CLA-2: OT:RR:CTF:TCM H247587 ERB
Port Director, Port of Atlanta
U.S. Customs and Border Protection
157 Tradeport Drive
Atlanta, GA 20254-3932
Attn: Tara Schwickrath, Import Specialist
RE: Application for Further Review of Protest Number 1704-13-100227; “Pure Wraps,” Coconut wraps from the Philippines
Dear Port Director:
This letter is in response to the Application for Further Review (AFR) of Protest Number 1704-13-100227, timely filed on August 23, 2013, on behalf of Improveat, LLC (Improveat). The AFR concerns U.S. Customs and Border Protection’s (CBP) classification and liquidation of three shipments of coconut “Pure Wraps,” under subheading 2008.19.85 of the Harmonized Tariff Schedule of the United States (HTSUS). Samples in packaging were provided to this office, and were sent to CBP’s Laboratories and Scientific Services (LSS) for analysis.
FACTS:
In New York Ruling Letter (NY) N061378, dated June 5, 2009, addressed to Improveat pursuant to their binding ruling request, CBP stated:
In your letters dated April 16, and May 14, 2009, you requested a tariff classification ruling. Two samples were submitted for our examination.
The first sample is a retail packet containing four “Pure Wraps (Original Coconut),” which are soft tortilla-like products composed mainly of coconut and flaxseed. The ingredients are coconut meat, coconut water, ground flaxseed and salt. It is appears that [sic] during manufacturing, the coconut meat was mashed, ground or similarly processed into a pulpy form so that it could be combined with the other ingredients and rolled into the flat “wrap” sheets. The sheets and their ingredients are said to be uncooked, but they have been dehydrated after mixing to reduce the “water activity level” (to prevent microbial proliferation), yet maintain natural enzymes and nutrients. Each square sheet measures 5” by 5” and is only about 1/32” thick.
The second sample is a retail packet containing four “Pure Wraps (Coconut Curry),” which are essentially the same as the “Original” but contain some curry as an additional ingredient. The ingredients are coconut meat, coconut water, ground flaxseed, curry and salt. Information submitted with your inquiry suggests that the coconut meat and coconut water together account for about 70% of the finished “Coconut curry” wrap’s weight, while the flaxseed contributes about 17 ½ %. (The respective percentages are about 79 and 17 ½ for the “Original Coconut.”).
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The applicable subheading for the “Pure Wraps” (“Original Coconut” and “Coconut Curry”) will be 2008.19.8500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for fruit, nuts, and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included: nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together: other, including mixtures: other, including mixtures: mixtures. The rate of duty will be 22.4% ad valorem.
Thereafter, Improveat entered the three subject shipments into the Port of Atlanta, between August 11, 2012 and February 20, 2013, classifying the goods under subheading 2008.19.15, HTSUS, which provides for “Fruit, nuts and other edible parts of plants, otherwise prepared or preserved…Other: Coconuts.” CBP liquidated all three shipments on July 7, 2013, under subheading 2008.19.85, HTSUS, pursuant to the analysis contained in NY N061378.
Improveat argues in its AFR that after receiving NY N061378, it altered the recipe for its product to remove the flaxseed ingredient. Subsequently, and without the benefit of a new ruling on the reformulated product, Improveat imported the subject merchandise. Improveat requested a classification ruling for the newly formulated product on August 21, 2013, but was rejected, via notification from CBP dated October 24, 2013, because this protest had already been filed.
Samples of the subject merchandise was obtained from Improveat and supplied to LSS. CBP Laboratory Report NY20141857 was issued on April 27, 2015. Therein it states:
Original Flavor: Laboratory testing is consistent with the ingredients stated by the manufacturer. The fatty acid profile is consistent with coconut as the only source of oil and is inconsistent with the presence of flaxseed or flaxseed oil. Salt, measured as chloride, is present at 33.6 mg of sodium chloride per gram of product.
Curry Flavor: Laboratory testing is consistent with the ingredients stated by the manufacturer. The fatty acid profile is consistent with coconut as the only source of oil and inconsistent with the presence of flaxseed or flaxseed oil. Salt, measured as chloride is present at 33.4 mg of sodium chloride per gram of product.
ISSUE:
Whether the subject product consisting of coconut meat, coconut water, salt, and in certain cases, curry spices, is classified as “dried coconut” of heading 0801, HTSUS, or “preserved or prepared” coconut of heading 2008, HTSUS.
LAW AND ANALYSIS:
Initially, we note that the 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 for entries made on or after December 18, 2004. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, §2103(2)(B)(codified as amended at 19 U.S.C. §1514(c)(3)(2006)).
Further Review of Protest Number 1704-13-100227 is properly accorded to Improveat pursuant to 19 C.F.R. §174.24(b), because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner or Customs or his designee or by Customs Courts. Specifically, the removal of the flaxseed ingredient, subsequent to the issuance of NY N061378.
Classification under the 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:
0801 Coconuts, Brazil nuts and cashew nuts, fresh or dried, whether or not shelled or peeled:
0801.11.00 Coconuts: Desiccated
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2008 Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included:
2008.19 Nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together: Other including mixtures:
2008.19.15 Coconuts:
2008.19.85 Other, including mixtures: Mixtures
Note 3 to Chapter 8 provides the following, in relevant part:
Dried fruit or dried nuts of this chapter may be partially rehydrated, or treated for the following purposes.
