Vanetta U.S.A. Inc. v. United States , 2004 CIT 8 ( 2004 )

Slip Op. 04 - 8
UNITED STATES COURT OF INTERNATIONAL TRADE
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VANETTA U.S.A. INCORPORATED, :
Plaintiff, :
Consolidated
v. : Court No. 97-01-00117
UNITED STATES, :
Defendant. :
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Opinion
[Upon classification of animal-feed additives,
judgment for the plaintiff.]
Decided: January 29, 2004
Barnes, Richardson & Colburn (James S. O'Kelly, Alan Goggins
and Kevin J. Sullivan) for the plaintiff.
Peter D. Keisler, Assistant Attorney General; Barbara S.
Williams, Attorney in Charge, International Trade Field Office,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice (Bruce N. Stratvert), for the defendant.
AQUILINO, Judge: Although the parties' cross-motions
for summary judgment herein served to condense their controversy,
the court concluded in slip op. 03-67, 27 CIT (June 25, 2003),
familiarity with which is presumed, that the opinions of their
respective experts on the definitive issue(s) had to be subjected
to cross-examination at a trial. That examination has taken place,
and counsel for both sides have now filed briefs thereon commensu-
rate with their excellent conduct thereof.
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Court No. 97-01-00117 Page 2
I
The motion papers showed the imported merchandise in
question to be menadione sodium bisulfite ("MSB"), menadione sodium
bisulfite complex ("MSBC"), menadione dimethylpyrimidinol bisulfite
("MPB"), or menadione nicotinamide bisulfite ("MNB"), each of which
substance is added to animal feeds. After ingestion, the menadione
in these products is converted into a form of vitamin K2, specifi-
cally K2(20).1 The parties agree that K1 and K2 are vitamins for
purposes of the Harmonized Tariff Schedule of the United States
("HTSUS"), classified under heading 2936, and that the chemical
structures of naturally-occurring vitamin K1 ("phylloquinone") and
vitamin K2 ("menaquinones") are 2-methyl-3-phytyl-1, 4-naphthoqui-
none, and 2-methyl-3-alltrans-polyprenyl-1, 4-naphthoquinone,
respectively. See Slip Op. 03-67, p. 4, 27 CIT at .
The U.S. Customs Service declined to classify plaintiff's
goods under HTSUS heading 2936 on the ground that it does not cover
"synthetic substitutes for vitamins", the essence of which was de-
fined in the motion papers as
a synthesized chemical compound that is not found in
nature but has vitamin activity. This differs from a
1
See Slip Op. 03-67, p. 4, 27 CIT at . As stated at the
trial,
the well-defined role of Vitamin K is to synthesize
proteins that are needed for normal blood coagulation.
In the absence of Vitamin K[,] animals can experience
hemorrhagic events.
Transcript ("Tr."), pp. 13-14. Cf. id. at 20.
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synthetically reproduced vitamin whose structure is found
in nature but has been synthesized from other chemicals.2
Whereupon the defendant rests on HTSUS heading 2914 ("Ketones and
quinones, whether or not with other oxygen function, and their
halogenated, sulfonated, nitrated, or nitrosated derivatives") or
heading 2933 ("Heterocyclic compounds with nitrogen hetero-atom(s)
only; nucleic acids and their salts") as the correct classifica-
tion(s).3
A
The trial was conducted pursuant to a pretrial order,
Schedule C of which set forth the following uncontested facts:
2
Slip Op. 03-67, p. 5, 27 CIT at . The defendant asserts
now as a contested fact that
Customs excluded the imported products from classifi-
cation under Heading 2936 because they are not natural
precursors of the natural vitamins K1 and K2, they are
not naturally occurring vitamins, they are not synthetic
reproductions of naturally occurring vitamins, nor are
they derivatives thereof, they are not provitamins within
the meaning of Heading 2936, and because of the
exclusions in the HTSUS Explanatory Notes for Heading
2936.
Pretrial Order, Schedule C-2, para. 15. See also Defendant United
States' Proposed Findings of Fact and Conclusions of Law
[hereinafter referred to as "Defendant's Post-Trial Brief"], p. 2.
