2013 (12) TMI 118 - AT - Customs

Classification of Xanthan Gum - Classification under Heading No. 39.13 or Heading No. 13.01 - Import of consignment of Xanthan Gum USP 80 Mesh - Held that - even though the product might have natural origin, it has been subjected to various processes and the product no longer retains the characteristics of a natural secretion. Heading 1301 covers Lac, natural gum, resins, resin gum, and oleo resins. The said heading does not cover products which have been processed further by using various processes. The classification of the product has also been examined by the US customs and it has been noted in the classification ruling that Xanthan Gum is obtained by microbial fermentation from the Xanthomonas campestris organism. At the end of the fermentation process, the Xanthium Gum is recovered from precipitation in isopropyl alcohol, then dried and milled. The said ruling further notes that CTH 13.01 covers natural gums, resins, gum resins, oleoresins and balsams. They may be crude, washed, purified, bleached, crushed or powdered, but excludes such items that have been subjected to more complicated processes such as treatment with water under pressure, treatment with mineral acids and treatment with heat. In other words, when the natural gum is further processed, it falls outside the CTH 13.01. Since the product is a natural polymer, the US customs has ruled that it merits classification under CTH 3913.90 - Therefore, the appropriate classification for the product is 3913 which covers natural polym - Therefore, decided against Revenue.

Summary

Issues involved:
Classification of Xanthan Gum under Customs Tariff; Interpretation of Heading No. 13.01 and 39.13; Comparison of Xanthan Gum and Xanthium Gum; Application of natural gum classification; Consideration of US customs classification ruling.

Analysis:

1. Classification of Xanthan Gum under Customs Tariff:
The case revolves around the proper classification of Xanthan Gum imported by M/s. NDC Drug & Chemical P. Ltd. The appellant claimed classification under Heading No. 39.13, while the adjudicating authority classified it under Heading No. 13.01 based on the product's natural origin and characteristics. The Dy. Chief Chemist's report supported this classification under CTH 13.01 as a natural gum, leading to the appeal before the Commissioner (Appeals).

2. Interpretation of Heading No. 13.01 and 39.13:
The lower appellate authority observed that the imported Xanthan Gum, produced through bacterial fermentation of carbohydrates, should not be classified as Xanthium Gum under Heading 1301 90 34. The US customs' classification ruling under Heading No. 3913 90 as a natural polymer was considered, leading to the setting aside of the lower authority's order in favor of the respondent.

3. Comparison of Xanthan Gum and Xanthium Gum:
The Tribunal analyzed the differences between Xanthan Gum and Xanthium Gum, emphasizing that the processed nature of Xanthan Gum, obtained through fermentation and various manufacturing processes, removes it from the scope of natural gum classification under Heading 1301. The product literature highlighted the manufacturing process involving fermentation, purification, and milling, supporting the classification under CTH 3913 as a natural polymer.

4. Application of natural gum classification:
The US customs' classification ruling noted that when natural gums undergo further processing beyond fermentation, they fall outside the scope of Chapter 13. The Tribunal concurred that Xanthan Gum's processing steps placed it under Heading 3913 for natural polymers, excluding it from the classification as a natural gum under Chapter 13.

5. Consideration of US customs classification ruling:
The Tribunal referenced the US customs' ruling, which differentiated Xanthan Gum obtained through microbial fermentation from Xanthomonas campestris and highlighted the product's recovery, drying, and milling processes. This ruling supported the classification of Xanthan Gum as a natural polymer under CTH 3913.90, aligning with the Tribunal's decision to dismiss the revenue's appeal.

In conclusion, the Tribunal upheld the lower appellate authority's decision, emphasizing the processed nature of Xanthan Gum and its classification as a natural polymer under Heading No. 39.13 based on the manufacturing processes and US customs' classification ruling.