CLA-2 RR:CR:GC 964595ptl
Port Director
U.S. Customs Service
111 West Huron Street
Buffalo, NY 14202
RE: Protest 0901-00-100146; Cap-Borage Oils and Cap-Borage/Flax Oil
Dear Port Director:
The following is our decision on Protest 0901-00-100146, against your classification of products described as Cap-Borage 500(115), Cap-Borage 1300(300) and Cap-Borage/Flax(org.) 600 B22 under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The merchandise under protest is described as bulk shipments of various types of encapsulated oils. The difference between Cap-Borage 500(115) and Cap-Borage 1300(300) is in the weight in milligrams that each capsule contains and the number in parenthesis is the amount in milligrams of the active ingredient. Protestant states that the oils are produced from plants grown, processed and encapsulated in Canada. The gelatin in the capsule is of Canadian origin and the glycerin is imported from the United States. The products were granted NAFTA preference at time of entry.
The Cap-Borage/Flax(org.) 600 B22 is an encapsulated blend of borage and organic flax oils. Protestant states both oils are entirely manufactured, grown and encapsulated in Canada. The gelatin in the capsule is of Canadian origin and the glycerin is imported from the United States. The protestant states that after processing and encapsulation the oils become suitable for commercial marketing and consumption.
The protest covers entries No. 112-NNNN4732 and 112-NNNN4674, dated April 12, 1999. According to protestant, the Cap-Borage capsules were entered in subheading 1515.90.4000, HTSUS, "per Customs advice" and the Cap-Borage/Flax capsules were entered in subheading 1517.90.2080, HTSUS "per Customs advice." A timely protest was filed on August 8, 2000. The protest states the both products should be properly classified under subheading 2106.90.9998, HTSUS, as "other food preparations not elsewhere specified or included … other."
ISSUES:
What is the classification of encapsulated borage oil, encapsulated borage/flax oil?
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:
1515 Other fixed vegetable fats and oils (including jojoba oil) and their fractions, whether or not refined, but not chemically modified:
* * *
1515.90 Other:
* * *
1515.90.40 Other
1517 Margarine; edible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, other than edible fats or oils or their fractions of heading 1516:
* * *
1517.90 Other:
Artificial mixtures of two or more of the products provided for in headings 1501 to 1515, inclusive:
1517.90.20 Other
* * *
1517.90.2080 Other
2106 Food preparations not elsewhere specified or included:
* * *
2106.90 Other:
Other:
Other:
Other:
Other:
2106.90.99 Other:
2106.90.9998 Other
One of the protestant's arguments that the product is not classified in chapter 15 is based on GRI 1, which requires Customs to base classification on any relevant section and chapter notes. In support of this, protestant identifies chapter Note 1(e) to chapter 15 which states, in relevant part, that: 1. This chapter does not cover:
(e) Fatty acids, prepared waxes, medicaments, paints, varnishes, soap, … .
Protestant claims that the encapsulated borage and borage/flax oil are considered an essential fatty acid (EFA) and is marketed as such. Accordingly, protestant argues, because of chapter Note 1(e), the borage and borage/flax oils are excluded from classification in chapter 15.
However, protestant has misinterpreted the Chapter note. The entire text of Chapter note 1(e) reads as follows: "This chapter does not cover: …(e) Fatty acids (Chapter 38), prepared waxes (Chapter 34), medicaments (Chapter 30), paints (Chapter 32), varnishes (Chapter 32), perfumery Chapter 33), cosmetic or toilet preparations (Chapter 33), sulphonated oils and other goods of Section VI; … ."[Chapter references added] It is clear that the note is referring to goods which are classified in Section IV of the Tariff Schedule. Protestant's goods are not the type of highly manufactured industrial fatty acids which are classified in Chapter 38, HTSUS, and thus, the note's exclusion does not apply.
The protestant next argues that the merchandise should be classified in heading 2106, HTSUS, as food supplements for human consumption, because of the ENs to that heading which provide, in part,
"The heading includes, inter alia :
(16) Preparations, often referred to as food supplements, based on extracts from plants, fruit concentrates, honey, fructose, etc. and containing added vitamins and sometimes minute quantities of iron compounds. These preparations are often put up in packagings with indications that they maintain general health or well-being. Similar preparations, however, intended for the prevention or treatment of diseases or ailments are excluded (heading 30.03 or 30.04)."
