CLA-2OT:RR:CTF:TCM: H254695 ERB
Ms. Sandi Siegel
M.E. Day & Co., Inc.
700 W. Virginia Street, Suite 300
Milwaukee, WI 53204
RE: Revocation of NY N237986; Tariff classification of Bergazid OA-4000
Dear Ms. Siegel:
U.S. Customs and Border Protection (CBP) issued M.E. Day & Co., Inc. (M.E. Day & Co) New York Ruling Letter (NY) N237986 on April 12, 2013, on behalf of your client, Berg & Schmidt America, LLC. NY N237986 pertains to the tariff classification under the Harmonized Tariff Schedule of the United States, (HTSUS) of Bergazid OA-4000, a mixture of approximately 70% or more of Oleic acid with Linoleic and Stearic acids as the majority of the balance. We have since reviewed NY N237986 and find it to be in error with respect to the classification of the product, which is described in detail herein.
Pursuant to Section 625(c), Tariff Act of 1930 (19 U.S.C. 1625(c)), as amended by Section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), this notice advises interested parties that CBP is revoking a ruling concerning the classification of Bergazid OA-4000, under the HTSUS. Similarly, CBP is revoking any treatment previously accorded by it to substantially identical transactions. Notice of the proposed revocation was published on February 25, 2015 Volume 49, Number 8, of the Customs Bulletin. No comments were received in response to the proposed notice.
FACTS:
NY N237986 found the following:
The instant product is called Bergazid OA-4000 (CAS # 88895-93-6). The Bergazid OA-4000 is indicated to consist of mixtures of fatty acids. It is a mixture of several unsaturated fatty acids containing predominantly Oleic Acid.
The applicable subheading for the Burgasurf OA-4000 will be 3824.90.4140, Harmonized Tariff Schedule of the United States (HTSUS), which provides for: “Prepared binders for foundry molds or cores; chemical mixtures of fatty acid esters products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included (con.): Other (con.): Fatty substances of animal or vegetable origin and mixtures thereof; Mixtures of fatty acid esters”. The general rate of duty is 4.6 percent ad valorem.
A sample of the product was submitted to CBP for laboratory analysis. CBP Laboratory Report NY20130332 was issued March 28, 2013 and it stated the following:
Product Name: Bergazid OA-4000
CAS#: 88895-93-6
CAS Name: Fatty Acids, C18-UNSATD.
As per the information received, the product is a mixture of several fatty acids containing predominantly oleic acid (about 70%), with linolenic acid and stearic acid (less than 20% each) with other fatty acids in trace amounts.
Functional Groups: Mono carboxylic fatty acids, carbonyl.
In its request for reconsideration of NY N237986, M.E. Day & Co. also provided additional information regarding the Bergazid OA-4000 product. Namely, that it is composed of Oleic acid and fatty acid C18 unsaturated. It is produced from palm oil and palm kernel oil in Malaysia, and is used chiefly for food ingredients, cosmetics and cleaners, and certain technical applications. Further, M.E. Day & Co. points to N237985, dated March 2, 2013 which classified a similar product, Bergazid OA-2000, (CAS# 88895-93-6) which also consists of Oleic acid, specifically fatty acids, C-18 unsaturated, in subheading 3823.19.20, HTSUS.
ISSUE:
Whether Bergazid OA-4000 is classified as a mixture of fatty acid of heading 3823, HTSUS, or as an other chemical preparation of heading 3824, HTSUS?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods 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 may then be applied.
The HTSUS provisions under consideration in this case are as follows:
3823 Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols:
Industrial monocarboxylic fatty acids; acid oils from refining:
3823.19 Other:
3823.19.20 Derived from coconut, palm-kernel or palm oil.
***
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:
3824.90.41 Fatty substances of animal or vegetable origin and mixtures thereof.
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provides a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg 35127, 35128 (August 23, 1989).
The EN to heading 38.23 states the following in relevant part:
Industrial monocarboxylic fatty acids are generally manufactured by the saponification or hydrolysis of natural fats or oils. Separation of solid (saturated) and liquid (unsaturated) fatty acids is usually done by crystallisation either with or without solvent. The liquid part (commercially known as oleic acid or olein) consists of oleic acid and other unsaturated fatty acids (e.g. linoleic and linolenic acids) together with small amounts of saturated fatty acids. The solid part (commercially known as stearic acid or stearin) consists mainly of palmitic and stearic acids with a small portion of unsaturated fatty acids.
This heading includes, inter alia:
Commercial stearic acid (stearin) which is a white solid material with a characteristic odour. It is relatively hard and rather brittle and is usually marketed in the form of beads, flakes or powder. It is also marketed in liquid form when transported hot in isothermal tanks.
