CLA–2 OT:RR:CTF:TCM H185715 AMM
Port Director
Service Port – Philadelphia
2nd and Chestnut Streets, Room 102
Philadelphia, PA 19106
Attn: Laurette Brush, SIS
RE: Internal Advice; Classification of puffed stem tobacco
Dear Port Director,
This is in regard to a request for Internal Advice from the Service Port of Philadelphia (the Port) initiated by Universal Leaf Tobacco Company, Inc. (Universal Leaf), pursuant to 19 CFR §177.11. At issue is the classification of a puffed stem tobacco product, under the Harmonized Tariff Schedule of the United States (HTSUS). Samples were provided by Universal Leaf.
FACTS:
The merchandise at issue is identified as puffed stem tobacco. It consists of the stems of a tobacco leaf which have undergone a process identified as “puffing.” It is used as an additive for the manufacture of cigarettes.
The manufacturing process for this product is as follows: First, the tobacco leaf is “threshed,” a process which removes the lamina portion of the leaf from the stem. Next, the stems are sorted by size using screens, and sent directly to the puffing process. Finally, the puffing process expands the size of the stems, using ambient air, through a sequence of heating, washing, laminating, and drying. Universal Leaf states that there is no separate cutting process. The stems are inadvertently cut to various sizes during threshing.
ISSUE:
What is the proper classification of the instant puffed stem tobacco under the HTSUS?
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (GRI). GRI 1 provides that classification 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 GRI may then be applied.
The 2011 HTSUS provisions at issue are as follows:
2401 Unmanufactured tobacco (whether or not threshed or similarly processed); tobacco refuse:
2401.30 Tobacco refuse:
Other:
Other:
Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions:
Tobacco stems:
2401.30.33 Not cut, not ground, and not pulverized
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2403 Other manufactured tobacco and manufactured tobacco substitutes; “homogenized” or “reconstituted” tobacco; tobacco extracts and essences:
Other:
2403.99 Other:
Other:
Other:
2403.99.60 Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions
Additional U.S. Note 5 to Chapter 24, HTSUS, states, in pertinent part:
(a) The aggregate quantity of tobacco entered, or withdrawn from warehouse, for consumption under subheadings … 2401.30.33, 2401.30.35 … and 2403.99.60 during the period from September 13 in any year to the following September 12, inclusive, shall not exceed the quantities specified below.
* * *
Quantity (metric tons)
* * *
Brazil 80,200
* * *
(c) The quantitative limitations under this note are subject to regulations as may be issued by the United States Trade Representative or its designated agency.
* * *
The Harmonized Commodity Description and Coding System Explanatory Notes (EN), constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to consult, whenever possible, the terms of the ENs when interpreting the HTSUS. See T.D. 89–80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The EN to heading 24.01 states, in pertinent part:
This heading covers:
(2) Tobacco refuse, e.g., waste resulting from the manipulation of tobacco leaves, or from the manufacture of tobacco products (stalks, stems, midribs, trimmings, dust, etc.).
The EN to heading 24.03 states, in pertinent part:
This heading covers:
(1) Smoking tobacco, whether or not containing tobacco substitutes in any proportion, for example, manufactured tobacco for use in pipes or for making cigarettes.
* * *
This is in regard to your request for internal advice concerning the classification of puffed stem tobacco, entered at the Port of Philadelphia. In Universal Leaf’s first submission, dated August 3, 2011, they assert that the instant merchandise is properly classified under heading 2401, HTSUS, as “tobacco refuse”. CBP has also considered whether the instant merchandise is properly classified under in heading 2403, HTSUS, which provides in pertinent part for “other manufactured tobacco”.
Heading 2403, HTSUS, provides in pertinent part for “Other manufactured tobacco”. CBP has previously considered the definition of the phrase “manufactured tobacco,” and stated that “[f]or a tobacco product to be considered manufactured tobacco, either entirely or partially, it must, of course, have first gone through some manufacturing process.” See Headquarters Ruling Letter (HQ) 088409, dated May 3, 1991. Furthermore, CBP specifically identified certain activities which are not considered “manufacturing tobacco processes,” such as “stemming, sweating, fermenting, and conditioning”. See HQ 088409; See also 7 C.F.R. §30.2.
