35 On a combined reading of Note 5 (a), Note 1 (b) to Chapter 34 and the HSN Explanatory Notes to heading 3404. the following essential requirements needs to be fulfilled in order to classify a product under the said heading:

a. The product must not be a separate chemically defined compound;
b. The product must be chemically produced organic product;
c. The product must not be covered within the scope of CTH 271;
d. The product must have waxy character;
e. The product must have a drop melt temperature of above 40°C;
f. The viscosity of the product must not exceed 10 Pa.s at 10°C above the drop melting point.

We analyse the physical and chemical characteristics of the subject product against each of the above conditions, as below.

I. The subject product is not a separate chemically defined compound

1.36 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.

1.37 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.

//. Subject product is waxy in nature

1.38 Additionally, the JCEFA Report also provides that the subject product is waxy in character

1.39 In light of the above, it can be understood that the subject product's final composition and structure cannot be determined due to the presence of different fatty acid moieties attached, and the subject product has a waxy character.

///. The product must be chemically produced organic product

1.40 As per the manufacturing process of the subject product, it is fatty acids (stearic acid) react with Polyglycerol in an esterification reaction. The resulting 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

1.41 CTH 2712 covers Petroleum Jelly, Paraffin Wax, Microcrystalline Petroleum Wax or other mineral waxes. 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

1.42 A mentioned above and on physical examination of the subject product shows that it has a waxy character,

1.43 The Applicant confirms that the subject product has a drop melt temperature of above 40°C. The Applicant also confirm that the subject product has a viscosity that does not exceed 10 Pa.s at 10°C above the drop melting point.

The fulfilment of above criteria by the subject products is discussed herein below

Classification of the subject product under CTH 3404

1.44 In view of the above, as the subject product fulfils all the conditions mentioned in Note 1(b), and Note 5 to the Chapter 34, hence the subject product merits classification under CTH 3404.

1.45 Now, coming to the 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".

1.46 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.

1.47 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 "---" (triple dash) or"----" (quadruple dash) are sub-classifications of the immediately preceding single dash or double dash, as the case may be.

1.48 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:

1.49 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.

1.50 Now, upon perusal of the single- dash entry- ''Other''. The entry is sub-divided into the following:

1.51 Basis the understanding of the facts and the analysis discussed so far, it is clear that 34049010 and 34049020 are excluded.

1.52 Now moving to the next — dash i.e. Artificial waxes (including water-soluble waxes) prepared waxes, not emulsified or containing solvents". The subject product is in the nature of artificial wax, not soluble in water. Further, the product in is as imported form is neither emulsified nor contains solvents. Accordingly, the subject product appears to fall within the scope of "Artificial waxes (including water-soluble waxes) prepared waxes, not emulsified or containing solvents".

1.53 The said entry is further sub-divided under:

1.54 The subject product has not undergone bromination or chlorination during its production. We understand that the subject product in its 'as imported' 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.
1.55

ISSUES REQUIRING ADVANCE RULING AND APPLICANT'S UNDERSTANDING

In light of the aforementioned submissions, the Applicant's interpretation of the questions raised will be as under:

a) Question: Whether the product in question in the present application is classifiable under Tariff Item 3404 90 39?

Applicant's Understanding: Yes.

b) Question: If the answer to the above question is in the negative, then what would be the correct classification of the product mentioned above under the Customs Tariff of India?

Applicant's Understanding: Not Applicable

Comments of the Port Commissionerate

1. The application was forwarded to Assessment Group in terms of section 28 I (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 PGE 55-M. The list of Bills of entry is as under:-

Point 3 iv). 1. As stated by the importer in their application the goods

i.e. 'Grindsted PGE 55-M' is a food emulsifying agent which enables 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 emulsifiers for fats. Those which have the character of artificial waxes are. however, excluded (heading 34.04).

It appears that the imported product may be either classifiable under CTH

38.24 or 34.04 depending on whether it meets the character of artificial waxes or otherwise. The compliance of the imported product to the various explanatory notes to CTH 34.04 need to be examined.

Point 3 v). As per available records in the assessment group, the matter is not pending before any officer of Customs, the Appellate Tribunal or any Court.

