Court Opinion

ID: 2753624
Source: CourtListenerOpinion
Date Created: 2014-11-20 17:01:06.670607+00
Date Added: 2024-06-11T10:21:51.392774
License: Public Domain

United States Court of Appeals
      for the Federal Circuit
                ______________________

              ROCHE VITAMINS, INC.,
                 Plaintiff-Appellee,

                           v.

                  UNITED STATES,
                 Defendant-Appellant.
                ______________________

                      2013-1568
                ______________________

   Appeal from the United States Court of International
Trade in No. 04-CV-0175, Judge Richard K. Eaton.
                 ______________________

              Decided: November 20, 2014
                ______________________

    ERIK D. SMITHWEISS, Grunfeld, Desiderio, Lebowitz,
Silverman & Klestadt LLP, of New York, New York,
argued for plaintiff-appellee. With him on the brief were
ROBERT B. SILVERMAN and JOSEPH M. SPRARAGEN.

    PATRICIA M. MCCARTHY, Assistant Director, Commer-
cial Litigation Branch, Civil Division, United States
Department of Justice, of Washington, DC, argued for
defendant-appellant. With her on the brief were STUART
F. DELERY, Assistant Attorney General, and JEANNE E.
DAVIDSON, Director. Of counsel on the brief were EDWARD
N. MAURER and SHERYL A. FRENCH, Office of Assistant
Chief Counsel, International Trade Litigation, United
2                                ROCHE VITAMINS, INC.   v. US

States Customs & Border Protection, of New York, New
York. Of counsel was SAUL DAVIS, Attorney, Appellate
Section, International Trade Litigation, International
Trade Field Office, United States Department of Justice,
of New York, New York.
                 ______________________

    Before PROST, Chief Judge, LOURIE and DYK, Circuit
                         Judges.
LOURIE, Circuit Judge.
     The United States (“the government”) appeals from
the decision of the United States Court of International
Trade reclassifying Roche Vitamin Inc.’s (“Roche”) product
BetaTab 20% (“BetaTab”) as “Provitamins, unmixed”
under subheading 2936.10.00 of the Harmonized Tariff
Schedule of the United States (“HTSUS”). See Roche
Vitamins, Inc. v. United States, 922 F. Supp. 2d 1353 (Ct.
Int’l Trade 2013) (“Opinion”). Because the Court of Inter-
national Trade correctly classified BetaTab under heading
2936, we affirm.
                      BACKGROUND
     Roche imported BetaTab, which is a mixture contain-
ing beta-carotene, antioxidants, gelatin, sucrose, and corn
starch, and can be used as a source of Vitamin A in foods,
beverages, and vitamin products. Beta-carotene crystal-
line makes up twenty percent of the mixture and is an
organic colorant with provitamin A activity. Whether
used as a colorant or provitamin A, beta-carotene must
first be combined with other ingredients.
    The United States Customs and Border Protection
(“Customs”) classified BetaTab under HTSUS subheading
2106.90.97 as “[f]ood preparations not elsewhere specified
or included.” Id. at 1356. Roche filed a protest to the
liquidation of BetaTab, which Customs denied. Id. Roche
 ROCHE VITAMINS, INC.   v. US                             3

then filed suit in the Court of International Trade and
moved for summary judgment.
    Roche argued that BetaTab was classifiable either as
a “coloring matter” under HTSUS subheading 3204.19.35,
and eligible for duty-free entry pursuant to the Pharma-
ceutical Appendix, or, alternatively, as a provitamin
under HTSUS heading 2936. The Court of International
Trade denied Roche’s motion for summary judgment.
Roche Vitamins, Inc. v. United States, 750 F. Supp. 2d
1367, 1382 (Ct. Int’l Trade 2010). The court concluded
that genuine issues of material fact as to the principal use
of BetaTab and the functionality of BetaTab’s ingredients
other than beta-carotene precluded summary judgment.
Id.
    Following trial, the Court of International Trade first
determined that the principal use of BetaTab was as a
source of provitamin A in foods or vitamin products,
rather than as a coloring matter. Opinion at 1360. As
part of the principal use analysis, the court found that
“BetaTab was developed for use in vitamin products and
its actual use during the relevant time period was pre-
dominantly as a source of Provitamin A for vitamin
products.” Id. The court explained that the “high concen-
tration and high bioavailability of beta-carotene in the
merchandise [made] it preferable for use in dietary sup-
plement tablets.” Id. at 1361. The court also noted that
BetaTab was developed specifically “for use in high poten-
cy and anti-oxidative vitamin tablets.” Id.
    The court then considered whether BetaTab was
properly classified under HTSUS heading 2936 as a
provitamin. Citing Note 1 to Chapter 29 and the Explan-
atory Notes to Chapter 29, the court explained that a
product would not properly be classified under heading
2936 “if the quantity of a stabilizing agent added to an
item of [heading 2936] is more than is necessary for
transport or preservation, or the nature of the stabilizing
4                                 ROCHE VITAMINS, INC.   v. US

