DHA Algal Oil is Classifiable under Heading 1515, 1516, 1516 or 1518
and not Vegetable saps and Extracts in 1302 or 2106 as Food – Board Clarifies
·
DHA Algal Oil falls in the
category of microbial fats and oils
·
Being a rich source of DHA,
it is reportedly used in health foods in microscopic quantities for
fortification of the foods which is essential, especially for pregnant,
lactating women and new horns. DHA Algal oil is micro encapsulated and made
available in powdered form for increased stability and ease of transportation.
·
Introduction of HS 2022, the
record of discussions in the WCO HS Committee sessions on classification of
microbial oils mention aspect of similarity to vegetable oils and application
of rule 4 of General Rules for Interpretation (GIR) of Harmonised
System.
·
The Board considers it
necessary for the purpose of uniformity in classification, to clarify that
depending on the characteristics or properties of the product when presented
for assessment, extent of its chemical modification, the edible or the inedible
nature of the mixture or preparation of the product, the product DHA Algal oil
is classifiable under the appropriate sub-heading below either of the following
headings 1515, 1516, 1517 or 1518, by application of General Rules for
Interpretation (GIR) of Harmonised System.
[CBIC
Instruction No. 18/2023-Customs dated 25.05.2023]
Subject: Clarification on
the classification of product DHA Algal oil
References
have been received in the Board highlighting the need to bring uniformity in
classification of the imported product referred as Algal Oil or Algal Oil
powder (oil encapsulated in powder) with varying DHA (Docosa
Hexaenoic Acid) concentration, also described as DHA
Algal Oil which is reported to be extracted from marine algae. The constituents
in the product other than DHA, are impurities i.e.
other fatty acids, free fatty acids, trans fatty acids, moisture, volatiles and
metallic minerals; and ingredients such as sunflower lecithin, tocopherols,
rosemary extract etc for the purpose of stabilization
of the product. Being a rich source of DHA, it is reportedly used in health
foods in microscopic quantities for fortification of the foods which is
essential, especially for pregnant, lactating women and new horns. DHA Algal
oil is micro encapsulated and made available in powdered form for increased
stability and ease of transportation.
2.
The issue was earlier raised in a Chief Commissioners of Customs Conference,
held on 17th and 18th December, 2018 during which the different headings that
were deliberated for purposes of classification were 1302, chapter 15
(1515/1516/1517/1518), 2106 and 2916.
3.
Presently, the matter has been examined afresh on account of representations
highlighting that non-uniformity persists, and in this regard, it is observed
that -
(a) to give effect to India's commitment to
implement the World Customs Organization (WCO) Harmonised
System of Nomenclature (HS) 2022 effective from 01.01.2022, amendments
effective from 01.01.2022 were made to the First Schedule to the Customs Tariff
Act, 1975 by the Finance Act, 2021 whereby in Section III, Chapter 15 and in
the headings 1515, 1516, 1517 and 1518, "microbial fats and oils"
were specifically mentioned. It makes for such product to be classified,
depending upon the extent of processing/chemical modification, the edible or
the inedible nature of the mixture or preparation of the product, in heading
1515, 1516, 1517 or 1518.
(b) further, the Explanatory Notes with HS 2022
introduced to heading 1515 refer:
“…..
Microbial
fats and oils, also known as single cell oils (SCOs) are obtained by extracting
lipids from oleaginous microorganisms such as fungi (including yeats), bacteria and microalgae. These lipids contain a
high percentage of triacylglycerols (TAGs), mainly of polyunsaturated fatty
acids such as arachidonic acid and linoleic acid, which are liquid at room
temperature.
…..
…
For
example.
(a)
Arachidonic acid oil (ARA), obtainedfrom the
fungus...
(b)Schizochytrium oil, obtained from microalgae Schizochytrium sp, which may be
used as an ingredient in food ........".
(c) these Explanatory Notes for Chapter 15 also
suggest for such product to be classified, depending upon the extent of
processing, in heading 1515, 1516, 1517 or 1518.
(d) prior to introduction of HS 2022, the record of
discussions in the WCO HS Committee sessions on classification of microbial
oils mention aspect of similarity to vegetable oils and application of rule 4
of General Rules for Interpretation (GIR) of Harmonised
System. The WCO tables correlating entries between HS 2022 and the HS 2017 also
indicate the previous product classification, depending upon the extent of
processing made on the product, in heading 1515, 1516, 1517 or 1518.
4. Additionally, it is
observed that-
(a) vegetable fats and oils are more specifically
covered under chapter 15 than as vegetable saps and extracts under heading
1302.
(b) DHA Algal oil, is only one of the several
components that make up a food supplement and is not a food preparation in
itself; it is not put up in packaging with indications as specified in the
Explanatory Notes to chapter 21; and the heading 2106 covers food preparations
not elsewhere specified or included.
(c) the product is not DHA itself, but an oil
containing DHA and thus not a distinct chemical under the category of poly
unsaturated fatty acids.
5. Accordingly, DHA Algal
Oil falls in the category of microbial fats and oils.
6.
Earlier, an issue had also arisen regarding DHA Algal Oil in oil form and in
powdered form (oil micro encapsulated in powder). Even upon micro encapsulation
of DHA Algal Oil for increased stability and ease of transportation, its
essential character is reported to be the same and the latter is not rendered a
food preparation as observed in para 4(b) above. It is clarified that DHA Algal
Oil in oil form as well as in powder form (oil micro encapsulated in powder)
are DHA Algal Oil.
7.
In light of the foregoing, the Board considers it necessary for the purpose of
uniformity in classification, to clarify that depending on the characteristics
or properties of the product when presented for assessment, extent of its
chemical modification, the edible or the inedible nature of the mixture or
preparation of the product, the product DHA Algal oil is classifiable under the
appropriate sub-heading below either of the following headings 1515, 1516, 1517
or 1518, by application of General Rules for Interpretation (GIR) of Harmonised System.
F.No.
528/56/2017-STO(TU)