Archer Daniels Midland Co. v. United States

United States Court of Appeals for the Federal Circuit
2008-1342

ARCHER DANIELS MIDLAND COMPANY,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

Lawrence M. Friedman, Barnes, Richardson & Colburn, of Chicago, Illinois,
argued for plaintiff-appellant. With him on the brief were Carolyn D. Amadon, and
Shama K. Patari.

Amy M. Rubin, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of New York, New York, argued for defendant-
appellee. With her on the brief were Jeanne E. Davidson, Director, and Barbara S.
Williams, Attorney in Charge, International Trade Field Office. Of counsel was Beth C.
Brotman, Attorney, Office of Assistant Chief Counsel, International Trade Litigation,
United States Customs and Border Protection, of New York, New York.

Michael K. Tomenga, Neville Peterson LLP, of Washington, DC, for amicus
curiae Cargill Nutri-Products, Inc. With him on the brief was Casey K. Richter.

Appealed from: United States Court of International Trade

Judge Evan J. Wallach
 United States Court of Appeals for the Federal Circuit

2008-1342

ARCHER DANIELS MIDLAND COMPANY,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

Appeal from the United States Court of International Trade in consolidated case
no. 05-00592, Judge Evan J. Wallach.
___________________________

DECIDED: March 26, 2009
___________________________

Before RADER, GAJARSA, and DYK, Circuit Judges.

Opinion for the court filed by Circuit Judge DYK. Dissenting opinion filed by Circuit
Judge GAJARSA.

DYK, Circuit Judge.

In July 2003, Archer Daniels Midland Company (“ADM”) imported deodorizer

distillate, a residue from the production of edible soybean oil. United States Customs

and Border Protection (“Customs”) classified the deodorizer distillate under Harmonized

Tariff Schedule of the United States (“HTSUS”) subheading 3824.90.28 (“[c]hemical

products and preparations of the chemical or allied industries . . ., not elsewhere

specified or included”), then subject to duty of 7.9% ad valorem. ADM protested,

contending, inter alia, that the product should instead have been classified under

subheading 3825.90 (“[r]esidual products of the chemical or allied industries, not
elsewhere specified or included”), which is duty-free. The Court of International Trade

agreed with Customs and held that the product should be classified as a chemical

product under 3824.90.28. Archer Daniels Midland Co. v. United States, 559 F. Supp.

2d 1347, 1363-64 (Ct. Int’l Trade 2008). Because we agree with ADM that deodorizer

distillate is a “residual product” properly classified under subheading 3825.90, we

reverse and remand.

BACKGROUND

Undesirable flavors and odors can be removed from edible soybean oil through

high-temperature high-vacuum steam distillation. In addition to palatable soybean oil,

an output of the distillation process is deodorizer distillate (“DOD”), a chemically

complex yellowish- to reddish-brown solid with a foul odor. DOD is a commercially

valuable substance primarily used as a feedstock for the recovery of tocopherols (used

to produce natural Vitamin E) and phytosterols (used to produce cholesterol-reducing

nutritional additives). The parties agree that DOD contains mainly organic constituents

and contains at least 5% by weight aromatic or modified aromatic substances. The

chemical composition of DOD is not formally specified, however, and the content of a

particular sample of DOD varies with the source oil and distillation conditions. Unlike

many chemical products, DOD is not listed by name in a specific heading or subheading

of the HTSUS.

ADM imported the DOD at issue in this case. Customs classified ADM’s entries

of DOD under HTSUS subheading 3824.90.28, a “basket” or catchall provision

applicable to “[c]hemical products and preparations of the chemical or allied

2008-1342 2
industries . . ., not elsewhere specified or included: Other . . .: Other.” 1 See United

States Customs & Border Protection, Headquarters Ruling No. 967,288 (Mar. 10, 2005),

available at 2005 WL 2646568.

ADM thereafter filed suit in the Court of International Trade under 28 U.S.C.

