United States Court of Appeals for the Federal Circuit
05-1477, -1523
BASF CORPORATION,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Cross Appellant.
Frederic D. Van Arman, Jr., Barnes, Richardson & Colburn, of New York, New
York, argued for plaintiff-appellant. With him on the brief was James S. O’Kelly. Of
counsel was Helena D. Sullivan.
Jack S. Rockafellow, Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of New York, New York, argued for defendant-
cross appellant. With him on the brief were Peter D. Keisler, Assistant Attorney
General, David M. Cohen, Director, of Washington, DC, and Barbara S. Williams,
Attorney in Charge, International Trade Field Office, United States Department of
Justice, of New York, New York . Of counsel on the brief was Sheryl S. French, Office
of Assistant Chief Counsel, International Trade Litigation, United States Customs and
Board Protection, of New York, New York.
Erik D. Smithweiss, Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP, of
New York, New York, for amici curiae Roche Vitamins, Inc. et al. With him on the brief
was Joseph M. Spraragen.
Appealed from: United States Court of International Trade
Judge Evan J. Wallach
United States Court of Appeals for the Federal Circuit
05-1477, -1523
BASF CORPORATION,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Cross Appellant.
__________________________
DECIDED: March 29, 2007
__________________________
Before NEWMAN, LOURIE, and RADER, Circuit Judges.
Opinion for the court filed by Circuit Judge NEWMAN. Opinion concurring in part and
dissenting in part filed by Circuit Judge LOURIE.
NEWMAN, Circuit Judge.
In this tariff classification case, both the importer BASF Corporation and the
government appeal the decision of the United States Court of International Trade, holding
that the imported product, brand name Lucarotin7 1%, which contains 1% beta-carotene
and is used as a food colorant, is classified under subheading 3204.19.35 ("Beta-carotene
and other carotene coloring matter") of the Harmonized Tariff Schedule of the United States
("HTSUS"). 1 BASF argues that the product is entitled to duty-free treatment because beta-
carotene is listed on the duty-free Pharmaceutical Appendix of the HTSUS. The Customs
Service had initially classified and liquidated Lucarotin7 1% under subheading 2106.90.99
("Food preparations not elsewhere specified or included: Other"), but at trial and on this
appeal the government proposes that 3204.19.40 ("Other") or 3204.19.50 ("Other") is the
correct classification.
I
The methodology of tariff classification is established by the HTSUS, which consists
of the General Notes, the General Rules of Interpretation (GRI), and the Additional United
States Rules of Interpretation (U.S. GRI), including all section and chapter notes and article
provisions and the Chemical Appendix. The rules are applied in numerical order. See
North American Processing Co. v. United States, 236 F.3d 695, 698 (Fed. Cir. 2001);
Baxter HealthCare Corp. of Puerto Rico v. United States, 182 F.3d 1333, 1337 (Fed. Cir.
1999).
1 BASF Corp. v. United States, 391 F. Supp.2d 1246 (Ct. Int'l Trade June 13,
2005).
05-1477, -1523 2
The HTSUS is a hierarchical classification system which requires application of the
most specific descriptive category in determining the applicable duty. See General Elec.
Co.-Medical Systems Group v. United States, 247 F.3d 1231, 1235 (Fed. Cir. 2001) (the
proper classification of merchandise according to the HTSUS requires looking to the most
specific description and is preferred to headings of a more general description); Marubeni
America Corp. v. United States, 35 F.3d 530, 536 (Fed. Cir. 1994) ("under the General
Rules of Interpretation (GRI) when an article satisfies the requirement of two provisions, it
will be classified under the heading giving a more specific description"). When the name of
the product and its use are included in an eo nomine 2 description, that specific
classification prevails over a more general classification of either name or use.
BASF states that the Court of International Trade erred in denying duty-free
treatment, because beta-carotene is a provitamin and is listed on the Pharmaceutical
Appendix. BASF argues that the purpose of the international agreement concerning duty-
free movement of pharmaceuticals is to facilitate and encourage trade in such products,
and therefore that they should be interpreted to include items such as Lucarotin7 1%.
BASF points out that beta-carotene is the only active component of Lucarotin7 1% and
argues that it is irrelevant, for tariff purposes, whether the beta-carotene is intended for
pharmaceutical use or for some other purpose, stressing the listing of beta-carotene in the
Pharmaceutical Appendix. BASF states that the court improperly incorporated an actual
use requirement into the Pharmaceutical Appendix.
2 An eo nomine classification describes a product by a specific name. See
Nidec Corp. v. United States, 68 F.3d 1333, 1336 (Fed. Cir. 1995).
