CLA-2 OT:RR:CTF:TCM H053650 HkP
David Dunbar, Esq.
Katter Muchin Rosenman, LLP
2900 K Street, NW, Suite 200
Washington, DC 20007-5118
RE: Tariff classification of milk protein isolate MPI 9060
Dear Mr. Dunbar:
This is in response to your letter dated February 21, 2009, on behalf of your client, Kerry Inc., requesting a binding ruling on the classification of a milk protein isolate (MPI) product line (MPI 9060) under the Harmonized Tariff Schedule of the United States (HTSUS). In reaching our decision we have taken into consideration additional arguments made in your submission dated May 14, 2009.
FACTS:
The merchandise at issue is described by you as follows:
MPI 9060, which is also known as “Ultranor™ Milk Protein Isolate” and “Ultranor™ 9060 Milk Protein Isolate,” will be used predominantly in the nutrition industry as a concentrated source of dairy protein, and will be typically used as a protein source in [low lactose] infant formula, nutritional ready-to-drink beverages, nutritional protein enriched powders, and high-protein nutritional bars and chocolate coatings. MPI 9060 is a concentrated milk protein manufactured by the ultrafiltration of non-fat milk. The manufacturing process begins with whole milk, from which cream is removed to obtain non-fat milk, followed by pasteurization before and after the ultrafiltration step, spray drying and packaging…. Small amounts of processing aids will be used during the manufacturing process….
In your submission dated May 14, 2009, you explain that, in addition to ultrafiltration, MPI 9060 undergoes other processes which facilitate the removal of lactose and minerals from nonfat milk.
By weight, the typical approximate chemical composition of MPI 9060 products will be: fat, 1-2.25%; protein, 85-91%; moisture, 2-6%; ash (minerals), 5-8%; and lactose, 0.2-1.5%. Of the protein content, you state that more than 70% will be casein and between either over 2% or over 10% will be lactalbumin, depending on how that term is defined. In either case, you point out, MPI 9060 to be imported by Kerry will contain both casein and lactalbumin that will, in all cases, be over 40% by weight. U.S. Customs and Border Protection (CBP) has previously tested two samples of products labeled “MPI 9060 (Milk Protein Isolate)” and found that one contained 88% protein (approximately 92% on the dry basis) and the other contained approximately 93% protein (dry basis). However, no samples were submitted with the instant request.
ISSUE:
Whether milk protein products consisting of: 1- 2.25% fat, 85-91% protein (casein and lactalbumin), 2-6% moisture, 5-8% ash, and 0.2-1.5% lactose, are products consisting of natural milk constituents of heading 0404, HTSUS, or other protein substances of heading 3504, HTSUS.
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). 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 2 through 6 may then be applied in order.
The HTSUS provisions at issue are as follows:
0404 Whey, whether or not concentrated or containing added sugar or other
sweetening matter; products consisting of natural milk constituents, whether or not containing added sugar or other sweetening matter, not elsewhere specified or included:
0404.90 Other:
0404.90.10 Milk protein concentrates….
3504 Peptones and their derivatives; other protein substances and their derivatives, not elsewhere specified or included; hide powder, whether or not chromed:
3504.00.10 Protein isolates ….
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not 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 these headings at the international level. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The General EN to Chapter 4 explains at part (I)(E) that “products consisting of natural milk constituents, not elsewhere specified or included” are covered by the chapter. Further, such products:
[M]ay contain, in addition to natural milk constituents (e.g., milk enriched in vitamins or mineral salts), small quantities of stabilizing agents which serve to maintain the natural consistency of the product during transport in liquid state (disodium phosphate, trisodium citrate and calcium chloride, for instance) as well as very small quantities of anti-oxidants or of vitamins not normally found in the product. Certain of these products may also contain small quantities of chemicals (e.g. sodium bicarbonate) necessary for their processing; products in the form of powder or granules may contain anticaking agents ….
EN 04.04 provides, in pertinent part:
The heading also covers fresh or preserved products consisting of milk constituents, which do not have the same composition as the natural product, provided they are not more specifically covered elsewhere. Thus the heading includes products which lack one or more natural milk constituents, milk to which natural milk constituents have been added (to obtain, for example, a protein-rich product).
EN 35.04 provides, in pertinent part:
(B) Other protein substances and their derivatives, not covered by a more specific heading in the Nomenclature, including in particular:
(1) Glutelins and prolamins … being cereal proteins
(2) Globulins … (but see exclusion (d) at the end of the Explanatory
Note.
