OT:RR:CTF:CPMM H304957 MMM
U.S. Customs and Border Protection
Service Port of Buffalo
726 Exchange Street Suite 400
Buffalo, NY 14210
Re: Application for Further Review of Protest Number 0901-18-100238; tariff classification of electronic cigarette flavoring liquids
Dear Port Director,
This is in reply to the Application for Further Review (AFR) of Protest No. 0901-18-100238, dated October 17, 2018, on behalf of Flavour Art North America Inc. (“Protestant”), contesting U.S. Customs and Border Protection’s (CBP) classification and liquidation of one entry of cigarette flavorings in heading 3302, Harmonized Tariff Schedule of the United States (HTSUS), as mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind used as raw materials in industry.
The subject merchandise was entered on March 22, 2017, in heading 3302, HTSUS, which provides for, in relevant part, “mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind used as raw materials in industry.” The entry was liquidated on April 30, 2018. The subject merchandise was liquidated 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.” Protestant claims classification in heading 3302, HTSUS.
FACTS:
The imported merchandise that is the subject of this protest and AFR are the “FA0048 Cookie,” “FA0595 7 Leaves Ultimate,” “FA0058 Coconut,” “FA0483 Lime Tahiti Distilled,” and “FA0577 Lime Tahiti CP” flavoring liquids in bulk plastic containers of 10kg, 5kg, and 1kg sizes labeled with the following warnings: “Concentrated products;” “Do not use as such;” and “For industrial use only.”
The “FA0048 Cookie” formulation contains, Propylene Glycol, Water, Triacetin, Vanillin (CAS No. 121-33-5), and other flavoring substances. The “FA0058 Coconut” formulation contains, Propylene Glycol, Water, Vanillin, a preservative, other flavoring substances, and other ingredients. The “FA0595 7 Leaves Ultimate” formulation contains, Propylene Glycol, Triacetin, Anise Oil (CAS No. 8007-70-3), a preservative, other flavoring substances, and other ingredients. The “FA0483 Lime Tahiti Distilled” formulation contains, Propylene Glycol, Water, Lime Oil (CAS No. 8008-26-2), surfactants, and other ingredients. The “FA0483 Lime Tahiti CP” formulation contains, Propylene Glycol, Lime Oil, surfactants, and other ingredients. The flavorings above have more than 10% alcohol content (propylene glycol). However, there are subsequent protests filed under lead AFR Protest # 0901-18-100238 which include entries for flavorings with 10% or less alcohol content.
The Protestant claims that the subject flavoring liquids are sold to manufacturers, who will combine the flavorings with other base components, such as nicotine, propylene glycol, and vegetable glycerin and package the good for retail sale as an e-cigarette liquid.
ISSUE:
Whether the cigarette flavoring is classified in heading 3302, HTSUS, as mixtures of odoriferous substances and mixtures with a basis of one or more of these substances, of a kind used as raw materials in industry, or in heading 3824, HTSUS, as a prepared binder 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:
Initially, we note that the matter 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. See 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 Number 1703-19-100629 is properly accorded pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve a question of law or fact that has not previously been ruled upon by CBP or the courts.
The classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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 Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System (HS) at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HS and are thus useful in ascertaining the proper classification of merchandise. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
In this case, the 2018 HTSUS headings under consideration are as follows:
3302 Mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind used as raw materials in industry; other preparations based on odoriferous substances, of a kind used for the manufacture of beverages
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
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Note 2 of Chapter 33 states: “The expression "odoriferous substances" in heading 3302 refers only to the substances of heading 3301, to odoriferous constituents isolated from those substances or to synthetic aromatics.”
Note 2(a) of Add. U.S. to Section VI states: “The term "aromatic" as applied to any chemical compound refers to such compound containing one or more fused or unfused benzene rings.”
Statistical Note 3 of Chapter 38 states: For the purposes of statistical reporting numbers 3824.99.2840 and 3824.99.9280, mixtures for use in “personal electric or electronic vaporizing devices” means a formulated liquid containing nicotine, whether or not packaged for retail sale in cartridges or tanks adaptable to such devices. Personal electric or electronic vaporizing devices electrically heat or atomize liquids or other substances producing a vapor to be inhaled through the mouthpiece. These devices are commonly known as electronic cigarettes, “e-cigarettes”, “e-hookahs”, “e-pipes”, vaporizers or “vaping” systems.
