OT:RR:CTF:FTM H315652 TJS/MJD
Mr. Lucas A. Rock
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt, LLP
599 Lexington Avenue
New York, NY 10022
RE: Modification of NY N308405; Tariff Classification of Rice Protein Powder
Dear Mr. Rock:
This is in reference to New York Ruling Letter (“NY”) N308405 issued to you, on behalf of Top Health Ingredients, Inc., on January 9, 2020, concerning the tariff classification of certain rice protein powder and pea protein powder under the Harmonized Tariff Schedule of the United States (“HTSUS”). In that ruling, U.S. Customs and Border Protection (“CBP”) classified the protein powders at issue under subheading 3504.00.50, HTSUS, which provides for “Peptones and their derivatives; other protein substances and their derivatives, not elsewhere specified or included; hide powder, whether or not chromed: Other.” Upon further review, we have found the classification of the rice protein powder under heading 3504, HTSUS, to be incorrect. For the reasons set forth below, we hereby modify NY N308405.
FACTS:
The product at issue is AdvantaRice™ Premier 300. It is a rice protein powder consisting of 80 percent or greater rice protein on a dry basis. The remaining 20 percent consists of residual materials of the protein extraction process such as ash, moisture, and fat. The rice protein powder does not contain additives. The manufacturing process begins with soaking rice flour, which is produced from milling rice. Then, an alkali solution is used to precipitate the protein. Once the excess amount of alkali solution is washed off, the product is sterilized, evaporated, and dried into powder form. The protein is imported in 20kg poly-lined paper bags and sold to food manufacturers for use as an ingredient in various food applications, which according to the importer’s website, include bars, chips, protein blends, RTD (ready-to-drink) beverages, and dips. The website further states that AdvantaRice™ has a “[m]ild, neutral flavor [that] is easily masked” and “can be used in both sweet and savory formulas.”
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. § 1625 (c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), notice of the proposed action was published in the Customs Bulletin, Volume 57, Number 32 on September 6, 2023. One comment was received in response to this notice, which we will address below.
ISSUE:
What is the tariff classification of the rice protein powder under the HTSUS?
LAW AND ANALYSIS:
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 GRI 2 through 6 may then be applied in order.
The 2024 HTSUS provisions under consideration are as follows:
2106: Food preparations not elsewhere specified or included:
2106.10.00: Protein concentrates and textured protein substances…
* * *
3504: Peptones and their derivatives; other protein substances and their derivatives, not elsewhere specified or included; hide powder, whether or not chromed:
3504.00.50: Other…
* * *
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The ENs to heading 2106, HTSUS, provides in pertinent part as follows:
Provided that they are not covered by any other heading of the Nomenclature, this heading covers:
Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption.
Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38).
…
The heading includes, inter alia:
…
(6) Protein hydrolysates consisting mainly of a mixture of amino-acids and sodium chloride, used in food preparations (e.g., for flavouring); protein concentrates obtained by the elimination of certain constituents of defatted soya-bean flour, used for protein-enrichment of food preparations; soya-bean flour and other protein substances, textured. However, the heading excludes non-textured defatted soya-bean flour, whether or not fit for human consumption (heading 23.04) and protein isolates (heading 35.04).
* * *
The ENs to heading 3504, HTSUS, provides in pertinent part as follows:
This heading covers:
…
(B) Other protein substances and their derivatives, not covered by a more specific heading in the Nomenclature, including in particular:
Glutelins and prolamins (e.g., gliadins extracted from wheat or rye, and zein extracted from maize), being cereal proteins.
Globulins, e.g., lactoglobulins and ovoglobulins (but see exclusion (d) at the end of the Explanatory Note).
Glycinin, the main soya protein.
Keratins obtained from hair, nails, horns, hoofs, feathers, etc.
(5) Nucleoproteids, being proteins combined with nucleic acids, and their derivatives. Nucleoproteids are isolated, for example, from brewer’s yeast, and their salts (of iron, copper, etc.) are used mainly in pharmacy.
