CLA-2 RR:CR:GC 962807ptl
Port Director
U. S. Customs Service
423 Canal Street
New Orleans, LA 70130
RE: Protest 2002-98-100306; Palm Fatty Acid Distillate.
Dear Port Director:
The following is our decision on Protest 2002-98-100306, filed by counsel on behalf of Church & Dwight, Inc. against your classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of a product described as palm fatty acid distillate.
FACTS:
According to information supplied by protestant, the product at issue, palm fatty acid distillate, referred to as "PFAD" is "produced in Malaysia by subjecting crude palm oil to heat and steam at reduced pressure. The steam carries off the PFAD, which later condenses to a liquid and, finally, becomes an amber-colored solid at room temperature."
The composition of the PFAD is described by protestant as follows: "More specifically, PFAD contains a group of free fatty acids that make up approximately 85-90 percent of the total substance by weight. These free fatty acids include palmitic acid (typically 45-50 percent by weight of the total free fatty acids), oleic acid (35-36 percent by weight), linoleic acid (8-9 percent by weight), and stearic acid (5-6 percent by weight). The 10-15 percent of PFAD that does not consist of a group of free fatty acids includes triglycerides (7-8 percent by weight) that are 'entrained,' i.e., carried off along with the free fatty acids by the steam in the distillation process. The remainder of the product (3-7 percent by weight) consists of waxes, sterols, tocopherols, water, and plant pigments."
The PFAD was entered on May 5, 1997, under subheading 1511.90.0000, HTSUS, which provides for palm oil and its fractions, whether or not refined, but not chemically modified. The entry was liquidated on March 13, 1998, under subheading 3824.90.4090, HTSUS, which provides for fatty substances of animal or vegetable origin and mixtures thereof … other. A timely protest was filed on June 9, 1998, arguing that the product should be classified as entered.
In preparing this decision, in addition to the original protest, we have considered supplemental materials filed by protestant on September 20, 2000 and December 17, 2001, as well as arguments and statements made during a conference at Customs Headquarters on October 19, 2001.
ISSUE:
What is the classification of "Palm Fatty Acid Distillate"?
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that virtually all goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied in order.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS provisions under consideration are as follows:
1511 Palm oil and its fractions, whether or not refined, but not chemically modified:
* * *
1511.90.0000 Other
3824 Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included:
* * *
3824.90 Other:
3824.90.40 Fatty substances of animal or vegetable origin and mixtures thereof
* * *
* * *
3824.90.4090 Other
Protestant argues that the goods, as entered, consist of a mixture of fatty acids which are fractions of palm oil. Protestant claims that the original substance has not been "chemically modified" because these fatty acids are the result of steam distillation, which protestant calls a "physical refining" process, rather than "alkali refining" process in which there is a chemical reaction when the palm oil is exposed to caustic soda and mineral acids.
Protestant claims that the goods do not fall within the scope of Chapter 38, HTSUS. In support of classification in Chapter 15,HTSUS, protestant asserts that the product should be considered to be a fraction of palm oil.
Protestant contends that the product is classified in subheading 1511.90.0000, HTSUS, which provides for palm oil and its fractions, whether or not refined, but not chemically modified.
To be classified in Chapter 15, the product must be described by the terms of the headings. The ENs to Chapter 15, on page 108, define the term animal or vegetable fats and oils as "esters of glycerol with fatty acids (such as palmitic, stearic and oleic acids)." … "Subject to the exclusions in Note 1 to this Chapter, vegetable or animal fats and oils and their fractions are classified in this Chapter whether used as foodstuffs or for technical or industrial purposes (e.g., the manufacture of soap, candles, lubricants, varnishes or paints)."
Fractionated oils are obtained from the whole oil by processes such as chilling, pressing and solvent fractionation. These processes separate the whole oil into two or more fractions. Each fraction is composed of the components of the original oil, but in selected proportions. As noted in the ENs, fractionation does not cause any changes in the chemical structure of the fats or oils.
HQ 088613, dated June 10, 1991, concerned the classification of four products: Palmy, a mixture of shea nut and palm oil stearins; Palkena, a fully refined palm kernel stearin; shea nut stearin, the hard fraction of shea nut oil; and palm oil stearin. The ruling describes the methods of producing these products as: "The refining process, in general, is said to consist of degumming and neutralization of the particular oil, then fractionalization into the hard part (stearin) and the soft part (olein); next bleaching and deodorization take place; finally, additives such as tocopheral, citric acid, lecithin are added in small amounts." The products were classified in various headings (1511, 1513 and 1517) of Chapter 15 because they actually were fractions of the subject oils. They were described as the hard (stearin) and soft (olein) fractions of the oils which retain the chemical structure of triglycerides. The products of HQ 088613 can be distinguished from the PFAD which is produced by a distillation process resulting in a mixture of predominately free fatty acids, waxes, sterols, tocopherols, water and plant pigments, but does not retain the chemical structure of triglycerides..
