Circular No. 9342/TC/TCT regarding import tax on flavoring materials and food additives used in the food processing industry

LETTER

OF THE MINISTRY OF FINANCE NUMBER 9342 TC/TCT ON OCTOBER 2, 2001
REGARDING IMPORT DUTIES FOR FLAVORINGS AND ADDITIVES USED IN FOOD PROCESSING INDUSTRY

TO: General Department of Customs

In response to Circular No. 2908/TCHQ-KTTT dated July 12, 2001 from the General Department of Customs regarding import duties for flavorings and additives used in food processing industry, the Ministry of Finance provides its opinion as follows:

1. Regarding classification of flavoring items:

Based on the Preferential Import Tariff Schedule issued with Decision No. 1803/1998/QĐ-BTC dated December 11, 1998 by the Minister of Finance; and the list of amendments and supplements to names and import tariff rates for certain items in the Preferential Import Tariff Schedule issued with Decision No. 193/2000/QĐ-BTC dated December 5, 2000 by the Minister of Finance, flavoring items used in food production or beverage production belong to Chapter 33, subheading 330210, wherein: those for beverage production are classified under tariff item number 33021010; others are classified under tariff item number 33021090.

However, in practice, flavoring items do not have standards to distinguish their usage between food and beverage production. Therefore, to address the arising issues given that the Import Tariff Schedule has yet to be amended or supplemented, we recommend the General Department of Customs direct local customs offices to uniformly classify flavoring items (including those for food and beverage production) under tariff item number 33021010 with a preferential import duty rate of 30% (if imported before January 1, 2001) or 20% (if imported from January 1, 2001 onwards) for calculating the import duty.

2. Regarding standards to distinguish food processing additives belonging to groups 2106 and 3824:

Based on the Preferential Import Tariff Schedule issued with Decision No. 1803/1998/QĐ-BTC dated December 11, 1998 by the Minister of Finance; list of amendments and supplements to names and import tariff rates for certain items in the Preferential Import Tariff Schedule issued with Decision No. 193/2000/QĐ-BTC dated December 5, 2000 by the Minister of Finance; and Circular No. 37/1999/TT-BTC dated April 7, 1999 by the Ministry of Finance guiding classification methods according to the Goods Classification List for Export Tariff Schedule and Import Tariff Schedule;

Referring to the Explanatory Notes on the Goods Classification List for Import and Export issued by the World Customs Organization Cooperation Council, the principles for distinguishing food processing additives belonging to groups 2106 and 3824 are as follows:

- Group 2106 includes items that are chemical mixtures with some foods or nutritional substances used in food processing industry. For example: a food additive named CREMODAN DC, consisting of guar gum, carrageenan (non-nutritive substance), sugar (food), and sodium alginate (chemical) is classified under group 2106, tariff item number 21069030.

- Group 3824 includes items that are chemical mixtures without food or nutritional substances used in food processing industry. For example: a food additive named RECODAN CM VEG, consisting of guar gum, carrageenan (non-nutritive substance), mono-diglycerides of fatty acids, and sodium alginate (chemical) is classified under group 3824, tariff item number 38249090.

The Ministry of Finance provides its opinion for the General Department of Customs to direct local customs offices to inspect the composition and characteristics of imported goods in practice, determine actual import duties collected, ensure accurate and full collection for the budget, avoid changing current applicable rates causing disruptions to production and business activities or creating loopholes for entities to exploit refunds on taxes as mentioned in this circular and other cases involving appeals regarding export tax, import tax, value-added tax on imported goods, special consumption tax on imported goods generally.