CLA-2 OT:RR:CTF:TCM H235513 LWF
Port Director
Service Port–Charleston
U.S. Customs and Border Protection
200 East Bay Street
Charleston, SC 29401
Attn: Import Specialist Heather Puckhaber
RE: Application for Further Review of Protest No. 1601-12-100304; Classification and duty treatment of Acephate 97 UP from India
Dear Port Director:
This is in reference to the Application for Further Review (“AFR”) of Protest No. 1601-12-100304, timely filed on September 6, 2012, on behalf of United Phosphorus, Inc. (“UPI”). The AFR concerns whether Acephate 97 UP (“Acephate 97”) qualifies for a temporary reduction in rate of duty under the terms of Subchapter II, Chapter 99, subheading 9902.25.68, Harmonized Tariff Schedule of the United States (“HTSUS”).
FACTS:
The merchandise at issue—Acephate 97—is described as a concentrated organophosphate insecticide. In prior New York Ruling Letter (“NY”) N203416, issued to UPI on April 24, 2012, U.S. Customs and Border Protection (CBP) described Acephate 97 as follows:
Acephate 97 UP, is a concentrated organophosphate insecticide that contains 97% by weight of Acephate (CAS-30560-19-1), as the active ingredient with the remaining 3% as other ingredients which includes a proprietary surfactant. It is used for controlling pests on selected agricultural crops and in certain non-crop area. In your letter, you state that Acephate 97 UP will be imported in 1,000 pound sacks as well as in 2x10 pound cases. You also state that it will be sent directly to distributors upon importation and that it must be diluted as per the directions for use label. According to the directions for use label submitted to this office, Acephate 97 UP appears to be sprayed directly by professional pest control handlers after dilution with water.
This protest involves several entries of Acephate 97 imported by UPI at the Service Port of Charleston between March 14, 2012 and April 1, 2012; UPI originally classified the entries of Acephate 97 in subheading 2930.90.43, HTSUS, as “Organo-sulfur compounds: Other: Other: Pesticides: Other: Other.” However, in response to a tariff classification ruling request submitted by UPI to CBP on November 23, 2011—resubmitted to CBP on January 30, 2012—CBP issued NY N203416 on April 24, 2012, classifying Acephate 97 in subheading 3808.91.50, HTSUS, as “Insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant-growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, sulfur-treated bands, wicks and candles, and flypapers): Other: Insecticides: Other: Other.”
The primary classification of the Acephate 97 is not at issue, as UPI does not contest that the merchandise is properly classified in heading 3808, HTSUS. On June 15, 2012, UPI filed a prior disclosure concerning the misclassification of the subject entries at the Port of Charleston, and CBP issued rate advances on the same date, liquidating the Acephate 97 under subheading 3808.91.50, HTSUS, as other insecticide.
This dispute concerns whether Acephate 97 qualifies for a temporary reduction in rate of duty under Subchapter II, Chapter 99, HTSUS. Specifically, UPI filed its protest on September 6, 2012, asserting that Acephate 97 is described by the terms of subheading 9902.25.68, HTSUS, which provides for a temporary reduction in the rate of duty on “O,S-Dimethyl acetylphosphoramidothioate (Acephate) (CAS No. 30560-19-1) (provided for in subheading 2930.90.43).”
ISSUE:
Whether UPI’s Acephate 97 is eligible for reduced-duty treatment under subheading 9902.25.68, HTSUS?
LAW AND ANALYSIS:
Initially, we note that the matter protested is protestable under 19 U.S.C. § 1514(a)(2) as a decision on classification. The protest was timely filed, within 180 days of liquidation for entries made on or after December 18, 2004. (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. 1601-12-100304 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts. Specifically, the question of whether Acephate 97 UP is eligible for reduced-duty treatment under a Chapter 99 temporary duty reduction provision is an issue of first impression.
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 Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTS and are thus useful in ascertaining the proper classification of merchandise. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS subheadings under consideration are the following:
2930 Organo-sulfur compounds:
2930.90 Other:
Other:
Pesticides:
Other:
2930.90.43 Other.
* * * * *
3808 Insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant-growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, sulfur-treated bands, wicks and candles, and flypapers):
Other:
3808.91 Insecticides:
Other:
3808.91.50 Other.
* * * * *
9902.25.68 O,S-Dimethyl acetylphosphoramidothioate (Acephate) (CAS No. 30560-19-1) (provided for in subheading 2930.90.43).
