2025(01)LCX0092(AAR)

Nutricia International Private Limited

decided on 09-01-2025

CUSTOMS AUTHORITY FOR ADVANCE RULINGS

NEW CUSTOM HOUSE, BALLARD ESTATE, MUMBAI - 400 001

E-MAIL: cus-advrulings.mum@gov.in

09^th January, 2025

Ruling Nos. CAAR/Mum/ARC/197,198/2024-25

 in

Application No. CAAR/CUS/APPL/117,118/2024 - O/o Commr-CAAR-MUMBAI

Ruling

1. Nutricia International Private Limited (IEC No. 051109638 I) (hereinafter referred as “The Applicant”) filed an application for advance ruling in the Office of Secretary, Customs Authority for Advance Ruling, Mumbai. The said application was received in the secretariat of the CAAR, Mumbai on 04.09.2024, along with its enclosures in terms of Section 281-1 (1) of the Customs Act, 1962 (hereinafter referred to as the ‘Act’). The applicant is seeking advance ruling regarding classification of 5-11M0 Mix being imported by them for manufacturing infant formula manufactured by them.

2. Submission by the Applicant:

2.1 Nutricia International Private Limited (“the Applicant”), is a Private Limited company incorporated in the  year 2011 under the Companies Act, 1956. The Applicant is part of the internationally renowned Danone group. The Applicant is engaged in the import, manufacturing and marketing of numerous products which serve the following markets:

i. Infant Nutrition

ii. Adult Nutrition

iii. Health and Wellness

2.2 The Applicant is now proposing to import the product `5-HMO mix’. Post import, the same will be used by the Applicant for manufacturing infant formula manufactured by them.

2.3 About 5- HMO Mix: 5-HMO Mix (hereinafter referred to as the ‘product’) is a mixture of 5 different types of human milk oligosaccharides (`HMOs’). Below is the composition of the product:

2.4 The HMOs in the 5 HMO Mix are individually synthesized from a carbon source (e.g. Socrose,glucose or glycerol) and lactose as precursor by production strains and secreted into the fermentation medium. The fermentation medium is isolated from the microbial biomass using filtration. The HMOs are further purified from the resulting solution using ion exchange resins and additional purification steps. The final HMO solution is then spray dried to produce a solid white powered. The resulting individual HMO powders are used in a wet-blending process to generate the 5-HMO Mix which is subsequently spray dried to obtain the final product.

2.5 The HMO content constitutes more than 90% of the product, with majority of it being 2’Fucosyllactose The Lactose and Carbohydrates are leftover unconverted starting material in the product. The Applicant also submitted the technical specifications sheet of the product.

2.6 About monosaccharides, oligosaccharides and Human milk oligosaccharides:

Monosaccharides are known as simple sugars and are the most basic units of carbohydrates. Oligosaccharides are a type of chain made up of 3 to 10 monosaccharides. Human milk oligosaccharide (`HMOs’) are multifunctional glycans, naturally present in human milk, and are a structurally and biologically diverse group of complex indigestible sugars. All HMOs are based on a lactose molecule and made of five basic monosaccharides: glucose (Glc), galactose (Gal), N-ethylglucosamine (G1cNAc), fucose (Fuc) and sialic acid (SA.). These naturally occurring HMOs can also be synthesized. The 5-HMO Mix is a product that utilises 5 different synthetically produced HMOs.

2.7 Benefits of 5 HMO mix: The HMOs in the 5 HMO mix are reported to reduce growth of several common harmful bacteria in infants. HMOs support a natural gut microbiome by nourishing beneficial gut bacteria such as bifidobacterial, lactobacilli and Bacteroides. It also helps build and balance immunity in infants and has a positive impact on brain development in infants by affecting cognition and regulation of neurons.

3. Applicants Interpretation of Law/Facts:

3.1 The applicant states that 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.

3.2 The classification of the goods imported into India is to be determined based on the General Rules of Interpretation (hereinafter referred to as the “GRI”) set out in the Tariff. As per Rule 1 of the GRI, classification of the imported products shall be determined according to the terms of the headings and any relative Section or Chapter Notes and, provided such headings or Notes do not otherwise require, according to the remaining Rules of the GRI.

3.3 The product in question i.e., 5-HMO Mix is a mixture of 5 different human milk oligosaccharides which are obtained from lactose. Oligosaccharides are specifically, covered under Heading 2940. Thus, at the outset classification under Pleading 2940 be examined.

3.4 THE PRODUCT CLASSIFICATION UNDER HEADING 2940: Relevant extracts of HSN Explanatory Notes to Heading 2940 are set out below:

29.40 - Sugars, chemically pure, other than sucrose, lactose, maltose, glucose and fructose; sugar ethers, sugar acetals and sugar esters, and their salts, other than products of heading 29.37, 29.38 or 29.39.

(A) SUGARS, CHEMICALLY PURE

This heading covers only chemically pure sugars. The term “sugars” covers monosaccharides, disaccharides and oligosaccharides. Each saccharide unit must consist of at least four, but not more than eight, carbon atoms and, as a minimum, must contain a potential reducing carbonyl group (aldehydic or ketonic) and at least one asymmetric carbon atom bearing a hydroxyl group and a hydrogen atom. The heading excludes :

a) Sucrose, this, even when chemically pure, falls in heading 17.01.

b) Glucose and lactose; these, even when chemically pure, fall in heading 17.02.

c) Maltose which, even when chemically pure, falls in heading 17.02. Isomeric with sucrose. Crystalline mass. Used in medicine.

d) Fructose (laevulose) which, even when chemically pure, falls in heading 17.02. Isomeric with glucose. Yellowish crystals in the pure state. Used in medicine (for diabetic diets).

e) Aldol (heading 29.12) and acetoin (3-hydroxy-2-butanone) .(heading 29.14), which, though they meet the criteria for being saccharide units, are not sugars.