agent alters the character of the basic product so as to
render it ‘particularly suitable for specific use.’” Id. at
1358–59. The court noted that “[a]dded ingredients that
make a chemical highly capable of a use that is not an
ordinary use of chemicals of the heading . . . will render
the item ‘particularly suitable for specific use rather than
for general use’ and exclude it from classification in the
headings of Chapter 29.” Id. at 1359 (emphasis in origi-
nal).
    Based on the evidence presented at trial, the court
found that a stabilizing matrix of some kind is necessary
for any beta-carotene product, and beta-carotene must be
processed and combined with other ingredients to be
commercially useable as either a provitamin A or color-
ant. Id. at 1362. The court found that Roche’s manufac-
turing process did not change BetaTab’s functionality as a
provitamin or change the character of beta-carotene as a
source of provitamin A. Id. According to the court, there
was “no evidence that the merchandise’s non-beta-
carotene ingredients enhance absorption or bioavailablity
of the beta-carotene in a manner greater than any other
stabilizing matrix.” Id. The court found that although
BetaTab was highly suitable for tableting, BetaTab itself
contained no ingredients “specifically prepared for tablet-
ing.” Id. The court noted that the stabilizers used in
BetaTab were essentially the same as those used to
stabilize other vitamins and other beta-carotene products
that are marketed for use as colorants. Id.
    The court concluded that “[i]t was demonstrated as a
matter of fact at trial that BetaTab’s additional non-beta-
carotene ingredients, added as stabilizers, do not make
[BetaTab] particularly suitable for a specific use.” Id. at
1363. As a result, the court concluded that the addition of
the stabilizing ingredients was permissible under Note 1
to Chapter 29, and did not exclude the merchandise from
classification under heading 2936. Id. at 1364. The court
concluded that, because BetaTab was “elsewhere includ-
 ROCHE VITAMINS, INC.   v. US                             5

ed,” Customs’ classification under heading 2106 was
incorrect and BetaTab was properly classified under 2936.
Id. The court then reasoned that because BetaTab is a
provitamin compound, BetaTab was properly classified
further under subheading 2936.10.00. Id. at 1365.
    The government timely appealed. We have jurisdic-
tion pursuant to 28 U.S.C. § 1295(a)(5).
                         DISCUSSION
    We review questions of law de novo, including the
interpretation of HTSUS terms. Home Depot U.S.A., Inc.
v. United States, 491 F.3d 1334, 1335 (Fed Cir. 2007).
The determination of whether a particular product fits
within that interpretation is a question of fact, reviewable
for clear error. Nat’l Advanced Sys. v. United States, 26
F.3d 1107, 1109 (Fed. Cir. 1994).
     Merchandise imported into the United States is clas-
sified under the HTSUS. The HTSUS scheme is orga-
nized by headings, each of which has one or more
subheadings; the headings set forth general categories of
merchandise, and the subheadings provide a more partic-
ularized segregation of the goods within each category.
The classification of merchandise under the HTSUS is
governed by the principles set forth in the General Rules
of Interpretation (“GRIs”) and the Additional U.S. Rules
of Interpretation. See Orlando Food Corp. v. United
States, 140 F.3d 1437, 1439 (Fed. Cir. 1998). GRI 1
provides that “for legal purposes, classification shall be
determined according to the terms of the headings and
any relative Section or Chapter Notes and, provided such
headings or Notes do not otherwise require, according to
the [remaining GRIs.]” GRI 1. The Chapter Notes are an
integral part of the HTSUS, and have the same legal force
as the text of the headings. Degussa Corp. v. United
States, 508 F.3d 1044, 1047 (Fed. Cir. 2007).
   The relevant section of the HTSUS reads as follows:
6                                  ROCHE VITAMINS, INC.   v. US

