Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise & Customs, New Delhi
Subject: Classification of hydrogenated vegetable oil after chilling and applicability of Money Credit Scheme to Vegetable Oil (Vanaspati)- Clarification – Regarding.
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 15004 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 tine 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 goods 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 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 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 fast or oils of this Chapter, other than edible fast and oils or their fractions of heading 15.16 for example imitation lard, liquid margarine and shortenings (produced from texturised 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 done 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 1540.00 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.