However, nucleoproteids of mercury answering to a description in heading 28.52 are excluded.
Protein isolates obtained by extraction from a vegetable substance (e.g., defatted soya bean flour) and consisting of a mixture of proteins contained therein. The protein content of these isolates is generally not less than 90%.
* * *
NY N308405 classified the rice protein powder in heading 3504, HTSUS, as “other protein substances and their derivatives, not elsewhere specified or included.” Heading 2106, HTSUS, covers food preparations, provided that the product is not covered by any other heading of the HTSUS. The issue here is whether the rice protein powder is classified as a protein substance of heading 3504, HTSUS, or as a food preparation of heading 2106, HTSUS.
According to the ENs to heading 3504, HTSUS, and prior CBP rulings, substances that have been classified in heading 3504 have at least four things in common. First, these protein substances are generally for use in making pharmaceuticals, textiles, or plastics. See Headquarters Ruling Letter (“HQ”) 950915 (Apr. 3, 1992). Second, the protein substances consist of a very high percentage of protein. Third, the protein in substances of heading 3504 are derived from a single source, such as milk or wheat gluten. See HQ H053650 (June 1, 2009); HQ 963306 (Sept. 6, 2000). Lastly, the substances classified in heading 3504, HTSUS, may be mixtures of protein and other substances, such as ash and moisture, but these other substances are a product of the derivation of the protein substance from its source, not a deliberate preparation of different protein substances mixed with flavoring and anti-caking agents. See HQ H008628 (Feb. 14, 2008).
The rice protein product under consideration is derived from a single source – rice – which is not mixed with other protein substances, flavoring, or anti-caking agents. However, importantly, the rice protein product is to be used as an ingredient in various food applications for human consumption, not for making pharmaceuticals, textiles or plastics. Additionally, none of the items listed in the ENs specifically describe the rice protein product. For these reasons, we find that heading 3504, HTSUS, does not cover the AdvantaRice™ Premier 300.
Heading 2106, HTSUS, covers food preparations. In Orlando Food Corp. v. United States, the United States Court of Appeals for the Federal Circuit considered the definition of “preparation” for purposes of classification under the HTSUS. Orlando Food Corp. v. United States, 140 F.3d 1437 (1998). The court held that “inherent in the term ‘preparation’ is the notion that the object involved is destined for a specific use. The relevant definition from The Oxford English Dictionary defines ‘preparation’ as ‘a substance specially prepared, or made up for its appropriate use or application, e.g., as food or medicine, or in the arts or sciences.’” Id. at 1441 (citing 12 The Oxford English Dictionary 374 (2d. ed. 1989)). Under our facts, the subject rice protein powder satisfies the definition of a preparation as it has been prepared and processed for a specific use. In this case, the rice protein powder is specifically used as a protein or nutritional supplement. In the context of “food preparations” for purposes of tariff classification in heading 2106, HTSUS, the finished subject rice protein powder is specifically intended to be incorporated and consumed in food applications.
The ENs for heading 2106, HTSUS, provide that food preparations of heading 2106 include preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. Heading 2106, HTSUS, includes certain preparations for incorporation in food preparations either as ingredients or to improve some of their characteristics. Here, food manufacturers use the rice protein as an ingredient and protein supplement in various food and beverage applications. Therefore, we find that the rice protein powder is a “preparation consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption” within the meaning of the ENs to heading 2106, HTSUS. Conversely, we find that the ENs to heading 3504, HTSUS, do not describe the subject rice protein powder. The ENs to heading 3504, HTSUS, list proteins from specific sources, none of which would include rice as a protein source nor are ejusdem generis to the product at issue.
