The Customs Classification Committee of the Federal Board of Revenue (FBR) has ruled in favor of a multinational beverage company regarding the import of “Kola Vanilla Extract,” a flavoring agent/preservative used in beverage manufacturing.
The Committee determined that “Kola Vanilla Extract” is correctly classified under Pakistan Customs Tariff (PCT) Heading 2106.9010, based on its characteristics and use in imported goods. This ruling has been followed by the issuance of a new valuation ruling.
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The issue arose when the Collectorate of Customs (Appraisement) Islamabad forwarded a request for the correct classification of “Kola Van” imported by M/s. Pepsi Cola International, seeking clearance under PCT heading 1302.1900. However, during an audit for the 2013-14 year at the Islamabad dryport, the Directorate General of Audit (Customs & Petroleum) raised concerns, stating that flavors and concentrates for aerated beverages should be classified under PCT heading 3302.1010, with a 10% customs duty and 50% federal excise duty. They also pointed out that Chapter 13 does not cover substances like essential oils or odoriferous substances used in beverages.
“Kola Van,” which consists of natural saponins, sugar, glycerin, and ethanol, was deemed to be an odoriferous substance and flavoring agent, fitting the classification under PCT heading 3302.1010. It was noted that M/s. Pepsi Cola had previously cleared “Kola Van” under this heading in 2016 and 2017.
The Collectorate of Customs Islamabad referred the matter to the Adjudication Collectorate, which ruled in favor of the department in May 2017. The importer then appealed to the Appellate Tribunal, which directed that the case be referred to the Classification Center in Karachi for a definitive classification.
After careful consideration, the Classification Committee concluded that “Kola Vanilla Extract,” consisting of kola and vanilla extracts, propylene glycol, glycerin, sugar, and caramel, is not a raw extract as defined under Chapter 13. The product’s classification is determined by its use as a concentrate for aerated beverages, which gives it its essential character, in line with relevant tariff rules.
Based on this analysis, the Committee confirmed that “Kola Vanilla Extract” should be classified under PCT Heading 2106.9010.
