CLA-2 OT:RR:CTF:CPMM H312954 RRB
Center Director
Center of Excellence and Expertise—Petroleum, Natural Gas, and Minerals
237 W. Service Rd Champlain, NY 12919
Attn: Laurie Rivers, Import Specialist
RE: Internal Advice Request; Classification of DT 80 (86.9% palmitic acid content), DT 98 (99.2% palmitic acid content), and DT 100 (45.5% palmitic acid content)
Dear Center Director:
This is in response to a request by the Center of Excellence and Expertise for Petroleum, Natural Gas and Minerals (“PNGM Center”) for Internal Advice(“IA”) pertaining to the proper classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of three different composite formulations of beaded fatty acids known as DT 80, DT 98, and DT 100. The PNGM Center submitted its request following receipt of a July 28, 2020, request by Grunfeld, Desiderio, Leibowitz, Silverman & Klestadt LLP (“GDLSK”), on behalf of Darby Trading Inc. (“Darby”), that the PNGM Center seek internal advice from our office pursuant to 19 C.F.R. § 177.11(a). In reaching our decision, we gave counsel for Darby the opportunity to meet with us telephonically on May 3, 2021 to provide additional comments. We have also given consideration to the subsequent arguments contained in counsel’s email, dated May 6, 2021, claiming classification of the DT 98 formulation in subheading 3823, HTSUS. In response, on May 10, 2021, we asked counsel to provide us with further documentation, by May 21, 2021, to support the statement in the May 6, 2021 email that “the stearic and myristic acids are not impurities (under Note 1(a)),” and whether the stearic and myristic acids serve a purpose for the DT 98. To date, our request has gone unanswered and our final determination as to the classification of the subject merchandise is set forth below.
FACTS:
U.S. Customs and Border Protection (“CBP”) confirmed that Darby has entered various unliquidated entries of three different composite formulations of beaded fatty acids known as DT 80, DT 98, and DT 100, each of which is described forthwith.
Darby explains that DT 80 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 (“RBDS”). 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 merchandise, consisting of approximately 86.9% palmitic acid.
According to the specification sheet, DT 80 is composed of the following:
Crude Fat: 99% min
Total Fatty Acids: 98% min
Free Fatty Acids, as Palmitic: 96-99%
Moisture: 0.5% max
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 confirms the ingredient breakdown for DT 80 and identifies the palmitic acid content as 86.9%. The final DT 80 is a beaded product, with a combination of fatty acids, including palmitic, lauric, myristic, stearic, oleic, and linoleic acids.
Darby also explains that DT 98 is produced by further processing refined, bleached, and deodorized (“RBD”) palm stearin by first hydrolyzing the triglycerides present. The resulting glycerol fraction is removed, leaving crude palm stearin fatty acids. These are hydrogenated and subsequently distilled, which separates the various fatty acids present. The merchandise is a fraction resulting from this distillation containing not less than 98% palmitic acid.
According to the specification sheet, DT 98 is composed of the following:
Crude Fat: 99% min
Total Fatty Acids: 98% min
Free Fatty Acids, as Palmitic: 98.5-100%
Typical Fatty Acid Profile:
C14:0 Myristic Acid: 2% max
C16:0 Palmitic Acid: 98% min
C18:0 Stearic Acid: 2% max
Other: 1% max
The certificate of analysis confirms the ingredient breakdown for DT 98 and identifies its palmitic acid content as 99.2%. The final DT 98 is a beaded product, with a combination of fatty acids, including palmitic, myristic, and stearic acids.
DT 100 is produced by further processing RBD palm stearin by first hydrolyzing the triglycerides present, leaving crude palm stearin fatty acids. These are further fractionated and blended to produce DT 100 liquid. DT 100 liquid is then spray dried into solid DT 100, which consists of 40%-60% palmitic acid, 30%-50% stearic acid, and smaller amounts of other fatty acids.
According to the specification sheet, DT 100 is composed of the following:
Total Fat: 99% min
Free Fatty Acids, as Palmitic: 80% min
Total Fat Content: 99% min
Moisture: 1% max
Typical Fatty Acid Profile:
C14:0 Myristic Acid: 5% max
C16:0 Palmitic Acid: 40-60%
C18:0 Stearic Acid: 30-50%
C18:1 Oleic Acid: 15% max
The certificate of analysis confirms the ingredient breakdown for DT 100 and identifies its palmitic acid content as 45.5%. The final DT 100 is a beaded product, with a combination of fatty acids, including palmitic, stearic, oleic, and myristic acids. The final product of each fatty acid formulation—DT 80, DT 98 and DT 100—is mixed with other ingredients after importation for feeding dairy cows.
Darby entered each of the fatty acid product formulations under subheading 1511.90.0000, HTSUSA (“Annotated”), which provides for “Palm oil and its fractions, whether or not refined, but not chemically modified: Other.” CBP issued a rate advance amending the classification of DT 80 to 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.” In response to CBP’s liquidation of one entry of DT 80 in subheading 2915.70.0110, HTSUSA, Darby filed a Protest and AFR on July 17, 2020, asserting that DT 80 is properly classified 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” at a duty rate of 2.3% ad valorem. In Headquarters Ruling Letter (“HQ”) H312647, dated February 16, 2021, we granted Darby’s protest and reliquidated DT 80 in subheading 3823.19.2000, HTSUSA.
