Inclusion of Ingredients Within Pharmaceutical Appendix Doesn't Make Unlisted Compound Eligible, CBP Says

The listing of several components within the Pharmaceutical Appendix to the Harmonized Tariff Schedule of the United States don't mean a combination of those ingredients are eligible for duty-free classification, CBP said in Sept. 9 ruling. The agency said that the appendix must specify the product in order for it to qualify for the duty-free treatment allowed for such pharmaceuticals. CBP said in HQ H240719 that a milk thistle seed extract, called silymarin powder, is classifiable under 2932.99.61 as "Heterocyclic compounds with oxygen hetero-atom(s) only: Other: Other: Aromatic: Other."

Novel Ingredient Services protested and applied for further review of entries that the company initially classified in subheading 1302.19.91 as “Vegetable saps and extracts; pectic substances, pectinates and pectates; agar-agar and other mucilages and thickeners, whether or not modified, derived from vegetable products: Other: Other.” CBP subsequently liquidated or reliquidated the entries in 2932.99.61, which includes a 6.5 percent duty rate. Novel argued in its protest that the entries should be classified as entered.

CBP disagreed and said "heading 1302, HTSUS, covers only those extracts that are not more specifically described elsewhere." At the same time, "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,'" the agency said. Based on CBP and independent lab testing, by "all indications, the balance of the powder’s constituents can be described as impurities resulting from the manufacturing process." Even if the silymarin powder can be classified in heading 1302, "it is more specifically described by heading 2932 and, in effect, must be classified there," CBP said.

Novel also argued that the product is eligible for "special" duty rate allowed for subheading 2932.99.61. "It is well-established that a product is not entitled to such treatment unless it is actually listed by name in the Pharmaceutical Appendix, irrespective of whether its constituent compounds are included in the Appendix," CBP said. Although the appendix includes "silibinin, silicristin, and silidianin, which are the main constituents of silymarin" none of those "encompasses the whole of silymarin" and there's no "term denoting the combination of these compounds with other naturally-occurring substances of which silymarin is comprised."

The company also said the entries were deemed liquidated in heading 1302 as entered because they weren't liquidated within a year. Three of the entries in question were reliquidated with a rate advance within 90 days from the notice of the original liquidation as allowed, CBP said. That means those entries were actually liquidated within the required time frame, it said. While Novel said it never received notice of extension for liquidation of the other entry, CBP's computer system shows a notice was sent, it said. "Other than Protestant’s assertion in its protest that it did not receive notice of extension, Protestant has not provided any evidence that it did not receive the notice," it said. "Consequently, Protestant has not successfully rebutted the presumption that CBP provided it with the notice of extension for this entry."