CIT Says "Principal Use" of Beta-Carotene Product to Determine if Duty-Free

In Roche Vitamins, Inc. v. U.S.,the Court of International Trade denied Roche’s motion for summary judgment on the classification of an imported product called BetaTab20%, because there was still a question as to the principal use of the product.

Roche had alleged classification was under subheading 3204.19.35 (normally dutiable at 3.1% ad valorem) and eligible for duty-free entry pursuant to the Pharmaceutical Appendix, while U.S. Customs and Border Protection had classified the product under subheading 2106.90.97 at 8% ad valorem plus 28.8 cents per kilogram.

(CBP had also argued that if classification was found to be under Heading 3204, the proper classification would be under subheading 3204.19.50, at a duty rate of 7.8% ad valorem. This tariff number is not eligible for duty-free entry under the Pharmaceutical Appendix.)

Product is a Source of Beta-Carotene for Dietary Supplements

BetaTab20% is a powder that consists of 20% by weight synthetic beta-carotene crystalline, and whose individual particles contain a finely dispersed solution of beta carotene in a cornstarch-coated matrix of gelatin and sucrose. It was developed, designed, and marketed as a source of beta-carotene/provitamin A and antioxidant activity for the purpose of sale to makers of dietary supplements.

Colorants in HTS 3204 Are a Principal Use Provision

Roche emphasized that beta-carotene, as a class of merchandise, is principally used as a colorant. Customs countered that BetaTab20% was within a class or kind of goods principally used as ingredients in dietary supplements.

The CIT stated that it was necessary to determine the principal use of the BetaTab20% and whether it belonged to a class or kind of goods used principally as a colorant. The purpose of principal use provisions in the HTS is to classify particular merchandise according to the ordinary use of such merchandise.

While the CIT noted that factors of general physical characteristics appear to support the fact that BetaTab20% can be used as a colorant, the Court also noted that BetTab20% beadlet form was listed by Roche with its main application as a non-coloring nutrient for dry food preparations. Other factors such as its advertising and marketing also supported use as other than a colorant.

Principal Use Must be Determined in Order to Classify Product

The CIT stated that it was necessary to determine the principal use of the BetaTab20% and whether it belonged to a class or kind of goods used principally as a colorant. While the CIT noted some factors supported the fact that BetaTab20% can be used as a colorant, other factors such as its advertising and marketing supported use as other than a colorant.

Principal Use Factors Not Satisfactorily Applied, Issue Still in Dispute

The CIT stated that Roche had not satisfactorily applied the principal use factors¹, and Customs only addressed these factors in a perfunctory fashion without any supporting records. As a result, the CIT denied Roche’s motion for summary judgment, stating that the material facts as to the principal use analysis remained in dispute.

¹The CIT stated that traditionally, courts undertaking the principal use analysis examine multiple factors that include: (1) the general physical characteristics of the merchandise; (2) the expectation of the ultimate purchasers; (3) the channels of trade in which the merchandise moves, (e.g. the manner in which the merchandise is advertised and displayed); (4) the usage of the merchandise; (5) the economic practicality of so using the import; and (6) the recognition in the trade of this use.

(Slip Op 10-140, dated 12/23/10)