CLA-2 OT:RR:CTF:TCM HQ H061122 TNA
Port Director, Laredo Service Port
U.S. Customs and Border Protection
P.O. Box 3130 Laredo, TX 78044-3130
Re: Protest and Application for Further Review No: 2304-09-100026; Marigold Oleoresin
Dear Port Director:
The following is our decision regarding Protest and Application for Further Review No. 2304-09-100026, timely filed on March 30, 2009, on behalf of Alcosa International, Inc., regarding the tariff classification of marigold oleoresin under the Harmonized Tariff Schedule of the United States (HTSUS). In reaching our decision, we have taken into consideration arguments made in a teleconference with members of my staff on August 26, 2010.
FACTS:
The subject merchandise consists of marigold oleoresin that is imported as a semi-solid, rust-colored paste, put up in 200-kg drums. In this state, it cannot flow or be dispersed without further processing. It emits a strong odor but does not contain flavoring principles.
The subject merchandise is composed entirely of fatty acid esters including fats, oils, and waxes, of which 13-14% are xanthophyll esters. It is processed before importation. First, marigold flowers undergo a silage process where the flowers are cut, compressed and fermented. They then undergo a two-part drying process, where a press removes 67% of the product’s water weight, and a drum dryer uses heat and blowers that evaporate another 18% of the water weight. The drum dryer puts the merchandise in contact with air that is heated to 90 degrees Celsius in order to evaporate the moisture while leaving the solid material unchanged. The resulting substance is marigold meal, a woody, cellulose material that includes oleoresin, which is then compressed into pellets and immersed in a hexane bath that removes the oleoresin from the fiber. The mixture of hexane and oleoresin is an intermediate material called micelle, which is composed of hexane, fats, oils, xanthophylls, esters and waxes. The final step in the extraction of the oleoresin is for the micelle to undergo vacuum evaporation that separates the hexane from the oleoresin. When this process is complete, the hexane is removed to leave the oleoresin, which is then imported.
Laboratory analysis shows that this product is a marigold extract that is essentially a mixture of carotenoid compounds.
The subject merchandise entered between September 21, 2007 and June 23, 2008 in subheading 1302.19.91, HTSUS, as “Vegetable saps and extracts; pectic substances, pectinates and pectates; agar-agar and other mucilages and thickeners, whether or not modified, derived from vegetable products: Vegetable saps and extracts: other: other: other.” It was liquidated between August 1, 2008 and October 31, 2008, in subheading 3203.00.80, HTSUS, which provides for “Coloring matter of vegetable or animal origin (including dyeing extracts but excluding animal black), whether or not chemically defined; preparations as specified in note 3 to this chapter based on coloring matter of vegetable or animal origin: other.” In addition, three of the entries which had been liquidated between August 1, 2008 and September 26, 2008 were reliquidated on October 3, 2008. Protestant now claims classification in subheading 1301.90.91, HTSUS, which provides for “Lac; natural gums, resins, gum-resins and oleoresins (for example, balsams): other: other,” or, in the alternative, in subheading 1302.19.91, HTSUS.
ISSUE:
Whether marigold oleoresin is classified in heading 1301, HTSUS, as an oleoresin; in heading 1302, HTSUS, as a vegetable sap or extract; or in heading 3203, HTSUS, as coloring matter of vegetable or animal origin?
LAW AND ANALYSIS:
Initially, we note that the matter protested is protestable under 19 U.S.C. §1514(a) (2) as a decision on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2) (B) (ii), (iii) (codified as amended at 19 U.S.C. § 1514(c) (3) (2006)).
Further Review of Protest No. 2304-09-100026 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(c) because Protestant alleges that this protest involves matters previously ruled upon by the Commissioner of Customs or his designee or by the Customs courts but facts are alleged or legal arguments presented which were not considered at the time of the original ruling. Specifically, Protestant argues that both the Court of International Trade and the Federal Circuit
have discussed products that use marigold oleoresin as a reactant in a chemical reaction in Lynteq, Inc. v. United States, 15 CIT 274 (1991) and Lynteq, Inc. v. United States, 976 F.2d 693 (Fed. Cir. 1992), respectively, but that in the time since those cases were decided, new applications for the subject merchandise have been developed, allowing for the presentation of new facts and arguments.