Personal Hearing

3. The Personal hearing in the matter was conducted on 13.12.2024 wherein the authorized representative of the applicant attended the same and reiterated the same which were already submitted with the application of the applicant.

Additional Submissions

4.1 M/s Danisco India Pvt. Ltd. (hereinafter referred to as 'Applicant') inter alia deals in food preparations, additives, enzymes and other bioproducts.

4.2 The Applicant has filed an application for Advance Ruling dated 24.09.2024 (hereinafter referred to as the "AAR") proposing to import the product "Grindsted PGE 55-M"; (hereinafter referred to as the "subject product"). The applicant intends to market and re-sell the subject product in its 'as-imported' condition for the purpose of trading.

4.3 The Applicant proposes to classify the subject product under Customs Tariff Item (hereinafter referred to as "CTI") 3404 90 39 of the First Schedule to the Customs Tariff Act, 1975 (hereinafter referred to as "Customs Tariff") chargeable to Basic Customs Duty (hereinafter referred to as "BCD") @ 10%, Social Welfare Surcharge (hereinafter referred to as "SWS") @10% and Integrated Goods and Services Tax (hereinafter referred to as "IGST") @18% in terms of SI. No. 62 of Schedule III of IGST Notification No. 01/2017 - Integrated Tax (Rate) dated 28.06.2017 (hereinafter referred to as "Notification No. 01/2017").

Comments by the Ld. Joint Commissioner of Customs, Gr. II (C-F). NS-l, JNCH. Nhava Sheva, Mumbai, Customs Zone-ll

4 4 Vide letter dated 02.12.2024, the Ld. Joint Commissioner of Customs, Gr. II (C-F), NS-l, JNCH, Nhava Sheva. Mumbai, Customs Zone-ll (hereinafter referred to as the "Ld. Jt. Commissioner"), has provided his comments on the AAR filed by the Applicant. In the said letter dated 02.12.2024, the Ld. Jt. Commissioner has stated that the subject product can be classified under CTH 3404 depending on whether it meets the character of artificial waxes or otherwise. Accordingly, the compliance of the subject product to the 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 100% composed of a 'Polyglycol 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 PGE 55-M

Details of Manufacturing Process

4.8 To describe the entire process briefly, Palm Oil is the raw material used for the manufacture of Polyglycol Ester (E475).1 Palm Oil consists of different types of fatty acids (stearic acid). In a single-unit process, the said Fatty acid (Stearic acid) is made to react with Polyglycerol in an esterification reaction.

4.9 The product so obtained after the afore-mentioned reactions is then subjected to the processes of distillation, storage, filtration, tube chilling, magnet separation to get the product in its 'as-imported' condition. The subject product contains minor amounts of mono-, di- and triglycerides, free glycerol and polyglycerols, free fatty acids etc.

4.10 Reference is invited to 35th Joint FAO/WHO Expert Committee on Food Additive (hereinafter referred to as the "JECFA Report") report published in FNP 49 (1990) and in FNP 52 (1992) has analysed Polyglycerol esters of fatty acids INS No. 475. Relevant portions of the JECFA Report has been extracted below.

Mixed partial esters formed by reacting polymerized glycerols with edible fats, oils, or fatty acids; minor amounts of mono-, di-, and triglycerides, free glycerol and polyglycerols, free fatty acids, and sodium salts of fatty acids map be present: degree of polymerization varies, and is specified by a number (such as tri-) that is related to the average number of glycerol residues per polyglycerol molecule. A specified polyglycerol consists of a distribution of molecular species characteristic of its nominal degree of polymerization. By varying the proportions as well as the nature of the fats or fatty acids to be reacted with the polyglycerols, a large and diverse class of products may be obtained.

The article of commerce may be further specified as to saponification value, solidification point of the free fatty acids, iodine value, hydroxyl value and ash content.

4.11 The subject product is pre-dominantly ccmposed of Sodium Stearoyl Lactylate and is proposed to 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:

4.13 The goods imported into India are classified under the Customs Tariff on the basis of General Rules of Interpretation (hereinafter referred to as ''GRI") set out in the Customs Tariff. As per Rule 1 of GRI, the classification of the products shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided that such headings or Notes do not otherwise require, according to the remaining rules of the GRI in sequential order.