The following are included among the chemically pure sugars falling under this heading :

(1) Galactose*. Isomeric with glucose. Obtained by hydrolysing lactose. Found in pectin substances and mucilage’s. Crystalline when pure.

(2) Sorbose (sorbenose). Isomeric with glucose. White crystalline powder, very soluble in water. Used in the synthesis of ascorbic acid (vitamin C), and in the preparation of culture media.

(3) Xylose (wood sugar) (C₅H₁₀O₅). White crysials. Used in pharmacy.

(4) Trehalose, isomeric with sucrose. Ribose and arabinose, isomeric with xylose. Raffinose (C₁₈H₃₂O₁₆)Fucose, rhamnose (C₆H₁₂O₅), digitoxoside (C₆H₁₂O₄) and other deoxy sugars. These sugars are all essentially laboratory products. .

The sugars of this heading may be in the form of aqueous solutions.

3.5 As per the above extract, oligosaccharides are clearly covered under Heading 2940. HMOs are nothing but oligosaccharides derived from human milk (natural or chemically synthesized). Thus, HMOs too are nothing but oligosaccharides and are covered under Heading 2940.

3.6 Lactose and carbohydrate present in the imported product are unconverted raw materials / by-products. Thus, they are permissible impurities allowed to be present in the imported product.Relevant extracts from the Chapter Notes to Chapter 29 are as follows:

The separate chemically defined compounds of this Chapter may contain impurities (Note 1 (a)). An exception to this rule is created by the wording of heading 29.40 which, with regard to sugars, restricts the scope of the heading to chemically pure sugars.

The term “impurities” applies exclusively to substances whose presence in the single chemical compound results solely and directly from the manufacturing process (including purification). These substances may result from any of the factors involved in the process and are principally the following :

(a) Unconverted starting materials.

(b) Impurities present in the starting materials.

(c) Reagents used in the manufacturing process (including purification):

(d) By-products.

It should be noted, however, that such substances are not in all cases regarded as “impurities” permitted under Note 1 (a). When such substances are deliberately left in the product with a view to rendering _.it particularly suitable for specific use rather than for general use, they are not regarded as permissible impurities. For example, a product consisting of methyl acetate with methanol deliberately left in with a view to improving its suitability as a solvent is excluded (heading 38.14) For certain compounds (e.g., ethane, benzene, phenol, pyridine), there are specific purity criteria, indicated in Explanatory Notes to heading 29.01, 79.02, 29.07 and 29.33.

3.7 Thus, 5 HMO mix is rightly classifiable under Heading 2940.

3.8 Classification of the product under Heading 2940 as per BTI Rulings: Reliance is also placed on the below BTI Rulings in support of the classification of HMOs under Heading 2940:

3.9 Thus, as per international customs practice as well the product is classifiable under Heading 2940.

3.10 THE PRODUCT CLASSIFICATION UNDER HEADING 1702: Sugars obtained from lactose (known as milk sugars) are covered under Heading 1702. Thus, alternatively, the product may be classifiable under Heading 1702. Chapter 17 covers Sugar and Sugar Confectionery. Relevant portion of Chapter Notes to Chapter 17 are extracted below:

“1. This Chapter does not cover:

(a) Sugar confectionery containing cocoa (heading 1806);

(b) Chemically pure sugars (other than sucrose, lactose, maltose, glucose and fructose) or other products of heading 2940; or

(c) Medicaments or other products of Chapter 30.”

3.11 Thus, from a perusal of the above it is _.understood that if the product is not classifiable under Heading
2940, the same can be classified here. If, arguendo, only chemically pure oligosaccharides are covered under Heading 2940 and the presence of lactose and carbohydrates renders the product to fall outside the ambit of Heading 2940, then the product would be classifiable’ under Chapter 17 as it covers other sugars, regardless of whether the presence / absence of impurities. The relevant portion of HSN Explanatory Notes to Heading 1702 is extracted below:

17.02 - Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavouring or colouring matter; artificial honey, whether or not mixed with natural honey; caramel.

(A) OTHER SUGARS

This part covers sugars, other than sugars of heading 17.01 or chemically pure sugars of heading 29.40, in solid form (including powders), whether or not containing added flavouring or colouring matter. The principal sugars of this heading are :

(1) Lactose (also known as milk sugar) (C₁₂H₂₂O₁₁), which occurs in milk and is produced commercially from whey. This "heading covers both commercial and chemically pure lactose. Such products must contain by weight more than 95% lactose, expressed as anhydrous lactose, calculated on the dry matter. For the purposes of calculating the percentage weight of lactose in a product the expression "dry matter" should be taken to exclude both free water and water of crystallisation. Products obtained from whey and containing 95 % or less by weight of lactose, expressed as anhydrous lactose, calculated on the dry matter, are excluded (generally heading 04.04).

Commercial lactose, when refined, is a white, slightly sweet, crystalline powder. Chemically pure lactose, whether anhydrous or hydrated, occurs as hard colourless crystals, which absoro odours.

Lactose is used extensively, with milk, in the preparation of infant foods; it is also used in confectionery, in jam-making or in pharmacy.

(2) Invert sugar, the main constituent of natural honey. It is usually prepared commercially by the hydrolysis of refined sucrose solutions and consists of equal proportions by weight of glucose and fructose. It may be presented in solid form or as a viscous syrup (see Part (B)). It is used in pharmacy, in bread making, in the manufacture of fruit preserves and artificial honey and in the brewing industry.

