CLA-2 RR:CR:GC 964373 AM
Mr. Richard A. Merriner
Richdel, Inc.
P.O. Box 1968
Carson City, NV 89702
Re: HQ 960053 revoked; chondroitin sulfate imported in bulk form
Dear Mr. Merriner:
This is in reference to HQ 960053 issued on October 21, 1997, concerning the classification, under the Harmonized Tariff Schedule of the United States, of sodium chondroitin sulfate (CS) imported in bulk.
We have reviewed the decision in HQ 960053, as well as decisions in NY A82011, issued on June 20, 1996, and NY 815350, issued on October 19, 1996, and have determined that the classification set forth in those rulings for CS imported in bulk form is in error. This ruling revokes HQ 960053. NY A82011 and NY 815350 are revoked in HQ 962697 of this date.
Pursuant to section 625 (c), Tariff Act of 1930, as amended (19 U.S.C. 1625(c)), notice of the proposed revocation of NY A82011, NY 815350, and HQ 960053 was published on August 23, 2000, in the CUSTOMS BULLETIN, Volume 34, No. 34. Five comments were received in opposition to the proposed revocation. After careful consideration of the comments, as set forth in this ruling, we have determined to proceed with the revocations.
FACTS:
The substance CS imported in bulk form is a white powder "glycosaminoglycan that predominates in the ground substance of cartilage, bone, and blood vessels but also occurs in other connective tissues. It consists of repeating disaccharide units in specific linkage, each composed of a glucoronic acid residue linked to a sulfated N-acetylgalactosamine residue." Dorland's Medical Dictionary, 321 (28th Edition,W. B. Saunders Company, 1994). Furthermore, the Merck Index, ยง2270, 371 (12th Edition, Merck & Co., Inc., 1996) adds that "[t]hese biological polymers act as the flexible connecting matrix between the tough protein filaments in cartilage to form a polymeric system similar to reinforced rubber." Id. The CAS registry number assigned to CS is 12678-07-8 and it is not listed in the Chemical or Pharmaceutical Appendixes to the HTSUS.
You state that the CS that is the subject of this ruling will be used as an additive to animal feed. We note that there are varying grades and types of CS. All are produced using three basic steps: extraction from animal cartilage, drying, and milling into a fine powder.
ISSUE:
Whether CS imported in bulk form is classified in heading 3001, HTSUS, as animal substances for therapeutic or prophylactic use, or heading 3913, HTSUS, as a naturally occuring polysaccharide.
LAW AND ANALYSIS:
Merchandise imported into the U.S. 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 that 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.
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 order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs. Additional U.S. Rule of Interpretation 1(a) requires that "a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use".
In interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUSA. See, T.D. 89 80, 54 Fed. Reg. 35127 (August 23, 1989).
The following headings are relevant to the classification of this product:
3001 Glands and other organs for organotherapeutic uses, dried, whether or not powdered; extracts of glands or other organs or of their secretions for organotherapeutic uses; heparin and its salts; other human or animal substances prepared for therapeutic or prophylactic uses, not elsewhere specified or included:
* * * * * * * * * * * *
3913 Natural polymers (for example, alginic acid) and modified natural polymers (for example, hardened proteins, chemical derivatives of natural rubber), not elsewhere specified or included, in primary forms:
In NY A82011, NY 815350, and HQ 960053, this merchandise was classified in subheading 3001.90.00, HTSUS, because it is a heparin-like substance. Chondroitin 4-Sulfate and Chondroitin 6-Sulfate are listed in the USP Dictionary of USAN and International Drug Names 1998 with a note to "see Danaparoid Sodium." Danaparoid Sodium is a mixture of the salts of heparan sulfate including 4% of chondroitin sulfate. Heading 3001, HTSUS, specifically includes heparin and the ENs for the heading describe heparin and its salts thus:
(c) Heparin and its salts. Heparin consists of a mixture of complex organic acids (muco-polysaccharides) obtained from mammalian tissues. Its composition varies according to the origin of the tissues. Heparin and its salts are used chiefly in medicine, especially as blood anti-coagulants. They remain classified here whatever their degree of activity.
However, CS itself is not heparin and is therefore not eo nomine included in HTSUS heading 3001.
