CLA-2 RR:CTF:TCM W968085ptl
TARIFF No.: 2106.90.9998
Ms. Sandra Liss Friedman
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016
RE: Reconsideration of NY L89633; Encapsulated Bacteria Cultures
Dear Ms. Friedman:
This is in response to your letter of January 18, 2006, on behalf of your client, Mitsui & Co. (U.S.A.), Inc., requesting reconsideration of New York ruling (NY) L89633, dated December 30, 2005, relating to the classification under the Harmonized Tariff Schedule of the United States (HTSUS), of various encapsulated products said to contain active bacteria cultures. That ruling classified the products in subheading 2106.90.9998, HTSUS, which provides for “food preparations not elsewhere specified or included … other … other.”
In preparing this ruling, we have considered the information you submitted with your request for reconsideration as well as the additional information you and your client provided during a meeting at our office on January 23, 2007.
FACTS:
You state the products under consideration consist of active bacteria cultures which have been encapsulated. When you requested the classification ruling from New York, you provided information and samples of two products. Enzymatic Therapy Acidophilus Pearls is said to contain lactobacillus acidophilus and bifidobacterium longum. Natrol BioBeads Acidophilus Complex is said to contain, in addition to the lactobacillus acidophilus and bifidobacterium longum, bifidobacterium bifidum and lactobacillus rhamnosus. You stated in your letter to New York, and again in the reconsideration letter, that your client will be importing several additional varieties of products that will include various formulations of some or all of the bacteria, including other bacteria, according to the requirements of their customers.
You state that the various bacteria cultures are contained in capsules made from ingredients such as palm oil (the enzymatic product) or vegetable oil (the Natrol product), and glycerin, lecithin and pectin. The ingredients are intended to create enteric properties of the capsule so that the bacteria will pass through the stomach and reach the intestinal tract without having been destroyed by the stomach acids. The capsule is designed to break apart after it reaches the intestinal tract and release the bacteria.
Your letter states that all of the listed ingredients other than the bacteria cultures are inactive ingredients whose sole purpose is to allow the bacteria to reach the intestines. You say that the capsules are marketed as probiotics, i.e., good bacteria, intended to promote digestive health. You further state: “The capsules are promoted by Natrol as products which ‘helps maintain a healthy digestive tract’ and ‘helps ease temporary stomach discomfort associated with travel.’ Enzymatic promotes their product for ‘digestive health’ with ‘guaranteed active cultures for better digestion.’”
The sample package provided for the Natrol product contains “Supplement facts” providing information to consumers on the amount of bacteria provided per “bead” which is said to be “1 billion.” Information on the Enzymatic product package states that it is a dietary supplement and recommends taking one “pearl” daily. Both packages contain the FDA Dietary Supplement advisory language that the products have not been evaluated by the FDA and are not intended to diagnose, treat, cure or prevent any disease.
ISSUE:
Whether encapsulated bacteria prepared for human ingestion are classified as cultures of micro-organisms, ferments, or food preparations not elsewhere specified or included.
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, 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 may then be applied in order.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS subheadings under consideration are as follows:
2106 Food preparations not elsewhere specified or included:
* * *
2106.90 Other:
Other:
Other:
Other:
Other:
2106.90.99 Other
Other:
Other:
Other:
2106.90.9998 Other
3002 Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; anti-sera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products:
* * *
3002.90 Other:
3002.90.1000 Ferments
3002.90.51 Other
* * *
3002.90.5150 Other
The products under consideration are manufactured gelatin capsules or pills that are said to contain bacteria cultures and other inactive ingredients which are intended to be ingested by people. These products are in finished condition at the time they are imported. Verbiage on the products packaging promises that the products offer “Big digestive support!” or “Strengthens the Body’s Natural Defenses.” The products are said to be specially manufactured so that the
capsule or pill will not dissolve until it reaches a person’s digestive tract whereupon the bacteria cultures will be released to allegedly promote digestive health.
It is argued that because the bacteria is a micro-organism, the products should be classified in heading 3002, HTSUS. The alternative suggested possibilities are either subheading 3002.90.5150, HTSUS, which provides for “Human blood; … vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products: … other: other,” or subheading 3002.90.1000, HTSUS, which provides for “Human blood; … vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products: … Other: Ferments.” In support of this position, two CBP classification rulings issued by the National Commodity Specialist Division in New York are cited as precedent. The first ruling, NY D80280, dated August 21, 1998, classified a product, Bifilon-50N, described as “a fine, white powder which, …, contains (by weight) 33.3% lyophilized (freeze-dried) bifidobacteria (Bifidobacterium longum BB536), 66.3% cornstarch (filler/stabilizer), and 0.4% calcium hypophosphate,” which was to be used as a dietary supplement, in subheading 3002.90.5050, HTSUS, as cultures of micro-organisms (excluding yeasts) and similar products: other. The second ruling, NY L86890, dated August 17, 2005, classified a product, LACTOACID-50, consisting of freeze-dried Lactobacillius acidophilus (Strain LAC-361) powder (40-60% by weight) mixed with cornstarch (40-60% by weight) that was to be used in the formulation of dietary supplements in the same subheading, 3002.90.5150, HTSUS.
