CLA-2 RR:CTF:TCM W967992 CAM
Lewis E. Leibowitz
William D. Nussbaum
Hogan & Hartson L.L.P.
Columbia Square
555 13th St. N.W.
Washington, D.C. 20004-1109
RE: Revocation of HQ 962807; Palm Fatty Acid Distillate
Dear Mr. Leibowitz and Mr. Nussbaum:
In Headquarters Ruling Letter (HQ) 962807, dated April 29, 2002, palm fatty acid distillate (PFAD), a product produced by your client, Church & Dwight Co., was classified in subheading 3824.90.4090 under the Harmonized Trade Schedule of the United States (HTSUS), which provides for: “prepared binders for foundry molds or cores; chemical products and preparations of chemical industries, not elsewhere specified or included: other: other: fatty substances of animal or vegetable origin and mixtures thereof, other.” Customs and Border Protection (CBP) has reviewed HQ 962807, and have found that ruling to be in error.
HQ 962807 is a decision on a specific protest. A protest is designed to handle entries of merchandise, which have entered the United States and been liquidated by CBP. A final determination of a protest, pursuant to Part 174, CBP Regulations (19 CFR 174), cannot be modified or revoked as it is applicable only to the merchandise, which was the subject of the entry protested. Furthermore, CBP lost jurisdiction over the protested entries in HQ 962807 when notice of denial of the protest was received by the protestant. See San Francisco Newspaper Printing Co.v. United States, 9 CIT 517, 620 F. Supp. 738 (1935).
Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. §1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed modification was published on September 6, 2006, in the Customs Bulletin, Volume 40, No. 30. No comments were received in response to this notice.
FACTS:
HQ 962807 described PFAD as a product that is produced by subjecting crude palm oil to heat and steam at reduced pressures. During this process, steam carries off the PFAD until it condenses into a liquid. After condensation, PFAD solidifies at room temperature into an amber-color. Once solidified, fatty free acids compose 85-90 % of PFAD’s total substance of weight. These fatty free acids include palmitic acid (about 45-50 %), oleic acids (about 35-36 %), linoleic acid (about 8-9 %), and stearic acid (about 5-6 %). The remaining 10-15% of the weight of PFAD does not consist of fatty free acids, and that includes a combination of entrained triglycerides (about 7-8 %), waxes, sterols, tocopherols, water, and plant pigments.
At issue in HQ 962807, was whether PFAD was classified in subheading 1511.90.0000, HSTUS, as “palm oil and its fractions whether or not refined, but not chemically modified: other,” or subheading 3824.90.4090, HTSUS, as “prepared binders for foundry molds or cores; chemical products and preparations of chemical industries, not elsewhere specified or included: other: other: fatty substances of animal or vegetable origin and mixtures thereof, other.” In that protest, classification in heading 3823, HTSUS, as industrial monocarboxylic fatty acids was never considered. Additional information has come before CBP suggesting that the correct classification of PFAD is in heading 3823, HTSUS.
ISSUE:
What is the proper classification under the HTSUS of palm fatty acid distillate?
LAW AND ANALYSIS:
Classification of merchandise under the HTSUS is 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 and legal notes do not require otherwise, then CBP may apply the remaining GRIs.
In interpreting the headings and subheadings, CBP looks to the Harmonized Commodity Description and Coding System Explanatory Notes (ENs), which constitute the official interpretation of the HTSUS. While not legally binding or dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and, generally, indicate the proper interpretation of headings. See T.D. 89-80, 54 FR 35127, 35128 (August 23, 1989).
The HTSUS provisions under consideration are as follows:
3823 Industrial monocarboxylic fatty acids; acid oils from refining; industrial fatty alcohols:
Industrial monocarboxylic fatty acids; acid oils from refining:
* * *
3823.19 Other:
3823.19.20 Derived from coconut, palm-kernel or palm oil
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:
3824.90 Other:
Other :
* * *
3824.90.40 Fatty substances of animal or vegetable origin and mixtures thereof
* * *
3824.90.4090 Other
In HQ 962807, PFAD was classified in heading 3824, HTSUS, but additional information has come before CBP, which indicates that is not the correct classification. Heading 3824, HTSUS, is a basket provision where merchandise should only be classified in that heading, if it is not “elsewhere specified or included” in another heading. Before we can classify PFAD in the basket provision heading 3824, HTSUS, classification in heading 3823, HTSUS, as industrial monocarboxylic fatty acids must be considered.
Applying GRI 1, PFAD meets the terms of heading 3823, HTSUS, because it is an industrial monocarboxylic fatty acid. For instance, PFAD is produced through an industrial process that includes fractional distillation. Furthermore, PFAD’s chemical structure comports with that of a monocarboxlyic fatty acid. A carboxylic acid is composed of a “broad array of organic acids” that end in a carboxyl group and, typically, a carboxylic acid includes “the large and important class of fatty acids.” Hawley’s Condensed Chemical Dictionary 223 (12th ed. 1993). A monocarboxlyic is one carboxylic acid. Id. The chemical composition of the PFAD in question meets the definition of a monocarboxlyic acid because it is an organic acid that includes fatty acids. A fatty acid is a “carboxylic acid derived from or contained in an animal or vegetable fat or oil.” Id. at 507. PFAD is composed of approximately 85 % fatty acids that are dervieved from palm oil. Therefore, PFAD is classifiable in heading 3823, HTSUS.
Moreover, the ENs to heading 3823, HTSUS, support classification of PFAD in that heading. The ENs indicate that heading 3823, HTSUS, includes “[d]istilled 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).” (emphasis in original). PFAD meets the description from the ENs. As stated, PFAD is a fatty acid that is produced through hydrolysis whereby steam and heat split palm oils and fats to create the final product. As such, the guidance provided by ENs’ indicates that PFAD meets the terms of heading 3823, HTSUS.
Though the ENs to heading 3823, HTSUS, preclude acids with a fatty acid purity of 90 % or more from falling with the ambit of heading 3823, HTSUS, that exclusion is not dispositive in this case. In HQ 964607, dated July 8, 2002, CBP classified saw palmetto berries with a total acid content of around 87 % in heading 3823, HTSUS. Similar to the saw palmetto berries, PFAD has an acid content between 85 and 90 %. Therefore, like in HQ 964607, the PFAD should not be precluded by the ENs to heading 3823, HTSUS.
Moreover, previous CBP rulings support classification of PFAD in heading 3823, HTSUS. In HQ 964531, dated March 14, 2002, CBP classified a coconut fatty acid produced through hydrolysis in heading 3823, HTSUS. Like the coconut oil in HQ 964531, PFAD is created from a similar hydrolysis process involving heat and steam on palm oil. CBP finds that because PFAD is specified elsewhere under heading 3823, HTSUS, that classification under heading 3824, HTSUS, is precluded by application of GRI 1.
HOLDING:
By applying GRI 1, Palm fatty acid distillate is classified under heading 3823, HTSUS, and, specifically, under subheading 3823.19.2000, HTSUS, 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 general, column one rate of duty is 2.3 % percent ad valorem.
EFFECT ON OTHER RULINGS:
HQ 962807, dated April 29, 2002, is revoked.
In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial & Trade Facilitation Division