§ 2632, seeking reliquidation of the entries and calculation of duties under its proposed

headings. ADM did not dispute that DOD fell under subheading 3824.90.28, but urged

that other headings were more specific and that, under the rule of relative specificity, the

product should be classified under one of the other headings. Primarily, ADM

maintained that DOD is encompassed by heading 3825, a duty-free heading added to

the HTSUS in 2002 applicable to “[r]esidual products of the chemical or allied industries,

not elsewhere specified or included,” as well as various types of “wastes.” 2 ADM

argued that DOD is the unavoidable “residual product” remaining after the distillation of

1
The full subheading provides:
3824: Prepared binders for foundry molds or cores; chemical products
and preparations of the chemical or allied industries (including
those consisting of mixtures of natural products), not elsewhere
specified or included:
90: Other: Mixtures containing 5 percent or more by weight of
one or more aromatic or modified aromatic substances:
28: Other.
(emphases added).
2
The pertinent subheadings (61 and 90) of HTSUS heading 3825 provide:
3825: Residual products of the chemical or allied industries, not
elsewhere specified or included; municipal waste; sewage sludge;
other wastes specified in note 6 to this chapter:
61: Other wastes from the chemical or allied industries: Mainly
containing organic constituents.
90: Other.
(emphasis added).

2008-1342 3
edible soybean oil, and is therefore properly classified under subheading 3825.90

(“Residual products of the chemical or allied industries, not elsewhere specified or

included . . .: Other”). Alternatively, ADM argued that DOD is a duty-free waste product

under subheading 3825.61 (“. . . [o]ther wastes from the chemical or allied industries:

Mainly containing organic constituents”) or a “vegetable pitch” subject to 0.1% duty

under HTSUS heading 3807. 3 For various reasons the government argued that these

alternative headings were inapplicable. The parties filed cross-motions for summary

judgment.

On April 11, 2008, the trade court granted the government’s motion for summary

judgment. Archer Daniels, 559 F. Supp. 2d at 1363-64. It rejected ADM’s argument

that DOD should be classified as a “residual product” under heading 3825. Id. Relying

mainly on the Explanatory Note to subheading 3825.90, which at the time of the entries

listed four specific substances (alkaline iron oxide, residues from the manufacture of

antibiotics, ammoniacal gas liquors, and spent oxide), the court held that 3825.90 was

not a true “basket” provision and that “there is no indication that . . . residual products

[other than those listed in the Explanatory Note] were meant to be included in this

provision.” Id. at 1361. Concluding that “the subheading was intended to be limited

only to the listed substances [in the Explanatory Note],” the court found that “DOD is not

properly classified as a residual product under subheading 3825.90.” Id. Relying on

E.T. Horn Co. v. United States, 945 F.2d 1540, 1543 (Fed. Cir. 1991), the trade court

3
HTSUS heading 3807 provides:
Wood tar; wood tar oils; wood creosote; wood naphtha; vegetable
pitch; brewers’ pitch and similar preparations based on rosin, resin
acids or on vegetable pitch.

2008-1342 4
additionally held that DOD could not be classified as a waste product under subheading

3825.61 because it was not a manufactured product that had become “useless.” Archer

Daniels, 559 F. Supp. 2d at 1359-60. Finally, the court held that DOD did not fall within

the common and commercial meaning of “vegetable pitch” under heading 3807 and that

ADM had not shown a different commercial meaning of the term existed that might

encompass DOD. Id. at 1355. The court therefore granted the government’s motion for

summary judgment and affirmed Customs’s classification of DOD as a chemical product

under HTSUS subheading 3824.90.28.

ADM timely appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(5).

DISCUSSION

The sole issue on appeal is the proper classification of DOD. The relevant facts

are not in dispute, and the proper interpretation of the headings and subheadings of the

HTSUS is a question of law that we review without deference. Drygel, Inc. v. United

States, 541 F.3d 1129, 1133 (Fed. Cir. 2008).