The ENs to Heading 3302 state, in relevant part, as follows: “Mixtures, whether or not combined with a diluent or carrier or containing alcohol, of products of other Chapters (e.g., spices) with one or more odoriferous substances (essential oils, resinoids, extracted oleoresins or synthetic aromatics), provided these substances form the basis of the mixture.”
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Classification of the subject merchandise in heading 3824 is appropriate when there is no tariff category that covers the merchandise more specifically. The Protestant asserts that the subject merchandise is more specifically covered by heading 3302.
We will first consider heading 3302, HTSUS. In order to be classified in heading 3302, the product must be (1) a mixture of one or more odoriferous substances and other substances, (2) with a basis that is an odoriferous substance, and (3) of a kind used as a raw material in industry.
FA0048 Cookie and FA0058 Coconut contain Vanillin, contain a synthetic aromatic, because it is a compound containing one or more fused or unfused benzene rings, and is thus an odoriferous substance according to Note 2 to Chapter 33. FA0595 7 Leaves Ultimate, FA0483 Lime Tahiti Distilled, and FA0577 Lime Tahiti CP, contain anise oil and lime oil, which are odoriferous substances found in heading 3301, and are also according to Note 2 to Chapter 33, mixtures of one or more odoriferous substances.
The odoriferous substances in the above subject merchandise form the basis of the mixture. The Protestant cites to the definition of “basis” found in HQ 957203, which defines “basis” as, “the main constituent, fundamental ingredient,” “the principal component parts of a thing,” and “the chief component or fundamental ingredient.” We agree with the Protestant that the odoriferous substances in the subject merchandise form the basis of the mixture, as they provide the flavor of the merchandise.
We now turn to whether the subject merchandise is “of a kind used as raw materials in industry.” “Raw material” is defined as, “material before being processed or manufactured into a final form.” “Raw” is defined as, “not having undergone processes of preparing, dressing, finishing, refining, or manufacture.” The Protestant asserts in its protest that the subject flavoring liquids are sold to manufacturers, who will combine the flavorings with other base components, such as nicotine, propylene glycol, and vegetable glycerin, and because they are subsequently processed and can be converted by combination into a new product, they are a raw material. The Protestant has provided CBP with shipping labels. The labels provide the following warnings: “Concentrated products;” “Do not use as such;” and “For industrial use only.” These warnings, in addition to the fact that the subject merchandise is shipped in bulk plastic containers of 10kg, 5kg, and 1kg sizes, show that the subject merchandise is not a finished product, but raw materials.
CBP previously classified electronic cigarette liquid, without nicotine, under heading 3824. The Protestant asserts that the subject merchandise is distinguishable from the merchandise classified in HQ H273386. The classified merchandise in HQ H273386 was a finished product ready for retail sale. The subject merchandise in this case is of a kind that cannot be sold to an end-user without further manufacturing and is not packaged for retail sale, but packaged in bulk.
HOLDING:
By application of GRI 1, the e-cigarette flavorings are classified under headings 3302, HTSUS, specifically subheading 3302.90.2050, HTSUS, which provides for: “Mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind used as raw materials in industry: Other: Containing over 10 percent of alcohol by weight: Other.” The 2018 column one, general rate of duty for subheading 3302.90.2050 is Free. The e-cigarette flavorings with 10% or less alcohol content are classified in heading 3302, HTSUS, specifically subheading 3302.90.1050, HTSUS, which provides for: “Mixtures of odoriferous substances and mixtures (including alcoholic solutions) with a basis of one or more of these substances, of a kind used as raw materials in industry: Other: Containing no alcohol or not over 10 percent of alcohol by weight: Other.” The 2018 column one, general rate of duty for subheading 3302.90.1050 is Free.
You are instructed to ALLOW 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 of 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,
Craig T. Clark, Director
Commercial and Trade Facilitation Division