BR&C Wins Appeal on Classification of Soybean Residue
March 27, 2009
On March 26, 2009, the Court of Appeals for the Federal Circuit (“CAFC”) decided Archer Daniels v. United States, and determined that deodorizer distillate is properly classified as a residual product of the chemical and allied industries under subheading 3825.90.0000 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The Court reiterated its holding from Airflow Tech v. United States, that when Explanatory Notes are contradictory to clear HTSUS language, no weight will be afforded to the explanatory notes.
Deodorizer distillate (“DOD”) is residue left over from the manufacture of edible soybean oil. The government argued that DOD should be classified under subheading 3824.90.2800 as chemical products and preparations of the chemical and allied industries not elsewhere specified or included. The government primarily stated that DOD was not classifiable under heading 3825 because that heading was limited to include only those residual products listed in the Explanatory Notes. The government stated that reliance on the Explanatory Notes was necessary to determine the heading’s scope. The Explanatory Notes listed five substances, but did not contain any qualifying language. The government construed the list of substances to be exhaustive and did not include DOD. It concluded that DOD had to be specifically enumerated within the Explanatory Notes or be encompassed by the substances listed to be classified under Heading 3825.
ADM argued, and the CAFC, agreed that though the Explanatory Notes “may be generally useful guides to the scope of unclear HTSUS headings, they are not legally binding.” The Court found that the tariff language of Heading 3825 was not ambiguous, therefore the contradictory language of the Heading’s Explanatory Notes could not be given controlling weight. The Court stated that DOD falls within the plain meaning of the terms residual product, and held that DOD is properly classified under subheading 3825.90.0000.