I

We begin by considering whether DOD is prima facie classifiable in heading 3807

as a “vegetable pitch.” Although it is undisputed that DOD is not commercially traded or

known under the name “vegetable pitch,” 4 ADM nevertheless contends that DOD was

within the term “vegetable pitch” as used in heading 3807. “When, as here, ‘a tariff term

is not defined in either the HTSUS or its legislative history, the term’s correct meaning is

4
See Archer Daniels, 559 F. Supp. 2d at 1355 (“[T]here is no indication
from [ADM]’s submitted materials, dictionary definitions or any other readily available
information that DOD is commercially or commonly known, sold or traded as ‘vegetable
pitch.’”).

2008-1342 5
its common or dictionary meaning in the absence of evidence to the contrary.’” Airflow

Tech., Inc. v. United States, 524 F.3d 1287, 1291 (Fed. Cir. 2008) (quoting Russell

Stadelman & Co. v. United States, 242 F.3d 1044,1048 (Fed. Cir. 2001)).

Although dictionaries do not define “vegetable pitch,” the trade court determined,

and we agree, that “vegetable pitch” is simply pitch derived from a vegetable base.

Archer Daniels, 559 F. Supp. 2d at 1354. The Court of International Trade relied on a

the dictionary definition of the term “pitch” as “‘[a]ny of various thick, dark, sticky

substances obtained from the distillation residue of coal tar, wood tar, or petroleum and

used for waterproofing, roofing, caulking, and paving.’” Id. (quoting The American

Heritage Dictionary 1380 (3d ed. 1996)); see also Webster’s Unabridged Dictionary

1476 (Random House 2d ed. 1998) (defining “pitch” as “any of various dark, tenacious,

and viscous substances for caulking and paving, consisting of the residue of the

distillation of coal tar or wood tar”). The trade court considered several additional

dictionary definitions, each of which specifically mentioned as part of the proffered

description that the substance being defined was used for waterproofing, caulking,

varnishes, or similar applications. Archer Daniels, 559 F. Supp. 2d at 1354. The court

concluded that vegetable pitch is defined by such uses, and that DOD is not within the

definition because it is not used for these or similar purposes. Id. at 1355.

On appeal, ADM contends that ordinarily “a use limitation should not be read into

an eo nomine provision unless the name itself inherently suggests a type of use.” Carl

Zeiss, Inc. v. United States, 195 F.3d 1375, 1379 (Fed. Cir. 1999). But as several of the

dictionary definitions indicate, this case presents the unusual situation where the

ordinary meaning of the term “pitch” may inherently suggest a type of use. The parties

2008-1342 6
also disagree as to whether the meaning of the term “pitch” is confined to substances

useful in paving, waterproofing, or the like. While some definitions suggest that in

ordinary usage pitch is defined by such applications, 5 ADM is correct that another

definition merely states that pitch is “chiefly” used in varnishes or waterproofing, 6

suggesting that the term is not in fact defined by its characteristic uses. The dictionary

definitions of the term “pitch” are thus unclear as to whether the ordinary meaning of

that term encompasses only products having such characteristics, and the heading

language is thus susceptible to more than one interpretation.

To resolve this ambiguity the trade court properly turned to the available sources,

including the Explanatory Notes, to clarify the intended scope of the heading. See, e.g.,

Degussa Corp. v. United States, 508 F.3d 1044, 1047 (Fed. Cir. 2007) (noting that

Explanatory Notes, while not legally binding, may be helpful in construing a tariff

provision). Explanatory Note 38.07(c) makes clear that “vegetable pitches” for purposes

of heading 3807 are those pitches that “are used, according to their type, for caulking

ships, waterproof-coating of woven fabrics, impregnating woods, preparing anti-rust

5
E.g., Webster’s Unabridged Dictionary 1476 (Random House 2d ed. 1998)
(defining “pitch” as “any of various dark, tenacious, and viscous substances for caulking
and paving”); American Heritage Dictionary 1380 (3d ed. 1996) (defining “pitch” as
“[a]ny of various thick, dark, sticky substances obtained from the distillation residue of
coal tar, wood tar, or petroleum and used for waterproofing, roofing, caulking, and
paving”).
6
E.g., Webster’s Third New International Dictionary 1724 (Merriam-Webster
2002) (noting that “pitch” is “used chiefly in varnishes and paints and in floor coverings”
(emphasis added)).