* * * * *
Acephate 97 is an EPA-registered pesticide, consisting of the active ingredient, O,S-Dimethyl acetylphosphoramidothioate (Acephate) (CAS No. 30560-19-1) (“Acephate Technical”) and other inert ingredients. There is no dispute that Acephate 97 is properly classified in subheading 3808.91.50, HTSUS, as other insecticides. At issue is whether the merchandise qualifies for a temporary reduction in rate of duty under subheading 9902.25.68, HTSUS, which provides for “O,S-Dimethyl acetylphosphoramidothioate (Acephate) (CAS No. 30560-19-1) (provided for in subheading 2930.90.43).”
UPI asserts that the chemical description contained in subheading 9902.25.68—“O,S-Dimethyl acetylphosphoramidothioate (Acephate) (CAS No. 30560-19-1)”—can be equally applied to describe both the active ingredient Acephate Technical, as well as the instant merchandise, Acephate 97. In support of this argument, UPI states on Page 3 of the attachment to its CBP Form 19 Protest that, “Both Acephate Technical and Acephate 97 contain the same organo-sulfur compound as active ingredient within the same percentage range, and both are registered as insecticides.”
Contrary to UPI’s assertion of similarity, we find that the composition of Acephate 97 differs from that of Acephate Technical, and note that the two products are classified separately in the HTSUS. By UPI’s own admission in its Protest, Acephate 97 is a preparation of Acephate Technical, to which inert ingredients have been added for ease of use in the field. Similarly, in NY N203416, CBP described Acephate 97 as a preparation of “concentrated organophosphate insecticide that contains 97% by weight off Acephate [Technical] (CAS-30560-19-1), as the active ingredient with the remaining 3% as other ingredients which includes a proprietary surfactant.” There, CBP disagreed with UPI’s statement that Acephate 97 was properly classified in heading 2930, HTSUS, and concluded that:
[Acephate 97] is a formulated insecticidal preparation that is processed beyond the definition of Chapter 29 Note 1(a) as a separate chemically defined organic compound, whether or not containing impurities. Furthermore, according to the General Explanatory Notes to heading 3808, HTSUS, ‘Intermediate preparations, requiring further compounding to produce the ready-for-use insecticides, fungicides, disinfectants, etc., are also classified here (i.e., under heading 3808, HTS), provided they already possess the insecticidal, fungicidal, etc., properties.’ For the preceding reasons it is our determination that classification of the subject product will be heading 3808, HTSUS, as an insecticidal preparation for tariff purposes.
Furthermore, UPI does not dispute the classification of Acephate 97 in heading 3808, HTSUS, even though it acknowledges on Page 1 of the attachment to its CBP Form 19 Protest, that Acephate Technical is separately classified in heading 2930, HTSUS. As stated above, subheading 9902.25.68, HTSUS, does not provide for mixtures or preparations that move Acephate Technical beyond the scope of heading 2930, HTSUS. Consequently, while it is correct that the active ingredient present in both Acephate Technical and Acephate 97 is identified by the chemical description found in subheading 9902.25.68, HTSUS, it is inaccurate to assert that the Chapter 99 provision fully describes Acephate 97.
According to the terms of the subheading 9902.25.68, HTSUS, merchandise enjoying a temporary duty reduction under the provision, must be classified in subheading 2930.90.43, HTSUS. Supporting this requirement, Endnote 137 to subheading 2930.90.43, HTSUS, instructs users to, “See headings 9902.01.83, 9902.05.31 and 9902.25.68.” (Emphasis added). By contrast, Footnote 1 to subheading 3808.91.50, HTSUS, does not reference subheading 9902.25.68, HTSUS, but instead instructs users to “See heading 9902.11.14.” As such, the plain meaning of subheading 9902.25.68, HTSUS, only provides for merchandise classifiable in subheading 2930.90.43, HTSUS.
