NY Customs Rules Texturized Palm Oil is Not Duty Free

July 3, 2013

New York Customs and Border Protection (“NY Customs”) is taking the position that the texturizing of palm oil removes this product from the duty-free provision of subheading 1511.90.00, which provides for palm oil and its fractions, free of duty. As a result of this position, texturized palm oil is being classified under subheading 1517.90.90 as “other preparations of vegetable oils” at the duty rate of 8.8% per kilogram. NY Customs bases this position on New York Ruling NY 097198. In NY 097198 NY Customs held that because the palm oil product had gone through a heat exchanger that texturized the product, added value to it, and transformed the mixture into a preparation commonly used as a fat ingredient in a variety of baked goods, the product was no longer palm oil under Heading 1511. Rather, the processing resulted in a product that is covered by subheading 1517.90.90.

The holding in NY 097198 is at odds with NY Customs Ruling NY 097199 where an almost identical product was classified under 1511.90.00 duty free. Although the product may have been texturized, there was no mention of texturizing in NY 097199.

Within the past year, a New York port issued a Form 29 to an importer of a very similar product (palm oil and stearin), rate advancing the merchandise to the dutiable rate under 1517.90.90 and citing Ruling NY 097198 as the basis for the rate advancement. The product that was the subject of the Form 29 was texturized and went through a scraped surface heat exchanger.

No ruling has been issued by Customs Headquarters that specifically addresses the issue on whether texturizing removes palm oil from the duty-free provision in subheading 1511.90.00. In light of the foregoing, it is possible that in the future, palm oil products may be more heavily scrutinized by Customs to determine whether the products were texturized. Therefore, importers should be alerted to the possibility that, if their palm products are texturized, the products may be excluded from the duty-free provision under 1511.90.00 by Customs.

If you have any questions about this or other customs issues, please contact Steve Spraitzar at steve.spraitzar@tuttlelaw.com or at (415) 288‑0427.

Stephen S. Spraitzar is an attorney with the Law Offices of George R. Tuttle in San Francisco.

 

The information in this article is general in nature, and is not intended to constitute legal advice or to create an attorney-client relationship with respect to any event or occurrence, and may not be considered as such.

 

Copyright © 2013 by Tuttle Law Offices. 

All rights reserved.  Information has been obtained from sources believed to be reliable.  However, because of the possibility of human or mechanical error by our offices or by others, we do not guarantee the accuracy, adequacy, or completeness of any information and are not responsible for any errors, omissions, or for the results obtained from the use of such information.

 

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