Furthermore, to be classifiable in heading 3001, HTSUS, an animal substance (other than glands and other organs or heparin) must be "prepared for therapeutic or prophylactic uses." By its terms, heading 3001, HTSUS, is a use provision. When two or more tariff categories are equally descriptive of an item, one that describes a use governs over one which describes the composition of the item. Totes, Inc. v. United States, 69 F. 3d 495 (Fed Cir. 1995) (citations omitted). It is well settled law that merchandise is classified according to its condition when imported. United States v. Citroen, 223 U.S. 407, 414-15, 56 L. Ed.486, 32 S. Ct. 259 (1911). If the rule were otherwise, not only could the same product be subject to different duty rates depending on its intended end use, but Customs would be flooded with affidavits or other evidence of differing intended uses. Mita Copystar America v. The United States, 21 F.3d 1079 (Fed. Cir. 1994). Therefore, the determinative issue is whether CS, as imported, is principally prepared for therapeutic or prophylactic use in the U.S.
The goods that are the subject of HQ 960053 are imported for use in animal feed. The goods that are the subject of NY A82011 and NY 815350 are ostensibly imported for pharmaceutical research. Commentators have pointed to voluminous research which shows that CS may have therapeutic properties in the treatment of joint pathologies in animals, and in osteoarthritis and heart disease in humans. Commentators have also pointed to the probable use of specially formulated low molecular weight chondroitin sulfate (LMWCS) in a National Institute of Health (NIS), Food and Drug Administration (FDA) phase III study on the treatment of osteoarthritis of the knee.
These studies do not change the fact that presently, in the U.S., CS is marketed and sold as a dietary supplement. Even specially formulated LMWCS is presently incorporated into formulations sold as dietary supplements. At this point in time, Customs can not separate out different types of CS when they are all used as a dietary supplement. (see Mita Copystar, supra at 1082).
In compliance with the Dietary Supplement Health and Education Act of 1994, CS preparations contain the legally required disclaimer that "the product is not intended to diagnose, treat, cure or prevent any disease." One commentator noted that not all CS products contain this disclaimer on their label. It is true that FDA regulations only require the disclaimer on products that claim to have therapeutic or prophylactic properties. Therefore, those products that do not display this disclaimer certainly are not claiming that they are prepared for use as a therapeutic or prophylactic substance.
Citing several court decisions, several commentators noted that the FDA's use of a term does not control Customs classification decisions. However, Customs is not classifying the product according to the definition of the terms "therapeutic" and "prophylactic" in FDA statutes. Rather, the FDA regulates the use of this product in the U.S. Where customs must determine whether a use provision applies to a substance, the controlling regulatory scheme is indeed relevant.
More importantly, the Courts have delineated some of the factors to consider in determining whether a product falls within the class or kind of a particular use provision. These are: (1) the general physical characteristics, (2) the expectation of the ultimate purchaser, (3) the channels of trade, (4) the environment of sale (accompanying accessories, manner of advertisement and display), (5) the use in the same manner as merchandise which defines the class, (6) the economic practicality of so using the import, and (7) the recognition in the trade of this use. See Lenox Collections v. United States, 19 CIT 345, 347 (1995); Kraft, Inc, v. United States, 16 CIT 483 (1992), G. Heileman Brewing Co. v. United States, 14 CIT 614 (1990); and United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F.2d 373 (1976), cert. denied, 429 U.S. 979 (1976).
Applying these factors, we find that they weigh overwhelmingly in favor of finding that CS is not prepared principally for use in the U.S. for therapy or prophylaxis thus:
The general physical characteristics of CS is that of a mucopolysaccharide, like rubber.
One commentator claims that LMWCS is more like heparin than rubber and claims that it should be classified nocitur a sociis ("known by its associates") as heparin in subheading 3001, HTSUS. To bolster the argument, the commentator cites the case of Western Dairy Products, Inc. v. the United States, 510 F.2d 376 (1975), wherein the court found that calcium reduced dried skim milk (CRDSM) was classified as an article of milk not specially provided for, rather than as an edible product not otherwise provided for, under the Tariff Schedules of the United States, TSUS, the predecessor of the HTSUS. In that case, the court noted that the specific tariff language mandated that all articles of milk, edible or non-edible, be classified under the milk provisions. The analogy does not apply to the instant case. The tariff provision at issue here does not suggest an intent that all articles similar to heparin be classified in this provision. Moreover, CS is not like heparin in the ways that CRDSM is like milk. CRDSM, like the eo nomine yogurt and whey of the heading in the TSUS, is made from milk that has been modified by a chemical change. Heparin is derived from animal livers or lungs. Hawley's Condensed Chemical Dictionary, 592 (11th Edition, Van Nostrand Reinhold Co. Inc., 1987). CS is derived from animal cartilage. CS is not a modified heparin. The case cited and theory of nocitur a sociis is therefore irrelevant to our determination of the proper classification of CS.