Merchandise imported into the United States is classified under the HTSUS. 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 and, unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The HTSUS provisions under consideration are as follows:
1301 Lac; natural gums, resins, gum-resins and oleoresins (for example, balsams):
1301.90 Other
1301.90.91 Other
* * * * * * * * * * *
1302 Vegetable saps and extracts; pectic substances, pectinates and pectates; agar-agar and other mucilages and thickeners, whether or not modified, derived from vegetable products:
Vegetable saps and extracts:
1302.19 Other:
1302.19.91 Other
* * * * * * * * * * * *
3203.00 Coloring matter of vegetable or animal origin (including dyeing extracts but excluding animal black), whether or not chemically defined; preparations as specified in note 3 to this chapter based on coloring matter of vegetable or animal origin:
3203.00.80 Other
Note 1(h) to Chapter 13, HTSUS, states, in pertinent part, the following:
Heading 1302 applies, inter alia, to licorice extract and extract of pyrethrum, extract of hops, extract of aloes and opium.
The heading does not apply to:…
(h) Tanning or dyeing extracts (heading 3201 or 3203).
Note 3 to Chapter 32, HTSUS, states, in pertinent part, the following:
Headings 3203, 3204, 3205 and 3206 apply also to preparations based on coloring matter (including, in the case of heading 3206, coloring pigments of heading 2530 or chapter 28, metal flakes and metal powders), of a kind used for coloring any material or used as ingredients in the manufacture of coloring preparations. The headings do not apply, however, to pigments dispersed in nonaqueous media, in liquid or paste form, of a kind used in the manufacture of paints, including enamels (heading 3212), or to other preparations of heading 3207, 3208, 3209, 3210, 3212, 3213 or 3215.
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 for heading 1301, HTSUS, states, in pertinent part:
(II) Natural gums, resins, gum-resins and oleoresins.
Natural gums, resins, gum-resins and oleoresins are vegetable secretions, which may solidify on contact with air. These terms are often used indiscriminately. These products have the following distinguishing features:…
(D) Oleoresins are exudates consisting mainly of volatile and resinous constituents. Balsams are oleoresins characterized by a high content of benzoic or cinnamic compounds….
The natural gums, resins, gumresins and oleoresins covered by this heading may be crude, washed, purified, bleached, crushed or powdered. They are, however, excluded from this heading when they have been subjected to processes such as treatment with water under pressure, treatment with mineral acids or heattreatment; for example : gums and gumresins rendered watersoluble by treatment with water under pressure (heading 13.02), gums rendered soluble by treatment with sulphuric acid (heading 35.06), and resins which have been heattreated to make them soluble in drying oils (heading 38.06).
The EN for heading 1302, HTSUS, states, in pertinent part:
(A) Vegetable saps and extracts.
The heading covers saps and extracts (vegetable products usually obtained by natural exudation or by incision, or extracted by solvents), provided that they are not specified or included in more specific headings of the Nomenclature (see list of exclusions at the end of Part (A) of this Explanatory Note)….
The saps and extracts classified here include:…
(12) Other medicinal extracts, e.g., belladonna, black alder (alder buckthorn), cascara sagrada, garlic, gentian, jalap, cinchona, rhubarb, sarsaparilla, tamarind, valerian, pine buds, coca, colocynth, male fern, witch hazel, henbane, ergot of rye…
Extracts may be in liquid, paste or solid form….
Extracts may be simple or compound. Simple extracts are obtained by the treatment of only one variety of plant….
The vegetable saps and extracts of this heading are generally raw materials for various manufactured products. They are excluded from the heading when, because of the addition of other substances, they have the character of food preparations, medicaments, etc.
The EN for heading 3203, HTSUS, states, in pertinent part:
This heading covers the greater part of the products of vegetable or animal origin used mainly as colouring substances. These products are generally extracted from materials of vegetable origin (wood, barks, roots, seeds, flowers, lichens, etc.) or of animal origin, by steeping them in water or in weak acid or ammonia solution or, in the case of certain vegetable materials, by fermentation. They are relatively complex materials and generally contain one or more colouring principles with small quantities of other substances (sugars, tannins, etc.) originating either from the raw materials or resulting from the extraction process. They are included in this heading whether or not they are chemically defined compounds.
