PCT Classification Committee fixes 10pc customs duty on flavouring agent for beverages

KARACHI: The Pakistan Customs Tariff (PCT) Classification Committee has set customs duty at the rate of 10 percent on the import of ‘Kola Van’ a flavouring agent for beverages under PCT heading 3302.1010.
The Committee proposed heading invites 10 percent customs duty, which is 5.0 percent less than 15 percent duty under the heading 1302.1900 as declared by the Goods Declaration (GD) filed by the importer i.e. Pepsi Cola International (Pvt) Ltd in a certain case.
According to details, Pepsi Cola imported Kola Van N/ALC-FB3866 and filed GD through their clearing agent their clearing agent Reliance International (Pvt) Ltd declaring the PCT 1302.1900 for the subject goods for release.
The Model Customs Collectorate (MCC) Appraisement treated the declaration vague and because absence of authentic literature, the MCC referred the samples to Customs House Laboratory.
The Laboratory found the goods to be nonalcoholic preparation consisting of compounding vegetable extracts in association with foaming agent preservative, glycerin etc for making of beverages and suggested PCT 2106.9010.
It may be mentioned here that the declared PCT 1302.1900 invites customs duty of 15 percent while PCT 2106.9010 attracts customs duty of 30 percent.
The importer disagreed with the lab report gave a certification from supplier McCormick & Company Inc classifying the product as US Harmonized Tariff Schedule 1302.19 described as a vegetable extract with less than 1.0 percent sugar.
Subsequently, the Customs House Lab revisited their opinion noting that being in very small quantity of sugar i.e. less than 1.0 percent if considered not enough for nutritional or any other purpose mentioned in HS Code 2106 then the possible HS Code might also attract PCT 1302.
Meanwhile, the representative sample was forwarded to HEJ Laboratories that remarked that the given sample produced foam at room temperature, which may be due to the presence of natural saponins in Kola nuts and vanilla beans extract. The sugar, glycerin and ethanol can act as preservative in given sample.
During the meeting of classification committee, importer’s lawyer, Akhtar Ali Naeem appeared and noted that the instant imported item is a raw material for preparation of concentrate which would subsequently be used in manufacture of beverages.
He emphasized on view of the contents of the product that the subject item is not a single extract rather compound extract.
He said, in light of the information submitted from Pepsi cola and McCormick, the subject kola/vanilla extract be properly classified in heading 1302 as this is consistent with how Pepsi and McCormick classify the material throughout the world.
Keeping in view the contents of the literature provided by the importer, the customs laboratory test report and findings of HEJ Research Laboratory, the classification committee considered 1302.1900, 2106.9010 and 3302.1010 for classification.
However, 1302.1900 and 2106.9010 were excluded from the consideration based on the literature provided by the importer, HEJ Research findings and Explanatory Notes of the respective PCT headings.
The Committee in its decision noted, “as the classification of this product has been considered on the basis of literature forwarded by the importer, Pepsi Cola, the chemical test reports of HEJ Research and Customs House Lab, the relevant ENs to chapters 1302, 2106 and 3302 and the relevant classification opinion by world Customs Organization (WCO), the classification committee is of the firm opinion that the product i.e. Kola Van comprising of natural saponins, being an odoriferous substance and a flavouring agent, along with propylene glycol and other preservatives falls for classification under 3302.1010.”