For the unliquidated entries of DT 80, DT 98, and DT 100, Darby asserts that these products are properly classified in subheading 3823.19.2000, HTSUSA, 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” at a duty rate of 2.3% ad valorem.
ISSUE:
Whether the subject DT 80, DT 98, and DT 100 are classified in 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 in 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:
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. GRI 6 states that, “[f]or legal purposes, the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. For the purposes of this rule, the relative section, chapter and subchapter notes also apply, unless the context otherwise requires.”
The 2020 HTSUS 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).
…
The heading excludes:
…
Other fatty acids of a purity of 90% or more (calculated on the weight of the dry product)
(generally heading 29.15, 29.16 or 29.18).
* * * *
Darby is seeking internal advice regarding the classification of unliquidated entries of DT 80, DT 98, and DT 100. As the issue of the proper classification of DT 80 has been resolved in HQ H312647, we incorporate the classification analysis in HQ H312647 herein, and find that the unliquidated entries of DT 80 are properly classified in subheading 3823.19.20, HTSUS.
In support of its assertion that the DT 100 is properly classified in heading 3823, HTSUS, Darby submitted a specification sheet for DT 100, indicating that the palmitic acid content of that product is 40%-60%, while the certificate of analysis for DT 100 indicates a palmitic acid content of 45.5%. 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). Like the DT 80, where DT 100 consists of various fatty acids, including palmitic acid—comprising 45.5% 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 DT 100 as a purposeful mixture of various fatty acids, DT 100 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 for the DT 100, whereby refined, bleached and deodorized palm stearin is processed by hydrolyzing the triglycerides present, leaving crude palm stearin fatty acids that are further fractionated and blended to produce liquid DT 100 that is ultimately spray dried into solid DT 100. Therefore, we find that pursuant to the EN 38.23 and based on the manufacturing process for the merchandise, the DT 100 is classifiable in heading 3823, HTSUS. We incorporate the remaining legal analysis from HQ H312647 into this ruling.
Turning to the DT 98, Darby submitted production flow charts, specification sheets, and certificates of analysis in support of its assertion that the DT 98 is properly classified in heading 3823, HTSUS. According to the specification sheet for DT 98, the minimum palmitic acid content is 98%, while the certificate of analysis indicates a palmitic acid content of 99.2%. DT 98 also consists of other fatty acids, including palmitic, myristic, and stearic acids. Unlike the DT 80 and DT 100, in which no single fatty acid component is over 90%, the DT 98 consists of 99.2% palmitic acid.
Note 1(a) to chapter 38, HTSUS, excludes separate chemically defined elements or compounds. Furthermore, the EN 38.23 states that fatty acids of a purity of 90 percent or more (calculated on the weight of the dry product) are excluded from heading 3823 and are generally classified in headings 2915, 2916, or 2918.
The subject DT 98 is sold commercially with a minimum palmitic acid purity level of 98%. The certificate of analysis for DT 98 revealed a purity level of 99.2% palmitic acid. As such, this separate chemically defined compound with 99.2% purity level is excluded from classification in chapter 38, HTSUS, under note 1(a) and from heading 3823, HTSUS, under the EN 38.23.
Darby cited to the following rulings in support of its proposed classification of the DT 98 in heading 3823, HTSUS: 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. However, unlike DT 98, which has a palmitic acid content of 99.2%, none of the merchandise at issue in the cited rulings has a fatty acid component constituting over 90% of the product weight. Therefore, none of the rulings cited by Darby are relevant to the classification of DT 98.
Instead, DT 98 is similar to the merchandise in HQ W967832, dated July 23, 2008. In HQ W967832, the Protestant asserted that a product identified as 12-Hydroxystearic acid, CAS 106-14-9, was properly classified in heading 3823, HTSUS, and cited to NY A82790, dated June 5, 1996, in support (classifying an industrial monocarboxylic fatty acid product with fatty acids containing less than 90% purity, including 12-Hydroxystearic acid with a purity of less than 90%, in heading 3823, HTSUS). However, unlike the 12-Hydroxystearic acid in NY A82790, the 12-Hydroxystearic acid in HQ W967832 had a purity level of 100%. Because the EN 38.23 excludes “other fatty acids of a purity of 90 percent or more,” CBP held that the merchandise was properly classified in chapter 29. Even though both products in HQ W967832 and NY A82790 consisted of 12-Hydroxystearic acid, it was the purity level of the fatty acids that was dispositive on the classification of the merchandise rather than the presence of the same fatty acid. Similarly, in the instant matter, even though all three fatty acid product formulations include C:16 palmitic acid as a component, only the DT 98 has a palmitic acid content above 90%. Therefore, like the 12-Hydroxystearic acid in HQ W967832, the DT 98 is excluded from classification in heading 3823, HTSUS, and is properly classified as “Saturated acyclic monocarboxylic acids and their anhydrides, halides, peroxides and peroxyacids” of heading 2915, HTSUS.
HOLDING:
By application of GRIs 1 and 6, DT 80 and DT 100 are classified in heading 3823, HTSUS, and specifically in subheading 3823.19.2000, HTSUSA, 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 2020 column one, general rate of duty is 2.3% ad valorem.
By application of GRIs 1 and 6, DT 98 is classified in heading 2915, HTSUS, and specifically in subheading 2915.70.0110, HTSUSA, which provides for “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 2020 column one, general rate of duty is 5% ad valorem.
Duty rates are provided for the internal advice applicant’s convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided online at www.usitc.gov.
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