The heading includes:
Colouring matter and dyeing extracts of vegetable origin obtained from logwood (haematein, haematoxylin, etc.), yellow woods (fustic, Cuba and Tampico woods, etc.), red woods (Pernambuco, Lima, Brazil wood, etc.), sandalwood, quercitron wood, black cutch (acacia catechu), annatto, madder, alkenna, henna, turmeric, Persian berries, safflower, saffron, etc. The heading also includes orchil and litmus, prepared from certain lichens; oenin from the skins of various kinds of grapes; chlorophyll extracted from nettles and from various other plants,
as well as sodium-chlorophyll, copper-chlorophyll and xanthophyll; an imitation Vandyke brown prepared by the partial decomposition of vegetable material such as beechwood bark or cork; and natural indigo obtained from plants of the genus Indigofera (mainly Indigofera tinctoria). It is generally in the form of dark blue powder, paste, cakes, lumps, etc…
The heading also covers preparations based on colouring matter of vegetable or animal origin, of a kind used for colouring any material or used as ingredients in the manufacture of colouring preparations.
Protestant argues that the subject merchandise, as an oleoresin, is classified, eo nomine, in heading 1301, HTSUS. In response, we note that different types of oleoresins are classified in different headings of the tariff schedule. For example, while heading 1301, HTSUS, covers “Lac; natural gums, resins, gum-resins and oleoresins,” heading 3301, HTSUS, covers “extracted oleoresins.” Thus, heading 1301, HTSUS, covers natural oleoresins, while heading 3301, HTSUS, covers oleoresins that have undergone further processing. See, e.g., Legal Note 1 to Chapter 33, HTSUS; EN 13.01; EN 13.02.
Merchandise is excluded from heading 1301, HTSUS, when it has been subjected to processes such as treatment with water under pressure, treatment with mineral acids or heat treatment. See EN 13.01. The subject merchandise undergoes a certain level of manufacturing before importation, including heating by a drum dryer to 90 degrees Celsius. This is enough processing to remove the subject merchandise from heading 1301, HTSUS. See EN 13.01.
We also note that the subject merchandise cannot be classified under heading 3301, HTSUS, as an extracted oleoresin because, while it contains volatile odoriferous principles, it lacks non-volatile flavouring principles. Furthermore, the subject merchandise is not used principally as a flavouring agent in the food industry. In addition, the ENs for this heading contain a list of principal extracted oleoresins that are classified here, and marigold oleoresin is not on the list. See EN 33.01; EN 13.02. As a result, it is excluded from this heading.
In the alternative, Protestant argues that the subject merchandise is classified in heading 1302, HTSUS, as a vegetable extract. Indeed, our lab analysis of the subject merchandise showed it to be a marigold extract. Our research, however, shows that orange and yellow marigolds have been cultivated for hundreds of years for their color, which has been used in a variety of commercial applications. For example, marigold petals can be used in poultry
feed to obtain colorful egg yolks and healthy skin tones. See, e.g., http://www.cas.org/aboutcas/colors/2010april.html. Furthermore, food manufacturers often use the pigment to dye confectionary, salad dressings and dairy products. Id. Legal Note 1(h) to chapter 13 expressly excludes such merchandise from heading 1302, stating that “the heading does not apply to Tanning or dyeing extracts.” Instead, this legal note directs classification into heading 3201, HTSUS, or heading 3203, HTSUS.
Heading 3203, HTSUS, provides for “Coloring matter of vegetable or animal origin,” and covers products of vegetable or animal origin used mainly as coloring substances. See EN 32.03. Nearly identical merchandise that underwent the same manufacturing process as the subject merchandise was classified in Lynteq, Inc. v. United States, to which counsel cites. Lynteq, Inc. v. United States, 976 F.2d 693 (Fed. Cir. 1992). There, the considered classification in subheading 3203.00.10, HTSUS, as coloring matter of vegetable or animal origin, including that of marigold meal, versus subheading 3203.00.50, HTSUS, which provided for “other” coloring matter of vegetable or animal origin.