2008-1342 7
coatings, as binding materials, etc.” 7 DOD, while sharing some physical characteristics

with vegetable pitch, is not characteristically used or useful for purposes that “resemble

caulking, waterproofing, or other commonly described ‘pitch’” applications. Archer

Daniels, 559 F. Supp. 2d at 1355. Nor does the presence of the term “etc.” following

the uses listed in the Explanatory Note suggest that heading 3807 is broad enough to

encompass DOD. As we have previously held in interpreting the HTSUS, “[i]t is well

settled that when a list of items is followed by a general word or phrase, the rule of

ejusdem generis is used to determine the scope of the general word or phrase.”

Avenues in Leather, Inc. v. United States, 423 F.3d 1326, 1332 (Fed. Cir. 2005). Here,

the principle limits the additional uses included by the general phrase “etc.” to others of

the types listed, such as caulking, waterproofing, and similar functions. Applications of

this type are not among the uses of DOD disclosed by the record. The Court of

7
In full, Explanatory Note 38.07(C) is as follows:
(C) Vegetable pitch.
These are residues of the distillation or other treatment of vegetable
materials. They include:
(1) Wood pitch (wood tar pitch), a residue of the distillation of
wood tar.
(2) Rosin pitch, a residue of the preparation of rosin spirit and
rosin oil by distillation of rosin.
(3) Sulphate pitch, a residue after the distillation of tall oil, etc.
These pitches are usually blackish-brown, reddish-brown or
yellowish-brown. They generally soften with the heat of the hand. They
are used, according to their type, for caulking ships, waterproof-coating of
woven fabrics, impregnating woods, preparing anti-rust coatings, as
binding materials, etc.
World Customs Org., Harmonized Commodity Description & Coding Sys., Explanatory
Notes 679 (3d ed. 2002) (“2002 Explanatory Notes”) (emphases in original).

2008-1342 8
International Trade did not err in concluding that DOD is not classifiable as “vegetable

pitch” under heading 3807.

II

Next, we consider whether DOD is prima facie classifiable in heading 3825 as a

“residual product” of the chemical or allied industries. As the term is undefined in the

HTSUS or the legislative history, we look to the ordinary meaning of “residual products.”

Airflow Tech., 524 F.3d at 1291.

There is no question but that deodorizer distillate falls within the ordinary

meaning of the term “residual products.” The dictionary definition of “residual” is “of,

relating to, or constituting a residue,” “remaining after a part is taken,” “left as a

residuum,” or, particularly pertinent here, “a product or substance remaining over (as at

the end of a chemical process, distillation, extraction).” Webster’s Third New

International Dictionary 1931 (Merriam-Webster 2002); accord Webster’s Unabridged

Dictionary 1638 (Random House 2d ed. 1998). The common thread running through

these definitions is that a “residual” product is a product that remains after something is

taken out. Deodorizer distillate is the residuum of the soybean oil manufacturing

process; it is a chemically undefined solid remaining after deodorized soybean oil is

taken from feedstock oil. Archer Daniels, 559 F. Supp. 2d at 1349 (“DOD is a residue

produced during the process of refining soybean oil . . . .”). As a product consisting of

the unavoidable residue that remains after unrefined soybean oil is distilled, it is within

the ordinary meaning of the term “residual products.”

2008-1342 9
 The government does not seriously dispute that DOD is a “residual product”

within the ordinary meaning of that term. 8 This case does not present any of the difficult

definitional issues potentially raised by the term “residual products.” Instead, the

government offers several legal theories why the term “residual products” in heading

3825 should not be given its ordinary meaning, and instead should be construed

narrowly so as not to encompass DOD.

