CLA-2-38:OT:RR:NC:N3:139
Ms. Madison Haiges
Candelay Industries LLC
4023 Kennett Pike
Greenville, DE 19807
RE: The tariff classification, country of origin and status under a trade agreement of bulk cannabidiol oil in solvent from Jamaica
Dear Ms. Haiges:
In your letter dated November 16, 2020, you requested a tariff classification, country of origin and status under a free trade agreement ruling on behalf of Candelay Industries LLC.
The subject product is cannabidiol (CBD) (CAS # 13956-29-1) distillate. It is stated to be three different mixtures of cannabidiol (CBD) (CAS # 13956-29-1) distillate oil in medium-chain triglyceride (MCT) carrier oil (i.e. coconut oil). The three different mixtures of CBD Oil will be: 3.99%, 5.51%, and 8.20% w/w concentrations, depending on the percentage of MCT carrier oil present. The CBD distillate is a purified extract of hemp.
You state the imported product is defined as a hemp extract under the US Agricultural Improvement Act of 2018 ("2018 Farm Bill"). You also state that the CBD Oil mixtures have been third-party laboratory tested to ensure concentrations of no more than 0.3% of delta-9 tetrahydrocannabinol (THC). These products are indicated to be derived solely from hemp grown in the country of Jamaica and each one is intended for commercial use in the United States as an ingredient in tinctures, creams and cosmetic products. A manufacturing flow chart was provided with your request, which details the extraction process. The raw hemp is harvested, weighed, dehydrated, extracted with alcohol, centrifuged, filtered, fractionally distilled, chromatographically separated, and tested prior to final packaging.
Item Description 1
Cannabidiol (CBD) (CAS #13956-29-1) distillate oil in MCT carrier oil. The component ingredients by weight are 3.99% CBD distillate oil and 96.01% MCT oil. The distillate oil contains 0% THC, as noted on the Certificate of Analysis (COA). The distillate oil comes in liquid form and is a transparent yellow to amber color.
Item Description 2
Cannabidiol (CBD) (CAS #13956-29-1) distillate oil in MCT carrier oil. The component ingredients by weight are 5.51% CBD distillate oil and 94.49% MCT oil. The distillate oil contains 0% THC, as noted on the COA. The distillate oil comes in liquid form and is a transparent yellow to amber color.
Item Description 3
Cannabidiol (CBD) (CAS #13956-29-1) distillate oil in MCT carrier oil. The component ingredients by weight are 8.2% CBD distillate oil and 91.8% MCT oil. The distillate oil contains 0% delta-9 THC, as noted on the COA. The distillate oil comes in liquid form and is a transparent yellow to amber color.
The applicable subheading for item description 1 will be 3824.99.9297, Harmonized Tariff Schedule of the United States (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: Other: Other: Other: Other.” The general rate of duty will be 5%.
The applicable subheading for item descriptions 2 and 3 will be 3824.99.2890, Harmonized Tariff Schedule of the United States (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: Other: Other: Mixtures containing 5 percent or more by weight of one or more aromatic or modified aromatic substances: Other: Other.” The general rate of duty will be 6.5%.
Articles classifiable under subheadings 3824.99.2890, and 3824.99.9297 HTSUS, which are products of Jamaica, may be entitled to duty free treatment under the Caribbean Basin Economic Recovery Act (CBERA) upon compliance with all applicable regulations.
We note, that due to the highly complex and variable nature of the raw material and the extraction and purification processes, that these products may require verification of their chemical constituents at time of entry, including potential sampling and analysis of chemical and other ingredients.
You also requested a determination on the correct country of origin for the indicated products.
The "country of origin" is defined in 19 CFR 134.1(b) as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the 'country of origin' within the meaning of this part.”
The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982). However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
You indicate that the CBD oil is distilled from hemp grown in Jamaica. All manufacturing is also performed in Jamaica. Therefore, it is our opinion that the country of origin is the country of growth and manufacture, that is, Jamaica.
A review of FDA Regulations for Cannabis derived products including those containing CBD Oil can be found at: https://www.fda.gov/news-events/public-health-focus/fda-regulation-cannabis-and-cannabis-derived-products-including-cannabidiol-cbd#legaltosell.
This merchandise may be subject to the Federal Food, Drug, and Cosmetic Act and/or The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which are administered by the U.S. Food and Drug Administration (FDA). Information on the Federal Food, Drug, and Cosmetic Act, as well as The Bioterrorism Act, can be obtained by calling the FDA at 1-888-463-6332, or by visiting their website at www.fda.gov.can be obtained by contacting the FDA at: Food and Drug Administration, Division of Import Operations and Policy, 5600 Fishers Lane, Rockville, Maryland 20857, Telephone: (888) 463-6332.
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 https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist John Bobel at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division