Commercial oleic acid (olein) which is a colourless to brown oily liquid with a characteristic odour.
Tall oil fatty acids (TOFA) which consists primarily of oleic and linoleic acid. They are obtained by the distillation of crude tall oil and contain by weight 90% or more (calculated on the weight of the dry product) of fatty acids.
Distilled fatty acids which are obtained after hydrolytic splitting of various fats and oils (e.g., coconut oil, palm oil, tallow) followed by a purification process (distillation).
Fatty acid distillate, obtained from fats and oils which have been subjected to vacuum distillation in the presence of steam as part of a refining process. Fatty acid distillate is characterised by a high free fatty acid (ffa) content.
Fatty acids obtained by catalytic oxidation of synthetic hydrocarbons of a high molecular weight.
Acid oils from refining, with a relatively high free fatty acid content, prepared by decomposing with mineral acid the soap-stock obtained during the refining of crude oils.
This heading excludes:
Oleic acid, of a purity of 85% or more (calculated on the weight of the dry product)(heading 29.16).
Heading 3824.90, HTSUS is a “basket provision,” in that it provides for products which are “not elsewhere specified or included.” Before CBP classifies a product in the basket provision heading 3824, HTSUS, classification in heading 3823, HTSUS, as an industrial monocarboxylic fatty acid must be considered.
According to the CBP laboratory report, as well as additional product information provided by M.E. Day & Co., the subject merchandise is comprised of over 70% Oleic acid with Linoleic and Stearic acids as the majority of the balance. In Headquarters Ruling (HQ) W967992, dated February 6, 2007, CBP considered the classification of a palm fatty acid distillate. The fatty free acids there included Palmitic acid (about 45-50%), Oleic acid (about 35-36%), Linoleic acid (about 8-9%), and Stearic acid (about 5-6%). The remaining components were not fatty free acids. There, CBP noted that to be considered an industrial monocarboxylic fatty acid, a product must go through an industrial process that includes fractional distillation. Further, a carboxylic acid is composed of a “broad array of organic acids” that end in a carboxyl group, and typically, a carboxylic acid includes “the large and important class of fatty acids.” Id citing Hawley’s Condensed Chemical Dictionary 223 (12th ed. 1993). A fatty acid is a “carboxylic acid derived from or contained in an animal or vegetable fat or oil.” Hawley’s, supra, at 507. The chemical composition of the Bergazid OA-4000 meets the definition of a monocarboxylic acids because it is a mixture of 70% monocarboxylic fatty acids derived from palm kernel or palm oil. The ENs also indicate that products including Stearic acid are classified in heading 3823, HTSUS when it states that in the separation of solid and liquid fatty acids, “The solid part (commercially known as stearic acid or stearin) consists mainly of palmitic and stearic acids with a small proportion of unsaturated fatty acids” are included inter alia. See EN. 3823(A).
Moreover, the ENs to heading 3823, HTSUS, support classification in that heading because it includes distilled fatty acids which are obtained after hydrolytic splitting of various fats and oils (e.g. coconut oil, palm oil, tallow) followed by distillation. Bergazid OA-4000 meets this description because the stearic acid component follows this same production process. Note, pursuant to the ENs, oleic acid of a purity of 85% or more is excluded, but that does not exclude the subject merchandise here as CBP’s laboratories found the Oleic acid component to be approximately 70%.
Furthermore, previous CBP rulings support classification of Bergazid OA-4000 in heading 3823, HTSUS. See N237985, dated March 1, 2013, which classified a substantially similar product, described as “Oleic Acid,” fatty acids, C-18, unsaturated (Bergazid OA-2000) in heading 3823, HTSUS. And see HQ962115, dated February 1, 1999, classifying a solution of approximately 45% stearic acid, 55% palmitic acid, and 0.1% oleic acid (also a saturated fatty acid) in heading 3823, HTSUS. Therefore, Bergazid OA-4000 is classifiable in heading 3823, HTSUS. It is specifically provided for in subheading 3823.19.20, as industrial monocarboxylic fatty acids: Other: derived from palm oil.”
HOLDING
By application of GRI 1, the subject Bergazid OA-4000 is provided for in heading 3823, HTSUS. It is specifically provided for under subheading 3823.19.20, HTSUS, which provides for, “Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohol: Industrial monocarboxylic fatty acids; acid oils from refining: Other: Derived from coconut, palm-kernel or palm oil.” The column one, general rate of duty is 2.3% ad valorem.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at www.usitc.gov
EFFECT ON OTHER RULINGS
NY N237986, dated April 12, 2013, is hereby REVOKED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Myles B. Harmon, Director
Commercial and Trade Facilitation Division