(3) Glucose, which occurs naturally in fruits and honey. Together with an equal part of fructose it constitutes invert sugar.

The heading includes dextrose (chemically pure glucose) and commercial glucose.

Dextrose (C₆H₁₂O₄) is a white crystalline powder. It is used in the food and pharmaceutical industries.

Commercial glucose is obtained by hydrolysing starch with acids and/or enzymes. It always contants, in addition to dextrose, a variable proportion of di-, tri- and other polysaccharides (maltose, maltodose, etc.). It has a reducing sugar content. expressed as dextrese on the dry substance, of not less than 20%. It is usually in the form of a colourless, more or less viscous liquid (glucose syrup, see Part (B)) or of lumps or cakes (glucose aggregates) or of an amorphous powder. It is used mainly in the food industry, in brewing, in tobacco fermentation and in pharmacy.

(4) Fructose (C₆H₁₂O₆) Which is present in large quantities, with glucose, in sweet fruits and in honey. Commercially it is produced from commercial glucose (e.g., corn syrup), from sucrose or by hydrolysis of inulin, a substance found mainly in the tubers of the dahlia and the jerusalern artichoke. It occurs in the form of a whitish, crystalline powder or as a viscous syrup (see Part (B)): it is sweeter than ordinary sugar (sucrose) and is especially suitable for use by diabeties. This heading cover both commercial and chemically pure fructose.

3.12 From a perusal of the above, it is clear that all sugars, other than those which are chemically pure, are classifiable under Heading 1702. It is undoubted that the imported product is a sugar. Thus, if the imported product is not classifiable under Heading 2940, the same will be classifiable under Heading 1702.

3.13 The Sugar in Heading 1702 are capable of use in various industries for various functions such as manufacturing of baby food or low-calorie food, as flavouring or colouring agents, as carriers,in the pharmaceutical industry, etc. The product is manufactured by treating lactose, and no other ingredients are added to the product. The product contains HMOs, and the unconverted starting material of lactose and carbohydrates. As demonstrated above, HMO is nothing but a sugar. Each of the 5 HMO present are oligosaccharides, which are sugars. The remaining unconverted lactose too is a sugar.

3.14 Further, from a perusal of the other sugars mentioned in the HSN Explanatory Notes to Heading 2940 and the functions / uses of these sugars, it is clear that the 5-HMO mix is similar to the other sugars which are covered under Heading 1702, such as those used in baby food products. Therefore, for the reasons enumerated above, the product is alternatively classifiable under Heading 1702. .

3.15 THE PRODUCT NOT CLASSIFIABLE UNDER HEADING 2106: Heading 2106 covers food preparations not elsewhere specified or included. The relevant portion of HSN Explanatory Notes to Heading 2106 is extracted below:

21.06 - Food preparations not elsewhere specified or included.

2106.10 - Protein concentrates and textured protein substances

2106.90 - Other

Provided that they are not covered by any other heading of the Nomenclature, this heading covers :

(A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption.

(B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparation for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38).

However, the heading does not cover enzymatic preparations containing foodstuffs (e.g., meat tenderizers consisting of a proteolytic enzyme with added dextrose or other foodstuffs). Such preparations fall in heading 35.07 provided that they are not covered by a more specific heading in the Nomenclature.

3.16 Therefore, it appears that for products to fall under Heading 2106, such products must be -

a. Food preparation

b. Such food preparations should not be specified or included elsewhere. In other words, it is a residuary heading and if products are covered or included elsewhere they will not fall under Chapter Heading 2106.

3.17 The product is not a food preparation as contemplated under Heading 2106: From a perusal of the above extract of HSN Explanatory Notes to Heading 2106, it is clear that only two categories of product are covered under Heading 2106. (A) Preparations which are for direct human consumption or consumption after processing; and (B) Preparations which are mixed with foodstuffs and further used for the manufacture of food preparations.

3.17.1 The product is not fit for direct human consumption as the product: It is submitted that the product in as imported condition cannot be directly used for human consumption. The product is a concentrated formulation which is further used by the Applicant as one of the ingredients in the mass production of the baby formula manufactured and sold by it. Therefore, it is clear that the imported products cannot be used for direct human consumption.

3.17.2 The product is not fit for human consumption after processing as the nature of processing envisioned under Heading 2106 is simple processing that can be undertaken at home: With respect to whether the product is for use for human consumption after processing, it is submitted that the product is not in the nature of products that can be consumed by humans after simple processing. The type of processing that is envisioned under the ambit of Heading 2106 is “cooking, dissolving or boiling in water, milk, etc”. These processes illustrate that the processes covered under Heading 2106 are simple processes which can be undertaken at home by a consumer to consume the preparations. The imported products being a concentrated HMO mix which is intended for use in further manufacturing, cannot be consumed after simple processing and is not fit for direct human consumption.

3.18 The product is not in the nature of preparations consisting wholly or partly of foodstuffs: Foodstuffs here refers to products ready for consumption. The imported product is just chemical in imported form. Thus, it is not classifiable under this Heading.

3.19 Heading 2106 is a residuary heading. As the imported products are aptly covered under Heading 2940 and Heading 1702; the same is automatically excluded from Heading 2106: From a perusal of Heading 2106, it is evident that the same is a residual entry; which would only include products which cannot be covered under any other Entry in the schedule. Whereas, the product in the present case squarely falls under Heading 2940, and if not that then under Heading 1702. Thus, it is submitted that resort to residuary Heading of 2106 can be Made only when the product does not fall under Heading 2940 or even Heading 1702 even by liberal interpretation of it. Thus, the product is not classifiable under Heading 2106.

