2023 (6) TMI 1258 - AT - Customs

Classification of imported goods - tomato dry flavour - to be classified under CTH 3302 1010 or under Tariff Item 2106 9060? - benefit of exemption of concessional rate of Basic Customs Duty (BCD) of 10% under Customs Notification No. 21/2002, Sl.No.119 - HELD THAT - The appellant s submission is that the subject goods consists of various odoriferous substances and what is imported i.e., the tomato flavour, is of synthetic origin, which makes it classifiable under CTH 3302 1010. The Ld. adjudicating authority has relied on Chapter Note 2 to Chapter 33 of the Customs Tariff Act, 1975, which states that odoriferous substances in Chapter Heading 3302 refers only to substances of Chapter Heading 3301 to odoriferous constituents isolated from those substances or to synthetic aromatics, and also referred to the HSN, which states that the goods which qualify for classification under Chapter Heading 3302 should be mixtures, whether or not combined with a diluent or carrier or containing alcohol, of products of other Chapters (e.g., spices) with one or more odoriferous substances (essential oils, resinoids, extracted oleoresins or synthetic aromatics), provided these substances form the basis of the mixture. The odoriferous substances can be of synthetic origin, which fact is omitted to be noted by the Ld. adjudicating authority. The appellant has been arguing that the tomato flavour is of synthetic origin though it may contain some natural odoriferous substances and it cannot be directly or indirectly used in food preparations. In this regard, the appellant has also put forth that it is not necessary that it should be made of essential oil, resinoid or oleoresin alone to merit classification under Chapter Heading 3302 and that in any case, the product contains garlic oil, which is an oleoresin - A closer study indicates that the item which is imported is of synthetic origin and consists of odoriferous substances, which is an industrial raw material for making food flavours and the same cannot be directly used in any food preparations for human consumption. Chapter Heading 3302 covers both natural and/or synthetic mixtures of odoriferous substances - the item imported is correctly classifiable under CTH 3302 1010 of the Customs Tariff Act, 1975. Appeal allowed.

Summary

Issues Involved:
1. Classification of imported 'tomato dry flavour' under the correct Customs Tariff Heading (CTH).
2. Eligibility for concessional rate of Basic Customs Duty (BCD) under Customs Notification No. 21/2002.

Summary:

Issue 1: Classification of 'Tomato Dry Flavour'

The appellant imported 'tomato dry flavour' and classified it under CTH 3302 1010 to avail a concessional BCD rate of 10% under Customs Notification No. 21/2002. The adjudicating authority reclassified it under Tariff Item 2106 9060, confirming the demand for differential duty with interest under Section 28 and 28AA of the Customs Act, 1962. The appellant contended that the product is not a food preparation but a mixture of odoriferous substances used as raw material in the food industry, classifiable under CTH 3302. They argued that the product is a synthetic mixture, not directly consumable, and relied on the Tribunal's decision in M/s. Britco Foods Company Ltd. v. Commissioner of Central Excise, Pune, which classified similar products under CTH 3302.

Issue 2: Eligibility for Concessional Rate of BCD

The appellant argued that the product is not a foodstuff but an industrial raw material for flavour blending, thus not fitting under CTH 2106, which covers food preparations for direct or indirect human consumption. They highlighted that the product contains synthetic and natural odoriferous substances, qualifying it for classification under CTH 3302. The Revenue maintained the classification under CTH 2106, arguing that the product is a flavour blend for food applications.

Judgment:

The Tribunal examined the Chapter Headings and HSN Notes for 2106 and 3302. It noted that CTH 2106 covers food preparations for direct or indirect human consumption, while CTH 3302 includes mixtures of odoriferous substances used as raw materials in the food industry. The Tribunal found that the imported product is a synthetic mixture of odoriferous substances, not meant for direct consumption, fitting under CTH 3302. It referenced the Tribunal's decision in M/s. Britco Foods Company Ltd., upheld by the Supreme Court, which excluded such preparations from CTH 2106 and classified them under CTH 3302.

Conclusion:

The Tribunal concluded that the imported 'tomato dry flavour' is correctly classifiable under CTH 3302 1010, setting aside the impugned order and allowing the appeal with consequential relief as per the law.