CLA-2 OT:RR:CTF:TCM H112716 GC
Mr. Munford Page Hall, II, Esq.
Adduci, Mastriani & Schaumberg, LLP
1200 Seventeenth Street, NW
Washington, DC 20036
RE: Modification of HQ H099760 and NY N064255; classification of vodka
Dear Mr. Hall:
This is in response to your letter, dated June 16, 2010, requesting reconsideration of Headquarters Ruling Letter (HQ) H099760, dated May 25, 2010, which pertains to the tariff classification under the Harmonized Tariff Schedule of the United States (HTSUS) and country of origin of vodka. You request reconsideration of HQ H099760 only with respect to the tariff classification of the vodka. We have since reviewed HQ H099760 along with New York Ruling Letter (NY) N064255, dated July 8, 2009, which pertains to the classification of a similar product. We find both rulings to be in error.
Notice of the proposed action was published in the Customs Bulletin, Vol. 45, No. 22, on May 25, 2011. No comments were received in response to the notice.
FACTS:
The vodka subject to HQ H099760 is produced in Sweden from ethyl alcohol followed by fermentation with yeast of cereals. The vodka is imported in bulk and contains 96% alcohol/volume. In HQ H099760, the instant vodka was found to be classified under subheading 2207.10.30, HTSUS, which provides for: “[u]ndenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher; ethyl alcohol and other spirits, denatured, of any strength: Undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher: For beverage purposes”.
In addition to the above information, you informed us in an e-mail submission, dated January 24, 2010, that the instant vodka is the product of at least five distillations as well as charcoal filtration, which removes virtually all of the alcohol’s secondary constituents. As a consequence, the subject merchandise possesses the distinctive characteristics of vodka inasmuch as it has no color, taste, or aroma.
As imported, the subject vodka is fit for human consumption. Related to that, you noted in your reconsideration request that equivalent products (i.e. vodka that is 96% alcohol by volume) are sold commercially as vodka in Europe and in the United States. You also noted that the subject merchandise satisfies the definition of “vodka” set forth in regulations of the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury (“TTB”) and the European Union.
ISSUE:
Whether the instant vodka is properly classified under heading 2207, HTSUS, as undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher, or heading 2208, HTSUS, as a spirit?
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 under consideration in this case are as follows:
2207 Undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher; ethyl alcohol and other spirits, denatured, of any strength:
* * *
2208 Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.; spirits, liqueurs and other spirituous beverages:
At the outset, we note that heading 2207, HTSUS, and heading 2208, HTSUS, are both divided by a semicolon. Accordingly, in this instance, the subject merchandise falls under the scope of either the provision for “undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher” (heading 2207, HTSUS), or “spirits, liqueurs and other spirituous beverages” (heading 2208, HTSUS).
In HQ H099760, we noted that the instant vodka would be diluted to 40 percent alcohol by volume after importation, and therefore was described by heading 2207, HTSUS, because it is ethyl alcohol of a strength of 96 percent alcohol by volume at the time of importation.
This conclusion overlooks the fact that the scope of the provision for “spirits, liqueurs and other spirituous beverages” of heading 2208, HTSUS, is not limited to certain products of a certain alcoholic strength by volume. Accordingly, it must be determined whether the instant merchandise falls under the scope of the eo nomine provision for “spirits”.
When a tariff term is not defined by the HTSUS or its legislative history, "the term’s correct meaning is its common meaning." Mita Copystar Am. v. United States, 21 F.3d 1079, 1082 (Fed. Cir. 1994). The common meaning of a term used in commerce is presumed to be the same as its commercial meaning. Simod Am. Corp. v. United States, 872 F.2d 1572, 1576 (Fed. Cir. 1989). To ascertain the common meaning of a term, a court may consult "dictionaries, scientific authorities, and other reliable information sources" and "lexicographic and other materials." C.J. Tower & Sons v. United States, 673 F.2d 1268, 1271 (CCPA 1982); Simod, 872 F.2d at 1576. The Oxford English Dictionary defines “spirit”, in pertinent part, as follows:
21. a. A liquid of the nature of an essence or extract from some substance, esp. one obtained by distillation…
b. Without article: Liquid such as is obtained by distillation, spec. that which is of an alcoholic nature…
c. orig. pl. Strong alcoholic liquor for drinking, obtained from various substances by distillation; sing. any particular kind of this…
We note that that the instant merchandise meets this definition for “spirits”. Particularly with respect to the scope of heading 2208, HTSUS, the subject merchandise is a strong alcoholic liquor for drinking obtained by distillation. The fact that it is suitable for consumption and substantially identical to varieties of vodka commercially available at 96 percent alcohol percent by volume serves as evidence that the instant vodka is recognizable as such. Based on the foregoing, we find that the product falls under the scope of the phrase “spirits, liqueurs and other spirituous beverages”, and is thus prima facie classifiable under heading 2208, HTSUS.