First, the government maintains that the Court of International Trade correctly

concluded that the only “residual products of the chemical or allied industries” actually

covered by subheading 3825.90 are the four (now five) products expressly listed in the

8
Like ADM, in its brief the government characterizes DOD as the substance
resulting from the “process that removes undesirable flavors and odors from edible oils
by steam stripping.” Appellee’s Br. 2. In addition, as noted by the Court of International
Trade, during the proceedings before that court the government “indicated that it does
not dispute th[e] characterization” of DOD as “an unavoidable residue resulting from
soybean distillation.” Archer Daniels, 559 F. Supp. 2d at 1362 & n.10. Although at oral
argument before this court the government for the first time appeared to dispute that
DOD is a “residue” because its specific content can be altered by manipulating the
soybean oil manufacturing process, it offered no reason why altering the content of a
residue during manufacture would somehow result in something other than a “residual
product.”

2008-1342 10
Explanatory Note to that subheading. 9 In its opinion, issued before our decision in

Airflow Technology, 524 F.3d at 1293, the trade court held that “[t]he proper inquiry

is . . . whether the subheading is limited to the substances listed in the accompanying

Explanatory Notes.” Archer Daniels, 559 F. Supp. 2d at 1361. While the trade court

recognized that the Explanatory Notes are nonbinding, it nevertheless reasoned that

“there is no indication that other residual products were meant to be included in this

9
In full, Explanatory Note 38.25(A)(1)-(4) provides:
(A) RESIDUAL PRODUCTS OF THE CHEMICAL OR ALLIED INDUSTRIES, NOT
ELSEWHERE SPECIFIED OR INCLUDED
(1) Alkaline iron oxide for the purification of gas (in particular, coal-gas)
containing impure ferric oxide, obtained as a by-product from one of the
processes of the extraction of aluminium from bauxite. These by-products
also contain sodium carbonate, silica, etc.
(2) Residues from the manufacture of antibiotics (called “cakes”), with
a very low antibiotic content, suitable for use for the preparation of
compound animal feeds.
(3) Ammoniacal gas liquors, produced as an aqueous portion settling
out from the crude coal tar condensed from coal gas, and also by the
absorption of ammonia in the waters used for washing coal. They are
usually concentrated before transportation. They are brownish liquids and
are used for the manufacture of ammonium salts (particularly ammonium
sulphate) and purified and concentrated aqueous solutions of ammonia
gas.
(4) Spent oxide. After the water-extraction of the greater part of its
ammonia content, coal gas is chemically purified by passing it through a
mass usually composed of bog iron ore or of hydrated iron(III)oxide,
sawdust and calcium sulphate. This mass removes from the gas certain
impurities (hydrogen sulphide, hydrocyanic acid, etc.). When spent, it
contains a mixture of sulphur, Prussian blue, a small quantity of
ammonium salts and other substances, and is known as spent oxide. It is
usually in the form of powder or granules, greenish to brownish in colour,
with a disagreeable odour, and is mainly used as a source of sulphur and
cyanides (particularly Prussian blue) and as a fertiliser or an insecticide.
2002 Explanatory Notes 704 (emphases in original). A fifth item, residues from
processing power plant combustion off-gasses, was added in 2007. See World
Customs Org., Harmonized Commodity Description & Coding Sys., Explanatory Notes
704 (4th ed. 2007).

2008-1342 11
provision” and that the “not elsewhere specified or included” language of the heading

did not create a true basket provision. Id. Because DOD was not listed in the

Explanatory Notes, the court held that it was not classifiable under “residual products” in

3825.90.

Although the government is correct that the Explanatory Note does not contain

expansive language expressly indicating that the four named products are exemplars,

there is also a notable absence of language in the Explanatory Note confining the list to

the enumerated items or suggesting the list is exhaustive. Moreover, even if the

Explanatory Note did contain express language purporting to make it a complete and

exhaustive list of all “residual products of the chemical or allied industries, not elsewhere

specified or included,” it would not serve to exclude DOD from the scope of subheading

3825.90.

We recently considered (and rejected) a similar argument in Airflow Technology,

524 F.3d at 1293. The question in Airflow Technology concerned filter cloth used to

separate dust from air, which Customs classified under subheading 5911.40.00 as

“straining cloth.” Id. at 1289. We held that the term “straining cloth” was limited to cloth

for straining solids from liquids, not solids from gasses. Also, we held that an

Explanatory Note stating that the heading covered cloth used “for gas cleaning or

similar technical applications in industrial dust collecting systems” could not change the

clear meaning of the term “straining cloth” in the heading. Id. at 1292-93.

