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HQ 230156




April 26, 2004

LIQ-11 RR:CR:DR 230156 RDC

CATEGORY: PROTEST

Customs and Border Protection,
Denver Service Port, Protest Section
24735 E 75th Ave.
Suite 100
Denver, CO 80249
Att: Joe Halbeisen

RE: MaxCell Bioscience, Inc.; Protest number 3307-03-100041; liquidation; liquidation by operation of law; 19 USC § 1504(a); deemed liquidation’ 2202.90.90, HTSUS; aloe vera; dietary supplement; food preparations; non-alcoholic beverage; 2106.90.99, HTSUS.

Dear Sir or Madam:

The above-referenced Protest was forwarded to this office for further review. Our decision follows.

FACTS:

The Protestant, MaxCell Bioscience, Inc., (Maxcell), protests the liquidation of entry number WLD-xxxxx54-9. According to CBP’ Automated Commercial System, (ACS), the protested entry was entered on August 13, 2002. According to the provided CF 7501, entry summary, the goods were entered on August 13, 2002, under subheading 2202.90.90, Harmonized Tariff System of the United States, (HTSUS), as a “non-alcoholic beverage.” The goods are described by Maxcell as “Aloe Gold,” a non-alcoholic beverage mixture consisting of 92 percent water plus aloe vera and other ingredients. According to Maxcell, Aloe Gold is “promoted as a dietary supplement” and “is to be consumed just prior to a meal.” It is imported in 1000ml (34oz.) bottles.

Additionally, the protestant states that the following information is found on the product label: "Suggested Use Instructions: As a dietary supplement, drink one to two ounces before a meal, up to three times a day or as needed. Keep in a cool, dry place before opening. Best served chilled. Shake well. Refrigerate after opening. This product is best if used within 60 days after opening." At entry, the goods were claimed to be non-alcoholic beverages, classified in subheading 2202.90.90, HTSUS. The goods were reclassified after liquidation by Customs in subheading 2106.90.99, HTSUS, as food preparations, not elsewhere specified or included.

According to ACS, on June 27, 2003, Customs, (“CBP”), liquidated the entry as entered. According to a representative from the Denver Service Port, the notice of liquidation is given to the importer on the same day the is liquidated. On August 20, 2003, a CF 29, Notice of Action was sent to the Protestant and advised that “Aloe Gold re-classified under subheading 2106.90.99, HTSUS, as a “food preparation not elsewhere specified or included.” The CF 29 informed the importer that the goods were “dutiable @ 6.4%. Additional duty of $2413.31, plus interest [was] to be assessed.”

On September 5, 2003, CBP re-liquidated the entry assessing the additional duty and interest from September 11, 2002. Subsequently on the same date, CBP re-liquidated the entry to correct the date from which to assess interest to August 27, 2002. On September 25, 2003, Maxcell filed the instant Protest, number 3307-03-100041, contending that the entry was liquidated by operation of law prior to the September 5, 2003, liquidation and that the goods were correctly classified as entered and should not have been re-classified by CBP.

ISSUES:

1. Was the protested entry not liquidated within one year from entry so that it was deemed liquidated as entered per 19 U.S.C. § 1504(a)?

2. Is "Aloe Gold" classified as a beverage or as a food preparation, not elsewhere specified or included?

LAW AND ANALYSIS:

We note initially that the matter protested, the liquidation of the protested entry and the classification of the entered goods, are subject to protest per 19 U.S.C. §§ 1514(a)(5),(2). We also note that the instant Protest was timely filed, i.e., within 90 days of the liquidation of the protested entry (19 USC § 1514(c)(3)(B)). Under 19 USC § 1514(a) “decisions of the Customs Service, including the legality of all orders and findings entering into the same, as to . . . the liquidation or reliquidation of an entry . . . are final unless a protest of that decision is filed within 90 days of the notice of liquidation (19 USC §1514(c)(3)(B)). The subject entry was liquidated on September 5, 2003; this Protest was filed on September 25, 2003.

