OT:RR:CTF:FTM H280419 JER
Port Director
U.S. Customs and Border Protection
301 E. Ocean Blvd., Suite 1400
Long Beach, CA 90802
Attn.: David Shaw, Supervisory Import Specialist
RE: Internal Advice; tariff classification of rice protein powder
Dear Port Director:
This letter is in response to the request for internal advice, initiated by counsel on December 14, 2015, on behalf of [***] Foods, Inc. ([***] or “importer”) regarding the tariff classification of rice protein powder, marketed as [***] (“product”) under the Harmonized Tariff Schedule of the United States (“HTSUS”). Our decision is set forth below.
The importer has asked that certain information submitted in connection with this internal advice request be treated as confidential. Inasmuch as this request conforms to the requirements of 19 C.F.R. § 177.2(b)(7), the request for confidentiality is approved. The information contained within brackets in this ruling or in the attachments to this ruling request, forwarded to our office, will not be released to the public and will be withheld from published versions of this ruling.
FACTS:
[***] is a low heat processed rice residue, which is enzymatically extracted from multiple layers of whole grain brown rice. It is produced in a multi-step process as follows: first, broken whole grain rice, or “middlings,” are gathered. These “middlings” are the product of either milling of the whole grain brown rice, or of polishing of the whole grain brown rice. The whole grain brown rice contains both carbohydrates and protein. The next step is the Hydrolyzed process used to obtain whole brown rice protein (40% to 60% concentrate). The organic enzymes (amylase) are added to the rice middlings to separate the protein from the carbohydrates (including fiber) present in the middlings through enzymatic hydrolysis and physical separation. This enzymatic hydrolysis splits the brown rice middlings into two substances: (1) rice syrup, which contains a high percentage of carbohydrates, and (2) feed grade rice residue, which contains a high percentage (approximately 70%) of rice protein. Next, is the Separation process, whereby the feed grade rice residue is separated from the rice syrup by a filtration press and only the feed grade rice residue (protein concentrate) is kept. Following the Separation process is the Drying process also referred to as the “Kill Step.” This is a kill step with the dual function of heat-inactivating any enzyme residue, consisting of the following steps: (a) The protein is washed, separated, dried and sterilized using a thermometer control, more than 80°C, time more than 2 hours. The protein concentrate is milled and sifted into the appropriate mesh; (b) Tested for microbial purity (Aerobic Plate Count, Yeast and Mold, E. coli, Coliforms and Salmonella); (c) If the concentrate passes it is ready for packaging; If it does not pass, then it goes through the kill step again; (d) Finally, the rice protein concentrate is packaged for retail.
According to [***], [***] is sold as a bulk ingredient to be used as a protein-based nutritional supplement in food or feed products, as well as in beverages, infant formula, nutraceuticals and nutritional products, small animal nutrition, weight management products, and cosmetic products. The [***] is made up of fat, ash, carbohydrates, and fiber. The process for producing the 70 percent protein grade of [***] is as outlined above. If 80 or 90 percent protein grades are desired, the feed grade rice residue is worked again to separate additional amounts of carbohydrates, fat, and ash, until the desired amount of protein residue content is reached. The residue is then sieved, dried, milled, sifted, and packaged. The majority of the [***] imported by [***] to the United States is the 80 percent rice protein grade.
On June 10, 2020, CBP received a supplemental submission from the importer regarding the subject product. In that submission, the importer discussed the meaning of the phrase “other workings” within the context of heading 2302, HTSUS, and included two articles discussing various types and methods of rice milling.
On September 8, 2020, CBP held a meeting with Counsel for [***] to discuss the classification of the subject [***] rice protein. In response to that meeting, [***] a supplemental submission on October 27, 2020, which further detailed the manufacturing process of the [***] rice protein. In their October 2020 submission, [***] contends that at the stage where the product is a feed-grade rice protein residue – that it is ready for consumption. [***] asserts that “it is not marketed and sold in this state because its texture may not be completely optimal for certain applications to which it may be put.” [***] adds that at the feed-grade rice protein residue “should be free of pathogens at this stage and levels of contaminants like heavy metals are low. However, a presence of foreign matter sometimes may pose a risk to consumer if the size is >7 mm and thus the residue needs to be sifted.” [***] further stated that the enzymes (used to separate the proteins from the carbohydrates) are not themselves consumable or palatable.