3.20 EVEN ON APPLYING GRI, THE PRODUCT IN QUESTION IS CLASSIFIABLE HEADING 2940 OR 1702, AND NOT UNDER 2106: The product in present case is a mixture of 5 HMOs. The composition is set out in facts. It is relevant here to refer to Rule 2(b) of the GRI, read with Rule 3:

“Rule 2 (b): Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substances . The classification of goods consisting of more than one material or substances shall be according to the principles of Rule 3.

Rule 3: When by application of Rule 2 (b) or for any other reason, goods are prima facie, classifiable under two or more headings, classification shall he effected as follows:

(a) The heading which provides the most specific description shall be preferred to heading providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods ro to part only of the items in a set put up for retail sale, those headings are to be regraded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.

(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by referent e to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable

(c) When goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration”

3.21 Thus, as per the above extracts, reference to Sugars (HMO) in Heading 2940 and Heading 1702 shall include reference to mixtures of HMOs.

3.22 Food preparations and similar mixtures are also covered under Heading 2106. If mixtures and combinations of materials or substances consisting of more than one material or substance, are prima facie classifiable under two or more headings, they ought to be classified according to the principles of Rule 3.

3.23 The product is classifiable under Heading 2940 or alternatively, under Heading 1702 by virtue of Rule 3(a) of GRI as it is the more specific heading: As per Rule 3(a), the most specific description is to be selected. Heading 2940 covers “Sugars, chemically pure, other than sucrose, lactose, maltose, glucose and fructose; sugar ethers, sugar acetals and sugar esters, and their salts, other than products of heading 29.37, 29.38 or 29.39”. Heading 1702 covers “Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavouring or colouring matter; artificial honey, whether or not mixed with natural honey; caramel”. Whereas, Heading 2106 covers food preparations not elsewhere specified or included”.

3.24 Heading 2940 clearly covers Sugars such as HMOS i.e. oligosaccharides, and Heading 1702 covers other sugars which do not fall under Heading 2940. The lactose and carbohydrates in the product are leftover impurities / unconverted starting material only. Therefore, for the product containing 90% HMOS, i.e. sugar, Heading 2940 or alternatively Heading 1702, are the more specific headings. As submitted in the foregoing paragraphs, Heading 2106 is a residuary entry which covers food preparations only if not specified elsewhere. Thus, it is clear that Heading 2940 or Heading 1702 are the more specific headings.

3.25 lf, arguendo, the classification is not possible even by virtue of Rule 3(a), then reference shall be made to Rule 3(b).

3.26 The product is classifiable under Heading 2940 or alternatively, under Heading 1702 by virtue Of Rule 3(b) of GRI as the essential character of the product is imparted by the HMO: In accordance with Rule 3(b) of GRI, the mixtures, composite goods consisting of different materials if cannot be classified by reference to Rule 3(a), then they shall be classified as if they consisted of the material or component which gives them their. essential character.

3.27 The HMO content in the product accounts for 90% of the total composition of the product. Out of the same, more than 50% of comprises of 2′-Fucosyllactose HMO. Further, as stated above, carbohydrates and lactose are merely leftover unconverted starting material. HMOs help in building immunity and balancing gut health in infants which is the intended use of the product. And the product is used for manufacturing “Aptamer Gold Stage 1 Infant Formula with Prebiotic” which is a baby formula for such integral function performed by the HMOs in it. Thus, it is evident that the essential character in the 5 HMO Mix is imparted by the HMOs only, and accordingly, the product i.e. a mixture of 5 HMOs is to be classified as per the correct classification for the HMO.

3.28 As demonstrated above by placing reliance on HSN Explanatory Notes to Heading 2940 and BTI Rulings, it is clear that an HMO being an oligosaccharide is classifiable under Heading 2940. Accordingly, a mixture of 5 HMOS, wherein the essential character is imparted by the HMO, shall be classifiable under Heading 2940 only. If not under Heading 2940, then alternatively, the product is classifiable under Heading 1702.

3.29 Thus, for the reasons enumerated above, the product is correctly classifiable under Heading 2940. In support of the same, the Supplier is also classifying the 5 HMO mix under Heading 2940. And alternatively, the product is classifiable under Heading 1702.

4. Port of Import and reply from Jurisdictional Commissionerate

4.1 The. applicant in their CAAR-^.1 indicated that they intend to import the subject goods i.e. 5HMO Mix at the jurisdiction of office of Commissioner of Customs (Imports), Air Cargo Complex, Sahar, Mumbai - 400099 and office of Commissioner of Customs, NS-III, JNCH,Tal-Uran, Dist: Raigad, Nhava Sheva, Maharashtra - 400 707. In terms of Provisions of the the Section 28-I(1) of the Customs Act, 1962 read with the Sub-regulation No. (7) of the Regulation No.8 of the Customs Authority for Advance Rulings Regulations, 2021, the application was forwarded to the office of Commissioner of Customs (Imports), Air Cargo Complex, Sahar, Mumbai  - 400099 and office of Commissioner of Customs, NS-III, JNCH, Tal-Uran, Dist: Raigad, Nhava Sheva, Maharashtra - 400 707 on 12.09.2024 as indicated by the application at Sr. No. 13 of their CAAR-1 Forms calling upon them to furnish the relevant records with comments, if any, in respect of the said application.