3
See Defendant's Post-Trial Brief, p. 2. On its part, the
plaintiff reiterates that,
[w]hile the parties agree that heading 2914 and 2933
describe the imported merchandise, if such merchandise is
also described under heading 2936, that heading prevails
in accordance with headnote 3 to HTSUS Chapter 29.
Plaintiff's Post-Trial Brief, p. 1 n. 2. See Slip Op. 03-67, pp.
8-9, 27 CIT at .
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1. The principal use of the imported products is as
a component in animal feed premixes, in particular
poultry feed premixes, to provide vitamin K nutrition to
the animal.
2. Vitamin K1 (phylloquinone) and vitamin K2 (me-
naquinones) are not used in animal feeds because they are
too unstable to withstand the feed pellet manufacturing
process and too costly in comparison with the imported
MSB, MSBC, MPB or MNB.
3. Menadione is a highly reactive substance which
must be derivatized before it can be used commercially in
the production of animal feeds.
4. A provitamin is a substance that, after inges-
tion, is converted into a vitamin by the human or animal
body.
5. After ingestion, the menadione in MSB, MSBC,
MPB and MNB is converted into menaquinone-4 in the liver
of the chicken by a natural process.
6. Menadione has been found in the Asplenium La-
ciniatum fern and in the husks of Black and English
walnuts. The chemical structure of naturally occurring
menadione is 2-methyl-1, 4[-]naphthoquinone.
7. Menadione sodium bisulfite was first synthesized
by Moore and Kirchmeyer, which resulted in U.S. Patent
No. 2,367,302, patented January 16, 1945. . . .
8. Menadione Dimethylpyrimidinol Bisulfite was
first synthesized by Nanninga, which resulted in U.S.
Patent No. 3,325,169, patented June 27, 1967. . . .
9. The products imported by plaintiff, MSB, MSBC,
MPB, and MNB[,] are derivatives of menadione.
Given these representations in the pretrial order, the
plaintiff submits that the central issue before the court in this
case is whether menadione is a natural provitamin. See Tr., p. 6.
On its part, the defendant also listed this as the number one issue
but proceeded to propound five additional questions about the
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specific "products in issue".4 All of them focus, of course, on
the meaning of HTSUS heading 2936:
Provitamins and vitamins, natural or reproduced by syn-
thesis (including natural concentrates), derivatives
thereof used primarily as vitamins, and intermixtures of
the foregoing, whether or not in any solvent[.]
(1)
The answer to the first issue is clear on the record
developed herein. As the parties have stipulated, a provitamin is
a substance that is converted within the body of an animal into a
vitamin after ingestion. See, e.g., Tr., pp. 12, 14, 180. Again as
stipulated, menadione has been determined to exist in nature. See,
e.g., Plaintiff's Exhibit 4 and Defendant's Exhibit P (Binder,
Benson & Flath, Eight 1,4-Naphthoquinones from Juglans, 28 Phyto-
chemistry 2799 (1989)); Plaintiff's Exhibit 5 and Defendant's
Exhibit Q (Gupta, Khanna & Sharma, Chemical Components of Asplenium
Laciniatum (1976)); Tr., pp. 16-17, 35, 140-41, 162-63. And, after
ingestion by a chicken, menadione is converted into a form of
vitamin K2, specifically, vitamin K2(20) or menaquinone-4. Compare
Slip Op. 03-67, p. 4, para. 11, 27 CIT at , with Pretrial Order,
4
Compare Pretrial Order, Schedule F-1, with id., Schedule F-
2. Now, the plaintiff asserts that "the Court conducted a trial to
determine whether the imported products are derivatives of a
natural provitamin." Plaintiff's Post-Trial Brief, p. 2.
To be sure, the parties, not the court, essentially conducted
the trial, during which and after which the undersigned has been
concerned with more than just this issue.
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Court No. 97-01-00117 Page 6
Schedule C, para. 5 and Tr. pp. 17-18, 33, 167-69, 187-88. Where-
upon the plaintiff would now limit the
issues for this Court to decide [to] whether menadione is
a "natural" provitamin and whether the imported products
are used primarily as vitamins.
Plaintiff's Post-Trial Brief, pp. 2-3.