The expectation of the ultimate purchaser is that CS increases the general health of their bones and joints and may treat joint ailments through the same mechanism that it improves joint function generally.
The channels of trade and environment of sale is through health food stores and pharmacies shelved with the dietary supplements. One can also purchase the product electronically on the internet through web sites promoting natural products for maintaining general good health. Products containing LMWCS are available from behind the pharmacy counter but no prescription is needed to obtain them and their package includes the FDA disclaimer mandated for dietary supplements.
The product is advertised as a substance which maintains healthy joints.
The product is used as a dietary supplement. One commentator argued that CS is "prepared" for use as a therapeutic or prophylactic agent in a similar manner as tomatoes were "prepared" for use as a tomato sauce in Orlando Food Corp. V. United States, 140 F.3d 1437 (Fed. Cir. 1998). There the issue was whether canned tomatoes prepared with tomato puree, basil, salt and citric acid were classifiable under the HTSUS as "prepared tomatoes" or as tomatoes "prepared for sauce". The court noted that the tomatoes were specifically prepared for sauce because the product was used "solely as an advanced base or preparation for sauces." The court classified the tomatoes at issue under the more specific use provision.
In the instant case, we do not believe that CS is described within the text of heading 3001, HTSUS, the more specific use provision. Unlike in Orlando, supra, the substance is not prepared for a sole use. The basic preparatory steps in the manufacture of the CS, extraction from animal cartilage, drying, and milling into a fine powder, occur whether or not the CS is being used as a dietary supplement. The very same CS which is sold as a dietary supplement may currently be recommended for use to "treat" osteoarthritis. Thus, Orlando, supra does not apply to the instant case.
Several commentators noted that CS has therapeutic and prophylactic use as witnessed by copious amounts of research and doctor recommendations. Therapeutic is defined as "having healing or curative powers." See Lonza, Inc. v. U.S., 46 F. 3d 1098 (Fed.Cir. 1995) The common meaning for prophylactic is "preventative". Webster's Third New International Dictionary defines prophylactic as "(1) guarding from disease: preventing or contributing to the prevention of disease (2) tending to prevent or ward off."
It may well be that CS has therapeutic or prophylactic use. However, to the extent health care professionals suggest using CS, or specifically LMWCS, these recommendations are no different from recommending a healthy diet to "treat" coronary artery disease, eating a hard candy to "treat" low blood sugar associated with the administration of insulin, or taking vitamin C to "prevent" a cold. Healthy foods, hard candy and vitamin C are not classified under subheading 3001, HTSUS, by virtue of these doctor recommendations. The fact remains that in this country, CS is marketed, used and regulated as a dietary supplement to maintain strong joints not unlike the purposes provided by any nutrient. See H. Reisman Corp v. U.S., 17 CIT 1260 (1993) (the court held that Vitamin B-12 "is not used in a therapeutic or prophylactic manner beyond the purposes provided by any nutrient, including ordinary grain feed or food of any kind.") Id.
The economic practicality of using the import as therapy or prophylaxis is not feasible as regulations preclude its being marketed as such.
Our research indicates that there is no consensus in the field that CS has prophylactic or therapeutic use, regardless of the grade or molecular weight of the product, beyond its ability to maintain healthy joints. Indeed, the NIH states that "results of previous studies in the medical literature have yielded conflicting results on the effectiveness of glucosamine and CS as effective treatments for osteoarthritis." Questions & Answers: NIH Study on Glucosamine and Chondroitin Sulfate for Knee Osteoarthritis, http://www.nih.gov/news/pr/sept 99/ucaam.15a.htm, p.1, Sept. 15, 2000. The imminent FDA phase III study sponsored by the NIH is needed to prove the claims of effectiveness of CS in the treatment of osteoarthritis.
Therefore, it can not be argued that CS is principally prepared, for use in the United States, as a therapeutic or prophylactic substance.
HOLDING:
CS is classified in subheading 3913.90.20, HTSUS, the provision for "[N]atural polymers . . .: [O]ther: [P]olysaccharides and their derivatives."
EFFECT ON OTHER RULINGS:
HQ 960053, dated October 21,1997, is hereby revoked. NY A82011 and NY 815350 are revoked by HQ 962697 of this date.
Sincerely,
John Durant, Director
Commercial Rulings Division