Pakistan Customs Levies 20% Duty on Chocolate Crumbs

Pakistan Customs Levies 20% Duty on Chocolate Crumbs

Islamabad, April 8, 2024- In a recent development, the classification committee of Pakistan Customs has announced the imposition of a 20 percent customs duty on the import of “CDM MAS CRUMBS,” a milk-based mixture with cocoa used in chocolates.

The decision comes after a ruling issued by the committee on Monday, clarifying that the item falls under Pakistan Customs Tariff (PCT) heading 1901.9090, thereby subjecting it to a higher customs duty.

The decision was prompted by credible information received by the authorities indicating that M/s Mondelez Pakistan was clearing “CDM MAS CRUMBS” under a lower tariff rate applicable to PCT heading 1806.2020. Upon further investigation, it was revealed that the correct classification for the product is under PCT heading 1901.9090, warranting a higher customs duty of 20 percent.

In response to the ruling, a consignment was initially blocked, and a lab test was conducted to ascertain the composition and classification of the imported goods. Subsequently, the importer filed a petition in the Sindh High Court (SHC) for provisional release, which was granted. However, while awaiting clarification from the lab, another consignment containing an identical item was blocked, and its fate remains pending.

The matter was eventually referred to the Classification Committee by the SHC to determine the exact classification of the subject goods. After thorough examination and consideration of various factors, including lab reports, manufacturer’s literature, and explanatory notes to the PCT headings, the committee concluded that the goods are a milk-based complex mixture of different commodities, falling under PCT heading 1901.9090.

Despite the manufacturer’s designation of the product as “CDM MAS Crumbs,” reflecting its association with Cadbury Dairy Milk, the committee emphasized that the pivotal factor in classification lies in the composition and characteristics of the product, particularly the cocoa content. With a cocoa mass percentage of only 3.77 percent, the goods do not meet the threshold for inclusion in either the category of chocolates or sugar confectionery.

The importer’s argument for classification as sugar confectionery under PCT heading 1806.2020 was deemed invalid by the committee, as sugar confectionery typically comprises items primarily composed of sugar, which does not align with the composition of the imported goods.

Consequently, the committee affirmed that the appropriate classification for the product lies within PCT heading 1901.9090, as milk-based preparations with a cocoa content below five percent, thereby subjecting it to a 20 percent customs duty.

This decision by the Pakistan Customs is expected to have implications for importers and traders involved in the importation of similar products, as it clarifies the classification criteria and applicable customs duties for chocolate crumbs and related items.