ISSUE 1. Was the protested entry not liquidated within one year from entry so that it was deemed liquidated as entered per 19 U.S.C. § 1504(a)?

The Protestant argues that, “protest is hereby made of the decision to liquidate this entry on September 5, 2003.” Maxcell contends that the protested entry was liquidated by operation of law per 19 USC § 1504(a) on August 13, 2002. 19 U.S.C. § 1504(a) (2003) provides,

Unless an entry is extended under subsection (b) or suspended as required by statute or court order, except as provided in section 751(a)(3) [19 U.S.C. § 1675(a)(3), administrative review of determinations], an entry of merchandise not liquidated within one year from: (1) the date of entry of such merchandise; . . . shall be deemed liquidated at the rate of duty, value, quantity, and amount of duties asserted at the time of entry by the importer of record.

The protested entry was entered on August 13, 2002, and CBP liquidated the entry as entered on June 27, 2003. Since the protested entry was liquidated “within one year from the date of entry” Maxcell’s claim that the entry was liquidated by operation of law is unfounded.

The protested entry was liquidated a second and third time on September 5, 2003, pursuant to CBP authority per 19 U.S.C. § 1501, which provides that CBP may re-liquidate an entry that has been liquidated or re-liquidated:
within ninety days from the date on which notice of the original liquidation is given or transmitted to the importer, his consignee or agent. Notice of such reliquidation shall be given or transmitted in the manner prescribed with respect to original liquidations under section 500(e) [19 U.S.C. § 1500(e)].

(19 U.S.C. § 1501(2003)). 19 U.S.C. § 1500(e) provides:

[CBP] shall, under rules and regulations prescribed by the Secretary-- . . . . (e) give or transmit, pursuant to an electronic data interchange system, notice of such liquidation to the importer, his consignee, or agent in such form and manner as the Secretary shall by regulation prescribe.

(19 U.S.C. § 1500(e) (2003)). Since the notice of liquidation was given to the importer on June 27, 2003, CBP had ninety days from this date to re-liquidate the entry, i.e., until September 27, 2003. The entry was re-liquidated on September 5, 2003, within the ninety days permitted by 19 U.S.C. § 1501. Therefore, CBP had statutory authority to re-liquidate the entry on September 5, 2003.

ISSUE 2. Is "Aloe Gold" classified as a beverage or as a food preparation, not elsewhere specified or included?

Merchandise is classifiable under the Harmonized Tariff Schedule of the United States, (HTSUS), in accordance with the General Rules of Interpretation, (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied in order.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes, (ENs), may be utilized. The Explanatory Notes, although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUS headings under consideration are either subheading 2106, which provides:

2106 Food preparations not elsewhere specified or included 2106.90 Other:
Other:
Other:
Other:
Other:
2106.90.99 Other
2106.90.99 Other
or heading 2202, HTSUS, which provides:

2202 Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavored, and other nonalcoholic beverages, not including fruit or vegetable juices of heading 2009: 2202.90 Other:
2202.90.90 Other:
2202.90.9010 Nonalcoholic beer
2202.90.9090 Other

The product is described on its container as being a "dietary supplement," with a "suggested use" of one to two ounces, up to three times a day. The protestant has submitted an ingredient breakdown of the product which indicates that the product is composed of approximately 92 percent water, 1 percent spray-dried aloe vera gel powder, 6 percent fructo-oliosaccharide, the remaining 1 percent being stabilizers, flavors and preservatives.