ISSUE:
Whether the rice protein powder is properly classified under heading 2106, HTSUS, which provides for “food preparations not elsewhere specified or included” or under heading 2302, HTSUS, which provides for “bran, sharps (middlings) and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants.”
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. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS headings at issue are as follows:
2106 Food preparations not elsewhere specified or included.
2106.10.00 Protein concentrates and texturized protein substances…
* * *
2302 Bran, sharps (middlings) and other residues, whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants.
* * *
2302.40.01 Of other cereals…
2302.40.01.05 Of rice…
* * *
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 the merchandise. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 21.06 provides, in pertinent part, as follows:
Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption.
Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.)…
EN 23.02 provides, in pertinent part, as follows:
Bran, sharps and other residues from the milling of cereal grains. This category essentially comprises by-products from the milling of wheat, rye, barley, oats, maize (corn), rice, grain sorghum or buckwheat, which do not comply with the requirements of Note 2 (A) to Chapter 11 as regards starch content and ash content.
These are, in particular:
Bran consisting of the outer skins of cereal grains with a small proportion of the adhering endosperm and a little flour.
Sharps (or middlings), obtained from ground cereals as a by-product in the manufacture of flour and consisting largely of the finer portions of the skins left after screening and sieving and of a little flour.
Residues from the sifting or other working of cereal grains. Sifting residues, obtained during pre-milling operations, consist essentially of:
grains of the basic cereal, smaller, mis-shapen, broken or crumbled;
seeds of various stray plants mixed with basic cereals;
fragments of leaves, stalks, minerals, etc.
This category further includes:
Residues from the cleaning of silos, ships’, holds, etc., which have much the composition as the above.
The pericarp removed from the rice grain during the bleaching operation
Residues resulting from hulling, rolling, flaking, pearling, slicing or kibbling of cereal grain.
* * *
The heading does not include oil-cake or other solid residues resulting from the extraction of vegetable fats or oils (headings 23.04 to 23.06).
[emphasis in original]
At issue is the classification of a rice protein powder known as [***], which is produced by means of enzymatic hydrolysis. The importer contends that the rice protein powder is a “residue” product, properly classified under heading 2302, HTSUS. In support of the classification under heading 2302, HTSUS, the importer avers that the subject rice protein powder meets the definition of a “residue” which is derived from the further working of rice. Moreover, the importer argues that enzymatic hydrolysis is a mechanical process and, therefore, it does not preclude the product from being classified under heading 2302, HTSUS.
For purposes of heading 2302, HTSUS, we note that the term “residue” is not defined by the tariff. When the HTSUS does not define a particular tariff term, it is well-settled that its definition is governed by “the term’s correct meaning [which] is its common or dictionary meaning in the absence of evidence to the contrary.” Airflow Technology, Inc. v. United States, 524 F.3d 1287, 1291 (Fed. Cir. 2008) (citing to Russell Stadelman & Co. v. United States, 242 F.3d 1044, 1048 (Fed. Cir. 2001); see also Kahrs Int’l, Inc. v. United States, 713 F.3d 640, 644 (Fed. Cir. 2013). The term “residue” is defined as “something that remains after a part is taken, separated, or designated or after completion of a process: remnant; remainder.” Merriam-Webster Online, at http://www.merriam-webster.com/dictionary/residue (last visited, April 4, 2020). Similarly, the term “refine” means “to free something from impurities or unwanted material; to improve or perfect by pruning or polishing.” Id.
In the instant case, the final protein supplement does not satisfy the definition of the term “residue” and is not a residue for purposes of heading 2302, HTSUS. Rather the subject rice protein substance is a refined protein-based nutritional supplement, which is ready for human consumption. In particular, the production process of which the original whole food source undergoes results in a “refined product” rather than a residue. The grain brown rice whole food source is broken down into rice middlings. The rice middlings then undergo a process referred to as enzymatic hydrolysis, which separates the protein from the carbohydrates. The enzymatic hydrolysis results into two byproducts: a feed grade rice protein residue and a rice syrup remain. At this stage of production, the substance no longer meets the definition of a rice middling or rice sharp within the meaning of heading 2302, HTSUS. Yet, it could be argued that the remaining rice syrup and rice protein residue are residual products.
