OT:RR:CTF:CPMM H312647 RRB
TARIFF NO: 3823.19.2000
Port Director
Port of Baltimore
U.S. Customs and Border Protection
40 South Gay Street
Baltimore, MD 21202
Attn: Tatum O’Brien, Supervisory Import Specialist
Laurie A. Rivers, Import Specialist
Re: Application for Further Review of Protest No. 1303-20-102258; tariff classification of Palmitic Acid 85%-DT80 (Beads)
Dear Port Director:
The following is our decision regarding the Application for Further Review (“AFR”) of Protest Number 1303-20-102258, timely filed on July 17, 2020, by Grunfeld, Desiderio, Leibowitz, Silverman & Klestadt LLP (“GDLSK”), on behalf of Darby Trading Inc. (“Protestant”). This AFR concerns U.S. Customs and Border Protection’s (“CBP”) of merchandise described as “Palmitic Acid 85%-DT80 (Beads) (hereinafter, “DT 80 Palmitic Acid”).
FACTS:
The protested merchandise, DT 80 Palmitic Acid, is described on the commercial invoice as “Palmitic Acid 85%-DT 80 (Beads).” According to the Protestant, DT 80 Palmitic Acid is produced by refining crude palm oil through a distillation process to remove Palm Fatty Acid Distillate (“PFAD”). The remaining fraction is then refined into a bleached and deodorized palm oil that is fractionated into an edible Refined Bleached Deodorized Stearin (“RBDPS”). The triglycerides are saponified and the glycerol fraction is removed, leaving a crude fatty acid palm stearin. The crude fatty acid palm stearin is then further fractionated into three fractions of varying purity, 95% and 99% palmitic acid, and a residual mixture. The 95% palmitic acid is then mixed with 50% palmitic acid to produce the protested merchandise, consisting of approximately 86.9% palmitic acid.
According to the specification sheet submitted by the Protestant, the DT 80 Palmitic Acid is composed of the following:
Crude Fat: 99% min
Total Fatty Acids: 98% min
Free Fatty Acids, as Palmitic: 96-99% min
Moisture: 0.5% min
Typical Fatty Acid Profile:
C12:0 Lauric Acid: 2% max
C14:0 Myristic Acid: 5% max
C16:0 Palmitic Acid: 80-90% max (typical 85%)
C18:0 Stearic Acid: 10% max
C18:1 Oleic Acid: 4-12%
C18:2 Linoleic Acid: 1-6%
The certificate of analysis submitted with the Protest and AFR confirms the ingredient breakdown for DT 80 Palmitic Acid and identifies the palmitic acid content as 86.9%. The final DT 80 Palmitic Acid product is a beaded product containing a combination of fatty acids, including palmitic, lauric, myristic, stearic, oleic and linoleic acids. The Protestant further states that the final product is mixed with other ingredients after importation for feeding dairy cows.
The protested merchandise consists of one (1) entry that was entered at the Port of Baltimore (“Port”) on November 13, 2019, and was liquidated on July 3, 2020 under subheading 2915.70.0110, HTSUSA (“Annotated”) (2019), as “Saturated acyclic monocarboxylic acids and their anhydrides, halides, peroxides and peroxyacids; their halogenated, sulfonated, nitrated or nitrosated derivative: Palmitic acid, stearic acid, their salts and esters: Palmitic acid.” The Protestant filed this Protest and AFR on July 17, 2020, asserting that all of the subject merchandise is properly classified under subheading 3823.19.2000, HTSUSA (2019), as “Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols: Industrial monocarboxylic fatty acids; acid oils from refining: Other: Derived from coconut, palm-kernel or palm oil” at a duty rate of 2.3% ad valorem.
