CLA-2 OT:RR:CTF:TCM H145541 TNA
Mr. Michael Tomenga, Esq.
Neville Peterson, LLP
1400 16th Street, N.W., Suite 350
Washington, D.C. 20036
RE: Request for Reconsideration of HQ H086082; Tariff Classification of Homeopathic Remedies
Dear Mr. Tomenga:
This is in response to your request for reconsideration, dated January 24, 2011, made on behalf of Nelsons Bach USA, Ltd. (“Nelsons Bach”), of Headquarters Ruling Letter (“HQ”) H086082, dated October 15, 2010, which pertains to the classification of homeopathic remedies under the Harmonized Tariff Schedule of the United States (HTSUS). We have reviewed HQ H086082 and found it to be in error. For the reasons set forth below, we hereby revoke HQ H086082.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice of the proposed action was published in the Customs Bulletin, Vol. 45, No. 41, on October 5, 2011. CBP received two comments in support of this notice.
FACTS:
The subject merchandise consists of Nelsons Bach’s homeopathic remedies. These remedies come in a variety of forms and are used to treat a variety of ailments. Some are in the form of alcohol-based homeopathic essences that are packaged in 20 milliliter bottles and contain 27% alcohol and 70% water. Some are labeled for the treatments of such ailments as stress, lack of focus, courage, presence of mind; others “bring courage and calm to face things that frighten or worry, also aids the shy and timid”; “restore energy when you are mentally weary, procrastinate , and doubt your ability to face the task ahead.” Other remedies are in the form of lozenges, and still others are in the form of small pills. All have similar labels describing what ailments they relieve.
In HQ H086082, CBP classified entries of the homeopathic remedies in liquid form in subheading 2208.90.80, which provides for “undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.: Other: Other: Other.” The “Rescue Remedy for Pets” was classified under subheading 3824.90.92, HTSUS, which provides for: “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: Other: Other: Other: Other: Other.” The entries that were in tablet or lozenge form were classified under subheading 2106.90.99, HTSUS, which provides for: “food preparations not elsewhere specified or included: other: other: other: other: other: other.”
ISSUE:
Whether homeopathic remedies that have the indicia of use as a drug are classified under heading 3004, HTSUS?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (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 may then be applied.
The HTSUS provisions under consideration are as follows:
2106 Food preparations not elsewhere specified or included:
2208 Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.; spirits, liqueurs and other spirituous beverages:
3004 Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses (including those in the form of transdermal administration systems) or in forms or packings for retail sale:
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:
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System 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. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN to heading 21.06 states, in pertinent part, the following:
Provided that they are not covered by any other heading of the Nomenclature, this heading covers :
(A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption.
The EN to heading 22.08 states, in pertinent part, the following:
Provided that their alcoholic strength by volume is less than 80 % vol, the heading also covers undenatured spirits (ethyl alcohol and neutral spirits) which, contrary to those at (A), (B) and (C) above, are characterised by the absence of secondary constituents giving a flavour or aroma. These spirits remain in the heading whether intended for human consumption or for industrial purposes.
The EN to heading 30.04 states, in pertinent part, the following:
This heading covers medicaments consisting of mixed or unmixed products, provided they are :
(a) Put up in measured doses or in forms such as tablets, ampoules (for example, re-distilled water, in ampoules of 1.25 to 10 cm3, for use either for the direct treatment of certain diseases, e.g., alcoholism, diabetic coma or as a solvent for the preparation of injectible medicinal solutions), capsules, cachets, drops or pastilles, medicaments in the form of transdermal administration systems, or small quantities of powder, ready for taking as single doses for therapeutic or prophylactic use…
(b) In packings for retail sale for therapeutic or prophylactic use. This refers to products (for example, sodium bicarbonate and tamarind powder) which, because of their packing and, in particular, the presence of appropriate indications (statement of disease or condition for which they are to be used, method of use or application, statement of dose, etc.) are clearly intended for sale directly to users (private persons, hospitals, etc.) without repacking, for the above purposes.
These indications (in any language) may be given by label, literature or otherwise. However, the mere indication of pharmaceutical or other degree of purity is not alone sufficient to justify classification in this heading.
