CLA-2-29:OT:RR:NC:N3:140
Mr. Peter Murphy
Candelay Industries LLC
4023 Kennett Pike
Greenville, DE 19807
RE: The tariff classification of Cannabidiol (CBD) (CAS # 13956-29-1) Distillate from Jamaica
Dear Mr. Murphy:
In your letter dated July 01, 2020, you requested a tariff classification ruling on behalf of Candelay Industries LLC.
The subject product is called Cannabidiol (CBD) (CAS # 13956-29-1) Distillate.
The subject product is stated to be a Cannabidiol (CBD) Distillate (CAS # 13956-29-1), derived from hemp extract. It is imported in 32 ounce glass jars.
Cannabidiol (CBD) (CAS # 13956-29-1) Distillate is described in your request letter as a distillate of hemp extract concentrated to approximately 82 percent CBD with very low concentrations of minor cannabinoids (including CBDV, CBG and CBN) and terpenes. No additional solvents are present, and “after extraction and before importation nothing is added to the product.” The product contains 0.0% delta-9 tetrahydrocannabinol (THC) per the Certificate of Analysis supplied with your letter. The extract is derived through a process of extraction of Cannabis sativa L. plant and distillation to remove all detectable amounts of THC. A manufacturing flow chart was provided with your request, detailing 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. It is a highly purified extract that contains isomers and impurities left over from the extraction process in addition to the targeted Cannabidiol (CBD) (CAS # 13956-29-1). No additional substances are indicated to have been added after extraction.
In HQ H240719 dated September 9, 2016 (regarding purification of an extract.), it was indicated that:
Per Note 1(a) and the EN to Chapter 29, a substance is classifiable within Chapter 29 where it is comprised almost entirely by a single molecular structure, so long as any structurally-deviant constituents satisfy the definition of “impurities” as set forth in the EN to Chapter 29. See Degussa Corp. v. United States, 508 F.3d 1044, 1047-48 (Fed. Cir. 2007) (discussing the scope of, and applying, identical language concerning chemical impurities in the 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).’). Pursuant to Note 1(b) to Chapter 29, headings of the chapter also cover mixtures of isomers of organic compounds, i.e., of organic compounds that are represented by a single chemical formula in diverse structural arrangements, that also may or may not contain such “impurities.” Among other things, “impurities” in a separately defined chemical compound or mixture of isomers cannot have been “deliberately left in the product with a view to rendering it particularly suitable for specific use rather than for general use.” See EN to Chapter 29; and Headquarters Ruling Letter (HQ) 965089, dated January 31, 2002 …
The applicable subheading for the Cannabidiol (CBD) Distillate (CAS # 13956-29-1) will be 2907.29.9000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Polyphenols; phenol-alcohols: Other.” The rate of duty will be 5.5 percent ad valorem.
Articles classifiable under subheading 2907.29.9000 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 be require verification of their chemical constituent’s at time of entry, including potential sampling and analysis of chemical and other ingredient’s.
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.
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, dated 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 Distillate is distilled from Hemp grown in Jamaica. All chemical processing is also performed in Jamaica. It is our opinion that for marking purposes the CBD Distillate will be country of origin, Jamaica.
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 Paul Hodgkiss at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division