CLA-2 OT:RR:CTF:TCM H086459 TNA
Port Director, New York/Newark Service Port
U.S. Customs and Border Protection
1100 Raymond Boulevard Newark, NJ 07102
Re: Protest and Application for Further Review No: 4601-09-101488; Classification of Sugar
Dear Port Director:
The following is our decision regarding Protest and Application for Further Review No. 4601-09-101488, timely filed on July 29, 2009, by counsel on behalf of American Sugar Refining, Inc. (“American Sugar”) regarding the tariff classification of sugar under the Harmonized Tariff Schedule of the United States (“HTSUS”). In reaching our decision, we have taken into account arguments presented to us during a conference in our office on September 27, 2010, as well as supplemental submissions made on October 8, 2010, October 18, 2010, November 3, 2010, November 8, 2010, and November 12, 2010.
FACTS:
The merchandise at issue consists of one entry of 36,555,115 pounds of raw sugar in bulk from Brazil. U.S. Customs and Border Protection’s (“CBP”) laboratory in New York tested seventeen samples of the subject merchandise using polar metric testing, a method recognized by the International Commission for Uniform Methods of Sugar Analysis (“ICUMSA”) which uses optical means to determine the polarity of sugar. Sugar’s polarity is a measurement of the degree of purity of the sugar, how close the color of the sugar is to pure white, and dextran content.
Samples of the subject merchandise were collected between November 29, 2007, and December 5, 2007, and one set of samples was sent to CBP’s Newark/New York laboratory on December 6, 2007. The laboratory received the samples on December 26, 2007 and issued Report #NY20071892 on January 25, 2008, which reported the laboratory’s findings that the subject merchandise had an average corrected polarization of 99.679 degrees with a margin of error of +/- 0.13.
American Sugar tested the seventeen samples at three independent laboratories in the United States. One independent laboratory in Brazil also tested the merchandise before shipment. One American laboratory, Stillwell & Gladding, found an average polarity of 99.3188 degrees. The second American laboratory, American Sugar Refining, Inc.’s laboratory, found an average polarity of 99.4324 degrees. The third American laboratory, the New York Sugar Trade Laboratory, found an average polarity of 99.3271 degrees. The Brazilian laboratory found an average polarity of 99.2006 degrees. Among these tests, several of the samples had a polarity greater than 99.5 degrees. All three independent laboratories submitted affidavits attesting to the fact that they adhere to the ICUMSA method in testing the polarity of sugar. None of these laboratories, however, are accredited by CBP or any independent accreditation agency. By contrast, CBP’s laboratory is accredited in accordance with the recognized International Standard ISO/IEC 17025:2005 General Requirements for the Competence of Testing and Calibration Laboratories. This accreditation demonstrates technical competence for a defined scope and the operation of a laboratory quality management system.
The merchandise was entered in subheading 1701.11.10, HTSUS, on December 6, 2007, as “Cane or beet sugar and chemically pure sucrose, in solid form: Raw sugar not containing added flavoring or coloring matter: Cane sugar: Described in additional U.S. note 5 to this chapter and entered pursuant to its provision.” The port liquidated the merchandise as entered, then reliquidated it on January 30, 2009, in subheading 1701.99.50, HTSUS, which provides for “Cane or beet sugar and chemically pure sucrose, in solid form: Other: Other: Other: Other.”
ISSUE:
Whether the polarity of raw sugar as determined by the CBP laboratory is conclusive in classifying the subject merchandise in subheading 1701.11.10, HTSUS, or subheading 1701.99.50, HTSUS?
LAW AND ANALYSIS:
The matter is properly protested 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. See 19 U.S.C. § 1514(c) (3).
Further Review of Protest No. 4601-09-101488 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24 because Protestant alleges that the liquidation was inconsistent with prior CBP rulings and that, in the alternative, the decision against which the protest was filed involves specific factual and legal questions that have not been the subject of a Headquarters ruling or court decision. Specifically, in accordance with 174.24(a), Protestant argues that the liquidation is inconsistent with prior rulings. See, e.g., HQ 562751, dated May 10, 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. 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 1 through 5.
The 2007 HTSUS heading and subheading under consideration are the following:
1701 Cane or beet sugar and chemically pure sucrose, in solid form:
Raw sugar not containing added flavoring or coloring matter:
1701.11 Cane sugar:
1701.11.10 Described in additional U.S. note 5 to this
chapter and entered pursuant to its provisions
* * * * * * * * * * *
Other:
1701.99 Other:
1701.99.50 other
Subheading Note 1 to Chapter 17, HTSUS, states, in pertinent part:
For the purposes of subheadings 1701.11 and 1701.12, “raw sugar” means sugar whose content of sucrose by weight, in the dry state, corresponds to a polarimeter reading of less than 99.5 degrees.
Additional U.S. Note 5(c) to Chapter 17, HTSUS, states, in pertinent part:
For purposes of this note, the term raw value means the equivalent of such articles in terms of ordinary commercial raw sugar testing 96 degrees by the polariscope as determined in accordance with regulations or instructions issued by the Secretary of the Treasury. Such regulations or instructions may, among other things, provide: (i) for the entry of such articles pending a final determination of polarity; and (ii) that positive or negative adjustments for differences in preliminary and final raw values be made in the same or succeeding quota periods.
In understanding the language of 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 at the international level, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
The EN to 17.01, reads, in pertinent part, as follows:
Raw or crude cane or beet sugars occur in the form of brown crystals, the colour being due to the presence of impurities. Their sucrose content by weight, in the dry state, corresponds to a polarimeter reading of less than 99.5 ° (see Subheading Note 1). They are generally destined for processing into refined sugar products. Raw sugar may, however, be of such a high degree of purity that it is suitable for human consumption without refining.