    Office of commissioner of Customs, NS-III, JNCH, Tal-Uran, Dist: Raigad, Nhava Sheva Maharashtra - 400 707 vide its email dated 24.10.2024 informed that it does not pertain to them and it shouId be forwarded to NS-I Commissionerate. Therefore, the application was forwarded to the office of Commissioner of Customs, NS-I, JNCH, Tal-Uran, Dist: Raigad, Nhava Sheva Maharashtra - 400 707 on 28.10.2024 calling upon them to furnish the relevant records with comments, if any, in respect of the said application. Further reminders were also issued on 04.12.2024 and 24.12.2024, however, no reply, till date, has been received in this Office.

    The office of Commissioner of Customs (Imports), Air Cargo Complex, Sahar, Mumbai - 400099 vide its letter dated 31.12.2024 replied that Human Milk Oligosaccharides merits classification under heading 2940 in terms of GRI Rule 3(a) as it provides more specific description of HMO Mix than any other heading.

5. Records of Personal Hearing

5.1 A persona hearing was held on 13.11.2024 at 3:00 PM in the office of the CAAR, Mumbai, Shri T.Viswanathan, Shri Srinidhi Ganeshan and Ms. Anaya Bhide all Advocates appeared for the hearing on behalf of the applicant and reiterated the contention of the applicant filed with the application. They contended that the subject import goods i.e. 5-HMO Mix (Human Milk Oligosaccharides) to be used in preparation of ‘Infant Milk Formula’ merit classification under CTI 29400000. They submitted that each component ingredient in pure form remain under the same CTH when mixed / processed together in form of HMO. They submitted a compilation index in support of their claim relying upon HSN explanatory notes (Page - 30) case laws in three BTI rulings dated 07.02.2022, 10.02.2022 and 04.02.2022.Alternatively, they also submitted that if the subject import goods do not merit consideration under CTH 2940,they may fall under CTH 1702. They also requested to provide an additional submission regarding the composition of the formula / source in a week time which was permitted.

    Nobody a appeared from the department for the PH.

6. Additional Submissions by the Applicant

6.1 The applicant vide its email dated 13.11.2024 further submitted a synopsis capturing in brief the submissions made during the hearing on 13.11.2024. The submission also answers the following queries posed during the hearing:

a. Whether HMOs can be obtained from a process other than biosynthesis, and whether even if they are chemically synthesized, the terminology for HMOs is still “human milk oligosaccharides”.

b. Whether HMOs are commonly used in infant formulas

6.2 The applicant further submitted that the 5-HMO Mix (hereinafter referred to as the `product’) is a mixture of 5 different types of human milk oligosaccharides (‘HMOs’). The HMOs used in the product have been chemically synthesised.

6.3 About HMOs & the product in question: Human milk oligosaccharides are a structurally and biologically diverse group of complex indigestible sugars, naturally present in human milk. `Oligosaccharides’ are a type of chain made up of 3 to 10 monosaccharides, which are simple sugars and are the most basic units of carbohydrates. All HMOs are based on a lactose molecule and made of five basic monosaccharides: glucose (Glc), galactose (Gal), N-ethylglucosamine (GIcNAc), fucose (Fue) and sialic acid (SA.). The product in question is made up of 5 chemically synthesized HMOs. Below is the composition of the product:

6.4 The HMOs in the 5 HMO Mix (2′-Fucosyllactose, 3-Fucosyllactose; 3′-Sialyllactose, 6′Sialyllactose. and Lacto-N-tetraose) are individually synthesized from a carbon source (e.g. sucrose, glucose or glycerol) and lactose as precursor using individual production strains and are secreted into the fermentation medium. The fermentation medium is separated from the microbial biomass using filtration. The HMOs are further purified from the resulting solution using ion exchange resins and additional purification steps. The final HMO concentrates are eventually spray-dried and blended to produce a solid white 5 HMO Mix powder. A flow scheme showing the production process is given below:

6.5. Each HMO is a chemically defined product. The statement provided by the Supplier regarding the chemical structures of each of the HMOs is depicted below:

6.6. The Total HMO content constitutes more than 90% of the product, with majority of it being 2’Fucosyll ctose. The Lactose and Carbohydrates are leftover Unconverted starting material in the product. The technical specifications sheet of the product is enclosed with the Application.

6.7 Chemically synthesized HMOs too are referred to as “Human Milk Oligosaccharide “. These are permitted for use in infant nutrition products: While HMOs are naturally biosynthesized by humans via breast milk, the large-scale use of it in research or in infant formula became difficult due to limited access to human donor milk. Thus, development of new synthetic methods began to emerge to solve this scale issue. Thus, artificial Synthes's methods such as chemoenzymatic techniques and microbial metabolic engineering processes were developed, resulting in ability to produce certain HMO structures at a large scale.

    The 5 HMO mix is artificially synthesized using the Microbial Fermentation Process. This process i.e. Microbial metabolic engineering, as well other processes such as chemoenzymatic synthesis, etc. and their prevalent use for commercially producing HMOs is elaborated upon in the publication titled ‘From lab bench to formulated ingredient: Characterization production, and commercialization of human milk oligosaccharides’ by Clodagh Walsh. The publication elaborates on artificial synthesis of HMOs for use as a formulated ingredient in various industries, and from the perusal of publication, it is clear that even chemically synthesized HMOs are still referred to as ‘human milk oligosaccharides’.

    HMOs at beneficial for protection against pathogenic bacteria or viruses, prevention against bowel inflammation, and improve the immune system response during the development of infants. And it is due to such benefits that HMOs are used in the manufacturing of infant formula. Synthetically produced 2′-Fucosyllactose (2’FL) and Lacto-N-neotetraose (LNnT) are the common HMOs that have been added to infant formula. The use of these HMOs in infant formula is approved by the European Union and the United States.