    2936 Provitamins and vitamins, natural or re-
    produced by synthesis (including natural concen-
    trates), derivatives thereof used primarily as
    vitamins, and intermixtures of the foregoing,
    whether or not in any solvent:
    2936.10      Provitamins, unmixed
Heading 2936, HTSUS (2002).
     HTSUS Note 1 to Chapter 29 provides: “Except where
the context otherwise requires, the headings of this Chap-
ter apply only to: . . . (f) The products mentioned in (a),
(b), (c), (d) or (e) above with an added stabilizer (including
an anticaking agent) necessary for their preservation or
transport.” HTSUS Ch. 29, n.1 (2002) (emphases added).
    The Explanatory Notes for HTSUS Chapter 29 pro-
vide further insight as to the proper classification of
merchandise under heading 2936. Explanatory Notes are
not legally binding, but may be consulted for guidance
and are generally indicative of the proper interpretation
of a tariff provision. Motorola, Inc. v. United States, 436
F.3d 1357, 1361 (Fed. Cir. 2006). Explanatory Note 29.36
states:
    This heading includes: . . .
    (a) Provitamins and vitamins, whether natural or
        reproduced by synthesis, and derivatives thereof
        used primarily as vitamins. . . .
    (d) The above products diluted in any solvent (e.g.,
        ethyl oleate, propane-1,2-diol, ethanediol, vege-
        table oils).
       The products of this heading may be stabilised
       for the purposes of preservation or transport:
    - by adding anti-oxidants,
    - by adding anti-caking agents (e.g. carbohy-
      drates),
 ROCHE VITAMINS, INC.   v. US                                7

    - by coating with appropriate substances (e.g.
      gelatin, waxes or fats), whether or not plasti-
      cized, or
    - by adsorbing on appropriate substances (e.g., si-
      licic acid),
    provided that the quantity added or the processing
    in no case exceeds that necessary for their preser-
    vation or transport and that the addition or pro-
    cessing does not alter the character of the basic
    product and render it particularly suitable for spe-
    cific use rather than for general use.
Explanatory Notes to the Harmonized Commodity
Description and Coding System 29.36 (3d ed. 2002)
(emphasis added) (“Explanatory Notes”); J.A. 336.
    The government argues that heading 2936 excludes
products that have undergone processing that renders
them suitable for a specific use, and BetaTab is processed
to such a degree that it has been rendered particularly
suitable for use as a nutritional ingredient in vitamin
tablets and capsules. The government contends that
nothing in either the text or the Explanatory Notes to
Chapter 29 supports the Court of International Trade’s
new interpretation that a “specific use” disqualifying
classification under Chapter 29 must necessarily be “a use
that is not an ordinary use of chemicals of the heading.”
E.g., Appellant’s Br. 10.
     Roche responds that BetaTab is properly classified as
a provitamin under heading 2936 and it satisfies the
limitations of Note 1 to Chapter 29 and Explanatory Note
29.36. Roche argues that BetaTab contains no ingredi-
ents that specifically prepare it for use in tablets, and the
evidence at trial demonstrated that BetaTab is suitable
for general use, i.e., for use in tablets, capsules, foods, and
even as a colorant. Roche contends that the added stabi-
lizing agents do not render BetaTab particularly suitable
8                                 ROCHE VITAMINS, INC.   v. US