Furthermore, in HQ 950915, CBP distinguished a rice protein powder, which was manufactured and used in a manner similar to the subject rice protein, from products of heading 3504, HTSUS. The rice protein powder of HQ 950915 was described as a precipitate derived from rice that had been steeped, milled, screened and centrifuged. The resulting rice substance was thereafter concentrated, dried, and sieved before being packaged for export. In distinguishing the scope of headings 2106 and 3504, HTSUS, HQ 950915 explained the following:
In essence, 2106 covers products which serve as, or are incorporated in, food preparations, while 3504 covers products which are not usually consumed, but are used, for instance, in making pharmaceuticals (peptones), textiles and plastics (glutelins and prolamins) and elastic fibers (keratins). The subject product is designed to be used as a protein source in baby foods, nutritional drinks and tablets and, thus, is ejusdem generis to the nutritional food products and supplements which have been classified in heading 2106. Its principal use is as a food preparation. See Additional U.S. Rule of Interpretation 1(a). As the EN’s above stated, a product may still be classified in 2106 even if it may require further processing to be used as a food preparation or if it is merely used as an ingredient in order to make or improve a beverage or food preparation.
As such, HQ 950915 determined that the rice protein powder was classified according to its principal use as a food preparation in heading 2106, HTSUS. See also HQ H008628 (finding that a powdered protein mixture, which was used in shakes, soups, sauces and other foods to enhance their protein content, was ejusdem generis to the products classified in heading 2106, HTSUS, as a food preparation).
HQ H280419, dated December 7, 2020, also classified a rice protein powder in subheading 2106.10.00, HTSUS. The rice protein powder of HQ H280419 was enzymatically extracted from multiple layers of whole grain brown rice. The product was sold as a bulk ingredient to be used as a protein-based nutritional supplement in food or feed products, as well as in beverages, infant formula, nutraceuticals and nutritional products, small animal nutrition, weight management products, and cosmetic products. CBP determined that the rice protein powder subject in HQ H280419 was similar to the product of HQ 950915 as they were both the result of extensive production processing and additional advanced refinement, as well as used as a protein source or nutritional protein supplement in food preparations and beverages. CBP further noted that the importer marketed and sold the rice protein powder as a protein source, protein supplement and nutritional supplement for consumption.
We find that the subject rice protein powder is substantially similar to the rice protein powders of HQ 950915 and HQ H280419. In each of these cases, the protein powder was processed from a single rice source and used as a food preparation designed to supplement the protein content in various consumption applications. Likewise, the subject rice protein powder is the result of extensive production processing and is incorporated as an ingredient in various food applications for human consumption. Additionally, the subject rice protein powder is marketed for applications such as bars, chips, protein blends, RTD beverages, and dips. Accordingly, based on the composition of the product, the manner of production, how the product is marketed, and its ultimate use in food and beverage applications, we find that heading 2106, HTSUS, encompasses the subject rice protein powder. Specifically, the rice protein powder is classified under subheading 2106.10.00, HTSUS, which provides for “Food preparations not elsewhere specified or included: Protein concentrates and textured protein substances.”
As noted above, we received one comment in response to the notice of the proposed modification to NY N308405. The commenter argues that the AdvantaRice™ Premier 300 is prima facie classifiable in heading 3504, HTSUS, and is precluded from classification in heading 2106, HTSUS. The commenter cites to HQ H053650, dated June 1, 2009, where CBP states that “[t]he only limit that is placed on the protein substances that can be classified in heading 3504, HTSUS, is that they cannot be provided for more specifically elsewhere in the nomenclature.” Since the rice protein powder at issue is a protein substance and is not classified elsewhere, the commenter provides that it can only be classified in heading 3504, HTSUS.
