CLA-2 OT:RR:CTF:TCM H261313 NCD
Port Director
Port of Los Angeles/Long Beach
U.S. Customs & Border Protection
301 East Ocean Boulevard
Suite 1400
Long Beach, CA 90802
RE: Internal Advice Request; Classification of dried mung beans
Dear Port Director:
This is in response to a January 30, 2015 message by the Port of Los Angeles/Long Beach (“the Port”) seeking internal advice from our office as to the proper classification of mung beans under the Harmonized Tariff Schedule of the United States (HTSUS). The Port’s message was submitted at the request of Caudill Seed Company, Inc. (“Caudill”) stated in a September 15, 2014 letter submitted to the Port on Caudill’s behalf. We note at the outset that Caudill has filed protests pertaining to classification of mung beans with several Ports of Entry, which have suspended action on the received protests pending issuance of this decision. Accordingly, the below determination is applicable to any substantially similar mung beans at issue in those protests.
FACTS:
Mung beans, referred to binomially as Vigna radiata, are legumes which lend themselves to a variety of diverse uses. Specifically, they can be softened and further prepared for direct consumption, placed in water and germinated into consumable sprouts, or sown into soil and grown into bean plants. Caudill states in its September 15, 2014 letter that the particular mung beans at issue are used solely for the former two purposes following entry.
Notably, the instant mung beans have been subject to two prior rulings issued to Caudill by U.S. Customs and Border Protection. The first, New York Ruling Letter (NY) 813882, dated September 7, 1995, describes the subject mung beans as dry, whole, and green. In that ruling, CBP classified the subject mung beans in subheading 0713.31.10, HTSUS, which provides for “Beans of the species Vigna radiata…of a kind used for sowing.” The second, Headquarters Ruling Letter (HQ) 965994, dated April 14, 2003, reaffirms NY 813822 and states, in relevant part, as follows:
To show that its product is not of a kind used for sowing, among its submissions [Caudill] can present evidence which shows how the channels of trade in which its merchandise differs from that of seeds of a kind used for sowing, such as advertising, packaging, shipping and handling, etc. It can show the different environments of sale of the two types of seed. Seed of a kind used for sowing must comply with the requirements of the Federal Seed Act set forth in US Department of Agriculture Regulations Part 361 (7 CFR 361). [Caudill] can provide evidence that its product is not shipped, packaged or labeled for inspection in accordance with that Act, but rather that it meets the requirements for food grade merchandise.
When [Caudill] presents the information required by Part 177, Customs Regulations, specifically the "full and complete description of the article and wherever germane to the proper classification of the article [as in this instance], information as to the article's chief use in the United States" (19 CFR 177.2(b)(2)(ii)), Customs will issue a ruling on its merchandise.
In support of its position as stated in its September 15, 2014 letter, Caudill has submitted various documents that it characterizes as evidence responsive to the requests made in HQ 965994. These include, in no particular order, the following:
A copy of a package label for “sprouting” mung beans stating that the beans contained therein have a germination rate of 99.5 percent, have undergone processing designed to eliminate microbial contaminants, and must be thoroughly cooked once sprouted.
A copy of a package label for “growing” mung beans stating that the beans contained therein have a germination rate of 85 percent.
Laboratory reports for “sprouting” mung beans indicating that the beans tested negatively for Shigella, Salmonella, Listeria, and E. Coli and have a germination purity of 99 percent.
Numerous invoices issued by Caudill, doing business as Caudill Sprouting, documenting the sale of mung beans to various sprout growers, sprout suppliers, and restaurants whose menu items include bean sprouts.
A signed confirmation of sale of mung beans to a purchaser listed on one of these invoices, as well as copies of email exchanges indicating delivery of mung bean orders to purchasers listed on the invoices.
Written statements, signed by purchasers listed on the invoices, indicating that all mung beans purchased are sprouted.
Entry summaries, shipping invoices, bills of lading, and other documents pertaining to entry of the mung beans.
ISSUE:
Whether the subject mung beans are properly classified in subheading 0713.31.10, HTSUS, as beans of the species Vigna radiata of a kind used for sowing, or in subheading 0713.31.40, HTSUS, as “other” beans of the species Vigna radiata.
