CLA-2 OT:RR:CTF:TCM HQ H261078 NCD
Port Director
Port of Charleston
U.S. Customs and Border Protection
200 East Bay Street
Charleston, SC 29401
Attn: Martita Shortridge, Senior Import Specialist
Re: Protest and Application for Further Review No. 1601-14-100187; Classification of phytostanol prills
Dear Port Director:
The following is our decision regarding the Application for Further Review of Protest No. 1601-14-100187, timely filed on September 23, 2014, on behalf of Raisio Staest US, Inc. (“Raisio” or “Protestant”). In the instant protest, Raisio contests classification by U.S. Customs and Border Protection (“CBP”) of phytostanol prills under the Harmonized Tariff Schedule of the United States (“HTSUS”). Our decision as to the proper tariff classification of the subject prills, and to the disposition of the instant protest, is set forth below. In reaching this decision, we have taken into account materials included with Raisio’s protest and its supplemental submissions filed October 29, 2015 and November 9, 2015.
FACTS:
The instant protest pertains to five entries of prills which, according to Raisio, are made up predominantly of phytostanols. A table appended to Raisio’s October 29, 2015 submission specifically indicates that the prills consist 88.1 percent of sitostanol, 8.3 percent of campestanol, 1.1 of sitosterol, 0.2 percent of campesterol, and 2.5 percent of other minor components. The table also indicates the molecular weights of the various components range from 398 g/mol to 416 g/mol. According to a manufacturer’s flowchart appended to Raisio’s November 9, 2015 submission, the prills’ production process entails catalytic hydrogenation of “sterol blends” derived from either vegetable oil or tall oil, followed by filtration, crystallization, washing, and drying of the hydrogenated phytosterols.
These materials, as well as samples of the prills, were submitted to a CBP laboratory for verification. The laboratory noted in its review that the production process depicted in the manufacturer’s flowchart converts the bulk of the phytosterols in the sterol blend to sitostanol. Based upon its review of the materials and analysis of the sample, the laboratory concluded that the samples are of 88 percent sitostanol purity and that the campestanol and other minor constituent contents are unintended byproducts of the manufacturing process.
The five entries at issue were entered as “Beta-sitostanol (CAS # 83-45-4) and Campestanol (CAS # 474-60-2)” at the Port of Charleston between September 4, 2013 and February 20, 2013 under subheading 1516.20.90, HTSUS, which provides for: “Animal or vegetable fats and oils and their fractions, partly or wholly hydrogenated, inter-esterified, re-esterified or elaidinized, whether or not refined, but not further prepared: Vegetable fats and oils and their fractions: Other.” They were liquidated on March 28, 2014 in subheading 3824.90.41, HTSUS, which provides for: “Prepared binders for foundry molds or cores; Chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Other: Other: Fatty substances of animal or vegetable origin and mixtures thereof.” Protestant now asserts that the subject merchandise is properly classified in subheading 2906.13.50, HTSUS, which provides for: “Cyclic alcohols and their halogenated, sulfonated, nitrated or nitrosated derivatives: Cyclanic, cyclenic or cycloterpenic: Sterols and inositols: Other.”
ISSUE:
Whether the subject phytostanol prills are properly classified as cyclic alcohols of heading 2906, HTSUS, or as chemical mixtures of heading 3824, HTSUS.
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. 1601-14-100187 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(a) because Protestant alleges that the decision against which the instant protest is filed is inconsistent with New York Ruling Letter (“NY”) K87451, dated July 1, 2004.