You note that when NY L89633 was issued to you, CBP stated that the subject product was ineligible for classification in subheadings 3002.90.5150 or 3002.90.1000, HTSUS, because “[t]hese subheadings cover raw materials for manufactured products. The above-described products, filled gelatin capsules, are finished products marketed as dietary supplements and would not fall in either subheading.” You state that CBP should disregard both the capsules and inactive non-bacteria filling because they “are present only to protect the bacteria and allow it to survive ingestion.” You state that nothing in the Chapter notes for Chapter 30 or the ENs to heading 3002 suggests that the heading is limited to raw, unfinished materials. You further state that the language of the EN to heading 3002 which provides “[t]he products of this heading remain classified here whether or not in measured doses or put up for retail sale and whether in bulk or in small packings” indicates that finished products are included within the scope of the headings.
Your next argument for classification of the products as bacteria in heading 3002 relies on the view that the products are mixtures which should be classified under GRI 2(b) “as they are composite goods consisting of different materials.”
GRI 2(b) states:
(b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.
GRI 3 states, in pertinent part:
When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
You state that the bacteria is the only active ingredient in the products, the other components being inert. Accordingly, you claim, it is the bacteria that provides the essential character to the capsules and pills. You further argue that because the capsules contain bacteria they do not meet the standard definition of food and thus cannot be considered to be a food article classifiable in heading 2106, HTSUS. You next argue that in spite of the fact that the products are clearly marked as “dietary supplements” on their retail packages, they should not be considered dietary supplements because bacteria cultures are not among the substances falling within the definition of that term in 21 USCA 321 of the Food Drug and Cosmetic Act. You finally state that the products cannot be classified in heading 2106 because they are more specifically provided for in Chapter 30.
After reviewing your arguments, we do not believe that the language of your preferred heading, “cultures of micro-organisms” describes your client’s
products. Stedman’s On-line Medical Dictionary, 27th Edition, defines “culture,” in relevant part, as: “1. The propagation of microorganisms on or in media of various kinds. 2. A mass of microorganisms on or in a medium.”
The language of EN 30.02 states, in relevant part;
(D) Vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products.
These products include:
* * *
(3) Cultures of micro-organisms (excluding yeasts). These include ferments such as lactic ferments used in the preparation of milk derivatives (kephir, yogurt, lactic acid) and acetic ferments for making vinegar; moulds for the manufacture of penicillin and other antibiotics; and cultures of micro-organisms for technical purposes (e.g., for aiding plant growth).
It is clear from the language of the relevant definition of “culture” and the exemplars in the EN, the cultures of microorganisms referred to in the tariff are cultures that serve as starting materials for the manufacture of finished products – not as the components of an already finished product. The products classified in the two New York rulings cited in support of your desired classification are distinguishable from your client’s product. The products classified in NY L86890 and NY D80280, in their condition as imported, consisted simply of pure, freeze-dried cultures of microorganisms diluted with cornstarch. The imported products were to undergo further processing (with the addition of inactive ingredients) before undergoing encapsulation as finished products to be marketed as dietary supplements. Your client’s products have already undergone that processing and are that final product.
Similarly, the instant products are not described by the term “ferments.” The language of the EN to heading 3002, previously cited, clearly indicates that “ferments” are starting materials for the production or manufacture of further products such as kephir, yogurt, lactic acid and vinegar. Your client’s products are designed to reach a consumer’s intestine, whereupon the bacteria are released to carry out fermentation. Encapsulated finished products marketed as dietary supplements are not akin to any of the exemplars of articles considered “ferments” of heading 3002, HTSUS.
Based on the above analysis, we do not believe that either of the products under consideration are described by the terms of heading 3002, HTSUS, and therefore cannot be classified therein.
We also do not agree that your client’s encapsulated finished products are classifiable pursuant to GRI 2(b) as mixtures of articles that are “prima facie, classifiable under two or more headings.” In their condition as imported, the articles are finished goods, encapsulated products, that are marketed as dietary supplements.
These products have been specially formulated and are intended for ingestion by humans. In HQ 966448, dated July 9, 2004, CBP stated:
Food supplements, classified in heading 2106, HTSUS, encompass an expansive group of items. They simply must be prepared for human consumption. As such, these products are packaged for oral ingestion only as a capsule, tablet, powder or liquid. They are put up in packaging with indications that they maintain general health or wellbeing. See HQ 966527, dated October 21, 2003.
The subject products have been prepared for human consumption and are marketed to consumers for that purpose. They readily fit into the heading for food preparations. They are intended for the consumer’s general health and well-being and are not intended to cure or prevent any disease. By virtue of
GRI 1, the subject products are properly classified in heading 2106, HTSUS, as food preparations not elsewhere specified or included.
The subject products are marketed and labeled as dietary supplements. We have determined that they have been prepared as food supplements. The Chapter Notes to Chapter 30, HTSUS, provide, in relevant part, as follows:
1. This chapter does not cover:
(a) Foods or beverages (such as dietetic, diabetic or fortified foods, food supplements, tonic beverages and mineral waters), other than nutritional preparations for intravenous administration (section IV); [Emphasis added]
Thus, by virtue of Chapter Note 1(a), the subject products are excluded from classification in Chapter 30, HTSUS.
HOLDING:
Enzymatic Therapy Acidophilus Pearls and Natrol BioBeads Acidophilus Complex dietary supplements are classified in subheading 2106.90.9998, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: … Other: Other: Other.” The 2007 general column one duty rate is 6.4 percent 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 on the World Wide Web at www.usitc.gov.
NY L89633, dated December 30, 2005, is affirmed.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division