According to Universal Leaf’s submissions, the instant merchandise is subjected to the “puffing” process, which uses ambient air to expand tobacco stems created from the process of threshing tobacco leaves. Universal Leaf indicates that the instant puffed stem tobacco product differs from other stem tobacco only by virtue of its having been expanded by the insertion of ambient air. In Exhibit 3 to Universal Leaf’s supplemental submission, dated August 31, 2011, they provided an outline of the puffing process. The tobacco stems are first filtered, washed, and heated. Then, they are allowed to rest and absorb moisture, before being passed through a steam tunnel to make them more flexible. The stems are then laminated to a uniform thickness, and passed through a second steam tunnel, where they are expanded. Finally, the stems are dried, filtered, and packaged for shipment.
It is CBP’s position that the “puffing process” described by Universal Leaf is a “tobacco manufacturing process” which rises beyond the level of mere stemming, sweating, fermenting, or conditioning. Specifically, the process results in a commodity known as “expanded tobacco,” a manufactured product. Therefore, the instant merchandise constitutes “Other manufactured tobacco,” and is properly classified under heading 2403, HTSUS. See EN(1) to heading 24.03.
Heading 2401, HTSUS, provides in pertinent part for “tobacco refuse.” The term “tobacco refuse” is defined as “[w]aste resulting from the manipulation of tobacco leaves, or from the manufacture of tobacco products (stalks, stems, midribs, trimmings, dust, etc.).” See EN(2) to heading 24.01.
According to Universal Leaf, the instant merchandise consists of tobacco stems obtained from a threshing process. CBP has previously defined “threshing” as “the removal of the midrib and side veins of tobacco leaves by mechanical means.” See HQ H014019, dated October 1, 2007 (citing The Tobacco Encylclopedia (Verlagsgruppe Rhein Main GmbH & Co., 2000)). CBP has classified tobacco stems obtained as a result of a threshing process, which have been rolled, steamed, and dried, under heading 2401, HTSUS, as tobacco refuse. See New York Ruling Letter (NY) N026926, dated May 12, 2008; NY G82523, dated December 5, 2000; HQ 953052, dated March 18, 1993. Tobacco stems may be processed and blended with other tobacco to make cigars or cigarettes. See NY N026926 (cigars); HQ 953052 (cigarettes).
The instant merchandise does consist of tobacco stems obtained from a threshing process. The fact that it is later processed and blended with other tobacco to make cigarettes does not affect the classification. See HQ 953052; NY N026926. However, the product at issue is not simply tobacco stems which have been rolled, steamed, or dried. Instead, they are subjected to additional
manufacturing processes, namely the “puffing” process described above. As such, they are no longer merely tobacco stems, and have passed beyond the scope of this heading. The instant merchandise is not properly classified under heading 2401, HTSUS.
We now turn to classification of the instant merchandise at the subheading level. As discussed above, the instant merchandise is properly classified under heading 2403, HTSUS. You have submitted documents indicating that Universal Leaf entered the instant merchandise in the correct time period and quantity, in accordance with Additional U.S. Note 5(a) to Chapter 24, HTSUS. Therefore, the instant merchandise is properly classified under subheading 2403.99.60, HTSUS, which provides in pertinent part for: “Other manufactured tobacco and manufactured tobacco substitutes …: Other: Other: Other: Other: Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions”.
According to Section 5713(a), Internal Revenue Code (26 U.S.C. §5713(a)), “[a] person shall not engage in business as a manufacturer or importer of tobacco products or as an export warehouse proprietor without a permit to engage in such business.” These permits are issued by the Alcohol and Tobacco Tax and Trade Bureau (TTB). As such, a determination of whether a permit is required to import the “puffed stem tobacco” at issue is outside the scope of CBP authority. For more information, please contact the TTB at , or directly at:
Alcohol and Tobacco Tax and Trade Bureau
1310 G Street, NW., Box 12
Washington, DC 20005
Phone: (202) 453-2000
HOLDING:
By operation of GRI 1, the instant puffed stem tobacco product is properly classified under heading 2403, HTSUS, specifically under subheading 2403.99.60, HTSUS, which provides for: “Other manufactured tobacco and manufactured tobacco substitutes; “homogenized” or “reconstituted” tobacco; tobacco extracts and essences: Other: Other: Other: Other: Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions”. The general, column one rate of duty is 24.7 ¢/kg.
Duty rates are provided for the internal advice applicant’s 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.
You are directed to mail this decision to the internal advice applicant, no later than 60 days from the date of this letter. On that date the Office of 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 public methods of distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division