PER : P. A. AUGUSTIAN

The issue in the present appeal is regarding classification of imported 'Chocolate flavour'.

2. The brief facts are the Appellant is engaged in manufacture and trading of flavours for supply to food industry. The Appellant had imported 'Chocolate flavour' under Bill of Entry dated 02.06.2019 classifying the same under Customs Tariff Heading (CTH) 3302 10 10 of the Customs Tariff Act, 1975 and out of charge was issued on 03.06.2019. Thereafter based on Audit observation, show cause notice was issued on 01.06.2021 proposing to reclassify the goods under Customs Tariff Heading (CTH) 1806 9090 and also demanded differential duty with interest and penalty. Thereafter a corrigendum is issued on 09.08.2021 proposing amendment of differential duty under Section 28(4) of the Customs Act, 1962. Adjudication authority confirmed the demand along with interest and imposed penalty under order-in-original dated 28.10.2021 and when an appeal was filed before the Commissioner (Appeals), it was dismissed vide impugned order dated 05.01.2023. Aggrieved by said order, present appeal is filed.

3. When the appeal came up for hearing, the Learned Counsel for the Appellant submits that the classification of goods under Customs Tariff Heading (CTH) 1806 9090 as per impugned order is prima facie unsustainable, since the Adjudication /Appellate authority has not considered the submissions made by the Appellant while replying to the show cause notice. In this regard, Learned Counsel submits that the description of the goods for Customs Tariff Heading (CTH) 33021016 as per Customs Tariff Act, 1975 is as under:-

MIXTURES OF ODORIFEROUS SUBSTANCES AND MIXTURES (INCLUDING ALCOHOLIC SOLUTIONS) WITH A BASIS OF ONE OR MORE OF THESE SUBSTANCES. OF A KIND USED AS RAW MATERIALS IN INDUSTRY: OTHER PREPARATIONS BASED ON ODORIFEROUS SUBSTANCES, OF A KIND USED FOR THE MANUFACTURE OF BEVERAGES: Of a kind used in the food or drink industries: Synthetic flavouring essences

4. Learned Counsel also draws our attention to Chapter Notes given under Chapter 33 as below:-

Essential oils and resinoids, perfumery, cosmetic or toilet preparations

NOTES: 1. This Chapter does not cover; (a) natural oleoresins or vegetable extracts of heading 1301 or 1302: (b) soup or other products of heading 3401; or (c) gum, wood or sulphate turpentine or other products of Trading 3805. 2. The expression "odoriferous substances" in heading 3302 refers only to the substances of heading 3301, to odoriferous constituents isolated from those substances or to synthetic aromatic.

5. Learned Counsel for the Appellant draws our attention to reply to show cause notice and submits that appellant has obtained 'Central Licence' for import and export of Natural Flavours and Natural Flavouring substances from Food Safety and Standards Authority of India (FSSAI), Government of India. The Central Licence No. 10014043001101 was valid upto 31.01.2026 and Central Licence No. 10015043001177 valid upto 23.04.2025 has been issued as "Exporters-Manufacturer". The said Flavours are categorized in the Licence issued under the FSS Act, 2006 under the Product Category 99, substances added to food, Flavours & Flavouring substances as per the Food Safety and Standards Authority of India (FSSAI). Learned Counsel also submits that the Food Categorization System (FCS) has been created in compliance with the guiding principles of the FSSA, 2006 and in keeping with India's commitment to the World Trade Organisation (WTO). The Indian food category system has therefore been harmonized with the Food Categorisation System adopted in Codex General Standard for Food Additives (GSFA). Learned Counsel also draws our attention to the General Standard for Food Addictive (CODEX-STAN) 19-1995 which defines Food Addictive and submits that the Flavours imported /exported by the appellant as per the Central Licence issued by FSSAI, it is a substance added to food which is 'not for direct consumption as food'. The Flavours i