4.14 Considering the subject product contains Sodium Stearoyl Lactylate and has a waxy appearance 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.

4.15 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 Chapter does not cover:

(a)....
(b) separate chemically defined compounds; or
(c)

"Chapter Note 5 In heading 3404. subject to the exclusions provided below, the expression "artificial waxes and prepared waxes" applies only to:

(a) Chemically produced organic products of a waxy character, whether or not water-soluble:
(b)...
(c) products of a waxy character with a basis of one or more waxes and containing fats, resins, mineral substances or other materials.

HSN EN to CTH 3404

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 or other materials. Unmixed animal or vegetable waxes, whether or not refined or coloured, are, however, excluded (heading 15.21). Unmixed mineral v/axes 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 °C: 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 product must be chemically produced organic product;
(c) The product must not be covered within the scope of CTH 2712;
(d) The product must have waxy character;
(e) The product must have a drop melt temperature of above 40°C;
(f) The viscosity of the product must not exceed 10 Pa.s at 10°C above the drop melting point.

4.17 Each of the above-listed conditions are dealt with specifically as under:

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 merits classification under "other bearing Customs Tariff Sub-Heading (hereinafter referred to as "CTSH") 3404 90 as the subject product is not made up of Polyethylene glycol (PEG).

4.20 Further, it is submitted that at the"---" (triple dash) level under Customs Tariff Sub-Heading 3404 90, the subject product is most appropriately covered as "Artificial waxes (including water-soluble waxes) prepared waxes, not emulsified or containing solvents" as the subject product is in the nature of wax is neither emulsified nor does it contains solvents.

4.21 The said entry is further categorised in four"----" quadruple dash entries which are as follows:

4.22 It is submitted that the subject product has not been subjected to bromination or chlorination during its manufacturing process and neither does the subject product contain bromine or chlorine in its 'as-imported' condition. The subject product is thus, not classifiable under CTI 3404 90 31. 3404 90 32, 3404 90 33 and is therefore, correctly classifiable under CTI 3404 90 39.

4.23 Examination of classification of the subject product under CTH 3824 vide the letter dated 02.12.2024. the Ld. Jt. Commissioner opined that the subject product may be classified under CTH 3404 provided that the subject product meets the requirement of 'waxy character' relying upon the relevant HSN EN.

It is. therefore, iterated that as outlined in the foregoing discussion, the subject product is palm oil-based Fatty acid (Stearic acid) which is subjected to an equilibrium esterification reaction, with Polyglycol Ester to obtain the final subject product in its 'as-imported' condition.

Analysis and Conclusion

5. The Applicant is importing the products 'Grindsted PGE 55-M' for the purpose of trading. Grindsted PGE 55-M (hereinafter referred to as 'subject product') is a food emulsifying agent. An emulsifier enables the creation of uniformly blended products (emulsions) from ingredients which, because of fundamental differences in their physical and chemical properties are immiscible. The chemical name of the subject product is polyglycerol ester (E475). The Subject product is 100% Polyglycerol Ester (E475). For ease of reference the description of the subject products is produced below:

5.1 E numbers: It is a system of codes used within the European Union (EU) to identify food additives. The “E’ stands for “Europe” and these numbers were established by the European Food Safety Authority (EFSA) and the European Commission. E400—E499 (thickeners, stabilisers. emulsifiers).

5.2 INS Number: It stands for "International Numbering System," are used by the Codex Alimentarius Commission. The Codex Alimentarius is a joint program of the Food and Agriculture Organization (FAO) and the World Health Organization (WHO), established to develop food standards, guidelines, and related text. In the instant case both E number and INS number are same for the subject product that is E475/INS

5.3 Physical properties of subject product are as follows:

5.4 The subject product offers the following benefits:

• Ensures good aeration of cake batters
• Improves crumb structure in cakes
• Facilitates use of all-in procedures
• Is an aerating agent in confectionary systems containing fat/oil
• Secures a high overrun in confectionary

5.5 Palm oil is the raw material used for the manufacturing of the subject product. Palm oil acts as a rich source of fatty acids. These fatty acids (stearic acid) react with Polyglycerol in an esterification reaction. The subject product contains minor amounts of mono-, di-, and triglycerides, free glycerol and polyglycerols, free fatty acids, etc.