The Protestant raises several arguments to support the claim that Aloe Gold should be classified as a beverage. Maxcell asserts that because the Aloe Gold can be ingested by drinking, it should be classified as a beverage. In support of this contention, the Protestant refers to language in Strohmeyer & Arpe v. United States, 28 CCPA 34, C.A.D. 121 (1940), where the court determined that a beverage is a product which is drinkable in its condition as imported. Maxcell states that since Aloe Gold is drinkable, the argument that it should be classified as a beverage is further supported by language in Cosmos International v. United States, 760 F. Supp. 914, 918 (Ct. Int’l Trade 1991), which indicated that where a product is found to meet the fit for beverage standard under the Tariff Schedule, then chief use is not required. The Protestant further argues that Aloe Gold should be classified as a beverage by application of GRI 3(a) which states that the heading which provides the more specific description of a product is preferable to one which provides a more general description. Maxcell notes that "beverage" is more specific than "other food preparations."

The heading in which the Protestant would classify Aloe Gold, heading 2202, provides for: "Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavored, and other nonalcoholic beverages, not including fruit or vegetable juices of heading 2009." The portion of the heading relevant is that which provides for "other non-alcoholic beverages." The ENs to heading 2202 state that this heading covers non-alcoholic beverages which include inter alia, "[b]everages such as lemonade, orangeade, cola, consisting of ordinary drinking water, sweetened or not, flavored with fruit juices or essences, or compound extracts, to which critic acid or tartaric acid are sometimes added. They are often aerated with carbon dioxide gas, and are generally presented in bottles or other airtight containers." The ENs further state that the heading also covers "[c]ertain other beverages ready for consumption, such as those with a basis of milk and cocoa."

The Protestant is reading the language of Strohmeyer too expansively. CBP has consistently held that all beverages may be potable products in liquid form, but for tariff classification, all potable liquids are not beverages. This proposition was stated in HRL 961909 (March 29, 1999), which discussed the applicability of heading 2202 to a liquid children's vitamin and stated: "It is clear, however, that from a review of the HTSUS and the ENs thereto the terminology "nonalcoholic beverages" for purposes of classification of merchandise under heading 2202 is limited and not intended to include all drinkable liquids not having a certain alcoholic content."

Although Aloe Gold is a drinkable liquid, the manufacturer's "suggested use" recommends drinking only small amounts at any one time. Customs considered similar products in HRL 084981 (June 19, 1990) and HRL 086744 (June 19, 1990), and stated with regard to heading 2202, HTSUS, "It is evident, then, that beverages, as the term is contemplated by this heading, consist of drinkable liquid substances which are marketed, sold, or distributed in multi-ounce containers (e.g., bottles) for consumption in significant (i.e., multi-ounce) and non-measured (e.g., not marketed, sold, or distributed in dosage form or in vials) quantities, and not necessarily consumed for strictly health or nutritional purposes (e.g., colas). Accordingly, food preparations in liquid form, containing, among other things, honey and royal jelly (in whatever proportional amounts), marketed, sold, or distributed in vials or other like containers for consumption in small, measured, or dosage-form quantities, and taken for nutritional or health purposes would, most certainly, not be classified as "beverages" under heading 2202 of the HTSUS."

The Aloe Gold is a liquid sold in a bottle containing 34 fluid ounces. The serving size is 1 ounce. The container describes the product as a dietary supplement. Based upon the recommended consumption rate and the product labeling and description, the Aloe Gold is not eligible for classification in heading 2202, HTSUS. Although the Aloe Gold is not a product of heading 2202, HTSUS, it is intended for human consumption. Heading 2106, HTSUS, provides for food preparations not elsewhere specified or included. Aloe Gold, a non-alcoholic dietary supplement, is classified in subheading 2106.90.99, HTSUS, which provides for food preparations not elsewhere specified or included: other: other.

HOLDING:

1. The protested entry was liquidated within one year from entry so that it was not deemed liquidated as entered per 19 U.S.C. § 1501(a). 2. "Aloe Gold" is classified as a food preparation, in subheading 2106.90.99, HTSUS. Therefore, the Protest should be DENIED in full.

Consistent with the decision set forth above, you are hereby directed to deny the subject protest. In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with this decision must be accomplished prior to mailing the decision. Sixty days from the date of the decision the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Myles B. Harmon, Director

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