CAFC Affirms CIT Decision on Classification of Amides, Chemical 'Derivatives'

The U.S. Court of Appeals for the Federal Circuit agreed with a Court of International Trade decision on the classification of a chemical as a derivative of an amide despite the lack of a transformation process, the CAFC said in a Dec. 21 ruling. CIT previously ruled that the chemical, imported by Chemtall, is not an amide because, according to the Explanatory Notes (ENs), amides include only an amide functional group (see 1605260031). The lawsuit hinged on the question of whether the inclusion of a heteroatom within the chemical structure of acrylamide tertiary butyl sulfonic acid (ATBS) means ATBS cannot be considered an amide.

Chemtall's argument that ATBS qualifies as an amide because an amide may include a "substituted hydrocarbyl" is lacking, the CAFC said. While ATBS includes a substituted hydrocarbyl partly made of sulfur as one component, a substituted hydrocarbyl "must be either alkyl or aryl groups, which contain only hydrogen and carbon atoms" for an amide classification, the government argued. "None of the other secondary sources cited by the parties support Chemtall’s broad definition of an amide," the CAFC said. The suit stems from Chemtall's classification of ATBS as an amide under subheading 2924.19.11, dutiable at 3.7%. CBP and CIT disagreed, classifying it as a derivative of an amide under subheading 2924.19.80, which has a 6.5 percent duty rate.

The government laboratory report that described ATBS as an amide and testimony from the technician that prepared the report didn't include a reliable definition of an amide, the CAFC said. "Although the technician testified -- as a fact witness, not as an expert -- that ATBS fell within what he understood to be the definition of an amide, he added that it was his understanding that any compound containing an amide functional group would be considered an amide," the court said. "That very broad definition is inconsistent with either party’s definition" and the "court does not find the technician’s view as to the meaning of 'amide' to be a reliable indication of the common and commercial usage of the term."

While both sides asserted that the ENs support their arguments, the ENs "do not clearly weigh in favor of either party," it said. Still, the ENs "either support the government’s definition of an amide or, at minimum, are inconsistent with Chemtall’s definition," it said. "We therefore do not find that the explanatory notes provide support for Chemtall." The court also disagreed with Chemtall's argument that if ATBS is classifiable as an amide derivative "it must be considered a derivative of acrylamide" and should be classified under the ten-digit subheading of 2924.19.11.50 for “Other: Amides: Other” with a 3.7 percent duty rate. But that would "subvert the logical structure of the first part of subheading 2924, which applies to 'acyclic amides (including acyclic carbamates) and their derivatives [and] salts thereof,'" the court said.