OT:RR:CTF:CPMMA H301529 CkG
TARIFF NO: 2106.90.98
2936.29.50
Port Director
U.S. Customs and Border Protection
John F. Kennedy International Airport
Bldg #77
Jamaica, NY 11430
ATTN: Joseph DiSalvo, Supervisory Liquidation Specialist
Re: Application for Further Review of Protest No. 4701-18-100255; classification of menaquinone-7 preparations
Dear Port Director,
This is in reply to the Application for Further Review (AFR) of Protest No. 4701-18-100255, dated July 18, 2018, on behalf of Nattopharma USA (“Protestant”), contesting U.S. Customs and Border Protection’s (CBP) classification and liquidation of seven entries of menaquinone-7 preparations in heading 2106, HTSUS.
The subject entries were made between August 17, 2016, and April 24, 2017. The merchandise was entered under heading 2936, HTSUS, specifically subheading 2936.29.50, HTSUS, as “[p]rovitamins 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: Other vitamins and their derivatives.” The subject entries were liquidated on March 2, 2018 in subheading 2106.90.98, HTSUS, as “[f]ood preparations not elsewhere specified or included.”
FACTS:
At issue are 19 different formulations of a vitamin K2 product, “Mena Q7® Vitamin K2”, under three different brand names: Natural, Natto, and PharmaPure. The percent of active ingredient in each formulation is included below:
NP-0199-10305
MenaQ7 Natural 96%
>96%
NP-0105-10305
MenaQ7 Natural 96%
>96%
NP-0199-10401
MenaQ7 Natural 1000 ppm GMS Powder
0.10%
NP-0199-10403
MenaQ7 Natural 2000 ppm GMS Powder
0.20%
NP-0199-10103
MenaQ7 Natural 2000 ppm MCC Powder
0.20%
NP-0199-20202
MenaQ7 Natural 1500 ppm MCT Oil
0.15%
NP-0199-21302
MenaQ7 Natural 1500 ppm Soybean Oil
0.15%
NP-0199-20502
MenaQ7 Natural 1500 ppm Sunflower Oil
0.15%
NP-0199-20504
MenaQ7 10,000 ppm Natural Sunflower Oil
1.00%
NP-0199-40703
MenaQ7 Natural 2000 ppm Water Dispersible
0.20%
NP-0499-10305
MenaQ7 NATTO 96%
>96%
NP-0499-10103
MenaQ7 Natto 2000 ppm MCC Powder
0.20%
NP-0499-21302
MenaQ7 Natto 1500 ppm Soybean Oil
0.15%
NP-0299-10306
MenaQ7 PharmaPure 98%
>97%
NP-0299-10101
MenaQ7 PharmaPure 1000 ppm MCC Powder
0.10%
NP-0299-10103
MenaQ7 PharmaPure 2000 ppm MCC Powder
0.20%
NP-0299-10104
MenaQ7 PharmaPure 10,000 ppm MCC Powder
1.00%
NP-0299-20202
MenaQ7 PharmaPure 1500 ppm MCT Oil
0.15%
NP-0299-20204
MenaQ7 PharmaPure 10,000 ppm MCT Oil
1.00%
ISSUE:
Whether the instant vitamin preparations are classified in heading 2936, as vitamins, or whether they are excluded from Chapter 20 by Note 1 to that Chapter and classified in heading 2106, as a food preparation not elsewhere specified or included.
LAW AND ANALYSIS:
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 of the first 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. 4701-18-100255 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24(a) 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 Customs or his designee or by the Customs courts.
Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that classification shall be determined according to the terms of the headings 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 or notes do not require otherwise, the remaining GRIs 2 through 6 may be applied.