Similarly, the commenter states that the rice protein powder is classified in heading 3504, HTSUS, per GRI 3(a) which provides that “[t]he heading which provides the most specific description shall be preferred to headings providing a more general description.” As heading 3504, HTSUS, provides for a narrower class of products and heading 2106 HTSUS, is a “basket provision” only appropriate if no other provision covers the product more specifically, under GRI 3(a) the rice protein powder should be classified in heading 3504, HTSUS. Additionally, the commenter provides that the subject rice protein powder is classifiable under heading 3504, HTSUS, per GRI 3(c) which states that “[w]hen goods cannot be classified by reference to [GRI] 3(a) or 3(b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.” Since between heading 2106, HTSUS, and heading 3504, HTSUS, heading 3504, HTSUS, occurs last in numerical order, per GRI 3(c), the rice protein powder is classified in heading 3504, HTSUS.
Moreover, the commenter explains that the rice protein powder is ejusdem generis to the cereal proteins listed in the ENs to heading 3504, HTSUS, and not ejusdem generis to the examples cited in the ENs to heading 2106, HTSUS. The commenter mentions that the proteins extracted from rice, include glutelin, which is specifically provided for in the ENs to heading 3504, HTSUS. In addition, because the rice protein powder meets the definition of protein isolate, which is also specifically listed as an example in the ENs to heading 3504, HTSUS, the product is classified therein. Furthermore, because the product is considered a “protein isolate” of heading 3504, HTSUS, which is specifically excluded from classification in heading 2106, HTSUS, according to the ENs to heading 2106, HTSUS, the subject product cannot be classified therein. Lastly the commenter opines that the requirement that products of heading 3504, HTSUS, be “generally for use in making pharmaceuticals, textiles, or plastics” is not supported by administrative precedent. The commenter cites to several CBP rulings where protein substances used in food products were classified in heading 3504, HTSUS.
CBP disagrees with the commenter. The AdvantaRice™ Premier 300 rice protein powder is not prima facie classifiable in heading 3504, HTSUS. The rice protein powder is a food preparation that has been prepared and processed for a specific use, namely as a protein or nutritional supplement. As a result, the rice protein powder at issue meets the exception to the provision that all protein substances are classified in heading 3504, HTSUS, as the product is provided more specifically in heading 2106, HTSUS, as a food preparation. In addition, the rice protein powder is not classified per GRI 3(a) or GRI 3(c). The rice protein powder is classified in heading 2106, HTSUS, under GRI 1 because it is a food preparation of heading 2106, HTSUS, and no other heading provides for it.
Moreover, the rice protein powder is not ejusdem generis to the cereal proteins listed in the ENs to heading 3504. The ENs to heading 3504, HTSUS, state that the heading includes, among other protein substances and their derivatives, glutelin and protein isolates obtained by extraction from a vegetable substance. The rice protein powder at issue here is made from one single source, rice, which is not listed in the ENs to heading 3504, HTSUS. Lastly, the commenter cites to several CBP rulings where protein substances were used in food products and not for use in making pharmaceuticals, textiles, or plastics, but were nevertheless classified in heading 3504, HTSUS. While the products in those ruling were used in food products, they were not food preparations like the rice protein powder at issue here. As mentioned beforehand the AdvantaRice™ Premier 300 is a food preparation because it is used to supplement the protein content in various consumption applications and is incorporated as an ingredient in various food applications for human consumption. Moreover, the subject rice protein powder is marketed for application in food products such as bars, chips, protein blends, RTD beverages, and dips.
Accordingly, we find that the AdvantaRice™ Premier 300 is properly classified in heading 2106, HTSUS, and specifically in subheading 2106.10.00, HTSUS, which provides for “Food preparations not elsewhere specified or included: Protein concentrates and textured protein substances.”
HOLDING:
By application of GRI 1, we find that the rice protein powder at issue is classified under heading 2106, HTSUS, and specifically in subheading 2106.10.00, HTSUS, which provides for “Food preparations not elsewhere specified or included: Protein concentrates and textured protein substances.” The 2023 column one, general rate of duty is 6.4% ad valorem.
EFFECT ON OTHER RULINGS:
NY N308405, dated January 9, 2020, is hereby modified.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Yuliya A. Gulis, Director
Commercial and Trade Facilitation Division