Tag: #Unibourne Food Ingredients

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 10.11.2026

CESTAT Mumbai Clarifies Customs Classification of Brown Rice Protein Powder

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai has ruled that Brown Rice Protein Powder is classifiable as an “other protein substance” under Customs Tariff Item (CTI) 3504 0099, not as a protein concentrate under CTI 2106 1000. The decision overturned a differential-duty demand of ₹85.28 lakh, equivalent penalty, and ₹10 lakh redemption fine imposed on Unibourne Food Ingredients.

Case at a glance

Unibourne Food Ingredients imported Brown Rice Protein Powder between September 2022 and June 2024. It declared the goods under CTI 3504 0099 and paid basic customs duty at 20%.

Customs authorities later contended that the product should instead fall under CTI 2106 1000, covering “protein concentrates and textured protein substances,” which attracted 40% basic customs duty. On that basis, the department demanded ₹85,28,035 in differential duty, along with interest, an equivalent penalty under Section 114A of the Customs Act, confiscation under Section 111(m), and a ₹10 lakh redemption fine.

CESTAT set aside the entire order and allowed the importer’s appeal with consequential relief under law.

The central dispute: Which tariff heading applies?

The competing tariff entries had materially different descriptions and duty consequences:

• CTI 3504 0099: “Other protein substances and their derivatives” — duty rate of 20%.
• CTI 2106 1000: “Protein concentrates and textured protein substances” — duty rate of 40%.

The imported product was Brown Rice Protein Powder with approximately 80% protein content. The Tribunal found that its composition and physical form were decisive: it was a cereal-protein powder, rather than a textured protein preparation.

Why CESTAT preferred CTI 3504

1. Cereal proteins are specifically covered under Heading 3504

The Tribunal relied on the Harmonized System of Nomenclature (HSN) explanatory notes for Heading 3504. Those notes expressly include cereal proteins, particularly glutelins and prolamins, as “other protein substances.”

Unibourne submitted a technical clarification from IIT Kharagpur stating that glutelins and prolamins are the principal protein classes in Brown Rice Protein Powder. IIT Kharagpur also characterized the product as an “other protein substance.”

The Tribunal held that this expert material directly supported classification under Heading 3504.

2. Customs did not technically rebut the expert evidence

The adjudicating authority had discounted the IIT Kharagpur clarification as general in nature. CESTAT found that approach unsustainable because the department had neither conducted further testing nor produced a contrary technical opinion.

The ruling reinforces an important evidentiary principle: where an importer relies on a relevant technical expert opinion, customs authorities cannot reject it on their own technical assumptions without a reasoned, evidence-based rebuttal or counter-expert material.

3. Protein powder is not a “textured” protein substance

Heading 2106 covers, among other things, textured protein substances. The Tribunal noted that texture generally refers to products made into forms such as chunks, pellets, nuggets, granules, slices, strips, or dry flakes.

Brown Rice Protein Powder was imported as a powder, not in a textured form. Accordingly, the Tribunal held that the department’s reliance on the reference to “other protein substances, textured” in the Heading 2106 explanatory note was misplaced.

4. The 90% protein-content reference did not exclude classification under Heading 3504

Customs had argued that the product could not fall under Heading 3504 because its protein content was approximately 80%, rather than 90% or more.

CESTAT rejected this argument for two reasons:

• The reference to protein content “generally not less than 90%” applies to protein isolates obtained through extraction from vegetable substances under a separate explanatory-note category.
• The product before the Tribunal was covered as a cereal protein under the category for glutelins and prolamins, which does not prescribe a 90% threshold.

The Tribunal also emphasized that the word “generally” describes a typical characteristic, not a mandatory legal condition.

5. The more specific heading had to prevail

Applying the General Rules for Interpretation of the Import Tariff, the Tribunal held that the heading specifically covering “other protein substances” was more appropriate than the more general food-preparation heading for protein concentrates and textured proteins.

The Tribunal also observed that Customs incorrectly invoked the “most akin” test under Rule 4. That rule applies only when classification cannot be resolved under the earlier rules. In this case, the Tribunal found that the product could be classified under Rule 3 based on the more specific description.

Revenue carries the burden of proving reclassification

The decision reiterates that when Customs seeks to displace the importer’s declared classification, the burden lies on Revenue to establish the alternative classification through cogent evidence.

Here, the Tribunal found that the department had not produced sufficient technical material to prove that Brown Rice Protein Powder belonged under CTI 2106 1000. The departmental reliance on United States customs rulings did not cure that evidentiary gap.

CESTAT noted that foreign customs rulings may, at most, have persuasive value and are not binding in Indian classification disputes. Their value was further weakened because the cited US rulings reflected divergent approaches at different times.

Extended limitation period could not be invoked

The Tribunal also struck down the use of the extended limitation period under Section 28(4) of the Customs Act.

The importer had accurately described the goods as Brown Rice Protein Powder in its Bills of Entry, and the department had cleared the goods for home consumption without challenging the declared classification at the time. The tariff classification was therefore already within the department’s knowledge.

CESTAT held that a genuine and legally complex classification dispute, based on competing tariff headings and HSN notes, does not by itself establish suppression, wilful misstatement, fraud, or intent to evade duty. Without those elements, extended limitation could not apply.

No confiscation, redemption fine, or penalty for a classification dispute alone

The Tribunal further held that a disputed tariff classification, without a false description or incorrect valuation of goods, does not amount to misdeclaration for confiscation purposes under Section 111(m).

The goods were correctly described, and the case concerned only the tariff item selected by the importer in self-assessment. That classification is subject to verification and reassessment by customs officers; it is not, on its own, a false factual declaration.

Because the Tribunal found no mala fide conduct and no valid basis for confiscation, it set aside:

• the confiscation finding under Section 111(m);
• the ₹10 lakh redemption fine; and
• the equivalent penalty imposed under Section 114A.

The Tribunal also noted that the imported goods were not available for confiscation, providing an additional reason why redemption fine could not stand.

Key implications for food-ingredient importers

This ruling is particularly relevant to importers of plant-based proteins, cereal proteins, nutritional ingredients, and food-industry inputs.

• Technical evidence matters: A credible, product-specific expert opinion can be central to classification, especially where the tariff treatment depends on composition, source material, or processing.
• Product form matters: A protein powder should not automatically be treated as a textured protein substance merely because it is used in food applications.
• HSN notes must be read in context: A protein-content benchmark associated with one subcategory cannot be mechanically applied to a different, specifically covered category.
• Classification disagreements are not automatically misconduct: Accurate product description and transparent disclosure materially weaken allegations of suppression, misdeclaration, confiscation, and penalty.
• Revenue must substantiate reclassification: Customs authorities must support an alternative tariff classification with reliable evidence rather than unsupported technical assumptions or non-binding foreign rulings.

Outcome

In Final Order No. 86363/2026, pronounced on 2 November 2026, CESTAT Mumbai set aside the order passed by the Principal Commissioner of Customs, Nhava Sheva. Brown Rice Protein Powder was held classifiable under CTI 3504 0099, preserving the 20% basic customs duty treatment claimed by the importer and eliminating the resulting duty demand, interest, fine, and penalty.

The ruling provides a clear precedent that cereal-based protein powders supported by technical evidence should be assessed according to their specific tariff character, rather than broadly treated as higher-duty food preparations or textured protein concentrates.

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Source: CESTAT Mumbai

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Ravi Shekhar Jha – Advocate, Bar Council of Delhi