LAW AND ANALYSIS:
Merchandise imported into the United States is classified under the HTSUSA. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first 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 heading and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and, mutatis mutandis, to GRIs 1 through 5. AUSRI 1(a) provides that 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 understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System, which constitute the official interpretation of the HTSUS at the international level, may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
The 2016 HTSUS provisions under consideration in the instant case are as follows:
0713 Dried leguminous vegetables, shelled, whether or not skinned or split:
Beans (Vigna spp., Phaseolus spp.):
0713.31 Beans of the species Vigna mungo (L.) Hepper or Vigna radiata (L.) Wilczek:
0713.31.10 Seeds of a kind used for sowing
Other:
0713.31.20 If entered for consumption during the period from May 1 to August 31, inclusive, in any year
0713.31.40 If entered for consumption outside the above stated period, or if withdrawn for consumption at any time
As an initial matter, it is undisputed that the subject mung beans are classified at the 4-digit heading level in heading 0713, HTSUS. Solely at issue is whether they are classified, at the 8-digit subheading level, in subheading 0713.31.10, HTSUS, or instead in subheading 0713.31.20 or 0713.31.40, HTSUS. As stated in HQ 965994, it is CBP’s position that shelled, dry, whole leguminous vegetables are presumed to be a “seed of a kind used for sowing” absent evidence that the merchandise is not for such use. See also HQ 088209, dated March 18, 1991 (“Dried leguminous vegetables are to be considered seeds of a kind used for sowing.”). Accordingly, we initially consider whether the instant mung beans are prima facie classifiable in subheading 0713.31.10, HTSUS.
Subheading 0713.31.10 provides for Vigna radiata seeds of a kind used for sowing. Because the subheading includes the language “of a kind used,” it is a “principal use” provision subject to the requirements of AUSRI 1(a), HTSUS. See Dependable Packaging Solutions, Inc. 757 F.3d 1374, 1378 (Fed. Cir. 2014) (deeming subheadings with identical language “principal use” provisions); BenQ Am. Corp. v. United States, 646 F.3d 1371, 1378 (Fed. Cir. 2011). AUSRI 1(a) calls for a determination as to the group of goods that are commercially fungible with the imported goods. Dependable Packaging, 757 F.3d at 1378. This determination in turn requires consideration of the seven Carborundum factors, which include: The general physical characteristics of the merchandise; the channels of trade in which the merchandise moves; the environment of the sale, such as the manner in which the merchandise is advertised and displayed; the expectation of the ultimate purchasers; actual use of the import as compared to use of the merchandise which defines the class; the economic practicality of so using the import; and the recognition in the trade of this use. Id. (citing United States v. Carborundum Co., 536 F.2d 373, 377, 63 C.C.P.A. 98 (CCPA 1976)). We must accordingly apply these factors to the instant mung beans, taking into consideration evidence proffered by Caudill, to determine whether they are commercially fungible with mung beans of a kind used for sowing. Our findings are as follows:
General Physical Characteristics
CBP has previously ruled that consumable seeds are physically distinguishable from those of a kind used for sowing where the seeds cannot actually be sown. See HQ H108019, dated February 14, 2012 (ruling that pumpkin seeds were not of a kind used for sowing in part because they had been hulled so as to render crop growth impossible). Here, however, both mung beans of a kind used for sowing and those entered by Caudill, ostensibly for sprouting only, are capable of germination. Moreover, according to our research, CBP laboratory reports issued in connection with HQ 965994, and recent consultations with the U.S. Department of Agriculture (USDA), mung beans used exclusively for sprouting are not otherwise physically, botanically, or chemically distinguishable from those of a kind used for sowing. All such beans are dried, green, and whole. See E.S. Oplinger et. al., Alternative Field Crops Manual: Mungbean, Nov. 21, 1997. Caudill contends that mung beans for sprouting are specifically selected from larger batches based on their higher quality and germination rates. However, these criteria do not establish a meaningful basis for distinction. Moreover, even assuming mung beans with lower germination rates and less desirable properties are not suitable for sprouting, this does not preclude the possibility that mung beans of higher quality and germination capacity may be used for either end. Accordingly, we find that the subject mung beans cannot be physically distinguished from those of a kind used for sowing.
Channels of Trade
Caudill contends, and our consultations with USDA confirm, that mung beans used for sowing and growing are sold to commercial plant growers rather than to commercial or private sprouters. Caudill asserts that the subject mung beans were sold only to the latter type of purchasers. To support its assertion, Caudill has submitted invoices issued by Caudill Sprouting to various sprout growers, processors, and distributors, as well as restaurants whose menu items include sprouts. In and of themselves, these invoices are insufficient evidence of the purported sales. However, Caudill has also proffered a written confirmation of sale, copies of email exchanges with purchasers, and several signed written statements by purchasers verifying the sales. Because these documents effectively provide third-party corroboration of the invoices, we find that the invoiced beans were in fact sold to mung beans sprouters, rather than to growers, and were therefore distributed through channels of trade other than those through which mung beans of a kind used for sowing are distributed.
