CLA-2 OT:RR:CTF:TCM H081683 TNA
Port Director
Port of New York City
U.S. Customs and Border Protection
John F. Kennedy International Airport Bldg #77 Jamaica, NY 11430
RE: Application for Further Review of Protest No. 4701-09-100897; L-Carnitine Compounds
Dear Port Director:
The following is our decision on the Application for Further Review of Protest No. 4701-09-100897, filed on behalf of Sigma Tau HealthScience, Inc, LLC (“Protestant”), regarding the classification of L-Carnitine compounds under the Harmonized Tariff Schedule of the United States (HTSUS). In reaching our decision, we have taken into consideration additional information supplied to staff of this office during a teleconference on May 20, 2010, as well as in a supplemental submission dated May 26, 2010.
FACTS:
The subject merchandise consists of four different L-carnitine compounds which have been analyzed by U.S. Customs and Border Protection’s (“CBP’s”) laboratory. Acetyl L-Carnitine HCl, CAS # 5080-50-2, was found by Laboratory Report Number NY20100812 to be a nonaromatic quaternary ammonium salt compound. The laboratory report further stated that it is a salt of an acetylated derivative of L-carnitine. Acetyl L-Carnitine Arginate DiHCl with 1.5% silica, CAS # 309757-23-1, was found by Laboratory Report Number NY20100811 to be a mixture of nonaromatic compounds. Glycine Propionyl L-Carnitine HCl with 1.5% silica, CAS # 423152-20-9, was found by Laboratory Report Number NY20100816 to be a mixture of nonaromatic
compounds. Acetyl L-Carnitine Taurinate HCl with 1.5% silica, CAS # 423152-18-5, was found by Laboratory Report Number NY20100810 to be a mixture of nonaromatic compounds. None of the CAS numbers are listed in the Pharmaceutical Appendix. All of the subject compounds are imported in bulk as white powder in 25k drums.
Carnitine is a quaternary ammonium compound biosynthesized from amino acids. In living cells, it is required for the transport of fatty acids from the intracellular fluid into the mitochondria during the breakdown of fats for the generation of metabolic energy. In humans and in other animals, carnitine is produced within the body, primarily in the liver and kidneys. Carnitine exists in two stereoisomers: the biologically active form, L-carnitine, and the biologically inactive form, D-carnitine. When originally discovered, carnitine was named Vitamin Bt. Three of the subject compounds contain a percentage of silica that the importer has identified as an anti-caking agent, processing aid and preservative to facilitate dry dispersion during further manufacturing.
On November 24, 2008, the merchandise was entered at the Port of JFK under heading 2923, HTSUS, as quaternary ammonium salts and hydroxides. On March 6, 2009, Customs and Border Protection (“CBP”) liquidated the merchandise in heading 3824, HTSUS, which provides for chemical products not elsewhere specified or included. The importer timely filed its protest and AFR on August 28, 2009, claiming classification under heading 2936, HTSUS, as synthetic vitamins.
ISSUE:
Whether Acetil L-carnitine cloruro AH CF.1, acetyl L-carnitine arginate dihydrochloride with 1.5% silica, glycine propionyl L-carnitine Hydrochloride with 1.5% silica, and acetyl L-carnitine taurinate with 1.5% silica are classified under heading 2923, HTSUS, as quaternary ammonium salts and hydroxides; under heading 2936, HTSUS, as vitamins; or under heading 3824, HTSUS, as chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included?
LAW AND ANALYSIS:
This matter is protestable under 19 U.S.C. §1514(a) (2) as a decision on classification and duty rate. The protest was timely filed, within 180 days of liquidation of the entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)).
Further Review of Protest No. 4701-09-100897 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because the instant decision is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee, or with a decision made at any port with respect to the same or substantially similar merchandise. Specifically, the Protestant argues that NY E88640, dated December 8, 1999, and NY N011436, dated June 1, 2007, classified L-Carnitine in subheading 2923.90.00, HTSUS.