    Even in the product concerned, the individual HMO are listed as novel foods and are approved under the European Union’s Commission Implementing Regulation (EU) 2017/2470 tar use in infant food. Further, its use in infant food is also concluded as ‘Generally Recognized as Safe (GRAS) in the U.S.

    From the above it is evident that HMOs can be chemically synthesized and its use in infant nutrition products is permitted.

6.8 The product is classifiable under Heading 2940: It is submitted that the product in question is a mixture of 5 different HMOs. Each human milk oligosaccharide is a type of oligosaccharide. Oligosaccharides are “a type of carbohydrate chain made up of three to 10 simple sugars, which are also known as monosaccharides”. Each Oligosaccharide present in the 5 HMO mix is in turn made of 5 monosaccharides [glucose (Gle), galactose (Gal), N-ethyl glucosamine (GlcNAc), fucose (Fuc) and sialic acid (SA.)] . Thus, each HMO is clearly an oligosaccharide and thus is specifically covered under Heading 2940 as visible from the INN Explanatory Notes. to Heading 2940. Thus, it is submitted that a mixture of 5 oligosaccharides should also be covered under Heading 2940.

    Further, there are various. BTI Rulings in support of the classification of HMO under Heading 2940. Further, the HMOs are chemically synthesized will not affect their classification, as the classification under Heading 2940 is determined based on the chemical formulas of the product concerned and not based on its source. Within Heading 2940 itself numerous products mentioned in HSN ‘Explanatory -Notes are chemically synthesised’ (e.g. galactose - obtained by hydrolyzing lactose). Accordingly, the product is classifiable under Heading 2940 only.

6.9 Alternatively, the product is classifiable under Heading 1702: It is submitted that if the product is not classifiable under Heading 2940, then it is classified under Heading 1702, as .the heading covers sugars other than those of Heading 1701 and Heading 2940. Further, the Heading covers. both commercially produced sugar as well as chemically pure sugars (e.g. commercial lactose and chemically pure lactose, commercial glucose and chemically pure glucose, commercial maltose and chemically pure maltose, etc.)

6.10 In any case, the product is not classifiable under Heading 2106: ;It is submitted that the product is not classifiable under Heading 2106 as it is not in the nature of a food preparation. Food preparation as per the HSN Explanatory Notes is chemical added with any foodstuff like flour, milk etc. The product in question is purely chemical and is not mixed with any foodstuff in the nature of flour, Milk etc.

    Further, the product is a raw material for manufacturing infant formula and cannot be consumed directly. ,The product cannot be consumed even after processing it using simple processes such as cooking, -dissolving etc. as envisaged in the HSN Explanatory Notes to Heading 2106.

    Further the product is not in the nature of food supplements covered under Heading 2106, as the products covered therein are products made using various vegetable/fruit extracts and marketed in retail with the declaration that the same maintain the general well-being of the consumer. The product in question is not in the nature of such a preparation. It is a raw material used in industry to make infant products. Thus, it is not in nature of ''food supplements” covered under Heading 2106. Accordingly, the product cannot be classifiable under Heading 2106.

6.11 In light of the above submissions made, it is submitted that that the product is correctly classifiable under Heading 2940, or alternatively under classifiable Heading 1702.

7. Discussions and Findings

7.1 I have considered all the materials placed before me in respect of the classification of subject goods. I have gone through the submissions made by the applicant during the personal hearing as well a. the response received from the Jurisdictional Customs Commissionerate. Therefore, I proceed to pronounce a ruling on the basis of information available on record as well as existing legal framework.

7.2 The applicant has sought advance ruling in respect of the following questions:

a) Question: Whether the product in question in the present application is classifiable under Tariff Item 2940 0000?

b) Question: If the answer to the above question is in the negative, then whether the product in question in the present application is classifiable under Tariff Item 1702 9090?

c) Question: If the answer to the above questions is in the negative, what would be the correct classification of the products mentioned above under the Customs Tariff of India?

7.3 At the outset, I find that the issue raised at the Sr. No. 08 in the CAAR-1 form is squarely covered under Section 28H(2) of the Customs Act, 1962 being a matter related to the classification of goods.

7.4 The applicant submitted that the subject goods i.e. `5-HMO Mix’ is a mixture of 5 different types of human milk oligosaccharides (`HMOs’) which would be used_. by the applicant for manufacturing “Aptamil Gold Stage I infant Formula with Prebiotic” which is a baby formula. The product is a mixture of various HMOs and consists of 2′ Fucosyllactose (2′ FL), 3′ Fucosyllactose (3′ FL), Lacto-N-Tetraose (LNT), 3′ Sialyllactose (3′ SL), Sialyllactose (6′ L) and leftover unconverted starting materials.

7.5 Before deciding on the issue, let me deliberate on the legal framework prescribed in Customs Tariff Act, 1975, Chapter/Section notes along with HSN explanatory notes. Classification of goods in the Harmonized System of Nomenclature (HSN) is governed by the General Rules for the interpretations. Rule 1 of the General Rules for the Interpretation of the Import Tariff to the Customs Tariff Act, 1975 stipulate that for legal purposes, the classification of the import item shall be determined according to the terms of the, headings and any relative Section or Chapter Notes.

7.6 In this case, there are 3 competing headings i.e. CTH 2940, CTH 1702 and CTH 2106 where this product i.e. `5-HMO Mix’ can be classified. Further, there are two more heading i.e. CTH 3824 a d CTH 1901, which are also required to be examined to arrive at the correct classification of the subject goods i.e. `5-HMO Mix’. Let me discuss each and every competing heading:

7.7 Relevant portion of CTH 2940 is reproduced below for ease of reference:

7.8 Based on the literature provided, I observed that the 5-HMO mix is a mixture consisting of 5 Oligosaccharides i.e. 2′ Fucosyllactose (2′ FL), 3′ Fucosyllactose (3′ FL), Lacto-N-Tetraose (LNT), 3′ Sialyllactose (3′ SL), 6′ Sialyllactose (6′ SL) and leftover unconverted starting materials.

