CLA-2 RR:CTF:TCM H253254 MG
TARIFF Nos.: 1901.90.42; 1901.90.43; 2106.90.99
Timothy J. Sheehan
Foley & Lardner LLP
777 East Wisconsin Avenue
Milwaukee, WI 53202-5306
RE: Classification of Probiotic Powders
Dear Mr. Sheehan:
This letter pertains to your request, dated May 16, 2013 and June 27, 2013, on Behalf of Chr. Hansen, Inc., requesting a binding ruling letter regarding the classification of three probiotic products imported in powder form (“probiotic powders”) used in the production of probiotic dietary supplements, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).
In preparing this ruling, we have considered the information you submitted with your request as well as the findings set forth in the CBP Laboratory Report No. NY20132165, dated May 1, 2014, and the issues discussed during a telephonic meeting held on November 14, 2014.
FACTS:
You state the three probiotic powders at issue contain freeze-dried cultures of bacterial micro-organisms that are produced and packaged in Denmark for export in 5 KG foil bags, packed in bulk non-retail containers. According to your submission, the probiotic powders are semi-finished products used in the production of probiotic dietary supplements. These products may be used as an ingredient in food products such as yogurt (drinkable and spoonable), ice cream, milk, etc., as a product for packaging in foil sticks containing individual amounts to be mixed by the consumer in yogurt, ice cream, and any other cool food or beverage, or as material to be put up in capsule or tablet form and taken by consumers as a dietary supplement. The three probiotic powders are described as follows:
Probiotec® BB-12® SastBl-6, is a powder blend that includes Bifidobacterium, BB-12® (“BB-12”), a freeze dried bacteria culture, as the active ingredient. The other ingredients are milk powder, glucose, inulin, sucrose, maltodextrin, vanilla flavor, and silicon dioxide. This BB-12 blend does not include any added vitamins. The sucrose used in the BB-12 blend is derived from sugar cane.
Probiotec® BG® SastBl-12, a powder blend that contains two freeze-dried cultures as active ingredients: BB-12 and lactobacillus rhamnosus LGG®. The other ingredients are milk powder, glucose anhydrate, inulin, sucrose, maltodextrin and silicon dioxide. This BG blend does not have any added vitamins and does not include vanilla flavor as an ingredient. The sucrose used in the BG blend is derived from sugar cane.
Probiotec® Penta-Blend-10, a powder blend that contains five freeze dried cultures as active ingredients: Lactobacillus acidophilus, LA-5®; Bifidobacterium, BB 12®; Lactobacillus paracasei, L. casei 431®; lactobacillus rhamnosus GG, LGG®; and streptococcus thermophilus, TH-4® (“Penta Blend”). This Penta Blend also contains maltodextrin, microcrystalline cellulose, magnesium stearate, sodium alginate and silicon dioxide.
According to your submission, the key ingredient in each Subject Powder is the freeze-dried cultures of microorganisms. You state that the microorganisms are rendered inactive by the freeze-drying process for processing and storage purposes and are reactivated after ingestion into the body, where they proliferate in the gut. You further posit that the probiotic powders are consumed to boost the immune system and promote gastrointestinal well-being. Specifically, that they are able to support and stimulate the body’s natural defenses, increasing the body’s ability to fight infections and help alleviate symptoms of atopic eczema in children.
You further state that the other ingredients in the subject powders are included as excipients to act as flow agents (the silicon dioxide and magnesium stearate), as fillers/texture agents (the milk powder, maltodextrin, glucose, and inulin), or as flavor maskers/sweeteners to hide any unpleasant taste in the freeze-dried cultures (sucrose and vanilla flavoring) and not as sources of flavor, nutrition or food energy. You claim that these excipients serve to facilitate the processing and handling of the probiotic powders and act as carrier for the freeze dried bacteria until ingested by the consumer. Lastly, you indicate that the freeze-dried bacteria cultures represent the key ingredients upon which classification of the products should be based.
ISSUE:
Whether the Probiotic Powders are classified under GRI 1 as food preparation of headings 1901 or 2106, HTSUS, (depending upon the inclusion of goods of headings 0401 or 0404, HTSUS) or are classified under GRI 3(b) as cultures of microorganisms.