For additional preservation or stabilization (for example, by moderate heat treatment, sulfuring, the addition of sorbic acid or potassium sorbate), …
Provided that they retain the character of dried fruits or dried nuts.
Note 1 to Chapter 20 states the following, in relevant part:
This chapter does not cover:
Vegetables, fruit or nuts, prepared or preserved by the processes specified in chapter 7, 8 or 11;
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 20.08 provides, in relevant part:
This heading covers fruit, nuts and other edible parts of plants, whether whole, in pieces or crushed, including mixtures thereof, prepared or preserved otherwise than by any of the processes specified in other Chapters or in the preceding headings of this Chapter.
By operation of Note 3 to Chapter 8, goods classified therein, which includes coconuts, may be treated with a small amount of preservatives. Potassium sorbate is the potassium salt of sorbic acid, or a neutralized sorbic acid. Both are white salts that are water soluble and are predominantly used in food preservation. Typical usage rates of these ingredients are 0.025% to 0.1%, which, in a 100 gram serving yields intake of 25 milligrams to 100 milligrams.
Chapter 20 also provides for coconut products, but the heading text directs that articles classified therein are “otherwise prepared or preserved” and are “not elsewhere specified.” But, the chapter notes direct that products which meet the terms of chapter 8 are excluded. Thus, products which are prepared or preserved with more than trace amounts of salts are classified in chapter 20, or, if they are otherwise prepared or preserved, they are also classified in chapter 20.
CBP’s LSS report concluded that the chloride level was 33.6 mg of sodium chloride per gram of product, and 33.4 mg of sodium chloride per gram of product, for the original and curry flavors, respectively. This is above the amount necessary to preserve the product, and instead is used to enhance the flavor of the product.
Though the subject merchandise consists in part of dried coconut, the coconut undergoes a manufacturing process described in Improveat’s Filipino patent submission. The coconut meat is extracted and blended with its filtered coconut water, salt and in some cases, spices. It is poured onto a baking sheet to a predetermined thickness and baked to fully dehydrate. As such, the first sample (“Original Coconut”), which consists of coconut meat, coconut water, and salt (33.6 mg sodium chloride per gram of product), is properly classified in subheading 2008.19.15, HTSUS, as a coconut product “otherwise prepared or preserved” and is not “elsewhere specified,” because the ingredients, including salt, and manufacturing process are beyond the intended scope of chapter 8. This is supported by the EN to 20.08, HTSUS, and is consistent with previous rulings issued by CBP regarding coconut products of subheading 2008.19.15, HTSUS. See NY 856796, dated November 17, 1990 (classifying creamed coconut); NY 888093, dated July 23, 1993 (classifying toasted and sweetened coconut slices covered with syrup (brown sugar and water)); and see NY N230016, dated August 28, 2012 (classifying dried coconut chunks composed of approximately 40% coconut, 60% sugar, and trace amount of sulfur dioxide).
The second sample (“Coconut Curry”) contains curry spices in addition to the coconut and salt. Improveat’s submission states that the ingredients include fenugreek, coriander, turmeric, allspice, cardamom, black pepper and red pepper and account for 0.4% (or 4/10 of 1%) of the total weight of the product. Some of these spices are derived from seeds or nuts. For classification purposes, a component of an article is de minimis if it is merely an incidental or immaterial element of an entire article, does not enhance its value, and has no commercial purpose. Arbor Foods, Inc. v. United States, 30 C.I.T. 670, 676 (Ct. Int’l Trade 2006), citing Tuscany Fabrics, Inc. v. United States, 65 Cut. Ct. 182, 186, 317 F. Supp. 741, 743, C.D. 4076 (1970).
In this case, the curry spice does impart a differing characteristic from the “Original Coconut” flavored version. But the addition of the curry does not alter the nature, use or commercial purpose of the coconut wrap, nor does it enhance its value. As such, it will be treated as de minimis for the purposes of this classification.
Thus, the second sample, which consists of coconut meat, coconut water, salt (33.4 mg sodium chloride per gram of product), and curry spices is also classified under subheading 2008.19.15, HTSUS. See NY H81464, dated May 30, 2001 (classifying a coconut flavoring paste comprised of 70% dried coconuts, 23% sugar, 2% stabilizer (E420), 2% water, 1% flavoring, 1% acidifier (E330), 0.9% salt, and 0.1% antioxidant (E307), in subheading 2008.19.15, HTSUS).
As the curry component is de minimis, the minute amount of ground seeds and nuts therein do not warrant classification as a “mixture” of seeds and nuts under subheading 2008.19.85, HTSUS, since, unlike the goods described in Improveat’s original ruling, and pursuant to CBP’s laboratory report, the flaxseed ingredient is no longer present in the subject merchandise.
HOLDING:
By application of GRI 1, the subject merchandise is classified in subheading 2008.19.15, HTSUS, which provides for, “Fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included: Nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together: Other including mixtures: Coconuts.” The general column one duty rate at the time of entry was one (1) percent ad valorem.
The protest should be GRANTED.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook, you are to mail this decision together with the Customs Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to the mailing of the decision.
Sixty days from the date of the decision the Office of International Trade 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