ISSUE:
Whether Palmitic Acid 85%-DT80 (Beads) is classified under subheading 2915.70.0110, HTSUSA, as “Saturated acyclic monocarboxylic acids and their anhydrides, halides, peroxides and peroxyacids; their halogenated, sulfonated, nitrated or nitrosated derivative: Palmitic acid, stearic acid, their salts and esters: Palmitic acid,” or under subheading 3823.19.2000, HTSUSA, as “Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols: Industrial monocarboxylic fatty acids; acid oils from refining: Other: Derived from coconut, palm-kernel or palm oil.”
LAW AND ANALYSIS:
The protest was properly filed as a decision on classification under 19 U.S.C. § 1514(a)(2). The protest was timely filed within 180 days of liquidation of the entries. See 19 U.S.C. § 1514(c)(3).
Further Review of Protest Number 1303-20-102258 was properly accorded to the 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 decided on by CBP or by the Customs courts.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI”). 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 2019 provisions under consideration are as follows:
2915 Saturated acyclic monocarboxylic acids and their anhydrides,
halides, peroxides and peroxyacids; their halogenated, sulfonated, nitrated or nitrosated derivative:
2915.70.01 Palmitic acid, stearic acid, their salts and esters:
2915.70.0110 Palmitic acid. . .
3823 Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols:
Industrial monocarboxylic fatty acids; acid oils from refining:
3823.19 Other
3823.19.2000 Derived from coconut, palm-kernel or palm oil. . .
* * * *
Note 1(a) to chapter 29, HTSUS, provides, in pertinent part:
Except where the context otherwise requires, the headings of this chapter apply only to:
Separate chemically defined organic compounds, whether or not containing impurities;
Note 1(a) to chapter 38, HTSUS, provides, in pertinent part:
This chapter does not cover:
Separate chemically defined elements or compounds with the exceptions of the following:
Artificial graphite (heading 3801);
Insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant-growth regulators, disinfectants and similar products put up as described in heading 3808;
Products put up as charges for fire-extinguishers or put up in fire-extinguishing grenades (heading 3813);
Certified reference materials specific in note 2 below;
Products specified in note 3(a) or 3(c) below.
* * * *
The Explanatory Notes (“ENs”) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The EN 29.15 states, in pertinent part:
This heading excludes:
…
(d) Fatty acids of a purity of less than 90% (calculated on the weight of the dry product) (heading
38.23).
The EN 38.23 states, in pertinent part:
Industrial monocarboxylic fatty acids are generally manufactured by the saponification or hydrolysis of natural fats or oils. Separation of solid (saturated) and liquid (unsaturated) fatty acids is usually done by crystallisation either with or without solvent. The liquid part (commercially known as oleic acid or olein) consists of oleic acid and other unsaturated fatty acids (e.g. linoleic and linolenic acids) together with small amounts of saturated fatty acids. The solid part (commercially known as stearic acid or stearin) consists mainly of palmitic and stearic acids with a small portion of unsaturated fatty acids.
The heading includes, inter alia:
…
(4) Distilled fatty acids which are obtained after hydrolytic splitting of various fats and oils (e.g., coconut oil, palm oil, tallow) followed by a purification process (distillation).
* * * *
In support of its assertion that the DT 80 Palmitic Acid is properly classified in heading 3823, HTSUS, the Protestant submitted commercial invoices and a certificate of analysis. According to the commercial invoice, the palmitic acid content of the subject merchandise is 85% while the certificate of analysis indicates a palmitic acid content of 86.9%. The merchandise also consists of other fatty acids, including lauric, myristic, stearic, oleic and linoleic acids. Pursuant to note 1(a) to chapter 29, HTSUS, products of chapter 29 must be separate chemically defined compounds, which may or may not contain permissible additions mentioned in the chapter note. In addition, the EN 29.15 excludes fatty acids of a purity of less than 90% (calculated on the weight of the dry product). Where the DT 80 Palmitic Acid consists of various fatty acids, including palmitic acid—comprising 86.9% of the merchandise—no single fatty acid component is over 90%. Moreover, note 1(a) to chapter 38, HTSUS, excludes separate chemically defined elements or compounds with five exceptions, none of which are applicable here.