The EN to heading 38.24 states, in pertinent part, the following:
(B) CHEMICAL PRODUCTS AND CHEMICAL OR OTHER PREPARATIONS
With only three exceptions (see paragraphs (7), (19) and (32) below), this heading does not apply to separate chemically defined elements or compounds.
The chemical products classified here are therefore products whose composition is not chemically defined, whether they are obtained as by products of the manufacture of other substances (this applies, for example, to naphthenic acids) or prepared directly.
The chemical or other preparations are either mixtures (of which emulsions and dispersions are special forms) or occasionally solutions. Aqueous solutions of the chemical products of Chapter 28 or 29 remain classified within those Chapters, but solutions of these products in solvents other than water are, apart from a few exceptions, excluded therefrom and accordingly fall to be treated as preparations of this heading.
The preparations classified here may be either wholly or partly of chemical products (this is generally the case) or wholly of natural constituents (see, for example, paragraph (24) below).
However, the heading does not cover mixtures of chemicals with foodstuffs or other substances with nutritive value, of a kind used in the preparation of certain human foodstuffs either as ingredients or to improve some of their characteristics (e.g., improvers for pastry, biscuits, cakes and other bakers’ wares), provided that such mixtures or substances are valued for their nutritional content itself. These products generally fall in heading 21.06. (See also the General Explanatory Note to Chapter 38.)
Additional U.S. Rule 1 states, in pertinent part, that:
In the absence of special language or context which otherwise requires-
(a) a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use.
In HQ H086082, we classified the subject homeopathic remedies in lozenge and pill form in subheading 2106.90.99, HTSUS; the remedies in liquid form that had 27% alcohol in subheading 2208.90.80, HTSUS; and the Rescue Remedy for Pets in subheading 3824.90.40, HTSUS. You argue, however, that these classifications are contrary to CBP’s published precedent. You argue that homeopathic remedies are classified as medicaments in heading 3004, HTSUS. In support of this argument, you assert that HQ 967075, dated December 6, 2004, and HQ 967363, dated December 6, 2004, specifically revoked prior rulings to set forth the standard by which homeopathic remedies are to be classified under the HTSUS.
In HQ 967075 and HQ 967363, we reasoned that headings 2106 and 3004, HTSUS, are principal use provisions. The principal use of the class or kind of goods to which an import belongs is controlling, not the principal use of the specific import. Group Italglass U.S.A., Inc. v. United States, 17 C.I.T. 1177, 839 F. Supp. 866, 867 (1993). “Principal use” is defined as the use “which exceeds any other single use.” Minnetonka Brands v. United States, 24 C.I.T. 645; 110 F. Supp. 2d 1020; 2000 Ct. Intl. Trade LEXIS 87; Slip Op. 2000-86. “The fact that the merchandise may have numerous significant uses does not prevent… classif[ication of] the merchandise according to the principal use of the class or kind to which the merchandise belongs.” Lenox Coll. v. United States, 20 C.I.T. 194; 18 Int’l Trade Rep. (BNA) 1181; 1996 Ct. Intl. Trade LEXIS 38; SLIP OP. 96-30 (Ct. Int’l Trade 1996).
When applying a “principal use” provision, CBP must ascertain the class or kind of goods which are involved and decide whether the subject merchandise is a member of that class. See Additional US Rule of Interpretation 1 to the HTSUS. In determining the class or kind of goods, the Court examines factors which may include: (1) the general physical characteristics of the merchandise; (2) the expectation of the ultimate purchasers; (3) the channels of trade in which the merchandise moves; (4) the environment of the sale (e.g. the manner in which the merchandise is advertised and displayed); (5) the usage of the merchandise; (6) the economic practicality of so using the import; and (7) the recognition in the trade of this use. See United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, 377, cert. denied, 429 U.S. 979, 50 L. Ed. 2d 587, 97 S. Ct. 490 (1976); see also Lenox Coll., 20 C.I.T. 194; E. M. Chemicals v. United States, 20 C.I.T. 382, 923 F. Supp. 202 (Ct. Intl. Trade 1996). Therefore, the determinative issue in HQ 967075 and HQ 967363, as well as in the present case, is whether the subject homeopathic products, which are regulated as drugs under the FFDCA, belong to the class or kind of good that is principally prepared for therapeutic or prophylactic use or whether they belong to the class or kind of good that is principally used as a dietary supplement.
