CLA-2 RR:CTF:TCM H063895 EG
Port Director
U.S. Customs and Border Protection
7141 Office City Drive
Houston, TX 77087
Attn: Linda Finnerty, Senior Import Specialist
Re: Application for Further Review of Protest No. 5301-09-100215: Heavy Propylene Glycol
Dear Port Director:
This is in response to Protest 5301-09-100215, dated April 23, 2009, filed by counsel on behalf of Third Coast Terminals (Third Coast), in response to your classification of heavy propylene glycol, under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The subject merchandise is heavy propylene glycol (HPG), a residual product of the propylene glycol manufacturing process. HPG consists of a mixture of organic solvent glycols, such as dipropylene glycol, tripropylene glycol and other higher glycols. Propylene glycol manufacturers sell HPG for use in applications such as oil-field drilling fluid and frothing agent in the mining industry.
Third Coast’s protest asserts that the subject HPG contains spent catalyst, unused catalyst and other detritus from the reaction. Third Coast states that the HPG is imported for reclamation of higher glycols which are extracted from the HPG through a large scale batch production and distillation process. Once the glycols are extracted,
the distillation is a further waste which must be disposed of properly and usually at a high cost. Although HPG has certain industrial applications, Third Coast claims that the subject HPG contains too many contaminants to be marketed as a primary product as imported.
In 2008, Third Coast entered six lines of HPG under subheading 3825.49.00, HTSUS, which provides in pertinent part for “…other wastes specified in note 6 to this chapter: waste organic solvents: other.” CBP’s Houston laboratory tested several of these HPG entries and determined that the subject HPG consists of a mixture of dipropylene glycol, tripropylene glycol and other higher glycols, as well as 3% to 19% unknown components. On October 31, 2008, CBP liquidated the six entries under subheading 3824.90.92, HTSUS, which provides in pertinent part for “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.”
On April 23, 2009, Third Coast timely submitted the subject Protest and Application for Further Review (AFR). Third Coast’s AFR satisfies application criteria because CBP has not previously ruled upon whether HPG is a chemical product or a waste product. 19 C.F.R. § 174.24(b).
ISSUES:
Is the subject HPG classified under subheading 3824.90.92, HTSUS, as a chemical product or under subheading 3825.49.00, HTSUS, as a waste product?
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context, which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The 2008 HTSUS provisions at issue are as follows:
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:
Other:
Other:
3824.90.92 Other.
* * * * *
3825 Residual products of the chemical or allied industries, not elsewhere specified or included; municipal waste; sewage sludge; other wastes specified in note 6 to this chapter:
Waste organic solvents:
3825.49.00 Other.
* * * * *
Note 6 to Chapter 38, HTSUS:
For the purposes of heading 3825, the expression “other wastes” applies to:
(a) Clinical waste, that is, contaminated waste arising from medical research, diagnosis, treatment or other medical, surgical, dental or veterinary procedures, which often contain pathogens and pharmaceutical substances and require special disposal procedures (for example, soiled dressings, used gloves and used syringes);
(b) Waste organic solvents;
(c) Wastes of metal pickling liquors, hydraulic fluids, brake fluids and anti-freezing fluids; and
(d) Other wastes from chemical or allied industries.
The expression “other wastes” does not, however, cover wastes which contain mainly petroleum oils or oils obtained from bituminous materials (heading 2710).
* * * * *
Subheading Note 2 to Chapter 38, HTSUS:
For the purposes of subheadings 3825.41 and 3825.49, “waste organic solvents” are wastes containing mainly organic solvents, not fit for further use as presented as primary products, whether or not intended for recovery of the solvents.
* * * * *
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide 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 (August 23, 1989).
EN 38.24 states, in pertinent part, the following:
The chemical products classified here are therefore products whose composition is not chemically defined, whether they are obtained as by-products of the manufacture of other substances (this applies, for example, to naphthenic acids) or prepared directly.
* * * * *
EN 38.25(D) states that the wastes specified in Note 6 to Chapter 38 include:
(2) Waste organic solvents generally derived from cleaning and washing processes and containing mainly organic solvents, not fit for further use as presented as primary products, whether or not intended for the recovery of solvents.
* * * * *
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes. Heading 3825, HTSUS, covers “other wastes specified in note 6 to [Chapter 38].” Note 6 to Chapter 38 is a list of waste products, including waste organic solvents. Subheading Note 2 to Chapter 38 defines a waste organic solvent as “wastes containing mainly organic solvents, not fit for further use as presented as primary products, whether or not intended for recovery of the solvents.”
The subject HPG contains mainly organic solvents such as dipropylene glycol, tripropylene glycol and other higher glycols. According to Third Coast, the subject HPG is not fit for further use as presented as a primary product because it contains contaminants, catalysts and other detritus from the production of propylene glycol. The CBP Houston laboratory reports indicate that the subject HPG contains between 3% and 19% unknown components which could account for the contaminants. As such, the subject HPG is properly classified under subheading 3825.49, HTSUS, as a waste organic solvent.
Two arguments seem to support classification of the subject HPG under heading 3824, HTSUS. According to EN 38.24, the term “chemical product” includes “by-products of the manufacture of other substances.” Since HPG has some limited commercial use in the drilling and mining industries, the Port determined that the subject HPG could not be a waste product because it was not useless. Thus, the Port classified the HPG as a by-product of the propylene glycol manufacturing process under heading 3824, HTSUS. However, Third Coast contends that the subject HPG is not fit for further use as imported because the subject HPG contains contaminants. Third Coast claims that the subject HPG is a waste product unless processed further. The CBP Houston laboratory results cannot refute this assertion. As a result, the subject HPG is a waste product and not a by-product fit for commercial use.
Second, EN 38.25(D)(2) states that waste organic solvents are “generally derived from cleaning and washing processes.” HPG is not the result of a cleaning or washing process. Rather, HPG remains after the propylene glycol manufacturing process. As a result of EN 38.25(D)(2), the Port declined to classify the subject HPG as a waste organic solvent under heading 3825, HTSUS. However, the ENs are merely informative while the HTSUS section notes, chapter notes and headings are binding legal authority. The ENs cannot limit the statutory provisions of the HTSUS. The HTSUS does not require that waste organic solvents be derived from cleaning and washing processes. The HTSUS merely requires that waste organic solvents be mainly comprised of organic solvents and not fit for further use as presented. As a result, the subject HPG is a waste organic solvent.
HOLDING:
By application of GRI 1, heavy propylene glycol is classified in subheading 3825.49.00, HTSUS, which provides for “Residual products of the chemical or allied industries, not elsewhere specified or included; municipal waste; sewage sludge; other wastes specified in note 6 to this chapter: waste organic solvents: other.” The column one, general rate of duty is free. You are instructed to GRANT the protest.
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 on the World Wide Web at www.usitc.gov.
You are to mail this letter 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 in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of this letter, the Office of International Trade 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 Rulings Division