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 HTSUS headings under consideration are the following:
2923 Quaternary ammonium salts and hydroxides; lecithins and other phosphoaminolipids, whether or not chemically defined
2936 Provitamins and vitamins, natural or reproduced by synthesis (including natural concentrates), derivatives thereof used primarily as vitamins, and intermixtures of the foregoing, whether or not in any solvent
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:
Legal Note 1 to Chapter 29, HTSUS, reads, in pertinent part:
Except where the context otherwise requires, the headings of this chapter apply only to:
Separate chemically defined organic compounds, whether or not containing impurities…
(c) The products of headings 2936 to 2939 or the sugar ethers, sugar acetals and sugar
esters, and their salts, of heading 2940, or the products of heading 2941, whether or
not chemically defined;
Products mentioned in (a), (b) or (c) above dissolved in water…
(f) The products mentioned in (a), (b), (c), (d) or (e) above with an added stabilizer
(including an anticaking agent) necessary for their preservation or transport
General Note 13 to the HTSUS, states, in relevant part:
Whenever a rate of duty of “Free” followed by the symbol “K” in parentheses appears in the “Special” subcolumn for a heading or subheading, any product (by whatever name known) classifiable in such provision which is the product of a country eligible for tariff treatment under column 1 shall be entered free of duty, provided that such product is included in the pharmaceutical appendix to the tariff schedule. Products in the pharmaceutical appendix include the salts, esters and hydrates of the International Non-proprietary Name (INN) products enumerated in table 1 of the appendix that contain in their names any of the prefixes or suffixes listed in table 2 of the appendix, provided that any such salt, ester or hydrate is classifiable in the same 6-digit tariff provision as the relevant product enumerated in table 1.
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 at the international level, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
Part A of the General Explanatory Notes to Chapter 29, defines, in relevant part, a “separate chemically defined compound” as:
[a] substance which consists of one molecular species (e.g., covalent or ionic) whose composition is defined by a constant ratio of elements and can be represented by a definitive structural diagram.
The EN for heading 2923, HTSUS, states, in pertinent part, the following:
Quaternary organic ammonium salts contain one tetravalent nitrogen cation R1R2R3R4N+ where R1, R2, R3 and R4 may be the same or different alkyl or aryl radicals (methyl, ethyl, tolyl etc.).
This cation may be associated with the hydroxide ion (OH–) to give a quaternary ammonium hydroxide of general formula R4N+OH – corresponding to its inorganic parent ammonium hydroxide NH4OH.
The residuary valence may, however, be filled by other anions (chloride, bromide, iodide, etc.) to give quaternary ammonium salts.
The most important salts and substitution derivatives of quaternary ammonium bases are:
(1) Choline, its salts and derivatives. A hydroxyethyltrimethylammonium hydroxide found in the bile, in the brain, in egg-yolk, and in all fresh seeds. A compound from which other very important biological substances are derived (e.g., acetylcholine, methylcholine).
The EN for heading 2936, HTSUS, states, in relevant part, the following:
Vitamins are active agents, usually of complex chemical composition, which are obtained from outside sources and are essential for the proper functioning of human or other animal organisms. They cannot be synthesised by the human body and must therefore be obtained in final or nearly final form (provitamins) from outside sources. They are effective in relatively minute amounts and may be regarded as exogenous biocatalysts, their absence or deficiency giving rise to metabolic disturbances or “deficiency diseases.”
The EN for heading 3824, HTSUS, states, in relevant part, the following:
(B) CHEMICAL PRODUCTS AND CHEMICAL OR OTHER PREPARATIONS
With only three exceptions (see paragraphs (7), (19) and (31) below), this heading does not apply to separate chemically defined elements or compounds.
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.
The chemical or other preparations are either mixtures (of which emulsions and dispersions are special forms) or occasionally solutions. Aqueous solutions of the chemical products of Chapter 28 or 29 remain classified within those Chapters, but solutions of these products in solvents other than water are, apart from a few exceptions, excluded therefrom and accordingly fall to be treated as preparations of this heading.
Protestant argues that L-carnitine is a vitamin, and should therefore be classified as such under heading 2936, HTSUS. In support of this argument, Protestant cites to scientific literature from the 1950s, which names L-carnitine as Vitamin Bt and discusses its therapeutic effects. We do not dispute that L-carnitine was named Vitamin Bt upon its discovery. However, EN 29.36 defines vitamins as agents that are obtained from outside sources because they cannot be produced in the body. L-carnitine is produced naturally in the liver and kidneys of both humans and animals. In addition, carnitine belongs to the same chemical family (quaternary amines) as choline, another nutrient referred to as a B vitamin. See http://www.innvista.com/health/nutrition/ amino/carnit.htm. Choline is excluded from heading 2936, HTSUS, by exclusion 1(c) in EN 29.36. See EN 29.36.