for a specific use rather than for general use, and BetaTab
must first be combined with tableting excipients to be
formed into a tablet.
     We agree with Roche that BetaTab is properly classi-
fied as a provitamin under heading 2936 because it fulfills
the description in the statutory heading and satisfies the
limitations of both Note 1 to Chapter 29 and Explanatory
Note 29.36. It is a stipulated fact that beta-carotene has
provitamin A activity, J.A. 84, and there is no dispute
regarding the Court of International Trade’s finding that
BetaTab is accurately described as a provitamin of head-
ing 2936, subject to the limitations of Note 1 to Chapter
29 and Explanatory Note 29.36. Thus, because in this
case no interpretation of HTSUS terms is before us, we
review the conclusions of the Court of International Trade
for clear error.
    Note 1(f) to Chapter 29 permits the addition of stabi-
lizer ingredients to BetaTab, as long as the amount of
stabilizer added is not more than necessary for preserva-
tion or transport. In its denial of summary judgment, the
Court of International Trade held that “the stabilizing
ingredients . . . are not in quantities greater than neces-
sary to achieve stabilization.” Roche, 750 F. Supp. 2d at
1381 n.11. The parties did not dispute this point at trial,
Opinion at 1359 n.5, and the government acknowledged
during oral argument that it is not raising the argument
now on appeal, Oral Argument at 7:41, Roche Vitamins,
Inc. v. United States, No. 2013-1568, available at
http://www.cafc.uscourts.gov/oral-argument-recordings/all
/roche-vitamins.html. Thus, we do not need to address
this point.
    Explanatory Note 29.36 expands on Note 1(f) to Chap-
ter 29 and permits the addition of stabilizer ingredients if
the addition or processing does not (1) alter the character
of the basic product and (2) render it particularly suitable
for specific use rather than for general use. The govern-
 ROCHE VITAMINS, INC.   v. US                             9

ment’s expert testified, and the Court of International
Trade found, that Roche’s manufacturing process does not
change BetaTab’s functionality as provitamin A or change
the character of the beta-carotene as provitamin A. J.A.
307; Opinion at 1362. The government does not provide
any evidence to the contrary. We therefore conclude that
the Court of International Trade did not clearly err in
finding that the additional ingredients and processing do
not alter the character of the beta-carotene.
    Nor does the addition of stabilizer ingredients render
the basic product, beta-carotene, particularly suitable for
specific use rather than for general use. Expert testimony
established that the sucrose and gelatin additives func-
tion as stabilizers and do not “specifically prepare
[BetaTab] for tableting.” J.A. 165. In addition, the record
demonstrates that BetaTab has no ingredients added
specifically for tableting, such as tableting excipients.
J.A. 164, 165. The stabilizers used in BetaTab were
essentially the same as those used to stabilize other
vitamins and other beta-carotene products that were
marketed for use as colorants. J.A. 134, 137, 144, 213;
Opinion at 1362. Although the high concentration and
high bioavailability of beta-carotene in BetaTab make it
preferable for use for the manufacture of tablets, no
evidence supports the assertion that the added stabilizers
make BetaTab particularly suitable for tableting. As a
result, the Court of International Trade did not clearly err
in finding that the addition of stabilizer ingredients did
not render BetaTab particularly suitable for the specific
use of tableting.
    Notably, BetaTab also remains suitable for general
use. Expert testimony established that BetaTab is “well-
suited for fortifying foods with provitamin A,” J.A. 235,
and “is suitable for general use as provitamin A,” J.A.
307. BetaTab can thus be used as a source of vitamin A
in foods, beverages, and vitamin products. Consequently,
10                                ROCHE VITAMINS, INC.   v. US

the Court of International Trade did not clearly err in
finding that BetaTab remains suitable for general use.
    The government places significant emphasis on the
Court of International Trade’s conclusion that “[a]dded
ingredients that make a chemical highly capable of a use
that is not an ordinary use of chemicals of the heading . . .
will render the item ‘particularly suitable for specific use
rather than for general use.’” E.g., Appellant’s Br. 10.
Although the court appears to have erred in this overly-
narrow interpretation of Explanatory Note 29.36, the
record demonstrates that the addition of stabilizer ingre-
dients did not render BetaTab particularly suitable for
specific use rather than for general use. Thus, the court
did not clearly err in classifying BetaTab as a provitamin
under heading 2936.
    Customs classified BetaTab under heading 2106,
which covers “[f]ood preparations not elsewhere specified.”
Opinion at 1356 (emphasis added). Because BetaTab is
properly classified under 2936, Customs’ classification
under heading 2106 cannot stand because BetaTab is
elsewhere specified. Assuming that BetaTab is properly
classified under heading 2936, the government does not
dispute that BetaTab is properly further classified as
“Provitamins, unmixed” under subheading 2936.10.00.
                       CONCLUSION
    Because the addition of stabilizer ingredients does not
render BetaTab particularly suitable for specific use
rather than for general use, we conclude that the Court of
International Trade did not err in classifying BetaTab as
“Provitamins, unmixed” under subheading 2936.10.00.
Accordingly, the judgment of the Court of International
Trade is affirmed.
                       AFFIRMED