The trial court in Lynteq found that subheadings 3203.00.10 and 3203.00.50, HTSUS, included “not only coloring matter of animal or vegetable origin, but also preparations based thereon of a kind used for coloring any material or used as ingredients in the manufacture of coloring preparations.” Id. at 696. On appeal, however, the Federal Circuit found that the trial court, did not support that conclusion and concluded that the trial court's broad interpretation of the scope of subheading 3203.00.10, HTSUS, was erroneous. Id. at 696. The Federal Circuit further reasoned that the language of subheading 3203.00.10, HTSUS, was unambiguous, and that as an eo nomine provision, it only covered coloring matter derived from the named terms of the subheading. Id. at 696. Thus, the court looked to determine whether the merchandise could have been considered to have been derived from marigold meal. Id. at 697. After consulting dictionaries, the court concluded that the tariff term “marigold meal” refers to the product produced by the coarse grinding of the marigold plant. Id. at 697. Upon examination of the merchandise at issue and its manufacturing process, the court concluded that the merchandise was not a form of marigold meal, and thus not classified in subheading 3203.00.10, HTSUS, because 94% or more of the xanthophyll present in marigold meal exists in the form of xanthophyll esters, not xanthophyll free alcohol. By contrast, the merchandise at issue was derived from marigold meal through saponification and was an aqueous extract of xanthophyll in which 98% or more of the xanthophyll was present in its free alcohol form. Id. at 697-8.
In the present case, counsel distinguishes the subject merchandise from the merchandise in Lynteq on the basis that the merchandise there underwent saponification before importation, was an aqueous solution, and was intended for use as a coloring agent. By contrast, counsel argues, the subject merchandise is not only intended for use as a coloring agent; to the contrary, it has many applications that all require further processing of the merchandise. Counsel argues that these differences exclude the subject merchandise from classification in heading 3203, HTSUS.
We agree with counsel that the subject merchandise is not marigold meal within the Lynteq court’s definition of the term, but we disagree with the effect these differences have on classification. The subject merchandise is more processed than a product produced by the course grinding of the marigold plant, such as was at issue in Lynteq. Furthermore, like the merchandise at issue in Lynteq, the subject merchandise is derived from marigold meal through saponification, a process that leaves relatively few xanthophyll esters in the resulting merchandise. Following the reasoning in Lynteq, we believe these differences classify the subject merchandise in subheading 3203.00.80, HTSUS, rather than excluding it from heading 3203, HTSUS, entirely.
Lastly, protestant argues that the subject merchandise is not imported in a finished condition, and must undergo further processing before it can be used as a final product. Specifically, Protestant argues that in order for the imported product to be processed into a pigment for poultry feed, it must undergo saponification, a hydrolysis reaction during which the merchandise is placed in a reactor where a strong alkali is added. A strong reaction occurs at 80 degrees Celsius for an hour and a half to yield lutein and a fatty acid salt. Furthermore, Protestant argues that it imports other products that are made from marigold oleoresin, all of which had to undergo the saponification process before reaching their final form.
In response, we note that our laboratory analysis showed that, as imported, the subject merchandise is in extract form, suitable for use as a coloring agent. It is “well settled that the methods of weighing, measuring, and testing merchandise used by customs officers and the results obtained are presumed to be correct.” Aluminum Company of America v. United States, 60 C.C.P.A. 148, 151, 477 F.2d 1396, 1398 (1973) (“Alcoa”). Absent a conclusive showing that the testing method used by the CBP laboratory is in error, or that the Customs’ laboratory results are erroneous, there is a presumption that the results are correct. See Exxon Corp. v. United States, 462 F. Supp. 378, 81 Cust. Ct. 87, C.D. 4772 (1978). As a result, CBP is obligated to adhere to its laboratory results absent evidence to the contrary. In the present case, protestant has not provided such evidence; as a result, CBP adheres to its laboratory results.
HOLDING:
By application of GRI 1, the marigold oleoresin is classified in heading 3203, HTSUS, specifically subheading 3203.00.80, HTSUS, which provides for: “Coloring matter of vegetable or animal origin (including dyeing extracts but excluding animal black), whether or not chemically defined; preparations as specified in note 3 to this chapter based on coloring matter of vegetable or animal origin: other.” The 2009 general column one rate of duty is 3.1%.
You are instructed to DENY the protest.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.CBP.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division