The booklet, Food Fats and Oils, 6th ed., (The Institute of Shortening and Edible Oils, Inc., Washington, D.C. 1988) describes triglycerides on
page 1, as follows: "A triglyceride is composed of glycerol and three fatty acids. All of the fatty acids in a triglyceride are identical, it is termed a 'simple' triglyceride. The more common forms, however, are '"mixed' triglycerides in which two or three kinds of fatty acid moieties are present in the molecule." Fats and oils are described on page 3 of the same booklet as: "Fats and oils are predominately triesters of fatty acids and glycerol, commonly called 'triglycerides.' … Triglycerides normally represent over 95 percent of the weight of most food fats and oils. The minor components include mono- and diglycerides, free fatty acids, phosphatides, sterols, fatty alcohols, fat soluble vitamins and other substances." (emphasis added) Protestant indicates the PFAD is 85 to 90 percent free fatty acids.
HQ 963214, dated May 25, 1999, concerned the classification of crude oil extracted from fermented fungal biomass by a hexane solvent. The ruling states: "The oil consists of triglycerides of several fatty acids. In a triglyceride, three fatty acids moieties are ester linked to one glycerol." The product was classified in subheading 1515.90.40, HTSUS, which provides for other fixed vegetable fats and oils.
In HQ 961401, dated July 13, 1998, a dietary supplement, Neuromins, derived from algae, was classified as a vegetable oil of Chapter 15. The ruling stated: "Neuromins is the proprietary name for a dietary supplement made from triglyceride oil derived from a species of algae. A triglyceride is an ester of glycerol in which all three hydroxyl groups are exterified with a fatty acid."
Hawley's Condensed Chemical Dictionary, 12th ed., 1993, on page 507, defines a fatty acid as "A carboxylic acid derived from or contained in an animal or vegetable fat or oil. All fatty acids are composed of a chain of alkyl groups containing from 4 to 22 carbon atoms (usually even numbered) and characterized by a terminal carboxyl group –COOH."
Protestant's product consists of free fatty acids which have been separated from their glycerol molecule. The resulting product is no longer a fat or oil, since it no longer has the chemical structure of a triglyceride. The ENs to Chapter 15, in pertinent part, state: "Headings 15.07 to 15.15 of this Chapter cover the single (i.e., not mixed with fats or oils of another nature), fixed vegetable fats and oils mentioned in the headings, together with their fractions, whether or not refined, but not chemically modified." (emphasis added) Clearly, distilling, or breaking up a palm oil into glycerol and fatty acids, and then separating the fatty acids, has chemically modified the oil.
The ENs also indicate that included in the products classified in Chapter 15 are "fractions" of vegetable fats and oils. "Headings 15.04 and 15.06 to 15.15 also cover fractions of the fats and oils mentioned in those headings, provided they are not more specifically described elsewhere in the Nomenclature (e.g., spermaceti, heading 15.21). The main methods used for fractionation are as follows :
(a) dry fractionation which includes pressing, decantation, winterisation and filtration;
(b) solvent fractionation; and
(c) fractionation with the assistance of a surface-active agent."
Fractionated oils are obtained from the whole oil by processes such as chilling, pressing and solvent extraction. These processes separate the whole oil into two or more fractions. Each fraction is composed of the components in the original oil, but in selected proportions. As noted in the ENs: "Fractionation does not cause any changes in the chemical structure of the fats or oils." Products which have undergone fractionation are essentially no more than concentrations of different glycerides that are themselves animal or vegetable fats or oils, as defined in the ENs.
The protestant's product is not a fraction of an animal or vegetable oil for the same reason it is not an oil. Protestant has misunderstood "not chemically modified." The term refers to chemical modification of the oil, not how that modification is caused. In the instant situation, protestant's product is produced from palm oil, but it has been chemically modified and does not have the chemical structure of an oil triglyceride and is not eligible for classification in Chapter 15.
Protestant's merchandise, palm fatty acid distillate, is properly classified under GRI 1 in subheading 3824.90.4090, HTSUS, which provides for fatty substances of animal or vegetable origin and mixtures thereof … other.
HOLDING:
Palm Fatty Acid Distillate is classified in subheading 3824.90.4090, HTSUS, which provides for: Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included; residual products of the chemical or allied industries, not elsewhere specified or included: other: fatty substances of animal or vegetable origin and mixtures thereof: other.
The protest should be DENIED. In accordance with Section 3A(11)(b) of Customs Directive 099 3550 065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
John Durant, Director
Commercial Rulings Division