However, the residual rice protein substance is further processed and improved upon into a product that can no longer be defined as a “residue.” Specifically, following the enzymatic hydrolysis, the rice protein residue undergoes a filtration or sieving process that separates the rice protein from the rice syrup. Next, the filtered rice protein substance is then dried, milled, sifted, and ultimately packaged. These final production steps serve to further advance, improve and refine the residual rice substance from a residue substance into the ready to use nutritional supplement called [***]. Inasmuch as the final product stems from the refining and further advancement of a residual substance, which is two-steps removed from being a residue, it follows that the final [***] product is not a residue but rather a highly processed food product, which has been refined into a protein-based nutritional supplement.
Moreover, we note that the stages involved in producing the subject [***] exceeds the production of residue as described by the terms of heading 2302, HTSUS. For example, the ENs to heading 2302, HTSUS, describe three types of residues: one which results from sifting, the other resulting from other workings of cereal grains and a third type of residue which results from the grinding or other working of leguminous plants. In the instant case, the product [***] is not obtained by the sifting of rice sharps, other working of rice middlings and is not the result of grinding leguminous plants. Instead, the product [***] is the result of enzymatic hydrolysis along with additional subsequent refinement; neither of which are contemplated by heading 2302, HTSUS.
Contrary to the importer’s contention regarding the term “other working”, the enzymatic hydrolysis process is unequivocally different and distinct from the processes enumerated under heading 2302, HTSUS. The ENs to heading 2302, HTSUS, describe “other working of cereals” as being, among other things: cleaning, hulling, slicing, bleaching, flaking and rolling of cereal grains. Under our facts, the enzymatic hydrolysis process contemplates the catalytic decomposition of a chemical compound by reaction with water. According to the importer, the insertion of enzymes enhances the breaking down of the carbohydrate molecular bonds inside the original rice middlings, which splits the brown rice middlings into two substances: rice syrup and a feed grade rice residue. This aspect of the production process serves to separate the carbohydrates from the proteins. As the description of enzymatic hydrolysis indicates, this process is distinct from mere sifting, flaking, hulling, pearling or slicing of grains. In sum, the enzymatic hydrolysis process exceeds the concept of “other workings” of cereal grains and is therefore outside the scope of heading 2302, HTSUS. Even if arguendo, the enzymatic hydrolysis process can be considered “other working”, the fact that the resulting feed grade rice protein residue thereafter undergoes further refinement, establishes that the end product has ceased to be a residue.
Contrary to the importer’s contentions, the feed-grade rice protein residue is neither intended nor capable of immediate consumption. In particular, the feed-grade rice protein residue is subjected to an additional step called “Drying” (also referred to as a “kill step”) intended to eliminate any leftover enzymes (amylase) or microbial elements. See [***]. According to [***] [***], “This [Drying] is a kill step with the dual function of heat-inactivating any enzyme residue.” During the drying process, the protein is washed, separated, dried and sterilized using a thermometer control, more than 80°C, for more than 2 hours. The protein concentrate is milled and sifted into the appropriate mesh and then tested for microbial purity (e.g., Aerobic Plate Count, Yeast and Mold, E. coli, Coliforms and Salmonella). It is not until the protein residue undergoes this final measure that it is ready for human consumption and retail packaging. Similarly, [***] concedes that the rice protein concentrate is neither sold nor marketed in its form as a residue. Accordingly, because the feed grade rice protein residue is not palatable or ready for immediate human consumption, it is clear that as a residue, it is not a finished product. Instead, the drying, sterilization and further refinement of the residue is required produce the refined rice protein concentrate, which is sold to consumers. As such, the finished rice protein concentrate can no longer be defined or described as a residue of Chapter 23.
