CLA-2- OT:RR:CTF:TCM H106785 CKG
Area Port Director
United States Customs and Border Protection
301 East Ocean Boulevard
Long Beach, CA 90802
RE: Application for Further Review of Protest No: 2704-09-101238; Classification of Lo Han Guo Extract and Goji Liquid Extract
Dear Port Director:
This is in reference to the Application for Further Review (“AFR”) of Protest No. 2704-09-101238, timely filed on April 27, 2009 by counsel on behalf of Arizona Production and Packaging (“Arizona”). The AFR concerns the classification of Lo Han Guo Extract and Goji Liquid Extract under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The protest at issue involves 8 entries of Lo Han Guo Extract or Goji Liquid Extract, entered between February 13, 2008 and June 28, 2008 under subheading 2009.80.6035, HTSUS, as “Fruit juices (including grape must) and vegetable juices, not fortified with vitamins or minerals, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter: Juice of any other single fruit or vegetable: Fruit juice: Other: Berry Juice: Other.” The merchandise was rate-advanced by a Notice of Action dated December 4, 2008 and liquidated between December 29, 2008 and March 6, 2009 under subheading 3824.90.9290, 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: Other: Other: Other: Other: Other: Other.” The importer filed its protest on April 27, 2009, claiming that the correct classification for the Lo Han Guo and Goji juice extracts is under subheading 1302.19.9140, HTSUSA, which provides for “Vegetable saps and extracts; pectic substances, pectinates and pectates; agar-agar and other mucilages and thickeners, whether or not modified, derived from vegetable products: Vegetable saps and extracts: Other: Other: Other.”
ISSUE:
Whether the Lo Han Guo Extract and the Goji Liquid Extract are classified as extracts of heading 1302, HTSUSA, or as chemical products of heading 3824 HTSUSA?
LAW AND ANALYSIS:
Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a)(2) as a decision on classification and duty assessment. The protest was timely filed within 180 days of liquidation for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)).
Further Review of Protest No. 2704-09-101238 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of Customs or with a decision made with respect to the same or substantially similar merchandise. Specifically, the Protestant refers to Headquarters Ruling Letters (HQ) W968370 and W967653, dated July 31, 2008, and New York Ruling Letters (NY) N037866, dated October 3, 2008, and NY L87065, dated September 12, 2005.
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification shall be determined 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 2 through 6 may then be applied in order. The 2008 HTSUS provisions under consideration are as follows: 1302 Vegetable saps and extracts; pectic substances, pectinates and
pectates; agar-agar and other mucilages and thickeners, whether or not modified, derived from vegetable products:
* * *
Vegetable saps and extracts:
* * * 1302.19 Other:
* * * 1302.19.91 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:
* * * * *
3824.90 Other:
* * *
Other:
* * *
Other:
* * *
Other:
* * *
3824.90.92 Other…
* * * * *
The Harmonized Commodity Description and Coding System Explanatory
Notes (EN), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 13.02 states, in pertinent part, the following: Vegetable saps and extracts. The heading covers saps and extracts (vegetable products usually obtained by natural exudation or by incision, or extracted by solvents), provided that they are not specified or included in more specific headings of the Nomenclature (see list of exclusions at the end of Part (A) of this Explanatory Note). These saps and extracts differ from the essential oils, resinoids and extracted oleoresins of heading 33.01, in that, apart from volatile odoriferous constituents, they contain a far higher proportion of other plant substances (e.g., chlorophyll, tannins, bitter principles, carbohydrates and other extractive matter). The saps and extracts classified here include: (1) Opium, the dried sap of the unripe capsules of the poppy (Papaver somniferum) obtained by incision of, or by extraction from, the stems or seed pods. It is generally in the form of balls or cakes of varying size and shape. However, concentrates of poppy straw containing not less than 50% by weight of alkaloids are excluded from this heading (see Note 1(f) to this Chapter).
* * *
(4) Pyrethrum extract, obtained mainly from the flowers of various pyrethrum varieties (e.g., Chrysanthemum cinerariaefolium) by extraction with an organic solvent such as normal hexane or "petroleum ether".
* * *
(11) Quassia amara extract, obtained from the wood of the shrub of the same name (Simaroubaceae family), which grows in South America…
* * *
(18) Papaw juice, whether or not dried, but not purified as papain enzyme. (The agglomerated latex globules can still be observed on microscopic examination.) Papain is excluded (heading 35.07).
* * *
(20) Cashew nutshell extract. The polymers of cashew nutshell liquid extract are, however, excluded (generally heading 39.11).
