Karachi, January 13, 2025 – The Classification Committee of Pakistan Customs has issued its verdict on the classification of “Kola Vanilla Extract,” a product imported by Pepsi Cola International. This decision, forwarded by the Collectorate of Customs (Appraisement) Islamabad, resolves a long-standing debate about the appropriate tariff heading for the product.
The dispute arose when M/s Pepsi Cola International sought clearance for “Kola Vanilla Extract” under Pakistan Customs Tariff (PCT) heading 1302.1900 via Goods Declaration No. 602, dated December 30, 2013. However, the Directorate General of Audit (Customs & Petroleum) Lahore raised an audit objection during their 2013-14 review of Islamabad Dry Port, asserting that the extract should instead fall under PCT heading 3302.1010. This heading carries a 10% customs duty and a 50% federal excise duty (FED), as it pertains to flavors and concentrates used in aerated beverages.
According to Chapter 13’s introductory notes in the First Schedule of the Customs Act 1969, the disputed PCT heading excludes preparations based on odoriferous substances for beverage manufacture. Similarly, Chapter 33’s notes exclude vegetable extracts of heading 13.02, emphasizing the product’s misclassification.
Upon detailed examination, the Classification Committee ruled that “Kola Vanilla Extract,” a mixture of kola and vanilla extracts, propylene glycol, glycerin, sugar, and caramel, does not qualify as a raw extract under Chapter 13.02. Applying General Interpretative Rules (GIR) 1 and 3(b), the committee determined that the extract’s essential character lies in its use as a beverage concentrate. Consequently, the product is classified under PCT heading 2106.9010.
The committee’s findings underscore the importance of correctly interpreting tariff rules and chapter notes. The decision emphasizes that the ruling applies strictly to the documented specifications of the product as provided by the referring Collectorate. Any subsequent discovery of false or incomplete information could render the ruling null and void.
This classification decision resolves a significant issue for Pepsi Cola International, aligning the product’s tariff heading with its actual characteristics and usage, and upholding the integrity of customs regulations in Pakistan.