(3) Glycinin, the main soya protein.
(4) Keratins …
(5) Nucleopreteids, being proteins combined with nucleic acids and the
their derivatives….
(6) Protein isolates obtained by extraction from a vegetable substance
(e.g., defatted soya bean flour) and consisting of a mixture of proteins
contained therein. The protein content of these isolated is generally
not less than 90%.
You argue that the product at issue is classified in heading 0404 (0404.90.10), HTSUS, because it is “composed of virtually 100 percent natural milk constituents.” Further, you point out that the ENs to heading 0404 indicate that the heading includes products which lack one or more natural milk constituents and milk which has been treated to obtain a protein rich product. Based on its manufacturing process, you believe that MPI 9060 is a product which lacks one or more milk constituents and is consistent with the example provided in the EN of milk being treated to obtain a protein-rich product.
You point out that CBP has previously found that heading 0404, HTSUS, includes milk protein concentrates (MPCs) and refer our attention to Headquarters Ruling Letters (HQ) 950484 (Jan. 3, 1992) and HQ 965592 (April 1, 2003). You believe that HQ 965592 is entitled to “great deference, since it was issued with the benefit of two separate public notice and comment proceedings under the Customs laws. Customs Headquarters reviewed the scope of HTSUS subheading 0404.90.10 extensively in those proceedings, which were undertaken from 2001 through 2003.”
In HQ 950484, this office classified in heading 0404, HTSUS, a milk protein concentrate obtained from skim milk by a chromatographic separation process, which separated lactose from the protein. The CBP lab analyzed a sample of the product and found that it contained, by weight, 79% protein, 12.8% ash, 1.1% fat, 3.7% moisture and approximately 3.4% lactose. We considered the requirements of heading 3501, HTSUS, and found that the product could not be classified in that heading because it had not undergone precipitation or curdling, as explained in EN 35.01. Consequently, we classified it in heading 0404, HTSUS, because it consisted of natural milk constituents.
We have reviewed HQ 950484 and find that it does not aid your argument. First, it does not discuss one of the headings at issue (3504, HTSUS). Second, the classification of the product described therein is based on the process by which the protein was separated from lactose (chromatography). However, this
is not relevant consideration for determining classification under heading 0404 or 3504, HTSUS, which are the headings currently under consideration. Finally, the product described in HQ 950484 is not similar in composition to the product at issue. For these reasons, we find that the legal analysis and classification decision in HQ 950484 is not persuasive.
In HQ 965592 there were two issues under consideration. The first was, “Whether milk protein concentrates of subheading 0404.90.10, HTSUS, are limited to products produced by ultrafiltration and containing casein and lactalbumin in the same proportion as found in milk or whether they also include a blend of milk constituents and concentrated milk proteins where the total casein and lactalbumin content exceeds 40 percent by weight.” Cust. B. & Dec., Vol. 37, No. 31, 4 (“Issue”), (July 30, 2003). The second was whether the MPC products should be classified in heading 0402, HTSUS, as concentrated milk or in heading 0404, HTSUS, as products containing natural milk constituents. Id. at 6. We found that, based on GRI 1, the MPC products did not meet the terms of heading 0402, HTSUS, because they were not concentrated milk but contained natural milk constituents. It was only after we classified the products in the correct heading (0404, HTSUS), that we then proceeded to determine whether the products met the definition of “milk protein concentrate” in Additional U.S. Note 13 to Chapter 4.
As was the case in HQ 965592, we first refer to the provisions of GRI 1, which require that goods must be classified according to the terms of the headings and the relevant legal notes. Consequently, we are unable to address your arguments regarding the scope and applicability of subheading 0404.90.10, HTSUS, until we first determine whether heading 0404, HTSUS, is the correct classification for the instant goods.
Heading 0404, HTSUS, provides for the entire range of products consisting of natural milk constituents, whether or not containing added sugar, unless they are more specifically provided for elsewhere in the nomenclature. For example, “reconstituted milk having the same qualitative and quantitative composition as natural milk” is excluded from the heading because it is more specifically provided for in heading 0402, HTSUS, as concentrated milk. See EN 04.04 (a). Products obtained from whey that contain, by weight, more than 95% lactose (milk sugar) on the dry matter are excluded from heading 0404, HTSUS, because they are more specifically provided for in heading 1702, HTSUS, as sugar. See Note 4(a) to Chapter 4; EN 04.04(c).