7.9 Before deciding on the classification of `5-HMO Mix’, it would be appropriate to take each and every oligosaccharide present in the mix to determine where these would be classified if imported separately.

7.9.1 2′ Fucosyllactose (2′ FL) have 52% DW of total weight in the 5-HMO Mix. I find that 2′-FL is an oligosaccharide, a disaccharide that consists of lactose (a disaccharide of glucose and galactose) and fucose (a monosaccharide) linked through a glycosidic bond. It is a naturally occurring, non-digestible sugar found in human breast milk and has beneficial prebiotic properties. 2′-Fucosyllactose is chemically pure in its isolated form, meaning it can be precisely synthesized or extracted and purified from biological sources, making it distinct from simple sugars like glucose or lactose. Therefore, 2′-Fucosyllactose satisfies the criterion mentioned in the Heading description of CTH 2940 as it is a chemically pure sugar other than common sugars like Sucrose, Lactose, Maltose, Glucose and Fructose.

7.9.2 3′ Fucosyllactose (3′ FL) have 13% DW of total weight in the 5-HMO Mix. I find that 3′FL is a type of fucosylated oligosaccharide composed of lactose (a disaccharide of glucose and galactose) and fucose (a monosaccharide). In 3i-FL, the fucose molecule is linked to the galactose unit of lactose via a glyosidic bond at the 3′ position of the galactose. Like 2′Fucosyllactose, 3′-FL is a chemically pure oligosaccharide that can be isolated and purified. It is a specific combination of sugars in a defined structure, making it chemically pure. Therefore, 3′-Fucosyllactose satisfies the criterion mentioned in the Heading description of CTH 2940 as it is a chemically pure sugar other than common sugars like Sucrose, Lactose, Maltose, Glucose and Fructose.

7.9.3 Lacto-N-Tetraose (LNT) have 26% DW of total weight in the 5-HMO Mix. I find that LNTis a tetra saccharide, a complex oligosaccharide composed of lactose (a disaccharide of glucose and galactose) and additional monosaccharides, typically glucose and galactose, linked by glyosidic bonds. Specifically, it contains a structure with N-acetylglucosamine (GlcNAc) linked to .the galactose unit ‘of lactose. LNT is a defined oligosaccharide with a specific molecular structure and can be isolated in pure form. Like other oligosaccharides, it is typically synthesized or extracted and purified to achieve a chemically pure product. Therefore, Lacio-N-Tetraose satisfies the criterion mentioned in the Heading description of CTH 2940 as it is a chemically pure sugar other than common sugars like Sucrose, Lactose, Maltose, Glucose and Fructose.

7.9.4 3′ Sialyllactose (3′ SL) have 4% DW of total weight in the 5-HMO Mix. I find that 3′-SL is a sialylated oligosaccharide, meaning it is a modified form of lactose (a disaccharide composed of glucose and galactose) with a sialic acid (a type of sugar molecule) attached to the galactose unit at the 3′ position via a glycosidic bond. The sialic acid is often referred to as N-acetylneuraminate. Like other oligosaccharides, 3′-SL is typically isolated and purified, resulting in a’ chemically pure sugar. It has a defined structure and can be synthesized or extracted with ‘a high degree of purity. Therefore, 3’ Sialyllactose satisfies the criterion mentioned in the Heading description of CTH 2940 as it is a chemically pure sugar other than common sugars like Sucrose, Lactose, Maltose, Glucose and Fructose.

7.9.5 .6′ Sialyllactose (6′ SL) have 5% DW of total weight in the 5-HMO Mix. I find that 6′-SI is a sialylated oligosaccharide consisting of lactose (a disaccharide composed of glucose and galactose) with a sialic acid (N-acetylneuraminate) attached to the galactose unit at the 6′ position via a glycosidic bond. The sialic acid modification is important for various biological functions, including modulation of immune responses and gut health. Like other oligosaccharides 6^.-SL is typically synthesized or extracted and can be purified to achieve chemically pure form. It has a specific molecular structure and can be produced in isolated or purified forms for use in nutrition and research. Therefore, 6′ Sialyllactose satisfies the criterion mentioned in the Heading description of CTH 2940 as it is a chemically pure sugar sugars  other than common sugar like Sucrose, Lactose, ‘Maltose, Glucose and Fructose.

7.10 - Further, in the Exhibit B submitted with the application, it is mentioned that the individual HMO powders i.e. 2′ FL, 3′ FL, LNT, 3′ SL and 6′ SL are used in a wet-blending process to generate to the product `5-HMO Mix’. I further find that The wet blending process is a manufacturing technique commonly used to create a homogeneous mixture of ingredients, including oligosaccharides like 2′-Fucosyllactose, 3′-Fucosyllactose, Lacto-N-Tetraose, 6′-Sialyllactose, and 3′-Sialyllactose and it does not chemically alter the oligosaccharides. It ensures a uniform mixture suitable for further processing, such as spray drying or incorporation into products e infant formula.

7.11 From the above, I find that the constituent oligosaccharides of 5-HMO mix individually can be classified under CTH 2940 and the wet-blending process used to mix these 5 constituent Oligosaccharides does not chemically alter them. Now the question before me is whether the mixture of these oligosaccharides containing some miniscule amount of impurity can also be classified under heading 2940 or not.