5.6 In 35th Joint FAO/WHO Expert Committee on Food Additive ('JECFA Report") report published in FNP 49 (1990) and in FNP 52 (1992) has analysed Polyglycerol esters of fatty acids INS No. 475. Relevant portions of JECFA Report has been extracted below.

Definition:

Mixed partial esters formed by reacting polymerized glycerols with edible fats, oils, or fatty acids; minor amounts of mono-, di-, and triglycerides, free glycerol and polyglycerols, free fatty acids, and sodium salts of fatty acids may be present; degree of polymerization varies, and is specified by a number (such as tri-) that is related to the average number of glycerol residues per polyglycerol molecule. A specified polyglycerol consists of a distribution of molecular species characteristic of its nominal degree of polymerization. By varying the proportions as well as the nature of the fats or fatty acids to be reacted with the polyglycerols. a large and diverse class of products may be obtained.

The article of commerce may be further specified as to saponification value, solidification point of the free fatty acids, iodine value, hydroxyl value and ash content.

5.7 In light of the above, it can be understood Polyglycerol Ester is not a chemically defined compound due to the presence of minor amounts of mono-, di-, and triglycerides, free glycerol and polyglycerol, free fatty acids etc., Further, by varying the proportions of fatty acids that is to be reacted with polyglycerol, many different products can be manufactured. Additionally, there is not a fixed chemical structure of the Polyglycerol Ester, as 'R1, R2, and R3 " can be different fatty acid moiety or hydrogen. Also, value of "n" can range from 1, 2 and 3.

5.8 In light of the above discussion and JCEFA Report, it can be said that the subject product is not a chemically defined compound. As per, the JECFA report Polyglycerol Ester of fatty acids is waxy in appearance. Relevant portion of report has been provided below:

Description: Light yellow to amber, oily to very viscous liquids: light tan to medium brown, plastic or soft solids; and light tan to brown, hard, waxy solids.

5.9 Coming to Classification of GRINDSTED PGE 55-M, the Tariff is aligned, up to the 6-digit level, with the Harmonized System of Nomenclature ("HSN") issued by the World Customs Organization ('WCO'). It has been held by the Hon'bie 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.

5.10 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.

5.11 The product in question i.e., Grindsted PGE 55-M is food emulsifying agent. It is is a polyglycerol ester made from edible, refined vegetable fatty acids and in which the polyglycerol moiety is mainly di-, tri, and tetraglycerol.

5.12 Given that it has a wax character, 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.

5.13 Before examining the classification of the subject product under CTH 3404, it is relevant to visit the Notes to Chapter 34. 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) ****

5.13.1 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) ***

5.13.2 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 (eq., 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) ***

……

The waxes of paragraphs (A), and (C) above must have:

(1) a dropping point above 40 °C; 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.”

5.14 On a combined reading of Note 5 (a), Note 1 (b) to Chapter 34 and the HSN Explanatory Notes to heading 3404, the following essential requirements needs to be fulfilled in order to classify a product under the said heading:

a. The product must not be a separate chemically defined compound;

b. The product must be chemically produced organic product;

c. The product must not be covered within the scope of CTH 271:

d. The product must have waxy character;

e. The product must have a drop melt temperature of above 40°C,

f. The viscosity of the product must not exceed 10 Pa.s at 10°C above the drop melting point.

5.14.1 The physical and chemical characteristics of the subject product are analysed against each of the above conditions, as below:

    I. The subject product is not a separate chemically defined compound

5.14.1.1 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. The Subject product is waxy in nature

5.14.1.2 Additionally, the JCEFA Report also provides that the subject product is waxy in character. In light of the above, it can be understood that the subject product's final composition and structure cannot be determined due to the presence of different fatty acid moieties attached, and the subject product has a waxy character.

