Courts Rule on Dietary Supplements, Mistake of Fact
CIT rules that market, not FDA or courts, recognizes a dietary supplement as therapeutic. In Inabata Specialty Chemicals v. U.S., the Court of International Trade (CIT) agreed with the importer and ruled that chondroitin sulfate (CS) entered in bulk powder form and packaged for retail sale as a dietary supplement according to FDA requirements, is classified under HTS 3001.90.0000 (duty-free) as other human or animal substances prepared for therapeutic or prophylactic uses, not elsewhere specified or included.
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(The CIT explains that CS is often combined with glucosamine to provide pain relief for osteoarthritis (OA) sufferers.)
The focus of this dispute is whether for tariff purposes, CS is prepared for a therapeutic use, in this case, pain relief. Although U.S. Customs and Border Protection (CBP) argues that CS is not classifiable under HTS 3001.90.0000 because its efficacy in treating OA pain has not been proven to the degree necessary for FDA to allow it to be marketed as a drug, the CIT rules that for tariff purposes neither the court nor the FDA are required to determine how effective CS is as an OA pain reliever; it is enough that the marketplace recognizes CS as a therapeutic substance. (CIT Slip Op. 05-48, dated 04/13/05, available at http://www.cit.uscourts.gov/slip_op/Slip_op05/05-48.pdf)
CIT rules that wrong HTS classification is mistake of law precluding reliquidation. In Brother International Corp. v. U.S., the CIT ruled that a customs broker's misclassification of certain multifunction centers (MFCs) amounts to a mistake of law rather than a mistake of fact that would be eligible for reliquidation under 19 USC 1520(c)(1).
The CIT explains that the plaintiff's customs broker used General Rule of Interpretation (GRI) 3(c) to determine that the MFCs should be classified under 9009.12.0000 as electrostatic photocopying apparatus operating by reproducing the original image via an intermediate onto the copy (indirect process) (3.7%) as this was the HTS number which occurred last in numerical order among tariff numbers equally meriting consideration.
Plaintiff later learned that as printing function dictates an MFC's classification, its entries were properly classified under HTS 8471.60.6200 as other laser printer units (duty-free), and requested that Customs reliquidate the earlier entries under this provision.
Customs denied plaintiff's request because the broker's erroneous classification constituted a mistake of law rather than a mistake of fact. (Slip Op. 05-53, dated 04/29/05, available at http://www.cit.uscourts.gov/slip_op/Slip_op05/05-53.pdf)
i.e. in this case, an MFC is a multi-function machine in one common housing that can perform printing, copying, scanning, fax, and PC fax functions
Under the Miscellaneous Trade and Technical Corrections Act of 2004 (Public Law (P.L. 108-429), 19 USC 1520(c) was repealed, effective for goods entered, or withdrawn from warehouse, for consumption on or after December 18, 2004. Issues involving clerical errors, mistakes of fact, or other inadvertences previously dealt with under 19 USC 1520(c) are instead covered under 19 USC 1514. It should be noted that the protest filing/amendment period for 19 USC 1514 has been extended to 180 days (from 90 days); however, this is less than the one year period previously allotted under 19 USC 1520(c).