CIT Erred in Classifying Beta-Carotene Product as Dietary Supplement, Importer Tells CAFC
The Court of International Trade erred when it failed to find that importer BASF's food additive betatene is classified as a natural or synthetically reproduced provitamin under Harmonized Tariff Schedule heading 2936, BASF argued in its opening brief at the U.S. Court of Appeals for the Federal Circuit. The importer said that it clearly established that its product was "prima facie classifiable under heading 2936, meaning that as a matter of law, classification under heading 2106," as a dietary supplement, "cannot stand" (BASF Corporation v. United States, Fed. Cir. # 26-1056).
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The trade court erred by not following General Rule of Interpretation (GRI) 1, since betatene is provided for "eo nomine in heading 2936 and Chapter 29, Note 1(f)," the brief said.
The U.S. described the good at issue, betatene, as a form of beta-carotene that's a "naturally occurring form of provitamin A that gives carrots and pumpkins their distinctive orange color." To prepare the item for sale, the product undergoes microencapsulation, during which the ingredients are turned into "beadlets" that can survive further transformation into tablets. The beadlets are then sold by BASF “for use as a provitamin A source in vitamin and dietary supplement tablets and hard capsules.”
CIT Judge Lisa Wang considered whether the betatene entries could be classified as provitamins under the criteria established in Roche Vitamins v. U.S. and Explanatory Note 29.36, concluding that they can't (see 2509050057). The note requires that, first, the products’ manufacturing process can’t impact the products’ “functionality as provitamin A,” and, second, added stabilizing agents can’t render the beta-carotene “particularly suitable for specific use rather than general use.”
Wang found that the microencapsulation process for betatene makes it "particularly suitable for tableting," stripping the product of its ability to be suitable for beta-carotene's other commercial uses. The judge added that the goods are a "food," since they are meant to be ingested and aren't elsewhere specified in the HTS.
On appeal, BASF first argued that the uncontested facts establish that betatene "falls within the eo nomine scope of heading 2936" as a natural of synthetic provitamin "whether or not in any solvent." To fall under heading 2936, betatene must be a provitamin, "of natural or synthetic origin," either in or not in a solvent and "formulated in a manner consistent with Chapter 29, Note 1." The imports clear all of these conditions, the brief said.
CIT focused on whether the "stabilizing matrix and antioxidants in betatene satisfied Chapter 29, Note 1(f)," which limits the Chapter 29 headings to vitamins and provitamin made with stabilizers "necessary for their preservation of transport." If betatene's "protective matrix is a stabilizer necessary for preserving or transporting the beta-carotone in the Betatene product, then Note 1(f) is satisfied," the brief said. Wang found that all of the elements of heading 2936 are satisfied, including the Note 1(f) requirement, expressly ruling that the “quantities of stabilizing ingredients added to Betatene satisfy the limitations explained in note 1(f) to Chapter 29.”
This should be enough to qualify the goods for heading 2936, the brief said.
However, Wang focused on Roche Vitamins and EN 29.36, finding that the record shows that the stabilizing ingredients in and processing of betatene didn't alter the "character of the beta carotene, as it remained provitamin A," thus failing the note's second condition. BASF argued that Wang erred when she "decoupled the compound condition in EN 29.36 and created two stand-alone conditions."
As a result, the trade court's "legal conclusion that Betatene’s stabilizer ingredients and processing are outside what is permitted under EN 29.36 was erroneous because it applied the wrong test, even though it found that character of the beta carotene had not been altered by either the stabilizing ingredients or the processing," the importer argued.
BASF also discussed Roche Vitamins, which established the "criteria for determining when stabilizing ingredients or processing render provitamins or vitamins particularly suitable for a specific use." In that case, the import at issue was formulated beta-carotene made of beta-carotene dissolved in a solvent then microencapsulated into beadlets. CAFC said the stabilizing ingredients and processing didn't render the beta-carotene a specific use product based on the facts that the ingredients were used to stabilize the beta-carotene for preservation and transport and "none of the ingredients were tableting excipients," which are needed for making vitamin tablets.
The importer argued that, like in Roche Vitamins, "the ingredients and processing in Betatene were used to stabilize the beta carotene for preservation and transport, and that no tableting excipients or other tablet ingredients were present in Betatene." However, Wang "disregarded" CAFC's criteria and instead found that betatene was distinguishable from the goods at issue in Roche Vitamins, since betatene was "microencapsulated."
The trade court erred in deciding not to follow the "controlling authority of Roche Vitamins" by not reviewing whether "the ingredients were present as tableting ingredients rather than to stabilize the beta carotene in Betatene," and the court committed "clear error on the issue of microencapsulation."
Distinguishing these two products "based on a mistaken belief that betatene was microencapsulated while the other was not, does not support the CIT’s decision to avoid the criteria adopted by the Federal Circuit for determining specific use under EN 29.36 for formulated beta carotene products," the brief said.