Similarly, we reject the broad assertion by UPI that the U.S. Court of International Trade’s (CIT) decision in Filmtec Corp. v. United States, 293 F. Supp. 2d 1364 (Ct. Int’l Trade 2003) instructs that a detailed inquiry into the intent of Congress is necessary when interpreting the scope of subheading 9902.25.68, HTSUS. In Filmtec, the CIT considered whether it was the intent of Congress to apply the rule of de minimis when interpreting technical specifications found in subheading 9907.56.01, HTSUS, providing for the duty-free treatment of certain non-woven fiber sheet. In an attempt to identify Congressional intent, the CIT reviewed portions of the Congressional Record and other examples of subsequently-introduced legislation to modify the Chapter 99 provision; however, the court was unable to identify a specific legislative intent that the rule of de minimis must be used. Filmtec, 293 F. Supp. 2d 1364, 1372-73. Nevertheless, the CIT ultimately applied the de minimis rule—not exclusively because of Congressional intent—but because to do otherwise, the CIT stated, would lead to “a manifestly perverse result… that no such goods [satisfying the technical specifications] existed at the time of liquidation.” Id. at 1373. Thus, the CIT concluded that, “When this incongruous result is combined with legislative history suggesting that the provision was originally proposed primarily as a means of benefitting Plaintiff, the Court sees no barrier to applying a de minimis standard.” Id.
The instant protest by UPI does not concern the application of a de minimis standard; nor does the application of the terms of subheading 9902.25.68, HTSUS, pursuant to GRI 1, precipitate an “incongruous result.” Subheading 9902.25.68, HTSUS, prima facie provides for Acephate Technical—a distinct and real product, classified in subheading 2930.90.43, HTSUS. See also Endnote 137 to subheading 2930.90.43, HTSUS. Legislative intent to provide for the temporary reduction in the rate of duty for Acephate Technical is confirmed by the United States Manufacturing Enhancement Act of 2010, H.R. 4380, 111th Cong. (2010) (enacted), which extended and amended existing temporary duty reductions for Acephate Technical of heading 2930, HTSUS, but contained no discussion of Acephate 97 separately classified in heading 3808, HTSUS. Similarly, H.R. 5063, 110th Cong. (2008), as referred to the House of Representatives Committee on Ways and Means, provided for the temporary reduction in the rate of duty for Acephate Technical, but remained silent as to the treatment of Acephate 97. See also S. 2959, 107th Cong. (2002).
Here, we also note that correspondence from UPI to Congressional offices—estimating the projected combined revenue loss resulting from duty reductions on Acephate Technical and Acephate 97—show that Congress may have been aware of Acephate 97 when it created subheading 9902.25.68, HTSUS. However, when considered in combination with Congress’s silence on Acephate 97 in the United States Manufacturing Enhancement Act of 2010 and H.R. 5063, 110th Cong. (2008), as well as the lack of any additional supporting evidence in the Congressional record, these communications fail to demonstrate Congressional intent to extend the scope of the subheading to include Acephate 97. In fact, the Congressional record could mean exactly the opposite—that Congress, after considering Acephate 97, chose instead to reduce the duty on Acephate Techincal, but not to suffer additional revenue loss from the reduced-duty treatment of Acephate 97.
To re-interpret the scope of subheading 9902.25.68, HTSUS, in the face of clear action by Congress—as UPI has suggested—would run contrary to the canon of construction, expressio unius est exclusio alterius (“the express mention of one thing excludes all others”). The chemical description contained in subheading 9902.25.68, HTSUS, specifically identifies the chemical compound O,S-Dimethyl acetylphosphoramidothioate (Acephate) (CAS No. 30560-19-1), otherwise known as Acephate Technical. Likewise, the referenced Chapter 29 subheading specifies that the merchandise falling under this duty-reduction provision must be classified as organic compounds of subheading 2930.90.43, HTSUS. Subheading 9902.25.68, HTSUS, does not describe mixtures or preparations of Acephate Technical; nor does the subheading reference products of Chapter 38. Insofar as subheading 9902.25.68, HTSUS, is silent as to mixtures and preparations of Chapter 38, we decline to infer that Congress intended for the subheading to provide for the temporary reduction of duty on such products. As such, we find that the plain meaning of the subheading 9902.25.68, HTSUS, narrowly describes Acephate Technical of Chapter 29, and that Acephate 97 is not eligible for reduced-duty treatment under this provision.
HOLDING:
By application of GRI 1, UPI’s Acephate 97 is classified in heading 3808, HTSUS. Specifically, it is classifiable in subheading 3808.91.50, HTSUS, which provides for “Insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant-growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, sulfur-treated bands, wicks and candles, and flypapers): Other: Insecticides: Other: Other.” The column one, general rate of duty is 5.0% ad valorem.
Furthermore, the subject merchandise does not meet the terms of subheading 9902.25.68, HTSUS, and cannot receive reduced-duty treatment under this provision. 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 re-liquidation 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 http://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