Additionally, examples of excluded preparations are provided: (iv) Intermediate products for the manufacture of insecticides, consisting of pyrethrum extracts diluted by addition of mineral oil in such quantities that the pyrethrins content is less than 2 %, or with other substances such as synergists (e.g., piperonyl butoxide) added (heading 38.08).
* * * * *
The relevant portion of heading 3824, HTSUS, referring to chemical products and preparations, can only be used to classify a mixture of natural products as such if the product is not provided for in another heading of the HTSUS. Therefore, if we find that the merchandise is described by the terms of heading 1302, HTSUS, then heading 3824, HTSUS, cannot be considered.
Heading 1302, HTSUS, describes vegetable extracts. The ENs provide that vegetable products are usually obtained by natural exudation or by incision, or extracted by solvents. Furthermore, the ENs distinguish products of heading 1302, HTSUS, from products of heading 3301, HTSUS (essential oils and resinoids), by the amount of plant material they contain.
CBP has found that when a product reaches a certain level of purity it is no longer considered an extract, stating that "substances obtained from a plant are not considered "vegetable extracts" if they only contain one ingredient divorced from the composition of the vegetable source." HQ 966566 (October 21, 2003). Further, CBP has determined that extensive processing can exclude a product from heading 1302. In HQ 959099 (May 1, 1998), CBP stated that "[t]he products in this case are the result of far more than simple processing. They go through several extractions, refining processes, and even centrifugation…. In other words, the products cannot be classified in heading 1302 as extracts or mixtures of extracts. They are formulated products far advanced from the extracts which would be classified in chapter 13."
In HQ W967214 (April 4, 2006), we determined that a lo han guo powder was over 80% mogroside after undergoing an extensive patented process involving concentration, acidification, homogenization, and use of solvents and an ion exchange resin to remove volatile and off-flavor compounds while minimizing the removal of mogrosides, then additional filtration and centrifugation of precipitate material, treatment with pectinase to remove most of the pectin in the juice, further concentration or evaporation to remove additional volatile compounds, and finally, heating the concentrated juice to deactivate enzymes and pasteurize the juice. The lo han guo powder of HQ W967214 was found to be a relatively pure, extensively processed chemical product and could not be classified as an extract.
Similarly, CBP determined that the use of a "cation resin isolation", similar to the process used for creating the lo han guo powder at issue in HQ W967214, excludes a product from classification as a vegetable extract in heading 1302. See HQ 966448 (July 9, 2004).
In the AFR, counsel argues that the instant subject products are basic fruit extracts unrelated to the types of products found in HQ W967214 or in the similar rulings cited above. According to counsel, the products subject to the actions taken by the port undergo relatively limited processing to produce an extract of the fruit itself. The manufacturing flowcharts submitted (which we note are identical) show that both the Lo Han Guo and the Goji Liquid Extracts are obtained by washing with water, extraction with ethanol and water, decompressing the extracted liquid below 60° Centigrade, centrifugation, additional decompression below 60° Centigrade, spray drying, breaking and passing through an 80 mesh. Counsel provides a slightly different narrative which describes the process as squeezing the fruit, filtration, ethanol solvent extraction, sterilizing and packing.
A final description of the methods applied to obtain the instant product and the composition of the imported product was provided by counsel for the protestant after consultation with the supplier, which confirmed that “[t]he extract is obtained through the production process shown in the flow chart. Mogrosides and dietary fibers are not added to this product.” The products are solvent-obtained extracts, not further subjected to extraordinary processing to isolate a single compound or family of compounds. Additionally, it appears that they are raw materials for various other manufactured products. There is no additional substance added to these products to give them the characteristics of a finished food preparation, medicament , etc.” Heading 1302, Explanatory Note (A), p. II-1302-3 noted.
As mentioned above, the relevant portion of heading 3824, HTSUS, referring to chemical products and preparations, can only be used to classify a mixture of natural products as such if the product is not provided for in another heading of the HTSUS. Therefore, since we find that the merchandise is described by the terms of heading 1302, we can no longer consider heading 3824. The Lo Han Guo Extract and the Goji Liquid Extract are classified in heading 1302, HTSUS.
HOLDING:
By application of GRI 1, the Lo Han Guo Extract and the Goji Liquid Extract are classified in heading 1302, specifically in subheading 1302.19.9140, HTSUSA, as "Vegetable saps and extracts: Other: Other: Other.” The 2008 column one, general rate of duty rate is free.
You are instructed to ALLOW the protest in full.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP 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 International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division