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, 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 in order.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS subheadings under consideration are as follows:
1901 Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included:
1901.90 Other:
Other:
Dairy products described in additional U.S. note 1 to chapter 4:
Dairy preparations containing over 10 percent by weight of milk
solids:
1901.90.42 Described in additional U.S. note 10 to chapter 4 and
entered pursuant to its provisions …
1901.90.43 Other …
* * *
2106 Food preparations not elsewhere specified or included:
2106.90 Other:
Other:
Other:
Other:
Other:
2106.90.99 Other
Other:
Other:
Other:
2106.90.9998 Other
* * *
3002 Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; anti-sera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products:
3002.90 Other:
3002.90.51 Other
3002.90.5150 Other
* * *
The Chapter Notes to Chapter 30, HTSUS, provide, in relevant part, as follows:
1. This chapter does not cover:
(a) Foods or beverages (such as dietetic, diabetic or fortified foods, food supplements, tonic beverages and mineral waters), other than nutritional preparations for intravenous administration (section IV); [Emphasis added]
Additional U.S. Note 10 to Chapter 4 provides as follows:
The aggregate quantity of dairy products described in additional U.S. note 1 to chapter 4, entered under subheadings 0402.29.10, 0402.99.70, 0403.10.10, 0403.90.90, 0404.10.11, 0404.90.30, 0405.20.60, 1517.90.50, 1704.90.54, 1806.20.81, 1806.32.60, 1806.90.05, 1901.10.35, 1901.10.80, 1901.20.05, 1901.20.45, 1901.90.42, 1901.90.46, 2105.00.30, 2106.90.06, 2106.90.64, 2106.90.85 and 2202.90.24 in any calendar year shall not exceed 4,105,000 kilograms (articles the product of Mexico shall not be permitted or included under the aforementioned quantitative limitation and no such articles shall be classifiable therein). Of the quantitative limitations provided for in this note, Australia shall have access to a quantity of not less than 1,016,046 kilograms, and Belgium and Denmark (aggregated) shall have access to a quantity of not less than 154,221 kilograms.
* * *
The General EN I(a) to Chapter 4 indicates that the Chapter excludes “[f]ood preparations based on dairy products (in particular, heading 19.01).” EN 19.01 (III) also states in relevant part that “[t]he products of this heading may be sweetened.”
The introductory language of EN 2106 states: “Provided that they are not covered by any other heading of the Nomenclature, this heading covers: [a list of exemplars follows]” [Emphasis in original]. Therefore, before classifying the products in Chapter 21, we must first determine whether they can be classified in any other heading.
In Orlando Food Corp. v. United States, the U.S. Court of Appeals for the Federal Circuit reasoned that “[i]nherent in the term ‘preparation’ is the notion that the object involved is destined for a specific use.” 140 F.3d 1437, 1441 (Fed. Cir. 1998). Moreover, the court referred to The Oxford English Dictionary definition of “preparation” which is “‘a substance specially prepared, or made up for its appropriate use or application.’” Id. (citing The Oxford English Dictionary 374 (2d. ed. 1989)).
You state that because the bacteria in the probiotic powders is a micro-organism, the products should be classified in heading 3002, HTSUS. You further argue that, alternatively, the probiotic products are mixtures, which should be classified under GRI 2(b) “as they are composite goods consisting of different materials.”
GRI 2(b) states:
(b) Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance. The classification of goods consisting of more than one material or substance shall be according to the principles of rule 3.
GRI 3 states, in pertinent part:
When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
You state that the bacteria is the only active ingredient in the products and that the other components are included as excipients to act as flow agents (the silicon dioxide and magnesium stearate), as fillers/texture agents (the milk powder, maltodextrin, glucose, and inulin), or as flavor maskers/sweeteners to hide any unpleasant taste in the freeze-dried cultures (sucrose and vanilla flavoring) and not as sources of flavor, nutrition or food energy. You further state that these additional ingredients serve to facilitate the processing and handling of the probiotic powders prior to use as a food ingredient or packaging or encapsulating for consumer use. In essence, you argue that the probiotic powders at issue cannot be classified in headings 2106 or 1901, HTSUS, because they are more specifically provided for in Chapter 30. We disagree.