Heading 3504, HTSUS, provides for specific protein substances (“peptones and their derivatives” and “hide powder”) as well as protein substances not provided for more specifically elsewhere in the HTSUS. The only limit that is placed on the protein substances that can be classified in heading 3504, HTSUS, is that they cannot be provided for more specifically elsewhere in the nomenclature. For example, hardened proteins are excluded from the heading because they are more specifically provided for in heading 3913, HTSUS, as natural polymers. See EN 35.04(g). That all types of protein substances are provided for in heading 3504 has been a long-standing position of CBP. See HQ 956644, Dec. 8, 1994. Consequently, CBP has classified milk protein isolates and other protein isolates not more specifically provided for elsewhere in the HTSUS in heading 3504, HTSUS. See N020518, May 9, 2008 (concerning a milk protein isolate powder with 93.1% protein), HQ 956644, Dec. 8, 1994 (concerning whey protein isolate) and HQ 963306, Sept. 6, 2000 (concerning enzymatically hydrolyzed wheat protein).
We note that the terms of headings 0404 and 3504, HTSUS, relevantly, “not elsewhere specified or included”, require a relative specificity analysis at GRI 1. Under such an analysis, we must look to the provision with the “requirements which are more difficult to satisfy and which describe the articles with the greatest degree of accuracy and certainty”. Sharp Microelectronics Technology v. United States (“Sharp Microelectronics”), 932 F. Supp. 1499, 1507 (citations omitted) (Ct. Int’l Trade 1996), aff’d, 122 F.3d 1446 (citations omitted), (Fed. Cir. 1997). Indeed, because both headings under consideration require a relative specificity analysis, the issue before us is whether it is the phrase “products consisting of natural milk constituents” or the phrase “other protein substances” that describes the product at issue with the greatest degree of accuracy and certainty.
Based on the scope of the headings at issue, we find that heading 3504, HTSUS, provides for a narrower class of products (“protein substances”) than heading 0404 (“natural milk constituents”, one of which is protein). Accordingly, heading 3504 is the provision that is more difficult to satisfy. In accordance with GRI 1, as interpreted by the CIT in Sharp Microelectronics concerning relative specificity analyses dictated by heading text, if the instant product can be classified in heading 3504, HTSUS, then classification in heading 0404 is precluded.
The products at issue consist of 85-91% protein (casein and lactalbumin), 1-2.25% fat, 0.2-1.5% lactose, 5-8% ash, and 2-6% moisture. Raw milk typically consists of 3.3% protein (80% casein, 20% whey (includes lactalbumin)), 3.65% fat, 4.75% lactose, 0.65% ash, and 87.75% water. It is evident that while all the natural constituents of milk are present in MPI 9060, protein is the principal ingredient. Lactose is only present in residual quantities.
Based on the formulation of MPI 9060, we find that it is specifically identifiable as a protein product of heading 3504, HTSUS. As such, it is precluded from classification in heading 0404, HTSUS, by the terms of that heading. Moreover, we note that, based on the text of heading 3504, HTSUS, as exemplified in EN 35.04, a protein substance is only precluded from classification in the heading if another heading more specifically provides for the protein substance. See EN 35.04 (a)-(g). Heading 0404, HTSUS, does not meet that requirement. As a result of these conclusions, we will not address your arguments regarding the scope and applicability of subheading 0404.90.10, HTSUS. We note, however, that CBP has previously addressed this issue. See HQ 965592.
Finally, we note that in HQ 967521, dated December 9, 2005 (product containing 82% colostrum protein classified in heading 0404); NY M85352, dated October 26, 2006 (mineral rich milk derivative containing 1.59% protein classified in heading 0404); HQ 965592 (one product containing 41.5% protein, one product containing 41% protein both classified in heading 0404); and in HQ 950484 (product containing 79% protein classified in heading 0404), CBP classified products composed of natural milk constituents in heading 0404, HTSUS, because they were not more specifically provided for elsewhere in the nomenclature.
HOLDING:
By application of GRI 1, the Kerry milk protein isolate product line MPI 9060 is classified in heading 3504, HTSUS. It is specifically provided for in subheading 3504.00.10, which provides for, in relevant part: “other protein substances and their derivatives, not elsewhere specified or included: Protein isolates.” The 2009, column one general rate of duty is 5% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
A copy of this ruling letter should be attached to entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch