Revocation of HQ W967214, NY N046672, and NY K84522 and modification of HQ H106785; Classification of luo han guo powder and liquid products

HQ H249896 February 29, 2016 CLA-2 OT:RR:CTF:TCM H249896 NCD CATEGORY: Classification TARIFF NO.: 2938.90.0000; 3824.90.9290 Andrew L. Rubman, ND BioVittoria 27 Stony Corner Lane Southbury, CT 06488 RE: Revocation of HQ W967214, NY N046672, and NY K84522 and modification of HQ H106785; Classification of luo han guo powder and liquid products Dear Mr. Rubman: This letter is in reference to Headquarters Ruling Letter (“HQ”) W967214, issued to you on April 4, 2006, and New York Ruling Letter (“NY”) K84522, issued to you on April 9, 2004, both of which involve the tariff classification of a luo han guo powder under the Harmonized Tariff Schedule of the United States (“HTSUS”). In both rulings, U.S. Customs and Border Protection (“CBP”) classified the subject powder in subheading 3824.90.91, 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.” We have reviewed these rulings and determined that they are incorrect. We have also reviewed NY N046672, dated January 7, 2009, and HQ H106785, dated October 14, 2010, both of which involve luo han guo liquids. Upon reviewing these rulings, we have determined that the former is incorrect and that the latter is incorrect with respect to the luo han guo liquid at issue in that ruling. Therefore, for the reasons set forth below, we hereby revoke HQ W967214, NY K84522, and NY N046672, and modify HQ H106785. 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, notice of the proposed action was published in the Customs Bulletin, Vol. 49, No. 44, on November 11, 2015. Two comments concerning the proposed action, submitted on behalf of Tate & Lyle Ingredients Americas LLC (“Tate & Lyle”) and Monk Fruit Corp. (“Monk Fruit”) respectively, were received in response to the notice. Both comments are addressed in this decision. FACTS: At issue in all four rulings under reconsideration are products derived from the fruit of the luo han guo plant. In HQ W967214 and NY K84522, this product was in the form of a dry powder, which, as we noted in HQ W967214, is provided a sweet taste by its constituent mogrosides, a group of terpene glycosides. In NY K854522, CBP stated as follows with regard to the luo han guo powder: You indicate in your letter that the subject product is “[s]imply a powder produced by drying a hot water decoction of a Chinese fruit.” However, the flow chart supplied by the manufacturer shows that, following separation from the fruit pulp, the “[l]iquid is passed through the resin column to remove suspended particulate and then evaporated.” As evidenced by the Product Specification Sheet, this chromatographic processing results in the finished product having a total mogroside content of =80%. Based on this, CBP classified the product in subheading 3824.90.92, 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.” We affirmed this determination in HQ W967214, in which we provided the following additional description of the product: A process for making the luo han guo powder was patented in 1995. The process is used to remove undesired flavors created by the drying process. The patented process entails picking the fruit before it is ripe and completing the ripening process during storage. The peel and seeds are removed and the fruit is mashed or pressed to become the basis for a concentrated fruit juice or puree. The pulp solids are removed from the juice to less than 2%. The juice is acidified to a ph of less than 5.3 (preferably 3.8 to 4.2) by using a selected acid including citric acid, malic acid, lactic acids, tartaric acid, acetic acid, phosphoric acid, sulfuric acid, hydrochloric acid or a mixture thereof. Acidified juice is lighter in color, less bitter, and does not gel when it is concentrated. The juice is homogenized in a high speed mixer to reduce the particle size to less than 850 microns. Next, solvents are used to remove volatile and undesirable components which produce sulfurous or vegetable-like odors and off-flavors such as at least 80% of the sulfur containing amino acids. The process reduces the amino-nitrogen compounds of the juice, which include sulfur-containing amino acids, peptides and proteins by at least 70% while reducing the mogroside or other sweet terpene glycosides content by no more than 20%. Off-flavor materials and precursors are removed from the juice by use of an ion exchange resin, such as a cation exchange resin. The ion exchange resin removes sulfur-containing amino acids quicker than it removes mogrosides. Therefore, the time the ion exchange resin is used is limited to maximize the removal of sulfur-containing compounds but minimize the removal of mogrosides. The resulting ion exchange resin adsorbent, fining agent, precipitate material is removed from the juice by filtration or centrifugation. At least 50% of the methylene chloride extractable volatiles fractions are removed from the juice. The juice is treated with pectinase to remove substantially all the pectin in the juice. Also used to remove off-flavor materials and precursors are adsorbing and/or fining agents such as activated charcoal, bentonite, bleaching earth, kaolin, perlite, diatomaceous earth, cellulose, cyclodextrin polymer, and insoluble polyamide (e.g. nylon). The juice may also be treated with precipitating agents such as gelatin, tannin/gelatin, sparkolloid, and water colloidal solutions of silicic acid (silica). An evaporator or concentrating equipment is used to remove certain volatiles from the juice and to concentrate it to from 15 degree Brix to 65 degree Brix (“Brix” is essentially equal to the percent of solid content). The concentrated juice is heated to deactivate enzymes and pasteurize the juice. The solution is mechanically dried and packed in mylar-aluminum bags in 5 kg amounts. In contrast to HQ W967214 and NY K84522, the products at issue in HQ H106785 and NY N046672 are in liquid form. In HQ H106785, we noted as follows with regard to the subject product: The manufacturing flowcharts submitted (which we note are identical) show that both the Luo han guo and the Goji Liquid Extracts are obtained by washing with water, extraction with ethanol and water, decompressing the extracted liquid below 60° Centigrade, centrifugation, additional decompression below 60° Centigrade, spray drying, breaking and passing through an 80 mesh. Counsel provides a slightly different narrative which describes the process as squeezing the fruit, filtration, ethanol solvent extraction, sterilizing and packing. A final description of the methods applied to obtain the instant product and the composition of the imported product was provided by counsel for the protestant after consultation with the supplier, which confirmed that “[t]he extract is obtained through the production process shown in the flow chart. Mogrosides and dietary fibers are not added to this product.” We additionally note that, according to a product specification sheet submitted by the protestant in HQ H106785, the luo han guo liquid at issue in that case is comprised 55.90 percent of mogrosides, 18.4 percent of fructose, 10.6 percent of glucose, 8.9 percent of sucrose, 3.37 percent of moisture, 2.38 percent of protein, and 0.45 percent of ash. The chemical composition of the goji liquid at issue was not reported. We classified both of the subject products in subheading 1302.19.91, HTSUS, which provides for “Vegetable saps and extracts; pectic substances, pectinates and pectates; agar-agar and other mucilages and thickeners, whether or not modified, derived from vegetable products: Vegetable saps and extracts: Other: Other.” Finally, NY N046672 involved a luo han guo liquid comprised 80 percent of mogroside which, according to the inquirer, is derived from the luo han guo fruit through alcohol/water extraction and subsequently dried to remove all traces of the alcohol. CBP noted in that case that the product had been extensively processed and, on this basis, classified the product in that case in subheading 3824.90.92, HTSUS. ISSUE: Whether the subject luo han guo products are classified as extracts in heading 1302, HTSUS, as glycosides in heading 2938, HTSUS, or as other chemical mixtures in heading 3824, HTSUS? LAW AND ANALYSIS: 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. The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989). The HTSUS provisions under consideration are as follows: 1302 Vegetable saps and extracts; pectic substances, pectinates and pectates; agar-agar and other mucilages and thickeners, whether or not modified, derived from vegetable products: Vegetable saps and extracts: 1302.19 Other: 1302.19.91 Other 2938 Glycosides, natural or reproduced by synthesis, and their salts, ethers, esters and other derivatives: 2938.90.00 Other 3824 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: 3824.90 Other: Other: Other: Other: 3824.90.92 Other At the outset, we note that the subject products can only be classified in heading 3824, HTSUS, if they are not classifiable in heading 2938, or more specifically classifiable in heading 1302. See Chapter 29, Note 1, HTSUS (“Except where the context otherwise requires, the headings of this chapter apply only to…separate chemically defined organic compounds.”); Chapter 38, Note 1, HTSUS (“This chapter does not cover…separate chemically defined elements or compounds.”); see also Cargill, Inc. v. United States, 318 F. Supp. 2d 1279, 1278-88 (Ct. Int’l. Trade 2004) (characterizing heading 3824 as a basket provision). Moreover, the subject products can only be classified in heading 1302, HTSUS, if they are not classifiable in heading 2938. See Chapter 13, Note 2, HTSUS (“The heading does not apply to… Camphor, glycyrrhizin or other products of heading 2914 or 2938.”). Consequently, we first consider whether the subject products are classifiable in heading 2938; if they are not, we will consider heading 1302 before finally considering heading 3824. Heading 2938 describes glycosides and their derivatives. As referenced above, Note 1 to Chapter 29 provides, in relevant part, as follows: Except where the context otherwise requires, the headings of this chapter apply only to: Separate chemically defined organic compounds, whether or not containing impurities; … The products of headings 2936 to 2939 or the sugar ethers, sugar acetals and sugar esters, and their salts, of heading 2940, or the products of heading 2941, whether or not chemically defined… With regard to “chemically defined” and “impurities” as referenced in Note 1(a) to Chapter 29, the EN to Chapter 29 states as follows: A separate chemically defined compound is a substance which consists of one molecular species (e.g., covalent or ionic) whose composition is defined by a constant ratio of elements and can be represented by a definitive structural diagram. In a crystal lattice, the molecular species corresponds to the repeating unit cell. … The term “impurities” applies exclusively to substances whose presence in the single chemical compound results solely and directly from the manufacturing process (including purification). These substances may result from any of the factors involved in the process and are principally the following: (a) Unconverted starting materials. (b) Impurities present in the starting materials. (c) Reagents used in the manufacturing process (including purification). (d) By-products. EN 29.38 states, in pertinent part, as follows: This heading also covers natural mixtures of glycosides and of their derivatives (e.g., a natural mixture of digitalis glycosides containing purpurea glycosides A and B, digitoxin, gitoxin, gitaloxin, etc.); but deliberate intermixtures or preparations are excluded. Per Note 1(a) and the EN to Chapter 29, a substance is classifiable within heading 29 where it is comprised almost entirely by a single molecular structure, so long as any structural deviations, i.e., impurities, are the result of processing. 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); Richard J. Lewis, Sr., Hawley’s Condensed Chemical Dictionary 324 (15th ed. 2007) [hereinafter Hawley’s] (similarly defining compound as “a homogeneous entity where the elements have definite proportions by weight and are represented by a chemical formula”). Note 1(c) and EN 29.38 establish an even broader degree of permissible chemical heterogeneity in specific relation to glycoside products, insofar as they set the scope of heading 2938 to include mixtures consisting of multiple, varying glycosidic structures in addition to any incidental impurities. Notwithstanding this allowance for impurities, it is CBP’s position that there do exist limits to the proportional weights of permissible impurities in a Chapter 29 product. Specifically, any impurities cannot be so prevalent so as to marginalize the product’s chemical identity and render it a chemical mixture classifiable elsewhere. Compare HQ 967971, dated March 2, 2006 (classifying extract with 80 percent silymarin content in heading 2932 on the grounds that remaining 20 percent content, comprised of starting material and solvent, constituted permissible impurities) with HQ 966448, dated July 9, 2004 (excluding extracts containing between 6 percent and 30 percent alkaloids as well as maltodextrin and ash from heading 2939); see also HQ W968424, dated December 19, 2006 (excluding from a product containing “proanthocyanidin, in concentrations of 76 percent or greater to the exclusion of other constituents” from