With the rising popularity of dietary supplements–specifically fish oil supplements–we have witnessed increasing scrutiny from governmental agencies, which are challenging the health claims, the legality of claims made on dietary supplement labels and whether any one agency can or should regulate the import of herbal or dietary supplements.
CBP’s treatment of fish oil supplements, specifically the classification or country of origin marking of fish oil supplements, serves as a bellweather for issues facing the importation of a number of other supplements and supplement ingredients.
Bulk and unaltered fish oils have always been classified under Chapter 15 of the Harmonized Tariff Schedule of the United States (HTSUS), which provides, among other things, for animal and vegetable fats and oils. However, the fish oil supplements could also potentially be classified under Chapter 21, as dietary supplements.
In the case of Inabata Specialty Chems. v United States, the Court of International Trade addressed the classification of chondroitin sulfate (CS)–processed bovine cartilage imported in bulk powder form, which was used for therapeutic purposes such as providing relief for osteoarthritis (OA). The court found that the evidence overwhelmingly established that CS was prepared for, bought and sold, and imported for “therapeutic uses”. In other words, regardless of whether substantial evidence existed as to whether use of CS had a measurable, positive effect on people suffering from OA, it was undeniable that CS was being used as a treatment for that particular ailment, rather than for purposes of general health of well being.
In determining the proper classification of the CS, the Inabata Specialty court recognized that tariff classification relies heavily on commercial practice and understandings, not just the indications given on labels, literature, or otherwise. The court reiterated that it was no required to determine how effectively CS functioned as an OA pain reliever, but rather, found it sufficient that the marketplace, among other factors, recognized CS as a therapeutic substance. In Inabata Specialty, the court recognized that the classification of CS depended upon the “use” of that product and thus took into consideration each of the factors to determine what that use is in the United States at, or immediately prior to, the date of importation of CS.
The same argument that was made in Inabata Specialty can be made for fish oil supplements. There are provisions in the tariff for fish oil supplements that, I believe, are more relevant and would allow the fish oil supplements to be imported into the United States, free of duty regardless of the country of origin or manufacture.
The industry and the commercial understanding of consumers that purchase fish oil supplements is clear–use of the fish oil supplements is intended to both treat and prevent various and specific ailments and diseases. There is a body of scientific evidence that supports the fact that fish oil supplements are prepared, bought, and sold for such purposes, and are simply not taken for general health and well being. This is strong evidence to support the marketing and public perception of the efficacy of fish oil supplements and, concurrently, that fish oil supplements are medicaments and should be treated and classified as such. With the importation of fish oil supplements increasing from year to year, the savings in duty upon a successful appeal to Customs or, failing that, the Court of International Trade, would be substantial and may potentially result in an ocean of savings.
There are many other additional herbal and dietary supplements that may be incorrectly classified and subject to Customs duties. Manufacturers and importers would be well served to learn more about the classification and country of origin marking of herbal and dietary supplements and whether such provisions apply to their products.