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 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 HTSUS provisions under consideration are as follows:
2906 Cyclic alcohols and their halogenated, sulfonated, nitrated or nitrosated derivatives:
Cyclanic, cyclenic or cycloterpenic:
2906.13 Sterols and inositols:
2906.13.50 Other
3824 Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included:
3824.90 Other:
Other:
3824.90.41 Fatty substances of animal or vegetable origin and mixtures thereof
As a preliminary matter, if the subject plant stanols are prima facie classifiable in heading 2906, HTSUS, they are excluded from classification in heading 3824, HTSUS. See The Pomeroy Collection, Ltd v. United States, 893 F. Supp. 2d 1269, 1278 (Ct. Int’l Trade 2013) (“The first step in any classification analysis is to determine whether the headings and notes require a particular classification.”); Chapter 29, Note 1, HTSUS (“Except where the context otherwise requires, the headings of this chapter apply only to…separate chemically defined organic compounds.”); Chapter 38, Note 1, HTSUS (“This chapter does not cover…separate chemically defined elements or compounds.”). Accordingly, we initially consider whether the plant stanols are prima facie classifiable in heading 2906, HTSUS.
Heading 2906, HTSUS, covers, inter alia, cyclic alcohols. Interpretation of heading 2906 is governed by Note 1(a) to Chapter 29, which provides, in relevant part, as follows:
Except where the context otherwise requires, the headings of this chapter apply only to:
Separate chemically defined organic compounds, whether or not containing impurities…
Neither “separate chemically defined compounds” nor “impurities” are defined in the HTSUS. However, General EN to Chapter 29 provides the following explanations of these terms for tariff classification purposes:
A separate chemically defined compound is a substance which consists of one molecular species (e.g., covalent or ionic) whose composition is defined by a constant ratio of elements and can be represented by a definitive structural diagram. In a crystal lattice, the molecular species corresponds to the repeating unit cell.
…
The term “impurities” applies exclusively to substances whose presence in the single chemical compound results solely and directly from the manufacturing process (including purification). These substances may result from any of the factors involved in the process and are principally the following:
(a) Unconverted starting materials.
(b) Impurities present in the starting materials.
(c) Reagents used in the manufacturing process (including purification).
(d) By-products.
It should be noted, however, that such substances are not in all cases regarded as “impurities” permitted under Note 1(a). When such substances are deliberately left in the product with a view to rendering it particularly suitable for specific use rather than for general use, they are not regarded as permissible impurities.
These explanations are not only in accord with definitions of the same found in technical references, but are explicitly referenced and endorsed in various court decisions. See Degussa Corp. v. United States, 508 F.3d 1044, 1047-49 (Fed. Cir. 2007) (stating, with respect to identical language in Chapter Note 1(a) to Chapter 28, that “[t]he Explanatory Notes for HTSUS Chapter 28 provide insight as to the meaning of ‘separate chemically defined compounds,’” and adopting definition of “impurities” set forth in General EN to Chapter 28); Rhodia, Inc. v. United States, 441 F. Supp. 2d 1368, 1375 n.3 (Ct. Int'l Trade 2006) (“The term ‘chemical compound’ is generally used to refer to ‘a substance composed chemically of two or more elements in definite proportions (as opposed to mixture).’”); Richard J. Lewis, Sr., Hawley’s Condensed Chemical Dictionary 324 (15th ed. 2007) [hereinafter Hawley’s] (defining compound as “a homogeneous entity where the elements have definite proportions by weight and are represented by a chemical formula”). Accordingly, Note 1(a) is clearly satisfied where the chemical product at issue is made up predominantly or entirely of a single molecular “species,” and where any deviating molecular species are unintended remnants created or left intact after purification or other manufacturing steps. See, e.g., Headquarters Ruling Letter (HQ) H026004, dated December 2, 2009 (“There is no evidence to conclude that the 3 tertiary butyl amines, the trialkyl amines or other by-products are deliberately left in to render the product particularly suitable for specific use. Hence, the impurities are permissible under note 1(b) to chapter 29.”); and HQ 967971, dated March 2, 2006 (“The other 20% is remainder from the starting material and a small amount of solvent. We consider this remainder to constitute "impurities" within the terms of the chapter note.”).