Chapter 29); see Hawley’s, supra, at 685 (defining impurity as “[t]he presence of one substance in another, often in such low concentration that it cannot be measured quantitatively by ordinary analytical methods…”). Here, each of the instant products contains varying amounts of mogrosides, which comprise a group of chemical compounds within the broader glycoside family. Our research indicates that mogrosides in toto encompass several different individual chemical compounds, most commonly mogrosides I-V, each of which bears a unique molecular make-up. See Dr. Subhuti Dharmananda, Luo Han Guo: Sweet Fruit Used as Sugar Substitute and Medicinal Herb, Institute for Traditional Medicine, Jan. 2004, http://www.itmonline.org/arts/luohanguo.htm. Our research further indicates that while mogroside V is typically the largest component by weight in luo han guo extracts, these extracts generally contain other mogroside compounds, albeit in much smaller amounts. Id. Even when mixed together, however, these individual mogroside compounds remain classifiable in heading 2938, HTSUS, by operation of Chapter 29, Note 1(c). In HQ W967214, NY K84522, and NY N046672, unspecified mogrosides account for 80 percent of the respective subject products’ chemical compositions, with the remaining 20 percent constituent matter comprised of various undefined materials. Assuming they lack glycosidic content, these 20 percent remainder portions qualify as impurities if they result from processing such as purification. According to CBP’s analyses of the manufacturing flowcharts you submitted, the powder at issue in HQ W967214 and NY K84522 is subjected to filtration, centrifugation, and column chromatographic procedures designed to remove certain materials from the substance. Specifically, we noted in HQ W967214 that the ion exchange resin used in the chromatographic procedure enables disposal of unwanted sulfur-containing compounds, and that, additionally, 50 percent of the unwanted methylene chloride extractable volatiles fractions and various off-flavor materials are removed. As a result, the remaining 20 percent constituent matter can be characterized as either unconverted starting materials or impurities in the starting materials. Likewise, CBP concluded in NY N046672 that the luo han guo liquid at issue has been extensively processed; hence, the remaining materials left unaffected by this processing can be considered impurities. Consequently, both the luo han guo powder of HQ W967214 and NY K84522 and the luo han guo liquid of NY N046672 are classifiable in heading 2938, HTSUS, as glycosides not chemically defined containing impurities from the starting material. In HQ H106785, by contrast, the subject luo han guo liquid contains only 55.90 percent mogrosides as its most predominant chemical constituent, although an additional 37.9 percent of the liquid is comprised by glucose, fructose and sucrose. The presence of a sugar may in some cases be indicative of glycoside content, as the latter by definition includes the former as a constituent part, but it is not necessarily dispositive of such. Hawley’s, supra, at 616 (defining glycosides as “acetals derived from a combination of various hydroxyl compounds with various sugars”). In HQ H106785, it is unclear whether the constituent sugars are incorporated into glycosides. In addition, the mixture contains other non-glycosidic substances.  Therefore, the presence of glycosides combined with other materials renders the liquid a heterogeneous mixture rather than a mixture of glycosides for classification purposes.  As such, it is excluded from Chapter 29 and must be classified elsewhere. We accordingly consider whether the liquid is classifiable in heading 1302, HTSUS, which covers vegetable extracts. EN 13.02 provides, in relevant part, as follows: The heading covers saps and extracts (vegetable products usually obtained by natural exudation or by incision, or extracted by solvents)… The saps and extracts classified here include: Opium, the dried sap of the unripe capsules of the poppy (Papaver somniferum) obtained by incision of, or by extraction from, the stems or seed pods. It is generally in the form of balls or cakes of varying size and shape. However, concentrates of poppy straw containing not less than 50% are excluded from this heading… (11) Quassia amara extract, obtained from the wood of the shrub of the same name (Simaroubaceae family), which grows in South America. Quassin, the principal bitter extract of the wood of