Although we recognized that the Explanatory Notes may be generally useful as

guides to the scope of unclear HTSUS headings, they “‘are not legally binding.’” Id. at

1293 (quoting Degussa Corp., 508 F.3d at 1047); see also Michael Simon Design, Inc.

2008-1342 12
v. United States, 501 F.3d 1303, 1307 (Fed. Cir. 2007). Thus, “when the language of

the tariff provision is unambiguous and the Explanatory Notes contradictory, we do not

afford the Explanatory Notes any weight.” Airflow Tech., 524 F.3d at 1293 (quotation

and alteration marks omitted).

The reasoning of Airflow Technology is equally applicable here. Because

“residual products” cannot reasonably be construed to be limited to the four or five

products listed in the Explanatory Note, we reject the government’s argument that the

Explanatory Note may be given controlling weight and used to narrow the ordinary

meaning of the term “residual products.” See Airflow Tech., 524 F.3d at 1293; Michael

Simon Design, 501 F.3d at 1307. Subheading 3825.90 is a basket provision not limited

to those four or five products. See Rollerblade, Inc. v. United States, 282 F.3d 1349,

1354 (Fed. Cir. 2002). 10

Next, the government contends that DOD cannot be within the meaning of the

term “residual products” in heading 3825 because it is also classifiable under “chemical

products,” specifically as a “by-product” mentioned in the Explanatory Note to heading

10
The government also urges that the Court of International Trade should
have deferred, under Skidmore v. Swift & Co., 323 U.S. 134 (1944), to Customs’s
determination in Headquarters Ruling No. 967,288 that heading 3825 applies to only
environmentally sensitive or hazardous substances. The trade court correctly rejected
this argument, noting that neither the language of the HTSUS heading nor even the
relevant Explanatory Notes suggest such a limitation. Archer Daniels, 559 F. Supp. 2d
at 1357-59.

2008-1342 13
3824. 11 In the government’s view, the two headings are mutually exclusive and

“cannot . . . encompass any of the same products.” Def.-Appellee’s Br. 24.

This argument is without merit. We have rejected the government’s argument

that “residual products” in heading 3825 is limited to the four (or five) substances listed

in the Explanatory Note to that heading. The government is bereft of any other theory

as to how the language of the two headings could possibly be construed to be mutually

exclusive, short of construing the term “chemical products” in heading 3824 to exclude

“residual products.” But that theory does not help the government at all, since the result

would be to require classification of the products in question under heading 3825 rather

than under heading 3824.

Moreover, there is no indication that headings 3824 and 3825 are in fact mutually

exclusive. The foundation of the government’s argument is that until January 1, 2002,

the “residual products” language now contained in heading 3825 was a part of former

heading 3824. 12 The government contends that “each clause of the former Heading

11
Although heading 3824 itself does not use the term “by-product,” the
parties do not dispute that “chemical products and preparations” includes chemical “by-
products.” Explanatory Note 38.24(B) confirms that the “chemical products” language of
heading 3824 includes products of undefined chemical composition “whether they are
obtained as by-products of the manufacture of other substances . . . or prepared
directly.” 2002 Explanatory Notes 698 (emphasis added). The government contends
that the Court of International Trade correctly viewed “residual products” and “by-
products” as synonymous. See Webster’s Third New International Dictionary 1932
(Merriam-Webster 2002) (offering “by-product” as a definition for “residual product”).
12
The 2001 (Supp. 1) version of HTSUS heading 3824 provided:
3824: Prepared binders for foundry molds or cores; chemical products
and preparations of the chemical or allied industries (including
those consisting of mixtures of natural products), not elsewhere
specified or included; residual products of the chemical or allied
industries, not elsewhere specified or included.

(emphases added).

