Importer Says US Claims Seeking to Exclude Medical Foods From HTS Heading 3004 Flawed

Importer Nutricia North America told the U.S. Court of Appeals for the Federal Circuit on Sept. 18 that the government's claims in a customs suit on the company's medical foods present "several fundamental flaws." Nutricia argued that, despite the government's claim that the products are barred from Harmonized Tariff Schedule heading 3004 due to Note 1(a) to chapter 30, the medical foods "easily fall within the terms of heading 3004 as 'medicaments ... for therapeutic uses'" (Nutricia North America v. United States, Fed. Cir. # 24-1436).

Nutricia brought the suit to argue that four of its branded medical foods -- MSUD Lophlex LQ, Perflex Infant, Perflex Junior and Ketocal Liquid -- fit under heading 3004 as medicaments. CBP countered that the goods fit under heading 2106 as food preparations. The Court of International Trade sided with the U.S., imposing a 6.4% duty on the medical foods (see 2312050028).

Responding to the importer's opening claims at the Federal Circuit, the U.S. invoked Hippocrates, who said "let thy food be thy medicine and thy medicine be thy food," noting that "even Hippocrates understood the difference between food and medicine." In its reply, Nutricia quipped back that the government "denies what the ancient Greeks recognized: that certain foods are used as medicine."

At the heart of Nutricia's appeal is the medicinal uses of the products, which are used to treat specific "metabolic disorders, neurological diseases, and gastrointestinal disorders." The importer argued that it's "hard to believe that Congress intended life-saving medical products," which even the U.S. admits are "often the sole treatment for rare childhood diseases, to be subject to significant tariffs rather than the duty-free treatment" given to other medicaments.

The government claimed that Note 1(a) to chapter 30 bars the goods' classification under heading 3004, since the note excludes foods, such as "dietetic, diabetic or fortified foods" not intravenously administered from any chapter 30 heading. In response, Nutricia said the U.S. interpretation of this note contains many issues, including CBP's effort to define the term "dietetic" to cover all food-related products.

The importer said the term has a "narrower meaning" as found in the note, and that, per the statutory construction rule of ejusdem generis, the term must be similar to or in the same class as "diabetic" or "fortified" foods and food supplements. All the exemplars in the note are "food products that may be used to complement a person's typical diet for general health and well being," which is distinct from Nutricia's medical foods, the brief said.

The government's definition of "dietetic" also doesn't apply to the medical foods, the importer argued. The U.S. defined dietetic as referring to a food adapted for use as part of a special diet. In contrast, the medical foods aren't adapted for a special diet but are "substances used as the primary method of treating life-threatening disease." They replace a normal diet.

Nutricia added that CBP ignored various other notes that bar classification under heading 2106, including note 1(f) to chapter 21, which excludes goods under heading 3004. As the CAFC has "routinely found, when there are competing notes," the more specific note wins. "As there is no dispute that heading 3004 is more specific than the heading 2106 residual basket provision, the Medical Foods cannot be classified under heading 2106," the brief said.

The government also misread the parenthetical at the end of note 1(a), which requires a product classifiable in section IV to be excluded from Chapter 30, the importer said. Medical foods are plainly not classifiable in section IV -- the section governing foods or beverages -- Nutricia claimed.

The importer lastly defended its alternative subheading, 9817.00.96, which provides for goods for use by handicapped or disabled persons. The government said the heading doesn't cover the medical foods, though this ignores "both the text of that provision and Congress's intent that it applies broadly," the importer said.

While CBP admits that the term "therapeutic" has a narrower definition than found in the subheading, it then tries "vainly to argue that Medical Foods meet that definition when they plainly do not," the brief said.