976 F.2d 693 (Fed. Cir. 1992), 92-1064, Lynteq, Inc. v. United States

Docket Nº:92-1064.
Citation:976 F.2d 693
Party Name:LYNTEQ, INC., Plaintiff-Appellee, v. The UNITED STATES, Defendant-Appellant.
Case Date:September 23, 1992
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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Page 693

976 F.2d 693 (Fed. Cir. 1992)

LYNTEQ, INC., Plaintiff-Appellee,

v.

The UNITED STATES, Defendant-Appellant.

No. 92-1064.

United States Court of Appeals, Federal Circuit

September 23, 1992

Rehearing Denied Oct. 28, 1992.

Page 694

Paul A. Lenzini, Wilkinson, Barker, Knauer & Quinn, Washington, D.C., argued, for plaintiff-appellee.

Carla Garcia-Benitez, Commercial Litigation Branch, Dept. of Justice, New York City, argued, for defendant-appellant. With her on the brief were Stuart M. Gerson, Asst. Atty. Gen., David M. Cohen, Director and Joseph I. Liebman, Atty. in Charge, Intern. Trade Field Office.

Patrick D. Gill, Rode & Qualey, New York City, was on the brief, for amicus curiae, Kemin Industries, Inc., of counsel was Eleanore Kelly-Kobayashi.

Before MICHEL, LOURIE, and CLEVENGER, Circuit Judges.

LOURIE, Circuit Judge.

The United States appeals from the judgment of the United States Court of International Trade granting summary judgment in favor of Lynteq, Inc., on Lynteq's challenge of a classification decision by the United States Customs Service. Lynteq, Inc. v. United States, 768 F.Supp. 350 (Ct. Int'l Trade 1991). The trial court held that the imported merchandise is a preparation of marigold meal that is properly classified under subheading 3203.00.10, Harmonized Tariff Schedules of the United States (HTSUS), and is thus entitled to duty-free treatment. We reverse and hold that the imported merchandise is properly classified under subheading 3203.00.50, HTSUS, dutiable at 3.1% ad valorem.

BACKGROUND

The merchandise at issue, known by its trade name "Cromophyl-L," was imported into the United States and sold by Lynteq to poultry feedmills for incorporation into poultry feed for the purpose of enhancing the yellow color of chicken skin and egg yolks. Cromophyl-L is an aqueous extract of the dried ground flower petals of Aztec marigold flowers which are a naturally rich source of xanthophyll pigment, an active coloring agent. 1 The petals are pressed, dried, and ground to obtain marigold meal. The marigold meal then undergoes a solvent extraction process that separates xanthophyll esters from the meal and produces marigold oleoresin, a semi-liquid substance comprised of xanthophyll esters, vegetable fats, and other oil-soluble materials. The solvent extraction process does not change the chemical structure of the xanthophyll esters.

Chromophyl-L is derived from the marigold oleoresin through a process known as "saponification." The saponification process releases the xanthophyll free alcohol by separating it from the fatty acids to

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which it was originally attached. The liberated xanthophyll can then be formulated into a stable, water-based solution, known commercially as Cromophyl-L. Although marigold meal may be used as a color-enhancing poultry feed additive, Cromophyl-L is preferred because it is, among other things, more stable than marigold meal, easier to incorporate into the poultry feed, and more readily absorbed by the poultry.

The applicable provisions of the Harmonized Tariff Schedule of the United States are as follows:

Heading Coloring matter of vegetable or animal origin (including

3203.00 dyeing extracts but excluding animal black), whether or

not chemically defined; preparations as specified in

note 3 to this chapter based on coloring matter of

vegetable or animal origin:

Subheading Annato, archil, cochineal, cudbear, litmus, logwood and

3203.00.10 marigold meal........................................... Free

Subheading Other .................................................... 3.1%

3203.00.50


(codified at 19 U.S.C. § 1202 (1988)) (emphasis added).

On July 7, 1989, the imported merchandise was liquidated by Customs at a duty of 3.1% ad valorem under subheading 3203.00.50, HTSUS, a residual provision covering "other" coloring matter of vegetable or animal origin. Lynteq filed a timely protest under 19 U.S.C. § 1514 (1988) challenging Customs' classification decision. Upon denial of the protest, Lynteq commenced an action before the Court of International Trade pursuant to 28 U.S.C. § 2631(a) (1988). Lynteq alleged that the imported merchandise was improperly classified by Customs under subheading 3203.00.50 because the merchandise is specifically provided for under subheading 3203.00.10, HTSUS, as a form of one of the enumerated coloring matters of vegetable or animal origin, viz., marigold meal, and thus should have been liquidated free of duty. Alternatively, Lynteq claimed that the merchandise is properly classified under subheading 3203.00.10 as a "preparation" based on marigold meal.

Before the trial court, Lynteq and the Government agreed that there were no genuine issues of material fact in dispute and the parties filed cross motions for summary judgment. The trial court rejected Lynteq's contention that Cromophyl-L was merely a refined form of the enumerated colorant marigold meal. The court determined that in deriving Cromophyl-L from the marigold meal, the raw material "undergoes a substantial chemical transformation which significantly alters the character as well as the molecular structure of the resulting product from that of marigold meal." 768 F.Supp. at 353. Further, the court found that Cromophyl-L "possesses qualities so altogether different from those present in the raw material from which it is derived, that it can no longer be deemed to be marigold meal for classification purposes." Id. at 353.

However, the trial...

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