CLA-2 OT:RR:CTF:TCM H097639 TNA
Port Director
Boston Service Port
U.S. Customs and Border Protection
10 Causeway Street - Room 603 Boston, MA 02222
RE: Application for Further Review of Protest No. 0401-10-100051; Classification of Bulk Krill Oil Superba
Dear Port Director:
The following is our decision on the Application for Further Review of Protest No. 0401-10-100051, filed on behalf of Jedwards International, Inc, (“Protestant”), regarding the classification of Krill Oil Superba under the Harmonized Tariff Schedule of the United States (HTSUS).
FACTS:
The subject merchandise consists of two entries of Krill oil that is imported in bulk form. It is a very viscous dark red liquid. The oil is obtained from Antarctic Krill, a shrimp-like marine invertebrate animal. It is manufactured in a two-stage process. The first stage involves producing Krill meal from the Krill animal. The second stage involves extracting the Krill oil from the Krill meal using ethanol.
A sample of the subject merchandise was sent to a U.S. Customs and Border Protection Laboratory for testing. The results, reported in Laboratory Report #NY20100528, show that the subject merchandise is composed of 53% phospholipids, 23% triglycerides, 3% each of mono- and diglycerides, and 8% free fatty acids. It also contains 7% water, 1.7% sodium chloride, and astaxanthin, an antioxidant that naturally occurs in krill oil.
On May 7, 2009, the merchandise was entered at the Boston port under subheading 1603.00.90, HTSUS, as other extracts and juices of meat, fish or crustaceans, mollusks or other aquatic invertebrates. On March 6, 2009, Customs and Border Protection (“CBP”) liquidated the merchandise in subheading 3824.90.40, HTSUS, which provides for “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: Fatty substances of animal or vegetable origin and mixtures thereof.” The Protestant timely filed its protest and AFR on February 17, 2010, claiming classification under subheading 1506.00.00, HTSUS as “Other animal fats and oils and their fractions, whether or not refined, but not chemically modified,” or, in the alternative, as entered under subheading 1603.00.90, HTSUS.
ISSUE:
Whether krill oil imported in bulk is classified in heading 1506, HTUS, as “other animal fats and oil, and their fractions, whether or not refined, but not chemically modified”; in heading 1603, HTSUS, as “extracts and juices of meat, fish or crustaceans, mollusks or other aquatic invertebrates”; or in heading 3824, 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”?
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. 0401-10-10051 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 N012187, dated October 30, 2007, the ruling upon which the liquidated classification was made, does not contain enough description of the merchandise to determine whether the subject merchandise is similar enough to it to warrant the same classification.
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:
1506 Other animal fats and oils and their fractions, whether or not refined, but not chemically modified
1603 Extracts and juices of meat, fish or crustaceans, molluscs or other aquatic invertebrates
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:
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).
The ENs for heading 1506, HTSUS, state, in pertinent part, the following:
This heading covers all fats and oils of animal origin and their fractions, except those which are classified in heading 02.09 or in earlier headings of this Chapter. It therefore covers all animal fats not obtained from pigs, poultry, bovine animals, sheep, goats, fish or marina mammals, and all animal oils except lard oil, oleo-oil, tallow oil, oils obtained from fish or marine mammals, and oils derived from wool grease….
This heading excludes:…
(c) Fats and oils of fish or marine mammals and their fractions (heading 15.04).
The ENs for Chapter 15, HTSUS, state, in relevant part, the following:
With the exception of sperm oil and jojoba oil, animal or vegetable fats and oils are esters of glycerol with fatty acids (such as palmitic, stearic and oleic acids).
They may be either solid or fluid, but are all lighter than water. On fairly long exposure to air they become rancid due to hydrolysis and oxidation. When heated they decompose, giving off an acrid, irritant odour. They are all insoluble in water, but completely soluble in diethyl ether, carbon disulphide, carbon tetrachloride, benzene, etc. Castor oil is soluble in alcohol but the other animal or vegetable fats and oils are only slightly soluble in alcohol. They all leave a persistent greasy stain on paper.
The esters forming triglyceride fats can be broken up (saponification) by the action of superheated steam, dilute acids, enzymes or catalysts, giving glycerol and fatty acids, or by the action of alkalis, which give glycerol and the alkali salts of fatty acids (soaps).
The ENs for heading 1603, HTSUS, state, in relevant part, the following:
The heading includes:…
(3) Extracts of fish or crustaceans, mollusks or other aquatic invertebrates. Extracts of fish are obtained, e.g., by concentrating water extracts of the flesh of herring or other fish or made from fish meal (whether or not defatted); during the production all or part of the constituents which give the fishy taste (e.g., trimethylamine in the case of sea fish) may be eliminated and such extracts therefore have characteristics similar to those of meat extracts…
All these products may contain salt or other substances added in sufficient quantities to ensure their preservation.
Extracts are used for making certain food preparations such as soups (whether or not concentrated) and sauces. Juices are used mainly as dietetic foods.
The ENs for heading 3824, HTSUS, state, 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.
