North American Processing Company v. United States
2001 U.S. App. LEXIS 170, 22 I.T.R.D. (BNA) 1993, 236 F.3d 695 (2001)
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Rule of Law:
When classifying a composite good under the Harmonized Tariff Schedule, an imported product containing both fat and lean muscle is classified as 'meat' if the fat adheres to the lean component, in accordance with the tariff schedule's explanatory notes and persuasive agency definitions.
Facts:
- North American Processing Company imported a shipment of bovine fat trimmings on October 14, 1992.
- The imported merchandise consisted of 65% fat and 35% chemical lean (muscle).
- The fat and lean components were not presented separately; the fat was adhering to the lean muscle within the trimmings.
Procedural Posture:
- The U.S. Customs Service initially classified North American's imported bovine fat trimmings as 'fats' under subheading 1502.00.00.
- Customs later reliquidated the merchandise, reclassifying it as 'meat' under subheading 0202.30.60, which carried a higher duty.
- North American filed a protest with Customs against the reclassification, which was denied.
- North American challenged the classification in the U.S. Court of International Trade (the court of first instance).
- The Court of International Trade sustained Customs' classification, ruling in favor of the United States.
- North American, as the appellant, appealed the decision to the U.S. Court of Appeals for the Federal Circuit, with the United States as the appellee.
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Issue:
Do bovine fat trimmings containing 35% lean and 65% fat qualify for classification as 'meat of bovine animals' under HTSUS subheading 0202.30.60?
Opinions:
Majority - Lourie
Yes, the bovine fat trimmings qualify for classification as 'meat.' Classification is determined first by the terms of the tariff headings and any relevant chapter notes. The Explanatory Notes for Chapter 2 ('meat') specify that fat 'adhering to meat is treated as forming part of the meat.' Because the imported product consists of fat adhering to a lean component, it fits within the description of meat. Furthermore, persuasive USDA regulations define meat as muscle 'with or without the accompanying and overlying fat.' Conversely, the merchandise cannot be classified as 'fats' under subheading 1502.00.00 because undisputed testimony established that the USDA only considers trimmings with less than 12% lean to be 'fat,' and the subject merchandise contained 35% lean. Since the product is classifiable only as meat, there is no need to apply the 'essential character' test under General Rule of Interpretation 3.
Analysis:
This case clarifies the methodology for classifying composite goods for tariff purposes, emphasizing the primacy of the Harmonized Tariff Schedule's specific language and explanatory notes over a simple analysis of the product's majority component. It establishes that persuasive definitions from other government agencies, like the USDA, can be instrumental in determining the common and commercial meaning of tariff terms. The decision reinforces that courts must follow the General Rules of Interpretation sequentially, applying Rule 1 fully before considering subsequent rules like the 'essential character' test in Rule 3. This precedent guides future cases involving mixed-component products by directing classifiers to prioritize textual guidance within the tariff schedule itself.