However, the introductory language of EN 21.06 states: "Provided that they are not covered by any other heading of the Nomenclature, this heading covers: [a list of exemplars follows]" [Emphasis in original]. Therefore, before classifying the articles in Chapter 21, we must first determine whether they can be classified in any other heading.
Customs has classified several encapsulated food products, described as food supplements, in heading 2106, HTSUS, the heading claimed by protestant as correct for the encapsulated fish oil. However, inasmuch as heading 2106 only covers food preparations not elsewhere specified or included (emphasis added), whenever heading 2106 was selected, it was chosen because no other competing heading specified or included the food preparations.
In HQ 953679, dated February 3, 1994, ginseng root and various extracts were classified in heading 2106, HTSUS, because the competing headings 1302 and 1211, which cover raw vegetable materials to be further processed, were determined inappropriate.
HQ 960607, dated July 31, 1998, classified encapsulated ginseng extract as a food supplement in heading 2106, HTSUS. In that case, the competing provision was heading 1302, HTSUS. That heading was rejected because the product had not retained its character as a raw material. Customs had classified such finished products used as food supplements in heading 2106, HTSUS.
HQ 085492, dated October 20, 1989, classified encapsulated herbal products in heading 2106, HTSUS. In rejecting the competing provision, 1211, HTSUS, Customs stated: "Heading 1211, HTSUSA, provides for plants and parts of plants, of a kind used primarily in [perfumery, in pharmacy or for insecticidal, fungicidal or similar purposes. The Explanatory Notes to this section state that products which are more specifically described in other headings of the nomenclature are excluded from this heading. Based upon the use of the herbal supplements, they would fit more specifically in the category of food supplements, than as an item that would fall under heading 1211, HTSUSA."
While these rulings show that encapsulated products can be classified in heading 2106, HTSUS, they should not be read as indicating that all encapsulated products or all products used as food supplements are to be classified in Chapter 21. The cited rulings are useful to indicate that Chapter 21 will be used only when classification in other chapters is precluded.
It has been Customs practice to classify encapsulated oil in Chapter 15, HTSUS, provided the processing, composition or added ingredients do not exclude it from the chapter. As the ENs indicate, products of Chapter 15 are not limited to raw materials without added ingredients. The General ENs to Chapter 15, page 107, state, in part,
(A) This Chapter covers:
(1) Animal or vegetable fats and oils, whether crude, purified or refined or treated in certain ways (e.g., boiled, sulphurised or hydrogenated).
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)." They continue to provide that, "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.
The ENs also provide, on page 109, that fats and oils of Chapter 15 may also be subjected to the refining processes: "These headings cover crude fats and oils and their fractions, as well as those which have been refined or purified, e.g., by clarifying, washing, filtering, decolorizing, deacidifying or deodorizing."
T.J. Weiss, Food Oils and Their Uses, 2d ed., (AVI Publishing Company, Inc., 1983), 72 – 84 discusses the basic processing of fats and oils:
"Refining usually refers to the removal of nonglyceride fatty materials by washing the oils with strongly alkaline water solutions… ."
"Bleaching is the process used for the removal of pigments from the oil although some color bodies are removed during other processes as well. … The process of bleaching is relatively simple…."
"As the term implies, deodorization is the process whereby the odors and flavors of fats and oils are removed, resulting in a bland finished product."
The ENs to Chapter 15, on page 112 state that "Cod liver and halibut and other fish liver yield oils with a high content of vitamins and other organic substances. They are, therefore, chiefly used in medicine. These oils remain in this heading whether or not their vitamin content has been increased by irradiation or other wise, but they fall in Chapter 30 when put up as medicaments, or emulsified or containing other substances with a view to therapeutic use." If the oils are not classified as medicaments in chapter 30, they remain in chapter 15, even if their vitamin content has been increased. There is no reference to food supplements in chapter 21 of the HTSUS. The products remain in chapter 15 if they are not considered to be medicaments of chapter 30.