In the present case, Protestant argues for classification in subheading 1506.00.00, HTSUS. Protestant argues that the subject merchandise meets all of the criteria for “animal or vegetable fats and oils” stated in the ENs to Chapter 15, HTSUS, i.e., that it consists of esters of glycerol with fatty acids, is lighter than water, and is insoluble in water.
In response, we note that while the instant merchandise may meet these criteria, CBP has consistently held that the fats and oils of Chapter 15 must consist predominantly of triglycerides. Triglycerides are defined as “any naturally occurring ester of a normal acid (fatty acid) and glycerol.” See Hawley’s Condensed Chemical Dictionary. Furthermore, HQ 959798, dated July 29, 1999, for example, describes in great detail various fractionation processes described in the booklet, Food Fats and Oils, 6th ed., (The Institute of Shortening and Edible Oils, Inc., Washington, D.C., 1988). There, we reasoned that “based on the foregoing, the ‘fractions’ described in the various headings of chapter 15 include only glycerides of similar composition, which products are included by the term animal or vegetable fats or oils, as defined in the General EN’s to that chapter.” Thus, to be considered for classification in heading 1506, an article must be a triglyceride. This is consistent with numerous CBP rulings. See, e.g., HQ 959798; HQ 963166, dated December 11, 2001; HQ 959798, dated July 29, 1999; HQ 965396, dated July 23, 2002.
The instant merchandise is not predominantly triglycerides; to the contrary, it is only 23% triglycerides, and its predominant component is phospholipids, which make up 53% of the merchandise. Phospholipids are defined as “group[s] of liquid compounds that yield on hydrolysis phosphoric acid, an alcohol, fatty acid, and a nitrogenous base. They… include such substances as lecithin, cephalin, and sphingomyelin.” See Hawley’s Condensed Chemical Dictionary. As a result, the subject merchandise cannot be classified in heading 1506, HTSUS.
In the alternative, Protestant argues for classification as entered in subheading 1603.00.90, HTSUS, arguing that the subject merchandise can be classified there eo nomine, and that the process by which the subject merchandise is processed does not exclude it from this subheading. In response, we note that extracts of fish or meat that are classified in heading 1603, HTSUS, are permitted to contain salt or other substances, as long as they are added in sufficient quantities to ensure the merchandise’s preservation. See EN 16.03. Merchandise that has contained too little salt has been disqualified from classification in heading 1603, HTSUS, because they had not been added in quantities reasonably sufficient for preservation. See, e.g., HQ 959191, dated November 23, 1998 (a 30% salt content was considered enough to be for preservation); and NY L86080, dated August 22, 2005 (a 6.5% salt concentration was not considered high enough to be considered for preservation, and the merchandise was excluded from heading 1603, HTSUS). In the present case, the subject merchandise contains 1.7% salt, far below the 6.5% that was found not to be enough to act as a preservative in NY L86080.
Furthermore, HQ 959191 considered what it means to be an extract, and focused on the content of the merchandise. HQ 959191 cited to Marcor Development Corporation v. United States, 20 C.I.T. 538 (C.I.T. 1996), where the Court of International Trade dealt with the question what constituted an extract and concluded that “an extract must maintain the essence of original [product].” Marcor, 20 C.I.T. at 546. The merchandise at issue in Marcor was 52 to 60 percent shark cartilage and 40 to 48 percent dextrin, and the court found that the product was not an extract, because even with the predominance of shark cartilage, the added dextrin rendered the product as something that did not maintain the essence of the main source. Id. at 596. HQ 959191 found that “the persuasive sense from Marcor is that the product failed as an extract first because it had gone beyond the purity required of an extract and second because the product was used as a food supplement and not as a flavoring.” Thus, the products there were not extracts due to their additional ingredients. See HQ 959191.
In the present case, the subject merchandise contains a mixture of ingredients. Its largest component is phospholipids, which, at 53% of the subject merchandise, is almost identical to the percentage of shark cartilage in the merchandise at issue in Marcor. Furthermore, it contains a number of other ingredients in varying percentages. Thus, the subject merchandise, like the merchandise at issue in Marcor, does not retain the essence of the Krill from which it was derived. As a result, the subject merchandise is excluded from heading 1603, HTSUS.
Protestant further argues that the subject merchandise should not be classified in accordance with NY N012187, because the merchandise in that ruling was not described well enough to determine whether the instant merchandise is similar enough for classification purposes. In response, we note that our laboratory specifically tested the instant merchandise to determine the similarity between it and the merchandise at issue in NY N012187. Laboratory Report # NY20100528 indicates that these two products are substantially equivalent. As a result, the subject merchandise is classified in heading 3824, HTSUS, and specifically in subheading 3824.90.40, 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: Fatty substances of animal or vegetable origin and mixtures thereof.”
HOLDING:
By application of GRI 1, the Bulk Krill Oil Superba is classified in heading 3824, HTSUS, and specifically in subheading 3824.90.40, 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: Fatty substances of animal or vegetable origin and mixtures thereof.” The 2010 column one general rate of duty is 4.6%.
You are instructed to DENY the protest.
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