Purchaser Expectations
The courts have consistently held that customer perceptions may be inferred from the way in which a given product is promoted and offered, especially where direct evidence of expectations is scant. See, e.g., Aromont USA, Inc. v. United States, 671 F.3d 1310, 1315 (Fed. Cir. 2012) (looking to advertising tendencies as evidence of purchaser expectations); see also Dependable Packaging, 757 F.3d at 1378 (looking to price as an indicator of purchaser expectations); Latitudes Int'l Fragrance, Inc. v. United States, 931 F. Supp. 2d 1247, 1255 (Ct. Int'l Trade 2013) (considering retail price upon determining that a small handful of testimonies was, in and of itself, insufficiently probative of purchaser expectations). According to our consultations with USDA, mung beans slated for sowing are typically treated with fungicides and pesticides that render consumption unsafe, and consequently must be dyed so as to indicate chemical treatment and deter consumption. See Federal Seed Act Regulations, 7 C.F.R. § 201.31a (2008). In contrast, Caudill’s “sprouting” beans are consistently presented as specifically suitable for sprouting and consumption. For example, the label for Caudill’s “sprouting” beans indicates that they have a germination rate of 99.5 percent, which is sufficient for germination of the beans into sprouts, and that the beans have undergone processing designed to render them safely edible. Additionally, a survey of publicly-available information pertaining to Caudill’s mung bean products reveals that such information is only found in a website maintained by Caudill Sprouting, specifically under a banner entitled “Sprouting Seeds and MicroGreens Testing.” Similarly, the invoices and signed confirmation of sale all list Caudill Sprouting as the seller in the documented transactions, further indicating that Caudill has held itself out as such to purchasers. While none of these sources discount the possible use of Caudill’s “sprouting” beans for propagation purposes, Caudill’s heavy emphasis on the beans’ sprouting function can be viewed as having created an expectation among purchasers that these beans are indeed used for sprouting. Accordingly, we find that the expectations of the instant mung beans’ purchasers vary from purchaser expectations associated with mung beans of a kind used for sowing.
Remaining Carborundum Factors
The signed purchaser statements, all of which affirm the beans’ sales and subsequent sprouting, establish that the beans were in fact sprouted rather than sown. This use is both well-recognized and economically practical, as made clear in the EN to heading 0713 and evidenced by the widespread availability of sprouted mung beans for private purchasers and restaurant patrons. See, e.g., Subheading EN 0713.31 (“Beans of the species Vigna radiata (L.) Wilczek, also known as mung or green gram…are widely used for bean sprout production.”). We are, however, unable to make a determination as to the final factor, environment of sale, because the circumstances typifying a transaction for the sale of mung beans used for sowing could not be identified.
In sum, five of the Carborundum factors weigh against treatment of the subject mung beans as commercially fungible with mung beans of a kind used for sowing within the meaning of subheading 0713.31.10, HTSUS. We accordingly conclude that the mung beans are excluded from subheading 0713.31.10 and are instead properly classified in subheading 0713.31.20, HTSUS, or in subheading 0713.31.40, HTSUS, as determined by reference to their dates of entry.
HOLDING:
In accordance with the above analysis, and subject to the conditions set forth therein, the subject mung beans are classified, by application of GRI 1 and GRI 6, either in subheading 0713.31.2000, HTSUSA (Annotated), which provides for “Dried leguminous vegetables, shelled, whether or not skinned or split: Beans (Vigna spp., Phaseolus spp.): Beans of the species Vigna mungo (L.) Hepper or Vigna radiata (L.) Wilczek: Other: If entered for consumption during the period from May 1 to August 31, inclusive, in any year,” or in subheading 0713.31.4000, HTSUSA, which provides for “Dried leguminous vegetables, shelled, whether or not skinned or split: Beans (Vigna spp., Phaseolus spp.): Beans of the species Vigna mungo (L.) Hepper or Vigna radiata (L.) Wilczek): Other: If entered for consumption outside the above stated period, or if withdrawn for consumption at any time.” The 2016 column one general rate of duty for subheading 0713.31.2000, HTSUSA, is free. The 2016 column one general rate of duty for subheading 0713.31.4000, HTSUSA, is 0.3 cents per kilogram.
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/.
Sixty days from the date of this decision, the Office of International Trade, Regulations and Rulings, will make this decision available for CBP personnel, and to the public on the CBP Home Page at http://www.cbp.gov by means of the Freedom of Information Act, and other methods of publication.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division