The HTSUS provisions under consideration are as follows:
21.06 Food preparations not elsewhere specified or included
29.36 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
Note 1 to Chapter 29 states, in relevant part, as follows:
Except where the context otherwise requires, the headings of this chapter apply only to:
Separate chemically defined organic compounds, whether or not containing impurities;
* * *
The products mentioned in (a), (b) or (c) dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use;
The products mentioned in (a), (b), (c), (d), (e) or (f) above with an added stabilizer (including an anti-caking agent) necessary for their preservation or transport;
The products mentioned in (a), (b), (c), (d), (e) or (f) above with an added anti-dusting agent or a coloring or odoriferous substance added to facilitate their identification or for safety reasons, provided that the additions do not render the product particularly suitable for specific use rather than for general use…
General EN(A) to Chapter 29 provides, in relevant part, as follows:
The provisions in the General Explanatory Note to Chapter 28 concerning the addition of stabilisers, antidusting agents and colouring substances apply, mutatis mutandis, to the chemical compounds of this Chapter.
In turn, General EN(A) to Chapter 28 provides, in relevant part, as follows:
Separate chemically defined elements and compounds as described above, put up with an added stabiliser necessary for their preservation or transport, remain classified in this Chapter. For example, hydrogen peroxide stabilised by addition of boric acid remains classified in heading 28.47; but sodium peroxide mixed with catalysts (for production of hydrogen peroxide) is excluded from Chapter 28 and is classified in heading 38.24.
Products added to certain chemicals to keep them in their original physical state are also to be regarded as stabilisers, provided that the quantity added in no case exceeds that necessary to achieve the desired result and that the addition does not alter the character of the basic product and render it particularly suitable for specific use rather than for general use. By application of these provisions anti caking agents may be added to the products of this Chapter. Such products with added water repellents are, on the other hand, excluded since such agents modify the original characteristics of the products.
EN 29.36 provides, in pertinent part, as follows:
…
The products of this heading may be stabilised for the purposes of preservation or transport:
by adding anti-oxidants,
by adding anti-caking agents (e.g., carbohydrates),
by coating with appropriate substance (e.g., gelatin, waxes or fats), whether or not plasticised, or
by adsorbing on appropriate substances (e.g., silicic acid),
provided that the quantity added or the processing in no case exceeds that necessary for their preservation or transport and that the addition or processing does not alter the character of the basic product and render it particularly suitable for specific use rather than for general use.
* * * *
Heading 29.36 applies (inter alia) to “vitamins…whether or not in any solvent.” Pursuant to Notes 1(e) and (g) to Chapter 29, vitamins of the heading may be combined with solvents, anti-dusting agents, and other substances added for safety reasons so long as the additions “do not render the product particularly suitable for specific use rather than for general use.” According to ENs 29.36, EN 23.09, and the General EN (A) to Chapter 29 (by reference to General EN (A) to Chapter 28), the same holds true for certain stabilizers – specifically antioxidants, anticaking agents, coating substances, adsorbents, and substances used to keep chemicals in their original state. Pursuant to Notes 1(e) and 1(f) to Chapter 29, solvents and stabilizers must also be “adopted solely for reasons of safety or for transport” (in the case of solvents) or are “necessary for preservation or transport” (in the case of stabilizers).
The instant products contain between 0.10% and 97% of menaquinone-7 (MK-7, or Vitamin K2). Specifically, of the 19 different formulations of MenaQ7® identified by the protestant, only four contain over one percent of the active ingredient: NP-0199-10305 (MenaQ7 Natural 96%), NP-0105-10305 (MenaQ7 Natural 96%), NP-0499-10305 (MenaQ7 NATTO 96%), and NP-0299-10306 (MenaQ7 PharmaPure 98%).
The remaining products contain only 1 percent or less of the active ingredient, along with antioxidants such as Ascorbyl Palmitate, Rosemary extract, and Natural Vitamin E, carriers such as Glycerol monostearate, Medium chain triglyceride oil, Microcrystalline cellulose, Soybean oil, Sunflower oil, Sucrose, and Gum acacia, and the surfectants Tween 80/Span 40.
We agree that item numbers NP-0199-10305 (MenaQ7 Natural 96%), NP-0105-10305 (MenaQ7 Natural 96%), NP-0499-10305 (MenaQ7 NATTO 96%), and NP-0299-10306 (MenaQ7 PharmaPure 98%) are vitamins of heading 2936; these are relatively pure chemical products with minimal additives, not suitable or processed for a specific use.