Furthermore, in the telephone conference with our office, you stated that carnitine was akin to Vitamin B12. Vitamin B12 is a nutrient found in certain foods which is necessary to make healthy red blood cells and to keep the nervous system working properly. It is also used to treat pernicious anemia, a condition where in the body cannot process the Vitamin B12 found in food because of an insufficient amount of
a specific enzyme, intrinsic factor. This is in direct contrast to carnitine, which is made in the liver and kidneys. Carnitine that is added to the diet supplements this natural process. Thus, Vitamin B12 is not like carnitine in the sense of being a Vitamin of 2936, because carnitine is made in the body, and Vitamin B12 is not. As a result, the subject merchandise cannot be classified under heading 2936, HTSUS.
Carnitine is a quaternary ammonium compound because it contains one tetravalent nitrogen cation R1R2R3R4N+. See EN 29.23. As such, carnitine is provided for eo nomine in heading 2923, HTSUS, and CBP has consistently classified pure L-carnitine in this heading. See, e.g., NY N011436, dated June 1, 2007; NY F80631, dated January 11, 2000; NY E88640, dated December 8, 1999; HQ 964589, dated March 8, 2002. Certain defined mixtures are permitted under Note 1 of Chapter 29. Protestant claims that the added silica is a permitted addition under Chapter 29, Note 1(f). Protestant has also provided evidence that the silica acts as an anti-caking agent for the carnitine, which cannot be allowed to cake during storage. Therefore, it is a stabilizer necessary for their preservation or transport within the meaning of Legal Note 1(f) to Chapter 29, HTSUS. As a result, Acetyl L-Carnitine HCl, CAS # 5080-50-2, is classified in subheading 2923.90.00, which provides for “Quaternary ammonium salts and hydroxides; lecithins and other phosphoaminolipids, whether or not chemically defined: other.”
This subheading has a “K” listed is the “special” subcolumn; therefore, General Note 13 is applicable. General Note 13 allows pharmaceutical products with this symbol, by whatever name known, to be entered free of duty, provided that the product is listed in the pharmaceutical appendix to the HTSUS. Acetyl L-Carnitine HCl was accorded duty-free treatment in NY E82956, dated June 18, 1999. Although we find this ruling to be incorrect in this regard because CAS# 5080-50-2 is not listed in the Pharmaceutical Appendix, see Laboratory Report #NY20100812, rulings of similar merchandise are in force unless revoked or modified. See 19 U.S.C. §1625. We intend to revoke NY E82956, but until its revocation is final, the subject merchandise will receive duty free treatment under General Note 13.
Laboratory analysis also shows that Acetyl L-Carnitine Arginate DiHCL, CAS #309757-23-1, Glycine Propionyl L-Carnitine HCl, CAS #423152-20-9, and Acetyl L-Carnitine Taurinate HCl, CAS #423152-18-5, are mixtures of nonaromatic compounds excluded from classification in Chapter 29, HTSUS by Note 1 thereto. Therefore, they are not similar to the L-carnitine of NY E88640 and NY N011436. Insofar as these three products are mixtures of chemicals not classified elsewhere, they are classified under heading 3824, HTSUS, and specifically under subheading 3824.90.92, HTSUS, as “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.” General Note 13 applies to this subheading as well. However, the entered esters contain terms which are not listed in Table 2 of the Pharmaceutical Appendix. As such, they are ineligible for the free duty rate provided in General Note 13.
HOLDING:
By application of GRI 1, Acetyl L-Carnitine HCl, CAS # 5080-50-2, is classified in heading 2923, HTSUS, and specifically in subheading 2923.90.00, HTSUS, which provides 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: other: other: other.” The 2008 column one general rate of duty is 6.2%. In accordance with NY E82956, this merchandise is duty-free.
Acetyl L-Carnitine Arginate DiHCL, CAS #309757-23-1, Glycine Propionyl L-Carnitine HCl, CAS #423152-20-9, and Acetyl L-Carnitine Taurinate HCl, CAS #423152-18-5 are classified in heading 3824, HTSUS, and specifically in subheading 3824.90.92, HTSUS, as “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.” The 2008 column one general rate of duty is 5%.
You are instructed to DENY the protest, except to the extent reclassification of the merchandise as indicated above results in a net duty reduction and partial allowance.
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