2008-1342 14
3824 had its own independent intended scope which did not overlap with the scope of

any of the other clauses in that heading.” Def.-Appellee’s Br. 23. Because prior to 2002

DOD was classifiable as a by-product under the “chemical products and preparations”

clause of former heading 3824, the government argues, it cannot also have been within

the “residual products” clause of former heading 3824 that later became current heading

3825.

We are not persuaded by the government’s argument that the “chemical

products” and “residual products” clauses of former heading 3284 were necessarily

mutually exclusive. To the contrary, we have held repeatedly that goods may be prima

facie classifiable under multiple subheadings within a single heading. See, e.g., Len-

Ron Mfg. Co. v. United States, 334 F.3d 1304, 1312-13 (Fed. Cir. 2003); Pillowtex Corp.

v. United States, 171 F.3d 1370, 1375-76 (Fed. Cir. 1999). There is no reason why this

could not have been equally true with regard to former heading 3824.

Nor do we agree that the 2002 separation of the “chemical products” and

“residual products” clauses into headings 3824 and 3825, respectively, indicates that

there can now be no overlap between the two. As the government itself acknowledges,

“in general tariff provisions may overlap.” Def.-Appellee’s Br. 25 n.20. Indeed, the

General Rules of Interpretation (“GRI”), which “govern the classification of imported

goods within the HTSUS,” specifically contemplate that situations will arise under the

tariff schedule where goods may be prima facie described by more than one heading.

Home Depot U.S.A., Inc. v. United States, 491 F.3d 1334, 1336 (Fed. Cir. 2007).

The government directs us to no legislative history supporting its contention that

the provisions are specially intended not to overlap, nor to any indication that the

2008-1342 15
President, in issuing the proclamation which added heading 3825 to the HTSUS,

concluded there could be no overlap between the provisions. See Proclamation No.

7515, 66 Fed. Reg. 66,549, 66,602-03 (Dec. 18, 2001). At bottom, the government

offers no compelling reason why current headings 3824 and 3825 on their face

“cannot . . . encompass any of the same products.” Thus, we decline to read the history

of headings 3824 and 3825 as sufficient to narrow the ordinary meaning of “residual

products” in heading 3825.

In summary, we agree with ADM that DOD, as a product consisting of the

residue remaining after the deodorization of edible soybean oil, is prima facie

classifiable under 3825.90 as a residual product.

III

Given that entries of DOD are prima facie classifiable both under heading 3824

as “chemical products and preparations of the chemical or allied industries . . . not

elsewhere specified or included,” and under heading 3825 as “[r]esidual products of the

chemical or allied industries, not elsewhere specified or included,” the question is which

is the more appropriate classification. To resolve this question we turn to GRI 3(a),

which provides that when a product is prima facie classifiable under more than one

heading, “[t]he heading which provides the most specific description shall be preferred

to headings providing a more general description.” GRI 3(a) (2002); see Home Depot,

491 F.3d at 1336; Bauer Nike Hockey USA, Inc. v. United States, 393 F.3d 1246, 1251-

52 (Fed. Cir. 2004).

In this case, it is clear that the term “residual products” used in heading 3825 is a

more specific term than the general “chemical products” described in heading 3824.

2008-1342 16
See Orlando Food Corp. v. United States, 140 F.3d 1437, 1440 (Fed. Cir. 1998)

(“[W]hen determining which heading is the more specific, and hence the more

appropriate for classification, a court should compare only the language of the headings

and not the language of the subheadings.”). “Chemical products” in heading 3824 is a

broad term. “Residual products” comprise a smaller and more specifically defined

subset of chemical products. The government offered no reason why GRI 3 would not

operate to place DOD in heading 3825 if both headings were applicable.

Thus, heading 3825, as the more specific heading, is preferred under GRI 3(a).

We therefore conclude that the Court of International Trade erred in denying ADM’s

motion for summary judgment and granting summary judgment to the government.

CONCLUSION

Because there are no genuine issues of material fact with respect to whether

DOD is properly classified under HSTUS subheading 3825.90, rather than under

subheading 3824.90.28, we reverse the Court of International Trade’s grant of the

government’s motion for summary judgment and order that on remand summary

judgment be granted to ADM. In light of our disposition of this case, we need not

address ADM’s arguments concerning classification of DOD as “waste” under heading

3825.61.