Instead, the imported product [***] is a ready to use rice protein powder, which by definition and use, is a food preparation. In Orlando Foods Corp. v. United States, the United States Court of Appeals for the Federal Circuit considered the definition of “preparation” for purposes of classification under the HTSUS. 140 F.3d 1437, 1441 (1998). The CAFC held that “inherent in the term “preparation” is the notion that the object involved is destined for a specific use. The relevant definition from The Oxford English Dictionary defines “preparation” as “a substance specially prepared, or made up for its appropriate use or application, e.g. as food or medicine, or in the arts or sciences.” 12 The Oxford English Dictionary 374 (2d. ed. 1989). Under our facts, the subject [***] satisfies the definition of a preparation as it is has been prepared and processed for a specific use. In this case, the specific use of the subject rice protein powder is as a protein or nutritional supplement. In the context of “food preparations” for purposes of tariff classification, the finished subject [***] rice protein powder is similar in its manner of use as other concentrates, which are classified as a preparation. Examples of this category of “preparations”, include “[s]oups and broths and preparations therefor,” heading 2104, HTSUS; and “[c]hocolate and other food preparations containing cocoa,” heading 1806, HTSUS. Much like “hot cocoa mix” of heading 1806, HTSUS, or “instant soup mix” of heading 2104, HTSUS, the [***] rice protein powder is a preparation for which the user simply adds water before consumption.
Laslty, CBP has previously considered the classification of rice protein powders and other nutritional supplements, which were manufactured in a manner similar to the subject rice protein powder. For instance, in Headquarters Ruling Letter (“HQ”) 950915, dated August 3, 1992, CBP classified a rice protein powder and nutritional supplement under heading 2106, HTSUS, as a food preparation. The rice protein powder of HQ 950915 was described as a precipitate derived from rice that had been steeped, milled, screened and centrifuged. The resulting rice substance was thereafter concentrated, dried, and sieved before being packaged for export. HQ 950915 distinguished such rice protein powders from products of heading 2302, HTSUS, explaining that a rice protein powder was ejusdem generis to the nutritional food products and supplements, which CBP had previously classified in heading 2106, HTSUS. Moreover, in HQ 950915, CBP noted that heading 2106, HTSUS, essentially covers products, which serve as food preparations or are incorporated into food preparations. As such, the decision in HQ 950915 explained that the rice protein powder was to be classified according to its principal use as a food preparation. See generally, HQ H008628, dated February 14, 2008, wherein a flavored CBP classified a protein supplement consisting of a soy-based protein powder as a food preparation under heading 2106, HTSUS, because it was used in foods to enhance their protein content.
We find that the subject rice protein powder is substantially similar to the rice protein powder of HQ 950915 and the soy-based protein powder of HQ H008628. In each of the aforementioned cases, the protein powder was used as a food preparation designed to supplement the protein content in various consumption applications. In each of the decisions cited, the raw source food was subjected to extensive processing and underwent additional advanced refinement. The subject [***] is no different as it is the result of extensive production processing and additional advanced refinement. Likewise, it too, is used as a protein source or nutritional protein supplement in food preparations and beverages. Additionally, the subject rice protein powder is marketed for applications such as: sports nutrition; protein supplements and body building formulas and is said to be used in smoothies, power drinks and other food and beverages. The importer does not market the subject rice protein powder as a “residue” or refer to it as a “residue” in its marketing material. Instead, the importer markets and sales the subject rice protein powder as a protein source, protein supplement and nutritional supplement. Accordingly, based on the makeup of the product, the manner of production and its ultimate uses, we find that the subject rice protein powder is not classifiable as a residue but is instead classified as a food preparation in heading 2106, HTSUS.
HOLDING:
By application of GRI 1, the rice protein nutritional supplement is classified in heading 2106, HTSUS. The rice protein nutritional supplement is specifically classified in subheading 2106.10.0000, HTSUS, which provides for “Food preparations not elsewhere specified or included: Protein concentrates and textured protein substances.” The 2020 general, column one rate of duty is 6.4% ad valorem.
Duty rates are provided for the internal advice requestor’s convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided online at https://hts.usitc.gov/current.
You are to mail this decision to the requestor no later than 60 days from the date of the decision. At that time, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and to the public on the Customs Rulings Online Search System (“CROSS”), at https://rulings.cbp.gov/, and other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division