05-1477, -1523 3
It is not disputed that the only active ingredient of Lucarotin7 1% is its content of
beta-carotene. Nor is it disputed that this product is not intended for vitamin or other
pharmaceutical use, but is intended for use as a food colorant. The beta-carotene provides
a strong red-orange color, and the other ingredients are diluents, stabilizers, and
dispersants. BASF's Technical Bulletin describes Lucarotin7 1% as a food colorant
containing "stabilized beta-carotene dispersed in soybean oil and embedded as minute
droplets in a polysaccharide sugar matrix." The Court of International Trade applied the
International Trade Commission's definition of a pharmaceutical product as "used in the
prevention, diagnosis, alleviation, treatment, or cure of disease in humans or animals,"
Advice Concerning the Addition of Certain Pharmaceutical Products and Chemical
Intermediates to the Pharmaceutical Appendix to the Harmonized Tariff Schedule of the
United States, USITC Pub. 3167, at 3 (April 1999), and found, without dispute, that
"[c]ustomers do not buy Lucarotin7 1% for any purpose other than delivery of a beta-
carotene colorant." Thus the court held that Lucarotin7 1% is not eligible for duty-free
importation despite the listing of beta-carotene on the Pharmaceutical Appendix.
When a product is specifically described or named (eo nomine) in the HTSUS, the
specific classification prevails over any more general listing that also includes the imported
product, as set forth in Rule 3 of the General Rules of Interpretation:
GRI 3(a). The heading which provides the most specific description
shall be preferred to headings providing a more general description.
However, when two or more headings each refer to part of the materials or
substances contained in mixed or composite goods or to part only of the
items in a set put up for retail sale, those headings are to be regarded as
equally specific in relation to those goods, even if one of them gives a more
complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or
made up of different components, and goods put up in sets for retail sale,
05-1477, -1523 4
which cannot be classified by reference to 3(a), shall be classified as if they
consisted of the material or the component which gives them their essential
character, insofar as this criterion is applicable. [Emphases added.]
The Court of International Trade found that "[b]eta-carotene imparts the essential character
to Lucarotin7 1%," and placed Lucarotin7 1% within subheading 3204.19.35 for "Beta-
carotene and other carotenoid coloring matter," citing Explanatory Note (I)(A) to
Subheading 32.04, allowing for diluents. We agree that for the Lucarotin7 1% formulation
of beta-carotene as a food colorant, the eo nomine and specificity rules establish the tariff
classification. The "most specific description" criterion of GRI 3(a) and/or the "essential
character" criterion of GRI 3(b) so require, whether one views the Lucarotin7 product as a
mixture, emulsion, formulation, composition, or preparation. The decision of the Court of
International Trade represents the clearest and most direct application of the HTSUS
provision of a separate tariff category for beta-carotene coloring matter. We affirm that this
classification prevails over the listing of beta-carotene on the Pharmaceutical Appendix. 3
BASF's appeal is denied.
II
On cross-appeal the government states that the correct classification of Lucarotin7
1% is as a beta-carotene "preparation not otherwise specified" under heading 3204.19.40
or 3204.19.50. The government argues that although the 1% of beta-carotene provides the
3 We note the concern of the amici curiae that if this formulation is denied
access to the Pharmaceutical Appendix, other beta-carotene products may be wrongly
classified. That concern is unfounded, for Lucarotin7 1% is unambiguously not imported as
a vitamin product.
05-1477, -1523 5
coloring matter, the other 99% renders the beta-carotene soluble and dispersible in foods
and beverages. Thus the government argues that Lucarotin7 1% is a "preparation" and
should be so classified, whether or not there is a classification specific to use as a colorant.
The Court of International Trade determined that it need not decide whether
Lucarotin7 1% is a "preparation," because the classification of beta-carotene coloring
matter, subheading 3204.19.35, necessarily takes precedence under the General Rules of
Interpretation. Subheading 3204.19.35 plainly is the more specific of the potential
classifications. Lucarotin7 1% does not involve a chemical reaction or series of steps, as in
Lynteq, Inc. v. United States, 976 F.2d 693 (Fed. Cir. 1992) (classifying Cromophyl-L as a
preparation derived from marigold meal, but not as marigold meal itself). The beta-
carotene is the active ingredient of the imported product, and the ingredient that imparts the
color. Even if Lucarotin7 1% were viewed as a "preparation," when a product may be
described by both its use and its name, the use is a "convenient rule of thumb" for weighing
competing considerations. See Len-Ron Mfg. Co. v. United States, 334 F.3d 1304, 1313
(Fed. Cir. 2003) (the "rule of relative specificity" looks to "the provision with requirements
that are more difficult to satisfy and that describe the article with the greatest degree of
accuracy and certainty" (citations omitted)). Thus when there is a specific tariff
classification naming the product and a specific use of a product that has other uses, that
classification prevails over any more general designation such as a non-specific
"preparation." See, e.g., Totes, Inc. v. United States, 69 F.3d 495, 500 (Fed. Cir. 1995)
(classifying the imported goods under the more specific description and not the more
general description, in accord with the greater specificity rule).
05-1477, -1523 6
The Court of International Trade found, without error, that "[b]eta-carotene imparts
the essential character to Lucarotin 1%" in its use as a food colorant, and correctly
classified it under HTSUS 3204.19.35. The government's appeal is denied.
AFFIRMED
05-1477, -1523 7
United States Court of Appeals for the Federal Circuit
05-1477, 05-1523
BASF CORPORATION,
Plaintiff-Appellant,
v.
UNITED STATES,
Defendant-Cross-Appellant.
LOURIE, Circuit Judge, concurring in part and dissenting in part.
I agree with the majority’s conclusion that Lucarotin® 1% (“Lucarotin”) was not
entitled to duty-free treatment under the PA. Lucarotin is not simply beta-carotene; it is
a 1% formulation of beta-carotene. As indicated by its title and the lack of more
expansive terms or contrary statements in the heading, the PA is apparently intended to
comprise substances that are to be used as pharmaceuticals and are substantially pure.
A one percent dispersion of beta-carotene intended for use as a coloring matter does
not meet those criteria, as 99% of the dispersion is not beta-carotene and the intended
use of Lucarotin as coloring matter indicates that it is not intended to be used as a
pharmaceutical.
However, I respectfully dissent from the majority’s conclusion that Lucarotin is
properly classified under 3204.19.35 and is not a “preparation.”
The relevant portions of the HTSUS at issue are as follows:
3204 Synthetic organic coloring matter, whether or not chemically
defined; preparations as specified in note 3 to this chapter based
on synthetic organic coloring matter; synthetic organic products of a
kind used as fluorescent brightening agents or as luminophores,
whether or not chemically defined:
[unnumbered] Synthetic organic coloring matter and preparations based
thereon as specified in note 3 to this chapter:
3204.11 Disperse dyes and preparations based thereon:
* * *
3204.12 Acid dyes, whether or not premetallized, and
preparations based thereon; mordant dyes and
preparations based thereon:
* * *
3204.13 Basic dyes and preparations based thereon:
* * *
3204.14 Direct dyes and preparations based thereon:
* * *
3204.15 Vat dyes (including those usable in that state as
pigments) and preparations based thereon:
* * *
3204.16 Reactive dyes and preparations based thereon:
* * *
3204.17 Pigments and preparations based thereon:
* * *
3204.19 Other, including mixtures of coloring matter of two or
more of the subheadings 3204.11 to 3204.19:
Solvent dyes and preparations based thereon:
* * *
Other:
* * *
3204.19.35 Beta-carotene and other carotenoid
coloring matter
Other:
3204.19.40 Products described in additional U.S.
note 3 to section VI
3204.19.50 Other
3204.20 Synthetic organic products of a kind used as fluorescent
brightening agents:
* * *
3204.90.00 Other
The trial court determined that it need not reach the question whether Lucarotin
is a “preparation” because it found “Beta-carotene . . . coloring matter” in subheading
3204.19.35 to be sufficiently broad to encompass Lucarotin. However, the government
05-1477, 05-1523 -2-
renewed its arguments here that Lucarotin is properly classifiable as a “preparation,”
asserting that the trial court failed to account for the structure of the headings under
3204 and failed to give appropriate weight to the significant differences in the content
and properties of Lucarotin versus pure beta-carotene. More specifically, the
government argues that the use of a semicolon between “Synthetic organic coloring
matter” and “preparations . . . based on synthetic organic coloring matter” in heading
3204 indicates a clear distinction between those two categories. In addition, the
government argues that while Lucarotin includes beta-carotene as a source of color, the
other 99% of its content significantly alters its properties, including making it water-
soluble, in order to make it suitable for use as a food and beverage colorant.
In response, BASF argues that Lucarotin is a mixture and a coloring matter
rather than a preparation, so that the government’s argument about the semicolon in
heading 3204 is irrelevant. BASF also argues that Lucarotin is a mixture in which the
beta-carotene is not altered by the formulation process (i.e., that it does not undergo a
chemical change).
While the trial court did not decide the "preparation" issue, it was raised below,
has been fully briefed, and involves interpretation of the tariff schedule, a matter of law.
Thus, I would decide the matter here and conclude that Lucarotin is a “preparation.”
We addressed the meaning of “preparation” in Orlando Food Corp. v. United
States, 140 F.3d 1437 (Fed. Cir. 1998), and stated that “[i]nherent in the term
‘preparation’ is the notion that the object involved is destined for a specific use. The
relevant definition from the Oxford English Dictionary defines a ‘preparation’ as ‘a
substance specifically prepared, or made up for its appropriate use or application, e.g.
05-1477, 05-1523 -3-
as food or medicine, or in the arts or sciences.’” Id. at 1441 (citation omitted). Thus,
under the definition provided in Orlando, Lucarotin clearly is a “preparation.” The trial
court found, and the parties do not dispute, that Lucarotin is synthetic beta-carotene that
has been dissolved in soybean oil, mixed with a vitamin C derivative and vitamin E to
prevent oxidation, then mixed with carbohydrate fillers to provide hardness and make it
water soluble, and finally mixed with an anti-caking agent. Similarly, the trial court
found, and the parties do not dispute, that Lucarotin is sold for use as a colorant in a
wide variety of foods including beverages and baked goods. Lucarotin has thus been
prepared in a very specific way for a particular use, and thus it is a “preparation.”
The government argues that preparations of beta-carotene coloring matter are
classifiable under 3204.19.40 because of the structure of the headings under 3204
described above and because our decision in Lynteq controls on the issue of how to
classify preparations when not otherwise specifically recited. The government further
argues that because each of the six-digit headings listed under 3204 before 3204.19
recites a particular type of coloring matter “and preparations based thereon,” the lack of
such specific language in subheadings 3204.19 and 3204.19.35 demonstrates that
preparations of beta-carotene coloring matter were intended to be classified under the
3204.19.40 “Other” subheading.
I would conclude that the government is correct in urging that Lucarotin is
properly classifiable under subheading 3204.19.40. Heading 3204 recites “preparations
as specified in note 3 to this chapter based on synthetic organic coloring matter." Thus,
“preparations” are clearly included under 3204.
05-1477, 05-1523 -4-
Next, the six-digit subheadings 3204.11 through 3204.17 all recite a type of
coloring matter “and preparations based thereon.” Subheading 3204.19, on the other
hand, does not specifically recite preparations, except for a subheading entitled "Solvent
dyes and preparations based thereon," which is not relevant here. Preparations of beta-
carotene coloring matter, then, must be classified under the subsequent "Other"
subheading of 3204.19, under either 3204.19.35, 3204.19.40, or 3204.19.50. The
Lucarotin preparation cannot be classified under 3204.19.35, because, as indicated
above, it is not beta-carotene and other carotenoid coloring matter, but is a preparation
thereof. Subheading 3204.19.40, on the other hand, recites “[p]roducts described in
additional U.S. note 3 to section VI.” Additional U.S. note 3 to section VI states that the
term "products described in additional U.S. note 3 to section VI are any product [under
the 3204 Synthetic organic coloring matter heading] not listed in the Chemical Appendix
to the Tariff Schedule.” (emphasis added), and it is uncontested that Lucarotin is not
listed in the Chemical Appendix. Therefore, because Lucarotin is a synthetic organic
coloring matter not listed in the Chemical Appendix, it is properly classified under
3204.19.40 as “Other: Products described in additional U.S. note 3 to section VI." It
should incidentally be noted that subheading 3204.19.40 lacks the special “K”
designation, and thus, for that reason as well, Lucarotin is not eligible for duty-free
treatment under the PA.
The majority relies on the rule of relative specificity. However, I believe that
reliance is misplaced. Heading 3204 specifically distinguishes preparations of coloring
matter from coloring matter alone. Thus, General Rule of Interpretation 1, which
requires “classification . . . be determined according to the terms of the headings,” takes
05-1477, 05-1523 -5-
precedence over General Rule of Interpretation 3, which includes the rule of relative
specificity. Subheading 3204.19.35 only recites beta carotene and other carotenoid
subject matter, which does not include Lucarotin, whereas 3204.19.40 covers
preparations, which does cover Lucarotin. Therefore, I believe those headings require
that a preparation of beta carotene coloring matter be classified under 3204.19.40.
Thus, I would reverse the Court of International Trade’s decision classifying
Lucarotin under heading 3204.19.35 of the HTSUS and classify it under heading
3204.19.40.
05-1477, 05-1523 -6-