7.12 I find that the Heading 2940 under the Harmonized System (HSN) refers to “chemically pure sugars,” and the term “chemically pure” generally means that the substance should have a high level of purity, typically without significant impurities. I further find that Chapter note 1(a) of Chapter 29 allows for the presence of a small amount of impurities (such as residual solvents, starting materials, or by-products) and therefore, although the heading mentions Chemically Pure sugars, the presence of small amount of impurities might not disqualify the product from being considered “chemically pure” as long as the primary substance is clearly identifiable and predominant and the impurities are not altering the characteristics of the compound.

7.13 I further find that the mixture i.e. `5-HMO Mix’ predominantly consists of these 5 oligosaccharides (more than 90%) with only trace amount of impurities. the mixture can be classified and under Heading 2940 as Chemically Pure Sugar.

7.14 The Heading 1702 covers common sugars, such as glucose, lactose, fructose, sucrose, and other sugars in solid form, including refined sugars or crude sugars whereas the constituent oligosaccharide present in 5-HMO Mix are synthesized from a carbon source (e.g. Sucrose, Glucose or Glycerol) and Lactose as precursor by production strains. Further, the explanatory notes of Heading 2940 clearly states that the term “Sugars” in the heading 2940 covers Oligosaccharides. Since, Oligosaccharides are specifically mentioned in heading 2940, they cannot be classified under Heading 1702.

    The Hon’ble Supreme Court in a catena of judgment has held that the specific entry should prevail lover general entry. Moreover, in case of Commissioner of Central Excise versus Wockhardt life Sciences Ltd. [2012 (277) E.L.T. 299 (S.c.)], it was held that classification of goods cannot be under residuary entry in presence of specific entry, even if it requires product to be understood in technical sense. It was further held that the Residuary entry can be taken refuge of only in absence of specific entry.

    Further, in the case of Western India Plywoods Ltd. Versus Collector of Customs, Cochin [2005 (188) E.L.T. 365 (S.c.)], it was held that application of residuary entry to be made with extreme caution, being attracted only when no other provision expressly or by necessary implication applies to goods in question.

7.15 I find that the product i.e. `5-HMO Mix’ cannot be classified under the Heading 2106 which covers “Other food preparations, not elsewhere specified” as it is not a food preparation but an intermediary product which would further used in manufacturing of final product.

7.16 I observe that the Heading 1901 covers “malt extract; food preparations of flour, groats, meal,starch or malt extract, not containing cocoa or containing less than 40% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included”. This heading is used for classification of Infant Formulas put up for retails sale, since the subject goods i.e. `5-HMO Mix’ are intermediaries used for manufacturing of’ Infant Formula, hence it cannot be classified under Heading 1901.

7.17 I, further observed that the Heading 3824 covers “prepared binders for foundry moulds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included”. Since there is a specific heading for oligosaccharides, they cannot be classified as misc. chemical products and preparations of the chemical or allied industries not elsewhere specified or included.

8. In light of the above facts, discussions and observations, my views on the questions raised by the applicant are as under:

a) Whether the product in question i.e., 5-HMO Mix in the present application is classifiable under Tariff Item 2940 0000 of the First Schedule to the Customs Tariff Act, 1975?

Ans.: Yes, 5-HMO Mix in the present application is classifiable under Tariff Item 2940 0000 of the First Schedule to the Customs Tariff Act, 1975.

b) If the answer to the above question is in the negative, then whether the product in question in the present application is classifiable under Tariff Item 1702 9090?

Ans.: Not Applicable

c) If the product mentioned above is not classifiable under the Tariff Item as mentioned above, then what would be the correct classification of the above product under the Tariff?

Ans.: Not Applicable

9. I rule accordingly.

(Prabhat K Rameshwaram)           
Customs Authority for Advance Rulings, Mumbai

F. No. CAAR/CUS/APPL/117,118/2024-O/O Commr-CAAR-Mumbai                    09.01.2025

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

1. Nutricia International Pvt. Ltd.
Unit NO 304, 3RD Floor, Building A Piramal Agastya Corporate Park, Lai Bahadur Shastri Rd, Kurla, Mumbai, Maharashtra - 400 070

2. The Commissioner of Customs, NS-I, JNCH, Nhava Sheva, Tal - Uran, Distt - Raigad. Maharashtra - 400 707

3. The Commissioner of Customs (Imports), Air Cargo Complex, Sahar, Andheri (East), Mumbai - 400099.

4. The Customs Authority for Advance Rulings, 5^th Floor, NDMC Building, Yashwant Place, Satya Marg, Chanakyapuri, New Delhi-110021.
Email: cus-advrulings.del@,gov.in

5. The Principal Chief Commissioner of Customs, Mumbai Customs Zone 1, Ballard Estate, Mumbai-400001. E-mail: ccu-cusmuml@nic.in

6. The Commissioner (Legal), CBIC Offices, Legal/CX.8A, Cell, 5^th floor, Hudco Vishala Building, C-Wing, Bhikaji Cama Place, R. K. Puram, New Delhi - 110066.
Email: anishgupta.irs@gov.in, commr.legal-cbec@nic.in

7. The Member (Customs), Central Boards of Indirect Taxes & Customs, North Block,
New Delhi-110001.
Email:mem.cus-cbec@nic.in

8. The Webmaster, Central Boards of Indirect Taxes & Customs.
Email:webmaster.cbec@icegate.gov.in

9. Guard file.

(Vivek Dwivedi)                    
Deputy Commissioner of Customs & Secretary
Customs Authority for Advance Rulings,    
Mumbai