This finding is supported by the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) to heading 22.08. The ENs constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989).
Regarding the scope of “spirits, liqueurs and other spirituous beverages” of heading 2208, HTSUS, EN 22.08 provides a list of finished products that meet the terms of the heading. In so doing, EN 22.08 states, in pertinent part:
In addition to undenatured ethyl alcohol of an alcoholic strength by volume of less than 80% vol, the heading includes, inter alia:
* * *
(5) Vodka obtained by distilling fermented mach of agricultural origin (e.g., cereals, potatoes) and sometimes treated with activated charcoal or carbon.
(Emphasis in original)
While it may be the case that spirits of heading 2208, HTSUS, are typically of an alcoholic strength of less than 80 percent by volume, this is not a requirement imposed by the legal text. Moreover, the fact that vodka is listed in EN 22.08 among the examples of spirits, liqueurs and other spirituous beverages covered by the heading in addition to those of an alcoholic strength by volume of less than 80 percent indicates that the heading covers beverages of a greater alcoholic content.
However, we note that the instant vodka is also described by heading 2207, HTSUS, which provides for, in pertinent part, “undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher”. EN 22.07 provides, in pertinent part, that heading 2207, HTSUS, “…covers neutral spirits, i.e., ethyl alcohol containing water from which the secondary constituents… present in the first distillate have been almost completely removed by fractional distillation.” (Emphasis in original).
Ethyl alcohol, also referred to as ethanol, is defined in Merriam-Webster Collegiate Dictionary Online (2011), in pertinent part, as “a colorless…liquid that is the intoxicating agent in liquors and is also used as a solvent and in fuel”. Considering the fact that the instant merchandise is solely the result of multiple distillations of yeast with cereals along with charcoal filtration, it constitutes ethyl alcohol. In this regard, vodka is unique among spirits inasmuch as it is neutral, meaning that it contains no secondary constituents that provide flavor or aroma as a result of multiple distillations and charcoal filtration. See also EN 22.07, supra. The pertinent definition of the word “denature” in the Oxford English Dictionary is “[t]o alter (anything) so as to change its nature; e.g. to render alcohol… unfit for consumption”. As noted above, the subject vodka is fit for human consumption and is thus “undenatured”. Accordingly, vodka is undenatured ethyl alcohol. The fact that the subject merchandise is imported at an alcoholic strength by volume of 96 percent vol. means that it is prima facie classifiable under heading 2207, HTSUS.
Because the instant merchandise is prima facie classifiable under two HTSUS headings, GRI 3 applies. It provides, in pertinent part, as follows:
When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
GRI 3(a) is known as the "rule of relative specificity." See Orlando Food Corp. v. United States, 140 F.3d 1437, 1441 (Fed. Cir. 1998) (Orlando Food). Where articles can be classified under two HTSUS headings, under GRI 3(a) the classification "turns on which of these two provisions are more specific." Orlando Food, 140 F.3d at 1441. Courts undertaking the GRI 3(a) comparison "look to the provision with requirements that are more difficult to satisfy and that describe the article with the greatest degree of accuracy and certainty." Faus Group, Inc. v. United States, 581 F.3d 1369 (Fed. Cir. 2009) (quoting Orlando Food, 140 F.3d at 1441).
In this particular case, it is more difficult to satisfy the provision for “spirits, liqueurs and other spirituous beverages” than the provision for “[u]ndenatured ethyl alcohol of an alcoholic strength by volume of 80 percent or higher”, as spirits are a finished commercial product and undenatured ethyl alcohol is a mere raw material used in the creation of spirits and for other industrial purposes. While vodka’s status as a “neutral spirit” places it under the scope of heading 2207, HTSUS, not all ethyl alcohol of heading 2207, HTSUS, meets the terms of heading 2208, HTSUS, as spirits, liqueurs and other spirituous beverages. The instant product has been distilled five times and subjected to charcoal filtration. It is also indistinguishable from products sold and consumed as vodka. Accordingly, the instant product is a spirit, liqueur or other spirituous beverage of heading 2208, HTSUS.
HOLDING:
By application of GRI 3(a), the subject vodka is classified under heading 2208, HTSUS, and is specifically provided for under subheading 2208.60, HTSUS, as: “Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.; spirits, liqueurs and other spirituous beverages: Vodka”. Classification beyond the six-digit level is determined by the capacity of the container in which the vodka is imported. The column one, general rate of duty is free.
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.
EFFECT ON OTHER RULINGS:
HQ H099760, dated May 25, 2010, and NY N064255, dated July 8, 2009, are hereby MODIFIED.
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division