Medicaments principally prepared for therapeutic or prophylactic use in the U.S. are packaged for oral, parenteral, or dermatological administration. The ultimate purchaser expects that the substance will cure their condition or reduce its symptoms. They are regulated by the FDA as a drug and typically sold in pharmacies, over the counter or by prescription only or administered by health care personnel in hospitals or clinics. They are also used according to a strict dosage schedule usually with a time limit on the recommended use. By contrast, food supplements encompass a much more expansive group of items. They need only be prepared for human consumption. As such, they are simply packaged for oral ingestion as a capsule, tablet, powder or liquid. They are put up in packaging with indications that they maintain general health or well-being, and are often used daily without a strict dosage schedule or time limit recommended.
The internet web page of the Homeopathic Pharmacopeia of the United States (HPUS) states, in pertinent part, the following:
Homeopathy is the art and science of healing the sick by using substances capable of causing the same symptoms, syndromes and conditions when administered to healthy people. . . . Any substance may be considered a homeopathic medicine if it has known ‘homeopathic provings’ and/or known effects which mimic the symptoms, syndromes or conditions which it is administered to treat, and is manufactured according to the specifications of the Homeopathic Pharmacopoeia of the United States.
See http://www.hpus.com/whatishomeopathy.php.
One of the principal concepts of homeopathy is the “Law of Infinitesimals.” This principal holds that the smaller the dose of the substance, the more powerful will be its healing effects. For example, the starting substance is first mixed in alcohol to obtain a tincture. One drop of the tincture is mixed with 99 drops of alcohol (to achieve a ratio of 1:100) and the mixture is strongly shaken. This shaking process is known as succussion. This bottle is labeled as “1C” or “2X.” One drop of this 1C is then mixed with 100 drops of alcohol and the process is repeated to make 2C. By the time 3C (6X) is reached, the dilution is 1 part in 1 million.
Whereas prior CBP rulings once held that the relevant standard in classifying homeopathic products was the ability to detect the presence of the active ingredient, HQ 967075 and HQ 967363 specifically overruled that approach to find that homeopathic products are medicaments within the meaning of heading 3004, HTSUS. Such products must comply with the standards listed in the HPUS. Furthermore, these products must be packaged with statements of the specific diseases, ailments or their symptoms for which the product is to be used, the concentration of active substance or substances contained therein, the recommended dosage and the mode of application. They are also marketed and sold in relation to a disease, condition, or ailment which they purport to treat. If the condition is a very serious one, e.g. cancer, they are sold only by prescription. As a result, HQ 967075 and HQ 967363 found that in the context of homeopathic products, the outcome of the principal use test described above should not be based on the degree of dilution of the active ingredient in the homeopathic product.
This reasoning also applies to the homeopathic products at issue in the present case, which are similar to the ones at issue in HQ 967075 and HQ 967363. They contain specific dosage instructions, including how to ingest the product and how often. Each remedy also contains statements regarding the ailments or symptoms they treat, and the concentration of active substances the product contains. They are also sold in relation to the ailment they are purported to treat. Therefore, the subject homeopathic products, which contain an active ingredient or ingredients officially included in the HPUS, and are packaged with statements of the specific diseases, ailments or their symptoms for which the product is to be used, the concentration of active substance or substances contained therein, the recommended dosage and the mode of application, are classified in subheading 3004.90.91, HTSUS, which provides for “Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses or in forms or packings for retail sale: Other: Other: Other.”
HOLDING:
Under the authority of GRI 1, Nelson’s Bach’s homeopathic remedies containing the necessary indicia of therapeutic or prophylactic use are classified in heading 3004, HTSUS. Specifically, they are classified under subheading 3004.90.91, HTSUS, which provides for: “Medicaments (excluding goods of heading 3002, 3005 or 3006) consisting of mixed or unmixed products for therapeutic or prophylactic uses, put up in measured doses or in forms or packings for retail sale: Other: Other: Other.” The column one general rate of duty is Free.
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 internet at www.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
HQ H086082, dated October 15, 2010, is REVOKED.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division