Circular No. 183/17/96-CX dated 8/3/96
Subject: Classification of hydrogenated vegetable oil after chilling and applicability of Money Credit Scheme to Vegetable Oil (Vanaspati) - Clarification
I am directed to say that doubts have been expressed as to whether chilling of
hydrogenated vegetable oil (vanaspati) amounts to "further preparations", as it
results in texturization, thus taking it outside the scope of heading 1504 and making
it ineligible for the benefit of money credit as per Notification No. 45/89-CE (NT).
2. It is reported that texturization is basically "modification of texture or
crystalline structure. Vanaspati, after being packed is subjected to refrigeration to
develop the desired consistency and texture. The tins and containers are stacked in a
cold room with ample space between them for free circulation of refrigerated air. The
rate of cooling is controlled to get good grain size. Refrigeration is also carried
out in some factories in continuous cooling machines like the Votator or chilling
roles. But the product chilled in the manner lacks the characteristic grained
structure of vanaspati. Besides, this there are various other processes which achieve
texturization.
3. The matter has been carefully examined by the Board in consultation with the Chief
Chemist, CRCL, New Delhi who has opined that texturization of hydrogenated vegetable
oil can be achieved by various processes and texturization does not alter the chemical
composition of the product. He has. concluded that Hydrogenated vegetable oils fall
under heading 1504 and as the process of simple controlled cooling does not alter the
chemical composition of vegetable oil the product may not be considered as "further
prepared" and thus the product may not be covered within the scope of heading 15.08
of CETA.
4. The process of texturisation only changes the physical form of the vegetable
product into a crystalline product. In other words, the process of texturisation is
done to increase the appeal of the vegetable product to the users. It is true that as
per the explanatory notes under heading 15.16 and 15.17, it amounts to further
preparation. But in the case of HSN, these headings cover not only vegetable oils but
even animal fats and oils. Further, the explanatory notes under heading 15.17 which is
similar to 1508.90 state the principal products of this heading are "margarine" and
other edible mixtures or preparations of animal or vegetable fats or oils or of
fractions of different fats or oils of this Chapter, other than edible fats and oils
or their fractions of heading 15.16 for example imitation lard, liquid margarine and
shortenings (produced from textures oils or fats).
Therefore, it would seem that the products of the heading 1508.90 (1517.00) are
completely different from edible fats or oils of heading 1504 (HSN 15.16). The
hydrogenated vegetable oil, even after chilling, which may lead to formation of
crystalline structure cannot in any way be compared to products like imitation lard,
margarine and shortenings. Thus it would be more appropriately classified under
heading 15.04 (HSN heading 15.16) rather than heading 1508.90 (15.17).
5. In any case, it is seen that the credit under notification 45/89-CE (NT) is
permitted in respect of quantity of oil which is subjected to hydrogenation for
manufacture of vanaspati and therefore emphasis appears to be on use of minor oils for
hydrogenation as the condition for availing of the money credit. Any other process
undertaken thereafter therefore does not dis-entitle the availability of money credit.
It is also observed that the product before chilling should fall under sub-heading No.
1504.00, and since minor oils have been used in the manufacture of a product falling
under sub-heading No. 1504.00, even on technical considerations the benefit of money
credit cannot be disallowed.
6. In view of the above it is clarified that hydrogenated vegetable oil which has
been chilled after hydrogenation would continue to fall under sub-heading 1504.00 and
in any case, the benefit of money credit under notification 45/89-CE (NT) will continue
to be available.
7. All pending disputes/assessments on the issue maybe settled in the light of these
guidelines.
Sd/-
(Rajiv Bhatia)
Under Secretary to the Govt. of India
F.No. 91/1/94-CX-3
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