The HTSUS, at least chapter 29 thereof, does not define
natural. Its predecessor Tariff Schedules of the United States
("TSUS") did define "natural substances" as
those substances found in nature which comprise whole
plants and herbs, anatomical parts thereof, vegetable
saps, extracts, secretions and other constituents
thereof; whole animals, anatomical parts thereof, glands
or other animal organs, extracts, secretions and other
constituents thereof, and which have not had changes made
in their molecular structure as found in nature[.]
TSUS Schedule 4, Part 3, Headnote 3(a) (1986). And Customs has let
it be known that TSUS definitions
are applied by [it] to the HTSUS, in the absence of
specific definitions, since these definitions are com-
monly accepted and it is clear from the wording of the
HTSUS provisions that the same distinction between
natural and synthetic is intended.
HQ 086658, p. 2 (March 21, 1990). In Schering Corporation v.
United States, 1 CIT 217, 219 (1981), the court pointed out that,
for a substance to be natural within the meaning of the foregoing
TSUS headnote 3(a),
(1) It must be found in nature in a vegetable or animal
source; and (2) it cannot have had changes made in its
molecular structure as found in nature.
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Moreover, absent contrary legislative intent, tariff terms can be
construed in accordance with their common or popular meaning.
E.g., Marubeni America Corp. v. United States, 35 F.3d 530, 534
(Fed.Cir. 1994). And, to
assist it in ascertaining the common meaning of a tariff
term, the court may rely upon its own understanding of
the terms used and it may consult lexicographic and
scientific authorities, dictionaries, and other reliable
information sources.
Brookside Veneers, Ltd. v. United States, 847 F.2d 786, 789
(Fed.Cir. 1988). Here, this court can and does accept "natural" as
the pristine adjectival reference to proven existence in nature5,
notwithstanding the fact that certain lexicographers and parsers of
the English language have sought to expand this seminal usage to
the limits of human experience. See, e.g., Webster's New Interna-
tional Dictionary of the English Language, 2d ed. Unabridged, pp.
1630-31 (1945); Funk & Wagnalls Standard Dictionary of the English
Language, Int'l ed., pp. 845-46 (1963). Whichever approach, the
court finds menadione to be a natural provitamin. See, e.g., Tr.,
p. 189.
(2)
The answer to the second triable issue posited by the
defendant in its schedule F-2 to the pretrial order, namely,
whether the products under consideration are natural vitamins or
natural provitamins, is also clear. They are neither. As far as
this record is concerned, none has been found to exist in nature,
5
Cf. Tr., pp. 12, 13.
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and the court can only find that none would exist but for the
ingenuity of man.
(3)
Defendant's next issue is whether plaintiff's products
are reproductions by synthesis of natural vitamins or natural pro-
vitamins. The court cannot find that they are, nor does the
plaintiff argue otherwise.
(4)
The defendant articulates its remaining "triable issues"
as follows:
4. Whether the products in issue are derivatives, used
primarily as vitamins, of natural vitamins or natural
provitamins.
5. Whether the bisulfite adducts of menodione [sic],
in issue, represent an "added stabilizer," within the
meaning of HTSUS Chapter 29 Note 1(f).
6. Whether the products in issue are intermixtures of:
provitamins and vitamins, natural or reproduced by syn-
thesis, and/or derivatives thereof used primarily as vi-
tamins.6
6
Pretrial Order, Schedule F-2. The HTSUS headnote 1 referred
to provides that the headings of chapter 29 apply, in part, only
to:
(a) Separate chemically defined organic compounds,
whether or not containing impurities;
(b) Mixtures of two or more isomers of the same
organic compound (whether or not containing
impurities), except mixtures of acyclic hydro-
carbon isomers (other than stereoisomers),
whether or not saturated (chapter 27);
(c) The products of headings 2936 to 2939 or the
sugar ethers and sugar esters, and their
(footnote continued)
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Court No. 97-01-00117 Page 9
The answer to number 4 is in the affirmative, given the record
support, supra, for the court's finding that menadione is a natural
provitamin and the parties' above-numbered stipulated fact 9 that
MSB, MSBC, MPB and MNB are derivatives7 of menadione. See Tr., pp.
salts, of heading 2940, or the products of
heading 2941, whether or not chemically de-
fined;
(d) Products mentioned in (a), (b) or (c) above
dissolved in water;
(e) Products mentioned in (a), (b) or (c) above
dissolved in other solvents provided that the
solution constitutes a normal and necessary
method of putting up these products adopted
solely for reasons of safety or for transport
and that the solvent does not render the pro-
duct particularly suitable for specific use
rather than for general use;
(f) The products mentioned in (a), (b), (c), (d)
or (e) above with an added stabilizer nec-
essary for their preservation or transport;
. . ..
7
In answering an interrogatory propounded by the plaintiff
pretrial, the defendant stated that, for
purposes of Heading 2936, a chemical derivative is a
compound containing the same basic structure as its
theoretical parent compound without any significant
portion of the parent compound having been removed. Our
definition is consistent with the definition in HRL
085775, dated February 27, 1990, which states: "a
derivative of a compound results from the modification of
that compound by adding to the moiety or the basic
structure of the compound without loss of that basic
structure."
Plaintiff's Exhibit 15 [Defendant's Response to Plaintiff's First
Interrogatories], p. 3, para. 9; Tr., p. 28. The defendant pointed
in subsequent paragraph 12 of its Response to definitions of
derivatives found in Hackh's Chemical Dictionary, Webster's Third
New International Dictionary, and in the sixth edition of Van
Nostrand's Scientific Encyclopedia. See Tr., pp. 28-29. Cf. id. at
70-71.
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28-29, 66, 104, 173, 196. See also Defendant's Post-Trial Brief,
pp. 4-5, 22-23. Moreover, the evidence shows that the bisulfite
adducts of these products are stabilizers necessary for their
preservation or transport. See, e.g., Tr., pp. 66, 184; Slip Op.
03-67, p. 6, para. 23, 27 CIT at . Finally, the primary if not
only use of these products shown on the record is "to provide
vitamin K nutrition to the animal." Pretrial Order, Schedule C,
para. 1. This occurs within the body of the animal when the sodium
bisulfite stabilizer becomes disassociated (and then excreted),
leaving the provitamin menadione for conversion to vitamin K2(20).
See, e.g., Tr., pp. 25-26, 44, 53, 78-79, 112, 149, 167-68, 178-79.
B
The defendant has admitted that HTSUS heading 2936 covers
"synthetic derivatives of naturally occurring vitamins or pro-
vitamins". Plaintiff's Exhibit 17 [Defendant's Response to Plain-
tiff's First Request for Admission], p. 1, para. 1. Indeed, the
Explanatory Notes to that heading emphasize this point. See De-
fendant's Exhibit N, p. 462, para. (a). Moreover, the HTSUS
chapter 29 subheading note 1 states:
Within any one heading of this chapter, derivatives of a
chemical compound (or group of chemical compounds) are to
be classified in the same subheading as that compound (or
group of compounds) provided that they are not more
specifically covered by any other subheading and that
there is no residual subheading named "Other" in the se-
ries of subheadings concerned.
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The defendant refers the court to that part of the Ex-
planatory Notes to HTSUS heading 2936 which would exclude from its
coverage "[s]ynthetic substitutes for vitamins", listing, among
others,
Vitamin K3: menadione, menaphthone, methylnaphthone or 2-
methyl-1, 4-naphthoquinone; sodium salt of 2-methyl-1, 4-
naphthoquinone bisulphite derivative (heading 29.14);
Menadiol or 1,4-dihydroxy-2-methylnaphthalene (heading
29.07).
Defendant's Exhibit N, p. 468, para. (2)(a) (bold face in orig-
inal).
The plaintiff claims that this exclusion misses the mark
-- as proven in this case. First, at the time of publication in
1964 of the Third Impression of the Brussels Nomenclature,
menadione was considered to be a form of vitamin K and given the
subscript 3. Since then, science has concluded that menadione is
not a vitamin, rather a provitamin for menaquinone-4, a form of
vitamin K2. See Tr., pp. 33-34. Hence, K3 is no longer the prop-
er reference. See id. at 33-34, 57, 120. Second, menadione has
since been discovered in nature. It is not a synthetic substitute
for a vitamin, nor are provitamins such synthetic substitutes.
The courts have consistently pointed out that the HTSUS
Explanatory Notes are not legally binding but that they may be
consulted for guidance and are generally indicative of the proper
interpretation of the various provisions of the Harmonized Tariff
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Court No. 97-01-00117 Page 12
Schedule. See, e.g., Park B. Smith, Ltd. v. United States, 347
F.3d 922, 929 n. 3 (Fed.Cir. 2003); Russell Stadelman & Co. v.
United States, 242 F.3d 1044, 1050 (Fed.Cir. 2001); Carl Zeiss,
Inc. v. United States, 195 F.3d 1375, 1378 n. 1 (Fed.Cir. 1999);
Intercontinental Marble Corp. v. United States, 27 CIT , , 264
F.Supp.2d 1306, 1320 (2003); Toy Biz, Inc. v. United States, 26 CIT
, , 219 F.Supp.2d 1289, 1293-94 (2002); North American
Processing Co. v. United States, 23 CIT 385, 387 n. 5, 56 F.Supp.2d
1174, 1176 n. 5 (1999), aff'd, 236 F.3d 695 (Fed.Cir. 2001).
To consider the above-quoted exclusionary note is to lead
the court to conclude that it is not of moment in this case. To
repeat, menadione is a natural provitamin. See, e.g., Tr., p. 31.
It is not a synthetic substitute for vitamin K, nor are the
bisulfite adducts that simply stabilize the "highly reactive
substance" that is menadione on its intended path to a chicken's
liver. Moreover, the court notes in passing that a subsection of
that exclusionary note (2), namely, "(d) Cysteine, a vitamin B
substitute (heading 29.30)", seems out of place8 in that the other
four lettered subsections, (a), (b), (c) and (e), at least refer to
forms of K, the vitamin at issue herein. In short, all that the
record developed herein supports is a finding that the note(s) at
bar could stand some correction and updating.
8
See Tr., pp. 75, 177-78.
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II
As pointed out in slip opinion 03-67, the court first
construes the language of an HTSUS heading, and any relevant
section or chapter notes, to determine whether merchandise at issue
is classifiable under that heading. Only after determining that it
is classifiable thereunder should the court look to subheadings to
determine the correct classification of the particular good. 27
CIT at , quoting Orlando Food Corp. v. United States, 140 F.3d
1437, 1440 (Fed.Cir. 1998); Schulstad USA, Inc. v. United States,
26 CIT , , 240 F.Supp.2d 1335, 1338 (2002). Three subhead-
ings of heading 2936 have the same setting in the matrix, to wit,
2936.10.00 ("Provitamins, unmixed"), 2936.21.00 ("Vitamins and
their derivatives, unmixed"), and 2936.90.00 ("Other, including
natural concentrates"). Clearly, plaintiff's products are not
vitamins and their derivatives within the purview of subheading
2936.21, nor are they provitamins, unmixed per 2936.10.00. Ergo,
each of them falls within the basket provision, subheading
2936.90.00. Cf. Plaintiff's Post-Trial Brief, p. 17:
. . . [E]ven if heading 2936 does not by its very terms
include synthetic derivatives of provitamins, Subheading
Note 1 directs the classification of such derivatives
therein, specifically, under subheading 2936.90.0000,
HTSUS.
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III
In view of the foregoing, which represents this court's
findings of fact and conclusions of law within the meaning of USCIT
Rule 52(a), the summary "LAW AND ANALYSIS" set forth in HQ 957946
(Dec. 10, 1996) and HQ 950338 (Feb. 16, 1993), which the defendant
offered in evidence as exhibits Y and Z and upon which it now re-
lies9, is not controlling. As the Supreme Court explained in
Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), and reaffirmed
in United States v. Mead Corp., 533 U.S. 218, 228 (2001), the
weight [accorded an administrative ruling] in a particu-
lar case will depend upon the thoroughness evident in its
consideration, the validity of its reasoning, its con-
sistency with earlier and later pronouncements, and all
those factors which give it power to persuade, [even] if
lacking power to control.
Here, defendant's classification of plaintiff's products under
HTSUS chapter 29 (1994) is entitled to deference, but not to the
extent of foreclosure of their most correct classification under
subheading 2936.90.00 in accordance with headnote 3 to that
chapter. Judgment will enter accordingly.
Decided: New York, New York
January 29, 2004
Thomas J. Aquilino, Jr.
Judge
9
See Defendant's Post-Trial Brief, p. 18.