Accordingly, based on the composition of the merchandise as a purposeful mixture of various fatty acids, the DT 80 Palmitic Acid (Beads) is excluded from classification in heading 2915, HTSUS, pursuant to note 1(a) to chapter 29, and the EN 29.15.
Heading 3823, HTSUS, covers industrial monocarboxylic fatty acids, acid oils from refining and industrial fatty alcohols. The EN 38.23 states that the heading covers industrial monocarboxylic fatty acids that “are generally manufactured by the saponification or hydrolysis of natural fats or oils.” It further states that after solid and liquid fatty acids have been separated, “[t]he liquid part (commercially known as oleic acid or olein) consists of oleic acid and other unsaturated fatty acids (e.g. linoleic and linolenic acids) together with small amounts of saturated fatty acids. The solid part (commercially known as stearic acid or stearin) consists mainly of palmitic and stearic acids with a small portion of unsaturated fatty acids.” Moreover, the EN 38.23 explains that the heading includes “[d]istilled fatty acids which are obtained after hydrolytic splitting of various fats and oils,” such as palm oil, followed by distillation. The process set forth in the EN 38.23 mirrors the manufacturing process described by the Protestant, whereby crude palm oil is refined through a distillation process to remove Palm Fatty Acid Distillate (“PFAD”), and the remaining fraction is refined and further fractionated into an edible Refined Bleached Deodorized Stearin. Crude fatty acid palm stearin remains after the triglycerides are saponified and the glycerol fraction is removed. Therefore, we find that pursuant to the EN 38.23 and based on the manufacturing process for the merchandise, the DT 80 Palmitic Acid is covered under heading 3823, HTSUS.
In further support of its assertion that the DT 80 Palmitic Acid is properly classified in heading 3823, HTSUS, the Protestant cites to various CBP rulings. See, e.g., NY N243526, dated July 25, 2013; HQ W967992, dated February 6, 2007; HQ 964607, dated July 8, 2002; and HQ 962115, dated February 1, 1999. In addition to the rulings cited by the Protestant, CBP has more recently classified merchandise similar to the DT 80 Palmitic Acid in heading 3823, HTSUS. For example, in NY N310785, dated April 7, 2020, we classified a product derived from palm oil, which consisted of a mixture of C12 to C16 fatty acids and was obtained through hydrolytic splitting of fatty acids. We also classified a second product known as a PFAD Fatty Acid Residue, which was obtained from palm oil through hydrolytic splitting of fatty acids, and consisted of a mixture of C16 to C18 fatty acids with distillation residues. In NY N310785, we ruled that both products were properly classified in subheading 3823.19.20, HTSUS. The products at issue in that ruling, as well as the DT 80 Palmitic Acid, are all described in the EN 38.23 as “[d]istilled fatty acids which are obtained after hydrolytic splitting of various fats and oils,” such as palm oil, followed by distillation. In addition, in HQ H254695, dated April 15, 2015, we similarly held that a product derived from palm oil that is a mixture of several fatty acids containing 70% oleic acid, with linoleic acid, stearic acids and other fatty acids in trace amounts was properly classified in subheading 3823.19.20, HTSUS. Like the products in NY N310785, the product described in HQ H254695 is substantially similar to the protested merchandise, as well as the merchandise described in the EN 38.23.
Accordingly, the DT 80 Palmitic Acid is properly classified in heading 3823, HTSUS, and specifically in subheading 3823.19.20, HTSUS, as an industrial monocarboxylic fatty acid derived from palm oil.
HOLDING:
By application of GRI 1 and 6, the DT 80 Palmitic Acid is classified in heading
3823, HTSUS, and specifically in subheading 3823.19.20, HTSUS (2019), which provides for “Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols: Industrial monocarboxylic fatty acids; acid oils from refining: Other: Derived from coconut, palm-kernel or palm oil.” The column one, general rate of duty at the time of entry was 2.3% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided at https://hts.usitc.gov/current.
You are instructed to GRANT the protest in full.
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 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