In HQ W968085, dated January 30, 2007, we classified encapsulated bacterial cultures in heading 2106, HTSUS. According to that ruling, Stedman’s On-line Medical Dictionary, 27th Edition, defines “culture,” in relevant part, as: “1. The propagation of microorganisms on or in media of various kinds. 2. A mass of microorganisms on or in a medium.”
The language of EN 30.02 states, in relevant part;
(D) Vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products.
These products include:
* * *
(3) Cultures of micro-organisms (excluding yeasts). These include ferments such as lactic ferments used in the preparation of milk derivatives (kephir, yogurt, lactic acid) and acetic ferments for making vinegar; moulds for the manufacture of penicillin and other antibiotics; and cultures of micro-organisms for technical purposes (e.g., for aiding plant growth).
As stated in HQ W968085, it is clear from the definition of “culture” and the exemplars in the ENs that the cultures of microorganisms referred to in the tariff are cultures that serve as starting materials for the manufacture of finished products and not as the components of an already finished product. The ruling further clarifies that the freeze-dried cultures of microorganisms in NY L86890, dated August 17, 2005 and NY D80280, dated August 21, 1998, consisted simply of pure, freeze-dried cultures of microorganisms diluted with cornstarch, which would undergo further processing (with the addition of inactive ingredients) before undergoing encapsulation as finished products to be marketed as dietary supplements. Like the encapsulated bacteria cultures of HQ W968085, the probiotic powders at issue in this ruling request have already undergone that processing and are tantamount to the final product. The particular excipients added act to create a product solely suitable as a food supplement, whether or not it is encapsulated. Based on the above analysis, we do not believe that any of the products under consideration are described by the terms of heading 3002, HTSUS, and therefore cannot be classified therein.
We also do not agree that the subject probiotic powders are classifiable pursuant to GRI 2(b) as mixtures of articles that are “prima facie, classifiable under two or more headings.” In their condition as imported, the subject probiotic powders are finished products that possess the characteristics of a food preparation.
These products have been specially formulated and are intended for ingestion by humans. In this regard, HQ H966448, dated July 9, 2004, states the following:
Food supplements, classified in heading 2106, HTSUS, encompass an expansive group of items. They simply must be prepared for human consumption. As such, these products are packaged for oral ingestion only as a capsule, tablet, powder or liquid. They are put up in packaging with indications that they maintain general health or wellbeing. See HQ 966527, dated October 21, 2003.
The subject products have been prepared for human consumption and are sold to consumers for such purpose. They readily fit into the heading for food preparations. They are intended for the consumer’s general health and well-being. By virtue of GRI 1, the subject products are properly classified in headings 1901 and 2106, HTSUS, as food preparations not elsewhere specified or included.
The probiotic powders at issue are not classified under heading 3002, HTSUS as “cultures of micro-organisms (excluding yeasts) and similar products” because Chapter Note 1(a) to Chapter 30, HTSUS, indicates that the chapter “does not cover . . . [f]oods or beverages . . ., other than nutritional preparations for intravenous administration.” Although the probiotic powders are food preparations that contain cultures of micro-organisms, they are not designed for intravenous administration. Therefore, because the subject probiotic products are food preparations for oral ingestion, they are specifically excluded from classification by virtue of Note 1(a) to Chapter 30, HTSUS. We find that the subject probiotic powders are instead provided for as food preparations of headings 1901 and 2106.
HOLDING:
If imported in quantities that fall within the limits described in additional U.S. Note 10 to Chapter 4, the Probiotec® BB-12® SastBl-6, and Probiotec® BG® SastBl-12 will be classified in subheading 1901.90.42, HTSUS, which provides, in pertinent part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa …not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions.” The 2015 column one, general rate of duty is 16%, ad valorem.
If imported in quantities that exceed the limits described in additional U.S. Note 10 to Chapter 4, the Probiotec® BB-12® SastBl-6, and Probiotec® BG® SastBl-12 will be classified in subheading 1901.90.43, HTSUS, which provides, in pertinent part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa …not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Other.” The 2015 column one, general rate of duty is $1.035 per kilogram plus 13.6%, ad valorem.
The Probiotec® Penta-Blend-10 is classified in subheading 2106.90.99, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: … Other: Other.” The 2015 general column one duty rate is 6.4%, ad valorem.
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 World Wide Web at www.usitc.gov.
Sincerely,
Ieva K. O’Rourke, Branch Chief
Tariff Classification and Marking Branch