Pursuant to 28 U.S.C. § 2639 (a) (1) (1994), CBP enjoys a statutory presumption of correctness. Thus, an importer has the burden to prove by a preponderance of the evidence that a Customs decision was incorrect. Ford Motor Company v. United States, 157 F.3d 849, 855 (Fed. Cir. 1998); American Sporting Goods v. United States, 27 C.I.T. 450; 259 F. Supp. 2d 1302; 25 Int’l Trade Rep. (BNA) 1345; 2003 Ct. Intl. Trade LEXIS 45. Furthermore, it is “well settled that the methods of weighing, measuring, and testing merchandise used by customs officers and the results obtained are presumed to be correct.” Aluminum Company of America v. United States, 60 C.C.P.A. 148, 151, 477 F.2d 1396, 1398 (1973) (“Alcoa”). Absent a conclusive showing that the testing method used by the CBP laboratory is in error, or that the Customs’ laboratory results are erroneous, there is a presumption that the results are correct. See Exxon Corp. v. United States, 462 F. Supp. 378, 81 Cust. Ct. 87, C.D. 4772 (1978). “If a prima facie case is made out, the presumption is destroyed, and the Government has the burden of going forward with the evidence.” Alcoa, 477 F.2d at 1399; American Sporting Goods, 27 C.I.T. 450.
In Libas, Ltd. v. United States, 193 F.3d 1361 (Fed. Cir. 1999) (“Libas”), the court noted in particular the standard espoused by the U.S. Supreme Court in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 125 L.Ed. 2d 469, 113 S.Ct. 2786 (1993) (“Daubert”). The Libas court noted that the reliability of CBP’s laboratory tests should be scrutinized according to the standards set forth in the Daubert case. They include: 1) whether a theory or technique, such as CBP’s test, has been tested; 2) whether it has been subjected to peer review and publication; 3) its known or potential rate of error; and 4) whether it is generally or widely accepted. See Daubert, 509 U.S. at 593-94. The Libas court also noted that the Daubert standards relate not only to whether evidence is admissible, but also to how much or how little weight the Court should accord such evidence. See Libas, 193 F.3d 1361, 1366. CBP has applied this standard in numerous prior rulings where the methods or results of its laboratory tests were at issue. See, e.g., HQ 562751; HQ W562809, dated April 23, 2004; HQ 966365, dated August 22, 2003; HQ 562043, dated March 11, 2002; HQ 563115, dated March 2, 2006; HQ H034575, dated May 10, 2010.
In the present case, American Sugar argues that consistent results from four laboratories that contradict CBP’s laboratory results are enough to raise doubts about the results of CBP’s laboratory tests. The company also cites inconsistencies in CBP’s testing methods to explain the different results. For example, CBP laboratory did not receive samples of the subject merchandise for twenty days after it was shipped to the laboratory, and did not issue Lab Report # NY20071982 until a month after it had received the samples. American Sugar argues that such a delay in testing can affect testing results.
Conflicting results alone, however, are not enough to establish the prima facie case required to rebut CBP’s presumption of correctness. The ICUMSA method, which CBP employs to test the polarity of sugar, has been tested, is widely known and accepted, and has been subjected to peer review. It also has a known rate of error, as CBP’s laboratories have a margin of error of +/- .13. Although the results of each of the independent laboratories differed from the results of CBP’s laboratories, none of the independent laboratories have been accredited by CBP or any independent accreditation agency. In contrast, CBP’s laboratory has been accredited by the ISO, thereby lending further credence to its results. As a result, we find that American Sugar has not made out a prima facie case.
Furthermore, in cases such as the instant case, where an outside report is submitted that differs from the Customs laboratory report, the Customs laboratory report cannot be disregarded and takes precedence over the outside report. See, e.g., HQ 957282, dated March 28, 1995 (citing Customs Directive 099 3820-002, dated May 4, 1992). “Customs cannot rely on outside reports, which may or may not utilize different
testing methods and still remain consistent in its tariff classification. Additionally, generally Customs does not have any evidence that the merchandise tested by the outside laboratory is the same merchandise that was imported in to the U.S. Therefore, Customs must rely on its own laboratory analysis when determining the proper tariff classification of merchandise.” See HQ 957282, dated March 28, 1995. See also HQ 958346, dated February 6, 1996; HQ 963748, dated November 20, 2000; HQ 965177, dated August 29, 2002.
American Sugar also cites to HQ 562751, dated May 10, 2004, as a case in which CBP disregarded its own laboratory’s results in favor of another laboratory’s results. Thus, the company argues that CBP can, in fact, disregard its laboratory results when the situation warrants it. In HQ 562751, however, tests had been performed by two different CBP laboratories, and the two laboratories had obtained contradicting results. In that case, CBP set aside one laboratory’s results in favor of the other. The present case can be distinguished in that the contradicting results come not from two different CBP laboratories, but rather from a CBP laboratory versus independent laboratories. CBP will therefore adhere to the result of its own laboratory. As a result, the polarity of the subject sugar is greater than 99.5 degrees. The subject merchandise is therefore classified in subheading 1701.99.50, HTSUS, which provides for “Cane or beet sugar and chemically pure sucrose, in solid form: Other: Other: Other.”
HOLDING:
By application of GRI 1, the subject sugar imported by American Sugar Refining Co. is classified in subheading 1701.99.50, HTSUS, which provides for “Cane or beet sugar and chemically pure sucrose, in solid form: Other: Other: Other.” The 2007 general column one rate of duty is 35.74¢/kg. Because the merchandise is classified in this subheading, it is also subject to subheadings 9904.17.08 through 9904.17.16, HTSUS, which may require additional duty based on value if entered during the effective period of safeguards.
You are instructed to DENY 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 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