REVERSED AND REMANDED

COSTS

Each party shall bear its costs.

2008-1342 17
 United States Court of Appeals for the Federal Circuit

2008-1342

ARCHER DANIELS MIDLAND COMPANY,

Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

Appeal from the United States Court of International Trade in consolidated case
no. 05-00592, Judge Evan J. Wallach.

GAJARSA, Circuit Judge, dissenting.

I respectfully dissent from the majority opinion. My principal disagreement with

the majority is that the terms in Heading 3825 are ambiguous. See Majority Op. at 12–

13. This is a typical enigmatic classification case. The product at issue here, DOD, can

be classified as a residual product under Heading 3825 only if it is “not elsewhere

specified or included.” In this case, the majority and ADM note that DOD is classifiable

as a chemical product under Heading 3824, but both also contend that DOD is clearly a

residual product. That causes a conundrum. If DOD is a chemical product that can be

classified under Heading 3824, it is not a residual product that is “not otherwise

specified or included” and should not be classified under Heading 3825. Unfortunately,

it is not so simplistic because Heading 3824 also contains the language of a basket

provision such that DOD is classifiable under Heading 3824 only if it is a chemical

product that is “not elsewhere specified or included.”
 As noted in the majority opinion, the chemical product and residual product

categories relevant here were previously both included under Heading 3824. Heading

3824 was then amended to remove the residual product category and place it under

Heading 3825. We must presume that the amendment intended to remove certain

types of products from Heading 3824 and place them under Heading 3825, but it is

unclear what products were intended to be removed. The question then posed is, what

exactly is a residual product that cannot be classified as a chemical product?

Because of this ambiguity, it is proper and helpful to consult the Explanatory

Notes (“ENs”) accompanying Headings 3824 and 3825 to interpret those provisions—

particularly in light of the uncertainty caused by the overlap in coverage between

Headings 3824 and 3825, the unclear purpose of the amendment, and the fact that the

ENs do not contradict the language of the headings. See Degussa Corp. v. United

States, 508 F.3d 1044, 1047 (Fed. Cir. 2007) (explaining that the ENs “are not legally

binding but may be consulted for guidance and are generally indicative of the proper

interpretation of a tariff provision”); Airflow Tech., Inc. v. United States, 524 F.3d 1287,

1293 (Fed. Cir. 2008) (explaining that ENs that contradict unambiguous language of the

tariff provision will be accorded no weight).

In this case, the ENs are particularly helpful in resolving the ambiguity. The EN

for Heading 3825 lists five items that are “residual products of the chemical or allied

industries, not elsewhere specified or included”: alkaline iron oxide, residues from the

manufacture of antibiotics, ammoniacal gas liquors, spent oxide, and residues from the

processing of power plant combustion off-gases. In contrast, the relevant EN for the

chemical products category under Heading 3824 lists broad categories of

2008-1342 2
merchandise—not specific products. Although I disagree with the Court of International

Trade’s determination that the residual products category of Heading 3825 is limited to

only those products listed in the EN, I note that ADM failed to establish that DOD is

anything like the products listed in that EN. In contrast, the EN accompanying Heading

3824 makes clear that Heading 3824 includes DOD. First, the EN clarifies that by-

products, such as DOD, are included in that heading. Second, the EN makes clear that

Heading 3824 was intended to cover many products because it lists broad categories of

products and includes “[chemical] products whose composition is not chemically

defined,” such as DOD.

It was ADM’s burden to establish that DOD is classifiable under Heading 3825,

and for the reasons stated above, I believe ADM failed to meet its burden. In addition,

both Customs and the Court of International Trade carefully considered this issue and

wrote well-reasoned opinions explaining why DOD is not classifiable under Heading

3825, and I would give Skidmore deference to the portions of those opinions that

comport with the analysis articulated above. Thus, I would affirm the decision of the

Court of International Trade.

2008-1342 3