Therefore, it is clear that processing, stabilizing and encapsulating should not remove the subject borage and borage/flax oils from classification in Chapter 15.
Heading 1517 provides for Margarine; edible mixtures or preparations of animal or vegetable fats or oils or of fractions of different fats or oils of this chapter, other than edible fats or oils of heading 1516. In describing the types of products classified in this heading, the ENs to the chapter state on page 121: "They are generally liquid or solid mixtures or preparations of:
(1) Different animal fats or oils or their fractions; (2) Different vegetable fats or oils or their fractions; or (3) Both animal and vegetable fats or oils or their fractions. The ENs then discuss the types of processing which may be performed on these products and ingredients which may be added: "The products of this heading, the fats or oils of which may previously have been hydrogenated, may be worked by emulsification (e.g., with skimmed milk), churning, texturation (modification of the texture or crystalline structure), etc., and may contain small quantities of added lecithin, starch, colouring, flavouring, vitamins, butter or other milkfat (subject to the restrictions in Note 1 (c) to this Chapter)." (emphasis added) Clearly, the ENs indicate that the mixtures may be processed, and may contain added ingredients. However, it is also clear that the mixtures are not required to be processed, or have added ingredients to be classified in heading 1517.
Products of Chapter 15 are not limited to raw materials without added ingredients. As noted above, the provisions also cover products when they are fractionated, refined, mixed with each other, when vitamins have been added, when they are mixed with certain added ingredients, and when they are subjected to certain additional processing. As stated, the ENs, on page 108, observe: "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)." If the product is an oil or fat which can be classified in Chapter 15, which provides for oils and fats, there is no reason to consider Heading 2106 which provides for "Food preparations not elsewhere specified or included."
While they are not treated as dispositive, decisions of the Harmonized System Committee of the World Customs Organization, when published in the Compendium of Classification Opinions, constitute the official interpretation of the Harmonized System, and should receive the same weight of the ENs in ascertaining the classification of merchandise. At its 13th session, the HSC examined the classification of a product, "Dr. Dunner Evening Primrose Oil," put up in capsules. In Document 38.827E, dated August 5, 1995, the product was described as "… consisting of gelatin capsules reportedly containing 500 mg of evening primrose oil and 10 mg tocopherol (vitamin E). The capsule shell comprised gelatin, glycerol, and milkfat (although it was not clear with respect to the milkfat). This product was put up for retail sale (4 blister packs each containing 30 capsules, packed together in a cardboard box) with information sheet indicating that the product was designed to be taken on a daily basis (one or two capsules daily) to supplement the normal diet with the essential fatty acids contained in the oil (in particular gamma-linolenic acid (8%), which was important to body metabolism)." The decision of the HSC states: The Secretariat remains of the opinion that the addition of vitamin E and encapsulation are not sufficient to exclude the product from Chapter 15. Furthermore, products should be classified in the residual heading 21.06 only if they are not covered by any other headings in the Nomenclature. For these reasons, the Secretariat feels that the product should be classified in Chapter 15 rather than in heading 21.06."
This decision of the HSC reinforces the analysis that Customs has been following in classifying products such as the subject encapsulated borage and borage/flax oil in Chapter 15. See NY 803222, dated October 27, 1994, which classified bulk evening primrose oil to which natural alpha-tacopherol had been added as an anti-oxidant in subheading 1515.90.40, HTSUS.
Because we have been able to classify the products by virtue of GRI 1, it is not necessary to address protestant's arguments regarding the application of GRIs 2 and 3(b).
HOLDING:
Encapsulated Borage/Flax oil, Cap-Borage 500 (115) and Cap-Borage 1300 (300) are classified in subheading 1515.90.4000, HTSUS, which provides for: Other fixed vegetable fats and oils (including jojoba oil) and their fractions, whether or not refined, but not chemically modified: … Other: … Other
Encapsulated Cap-Borage/Flax(org) 600 B22 is classified in subheading 1517.90.2080, HTSUS, which provides for artificial mixtures of two or more of the products provided for in headings 1501 to 1515, inclusive … other … 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