III. The product must be chemically produced organic product

5.14.1.3 As per the manufacturing process of the subject product, it is fatty acids (stearic acid) react with Polyglycerol in an esterification reaction. The resulting 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

5.14.1.4 CTH 2712 covers Petroleum Jelly, Paraffin Wax. Microcrystalline Petroleum Wax or other mineral waxes. 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

5.14.1.5 A mentioned above and on physical examination of the subject product shows that it has a waxy character. The Applicant confirms that the subject product has a drop melt temperature of above 40°C. The Applicant also confirm that the subject product has a viscosity that does not exceed 10 Pa.s at 10°C above the drop melting point.

5.14.2 The fulfilment of above by the subject products is discussed herein below:

5.14.3 In view of the above, as the subject product fulfils all the conditions mentioned in Note 1(b), and Note 5 to the Chapter 34, hence the subject product merits classification under CTH, 3404.Now, coming to the 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”

5.14.4 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. ft 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 “--­'' (triple dash) or “----” (quadruple dash) are sub-classifications of the immediately preceding single dash or double dash, as the case may be.

5.14.5 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;

5.14.5.1 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”. Now, upon perusal of the single-dash entry- “Other”. The entry is sub-divided into the following:

5.14.5.2 Basis the understanding of the facts and the analysis discussed so far, it is clear that 34049010 and 34049020 are excluded. Now moving to the next — dash i.e. Artificial waxes (including water-soluble waxes) prepared waxes, not emulsified or containing solvents”. The subject product is in the nature of artificial wax, not soluble in water. Further, the product in is as imported form is neither emulsified nor contains solvents. Accordingly, the subject product appears to fall within the scope of “Artificial waxes (including water-soluble waxes) prepared waxes, not emulsified or containing solvents”.

5.8.13 The said entry is further sub-divided under:

5.15 The Comments of the Port Commissionerate is the product appears to be either classifiable under CTH 38.24 or 34.04 depending on whether it meets the character of artificial waxes or otherwise. The compliance of the imported product to the various explanatory notes to CTH 34.04 need to be examined.

5.16 Considering the subject product is pre-dominantly composed of Polyglycol 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 Chapter does not cover:

(a) ….
(b) separate chemically defined compounds; or
(c) …… “

''Chapter Note 5 In heading 3404, subject to the exclusions provided below, the expression “artificial waxes and prepared waxes” applies only to:

(a) Chemically produced organic products of a waxy character, whether or not water-soluble;
(b) ….
(c) products of a waxy character with a basis of one or more waxes and containing fats, resins, mineral substances or other materials…”

HSN EN to CTH 3404:

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 (eq. 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 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:

(3) a dropping point above 40 °C; and

(4) 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).”

5.17 Each of the above-listed conditions are dealt with specifically as under:

5.13 in light of the above, it is concluded that the subject products fulfil ail 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. Further, as the subject products have not been subjected to bromination or chlorination during its manufacturing process and neither does the subject products contain bromine or chlorine in its "as-imported' condition The subject products are thus, not classifiable under CTIs 3404 90 31. 3404 90 32. 3404 30 33 and are therefore, correctly classifiable under CTI 3404 90 39.

6.a. Question: Whether the products in question in the present application are classifiable under Tariff Item 3404 90 39?

    Answer: Yes.

b. Question: If the answer to the above question is in the negative, then what would be the correct classification of the products mentioned above under the Customs Tariff of India?

    Answer: Not Applicable

7. I, rule accordingly.

(Samar Nanda)
Customs Authority for Advance Rulings

F. No. Vill/CAAR/Delhi/ Danisco India /143/2024                 Dated: 30.12.2024

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

1. M/s. Danisco India Pvt. Ltd., 206, 2nd Floor, Neelkanth House, S-524 School Block, Shakarpur, East Delhi, Delhi- 110092

2. The Principal Commissioner of Customs, Nhava Sheva - I, JNCH, Nhava Sheva Tal: Uran, District: Raigad, Maharashtra-400707

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

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

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

6. Guard file.

7. Webmaster.

(Bharti Sharma)
Additional Commissioner & Secretary,
Customs Authority for Advance Rulings, New Delhi