However, the remaining fifteen products contain numerous additives with a range of functions. Protestant asserts that these additives do not play a role in the efficacy or function of the products, but rather are simply diluents to reduce the concentration of the vitamin according to the specific needs of the customer. As these ingredients are, by the admission of the Protestant, added as diluents, they are evidently not added solely for reasons of stabilization or transport as required by Note 1 to Chapter 29. Indeed, several of these ingredients have specific uses beyond stabilization or transport; surfectants, for example, serve no stabilization purpose, sucrose typically serves as an excipient or coating agent or to increase palatability, and soybean or sunflower oil are frequently used as flow agents or binders. Moreover, given the proportionally high content of non-vitamins, which constitute 99% or more of 15 of the 19 products, these constituents do not appear to be present only in quantities necessary for safety, preservation, or transport; as evidenced by the formulations containing 96% or more of MK-7 with none of the listed additives, additives in such overwhelming proportions are clearly not required to stabilize vitamin K.
We find that the 15 above listed “MenaQ7 Natural”, “MenaQ7 Natto” and MenaQ7 Pharma Pure” products which contain one percent or less of Vitamin K are precluded by Chapter 29 Note 1 from classification in heading 2936, HTSUS, because they have been processed beyond that which is necessary for preservation or transportation; the number, nature and quantity of excipients renders the products suitable for specific use as dietary or food supplements rather than for general use. See e.g., HQ 966366, dated June 19, 2003; HQ 965447, dated July 23, 2002; and HQ 964873, dated July 19, 2002.
HOLDING:
By application of GRIs 1 and 6, item nos. NP-0199-10305 (MenaQ7 Natural 96%), NP-0105-10305 (MenaQ7 Natural 96%), NP-0499-10305 (MenaQ7 NATTO 96%), and NP-0299-10306 (MenaQ7 PharmaPure 98%) are classified in heading 2936, HTSUS, specifically subheading 2936.29.50, HTSUS, which provides for ““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: Other vitamins and their derivatives: Other: Other.” The 2018 column one, general rate of duty is Free.
By application of GRIs 1 and 6, the following items are classified in heading 2106, specifically subheading 2106.90.98, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Other.” The 2018 column one, general rate of duty is 6.4% ad valorem:
NP-0199-10401 MenaQ7 Natural 1000 ppm GMS Powder
NP-0199-10403 MenaQ7 Natural 2000 ppm GMS Powder
NP-0199-10103 MenaQ7 Natural 2000 ppm MCC Powder
NP-0199-20202 MenaQ7 Natural 1500 ppm MCT Oil
NP-0199-21302 MenaQ7 Natural 1500 ppm Soybean Oil
NP-0199-20502 MenaQ7 Natural 1500 ppm Sunflower Oil
NP-0199-20504 MenaQ7 10,000 ppm Natural Sunflower Oil
NP-0199-40703 MenaQ7 Natural 2000 ppm Water Dispersible
NP-0499-10103 MenaQ7 Natto 2000 ppm MCC Powder
NP-0499-21302 MenaQ7 Natto 1500 ppm Soybean Oil
NP-0299-10101 MenaQ7 PharmaPure 1000 ppm MCC Powder
NP-0299-10103 MenaQ7 PharmaPure 2000 ppm MCC Powder
NP-0299-10104 MenaQ7 PharmaPure 10,000 ppm MCC Powder
NP-0299-20202 MenaQ7 PharmaPure 1500 ppm MCT Oil
NP-0299-20204 MenaQ7 PharmaPure 10,000 ppm MCT Oil
You are instructed to deny the protest, except to the extent that 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 Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public online at http://www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution. The text of the most recent HTSUS and the accompanying duty rates are provided online at www.usitc.gov/tata/hts/.
Sincerely,
Myles B. Harmon, Director Commercial and Trade Facilitation Division