Here, the subject prills contain sitostanol, a single molecular species represented by a definitive structural diagram, as well as campestanol, sterols, and various other constituents with unique molecular make-ups. See The Merck Index: An Encyclopedia of Chemicals, Drugs, and Biologicals 8814 (14th ed. 2006) (listing beta-sitostanol). We note that the exact concentrations of these components in the prills vary according to the oil type from which these components are originally derived. While Raisio reported, and submitted a sample containing, 88.1 percent sitostanol content, 8.3 percent campestanol content, and 3.8 percent minor constituent content, these values are consistent only with the make-up of phytostanols derived from tall oil-based sterol/stanol blends. See Richard Cantrill, Phytosterols, Phytostanols and Their Esters: Chemical and Technical Assessment 4 (2008) [hereinafter Cantrill] (Phytostanols produced from tall oil sterols typically contain ~ 90% sitostanol and ~10% campestanol.”). Where, on the other hand, the prills are obtained from hydrogenation of vegetable oil-based blends, the constituent sitostanol is lower in content. See id. (“A blend of stanols obtained from vegetable oils, typically from soybean oil, contains 68-75% sitostanol and 25-32% campestanol.”); see also U.S. Patent No. 8,349,821 (issued Jan. 8, 2013) (reporting yield from hydrogenation of sterol/stanol mixture obtained from vegetable oil distillate as 70.1 percent sitostanol, 28.9 percent campestanol, and 0.5 percent sterols of diverse molecular structures). In either case, however, the prills are made up predominantly of the chemically defined compound sitostanol.
Additionally, the manufacturer’s flowchart and pertinent references indicate that in either case, the prills are obtained through application of a single, uniform production process. See U.S. Food and Drug Admin., Agency Response Letter: GRAS Notice No. GRN 000438 (Jan. 16, 2013) (describing Raisio’s reported use of catalytic hydrogenation methods on phytosterols derived from vegetable oil or tall oil); U.S. Patent No. 8,349,821 (listing the steps of hydrogenation, crystallization, washing, and drying in the production of phytostanol blends originating from vegetable oil). As verified in the CBP laboratory report, this process converts relatively impure sterol blends with only minor sitostanol content to the relatively pure sitostanol products described above. See Cantrill, supra, at 3 (describing the composition of a tall oil-derived starting blend as 40 to 65 percent sitosterol, 16 to 31 percent sitostanol, 6 to 15 percent campesterol and 2.5 to 11 percent campestanol); U.S. Patent No. 8,349,821 (describing the composition of the vegetable oil-derived blend as 26.7 percent campesterol, 18.4 percent stigmasterol, 2.7% brassicasterol, 18.4 percent stigmasterol, 49.1 percent sitosterol, and 2.9 percent sitostanol). The high degree of similarity among the molecular structures of sitostanol, campestanol, and the remaining sterol constituents in the subject products renders further removal or marginalization of any minor constituents all but impracticable. See Cantrill, supra, at 13 (“Phytosterols and phytostanols…consist of a steroid skeleton with a hydroxyl group attached to the C-3 atom of the A-ring and an aliphatic side chain attached to the C-17 atom of the D-ring.”). In effect, the campestanol and other minor constituents can be characterized as unconverted starting materials or byproducts that were not deliberately left in the products. They can in turn be described as impurities within the meaning of Note 1(a) to Chapter 29.
In conclusion, as separately defined organic compounds containing impurities, the subject products are properly classified in heading 2906, HTSUS, which is the more specific of the two headings at issue. We note that, as Raisio asserts, this determination is consistent with NY K87451, in which pure stigmasterol was classified in heading 2906, HTSUS.
HOLDING:
By application of GRI 1, the subject phytostanol prills are classified in heading 2906, HTSUS. Specifically, they are provided for in subheading 2906.13.5000, HTSUS (Annotated), which provides for: “Cyclic alcohols and their halogenated, sulfonated, nitrated or nitrosated derivatives: Cyclanic, cyclenic or cycloterpenic: Sterols and inositols: Other.” The general column one rate of duty is 3.7% 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 internet at www.usitc.gov/tata/hts/.
You are instructed to GRANT 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 website 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