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 CBD Distillate in solvent, from Colombia
Dear Mr. Murphy:
In your letter dated July 10, 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. It is stated to be two different mixtures of Cannabidiol (CBD) Distillate (CAS # 13956-29-1) in solvent. The CBD Distillate is a purified extact of Hemp.
You indicate that the you are seeking a classification, country of origin, and trade agreement review for these two mixtures. Both products will be imported into the United States from Colombia. You state that the imported products are defined as hemp extracts under the US Agricultural Improvement Act of 2018 ("2018 Farm Bill"). You state that the CBD distillate mixtures are designated for business to business use only, and 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 Colombia. Flow charts detailing the manufacturing process and product specifications were provided by the manufacturer and are also attached with your request. The products are for commercial use in the United States as an ingredient in tinctures, creams and cosmetic products. A detailed description of both products was provided with your request. The description you provided is summarized below.
Item Description 1
Cannabidiol (CBD) (CAS # 13956-29-1) Distillate oil in medium-chain triglyceride (MCT) carrier oil (i.e., coconut oil). The component ingredients by weight are 5 percent CBD distillate oil and 95 percent coconut oil. The distillate oil contains 0.19 percent delta-9 tetrahydrocannabinol (THC). The distillate oil also consists of isomers of CBD, most notably CBDV and CBG in very low concentrations as noted on attached Certificate of Analysis. No residual solvents are present and after extraction and before imprtation nothing is added to the product. The distillate oil comes in liquid form and has a honey-like consistency. The product will be packaged in wide mouth plastic (HDPE) containers measuring 500 cubic centimeters with screw caps.
Item Description 2
Cannabidiol (CBD) (CAS # 13956-29-1) distillate oil in ethanol. The component ingredients by weight are 5 percent CBD distillate oil and 95 percent ethanol. The distillate oil contains 0.17 percent delta-9 tetrahydrocannabinol (THC). The distillate oil also consists of isomers of CBD, most notably CBG in very low concentrations as noted on the Certificate of Analysis provided with your request. No residual solvents are present and after extraction and before importation nothing is added to the product. The distillate oil comes in liquid form and has a honey-like consistency. A manufacturing flow chart was provided detailing the extraction process. Product is packaged in 20L square plastic (HDPE) containers with screw caps.
Dry and ground plant material is processed using an ultrasonic assisted extraction (UAE) and ethanol (at -60°C ± 10). Then, the mix is filtered and concentrated to obtain the full spectrum extract. This extract is decarboxylated at high temperature to subsequently start the purification process through the molecular distillation and to obtain the distillate oil.
Based on the processing flowcharts received with your letter, the concentrated distillate is first extracted. It is then purified in a distillation process. The solvent of choice is then added to dilute to the final concentration “as required”. The solvent is added after the extraction and purification process is completed.
This oil has high purity. The percentage of cannabidiol (CBD) is between 80-90%. The oil is used in the preparation of different cannabis derivates products.
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 …
Chemical products classifiable under Chapter 29 may consist of those products as delineated in Chapter 29 Note 1 (a-h).
Note 1 to Chapter 29 states, in pertinent part:
Except where the context otherwise requires, the headings of this chapter apply only to:
Separate chemically defined organic compounds, whether or not containing impurities…
(e) Products mentioned in (a), (b) or (c) above dissolved in other solvents provided that the solution constitutes a normal and necessary method of putting up these products adopted solely for reasons of safety or for transport and that the solvent does not render the product particularly suitable for specific use rather than for general use;
Both products, distillate oil in 100% coconut oil and distillate oil in Ethanol, will be “made according to the customer specification.” A known amount of distillate oil and ethanol (or coconut oil) are purposefully mixed to obtain the end product. Both ingredients will be mixed with constant agitation until they obtain a homogenous mix. Finally, the products will be packed for shipment. An aliquot will be taken separatey for quality control parameter evaluation.
The carrier oil is purposefully added to create specific formulations. It is not present “solely” for reasons of safety, or transport. The products as entered do not represent chemically pure organic compounds as those in the rulings cited in your request letter. They are chemical mixtures and preparations for Tariff purposes. They are therefore excluded from classification in Chapter 29.
The applicable subheading for both the Cannabidiol (CBD) (CAS # 13956-29-1) Distillate oil in medium-chain triglyceride (MCT) carrier oil and the Cannabidiol (CBD) (CAS # 13956-29-1) distillate oil in ethanol 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%.
Articles classifiable under subheading 3824.99.9297 HTSUS, which are products of Colombia, may be entitled to duty free treatment under the U.S.-Colombia Trade Promotion Agreement, 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.
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, 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 Distillate is distilled from Hemp grown in Colombia. All chemical processing is also performed in Colombia. It is our opinion, that for country of origin marking purposes, the CBD Distillate in either coconut oil or ethanol, will be country of origin, Colombia.
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