| OTO No. | 672 | Classification | MOF-3 |
|---|---|---|---|
| Date of Acceptance | November 12, 2004 | Ministry/Agency Receiving Complaint | Cabinet Office |
| Responsible Ministries | Ministry of Finance | Related Laws | Customs Law |
| Complainant | Domestic firm | Exporting Countries | USA |
| Subject | Customs tariff classification of immatures (poorly ripened brown rice) | ||
| Description of Complaint |
1.Immatures (immature grains, etc. that made it through a sifter of 1.7 mm aperture) are brown rice sifted at a rice milling plant to the extent that brown rice after further sifting will not be worth milling. In other words, immatures are shipped as byproducts because no suitable rice milling technique is available. Immatures are treated as "Husked (brown) rice" of 1006.20 under 10.06 "Rice," though there are now no clear classification standards under the customs tariff classification. 2. However, such immatures should originally be classified in 2302.20 "Bran, sharps and other residues (whether or not in the form of pellets, derived from the sifting, milling or other working of cereals or of leguminous plants) of rice" (i.e. poorly ripened brown rice) due to the following reasons. (1) The Statistical Survey on Crops clearly specifies that the yield of paddy rice in Japan shall be the weight of brown rice with the quality of the third or higher class under the Agricultural Crop Inspection Standards, which can be supplied as table rice, and that it is in principle the weight of brown rice sifted by sifter of 1.7 mm. (2) The above-mentioned immatures cannot be supplied as table rice because they will become glue-like or porridge if they are milled and boiled. In addition, about 50% of milled immatures become sharps and can be used only as feed or materials for oil milling. (3) As a result of the complainant's inquiry to the office in charge of customs tariff in the United States (a WTO Member), the complainant received the reply that immatures should be classified in 2302.20. 3. Consequently, the complainant requests that (1) the ministry prepares and publishes clear classification standards for the customs tariff classification of "Husked (brown) rice" under 1006.20 and "poorly ripened brown rice" under 2302.20 and (2) the ministry confirms that the above-mentioned immatures (immature grains, etc. that made it through a sifter of 1.7 mm aperture) are classified in 2302.20. (Opinion No. 2 on December 24, 2004) 1. Our complaint is regarding the unclear provision of classification standards for "immatures" under the HS Convention, and we must note that this leads to too rough interpretation that immature grains are classified in the same heading as mature grains. Therefore, we request the ministry promptly prepare and publish clear classification standards for "immatures" under the HS Convention. 2. The Ministry of Finance, in its reply, states that "immatures" are classified in the same heading as mature grains based on the content described in the Annex and Explanatory Notes to the HS Convention only for the reason that Japan has adopted the HS Convention, and concludes that the same tariff rate shall be thereby applied to mature and immature grains. However, the ministry has not given any explanation on (1) a reply by the Ministry of Agriculture, Forestry and Fisheries to an inquiry for the "gist of the 1.7 mm standard in the Statistics on Crops" and (2) a reply to an inquiry to the U.S. Customs Service for the "reasons for U.S. Customs Service's classifying immatures in 2302.20," in the process of the ministry's drawing this conclusion. We thus request the disclosure of explanation on these two points. 3. We regard it as a measure equivalent to import ban to apply the same tariff rate to products, of which purpose of use (mature grains = for table rice: immatures = for materials for feed and oil milling) and economic value (mature grains = \141/kg: immatures = \40/kg) are largely different. Therefore, we request the ministry adopt more specific standards for the purpose of use and economic value in the customs tariff classification and make a review so as to prevent the application of tariff rates equivalent to import ban. (Opinion No. 3 on March 23, 2005) 1. Clarification of customs tariff classification standards (1) The Ministry of Finance stated: Immature grains are classified in the same heading as mature grains if grains are present because Note 1(a) of Chapter 10 of the Nomenclature stipulates "The products specified in the headings of this Chapter are to be classified in those headings only if grains are present, whether or not in the ear or on the stalk." However, "poorly ripened brown rice of U.S. origin," which we plan to import, are not grains obtained from cereals cut before maturity but "immatures" (immature grains, etc. that made it through a sifter of 1.7 mm aperture) resulting from sifting of brown rice at a rice milling plant, i.e. poorly ripened brown rice. This is a byproduct of rice milling and is different from immature grains mentioned in the above-mentioned note. (2) The Ministry of Finance stated: "Immatures" (immature grains, etc. that made it through a sifter of 1.7 mm aperture) are a mixture of husked brown rice, which contains grains, and its fragments, and they are classified in 10.06 (1006.20) in which mature grains are classified. Consequently, it is obvious that immature grains are classified in the same heading as mature grains under the HS classification if grains are present, and thus, there is no need to venture to create classification standards for "immatures." However, 23.02 of the Nomenclature stipulates: "This heading covers: ... (B) Residues from the sifting or other working of cereal grains. Shifting residues, obtained during pre-milling operations, consist essentially of: - grains of the basic cereal, smaller, mis-shapen, broken or crumbled; ... " Therefore, there seems room for classifying immatures resulting from sifting of brown rice at a rice milling plant, including those containing cereal grains, in 23.02. Consequently, it cannot be immediately said that "immatures" are classified in 10.06 (1006.20) in which mature grains are classified. As long as "immatures" in question result from sifting of brown rice at a rice milling plant, there is room for them to fall into residues from the sifting or other working of cereal grains under 23.02. Therefore, it is hard to accept the Ministry of Finance's assertion that "it is obvious that immature grains are classified in the same heading as mature grains under the HS classification if grains are present. (3) The necessity of creating classification standards for "immatures" is recognizable. 2. Customs tariff classification of "poorly ripened brown rice of U.S. origin," which we plan to import (1) The Ministry of Finance stated: In the Ministry of Agriculture, Forestry and Fisheries' Statistics on Crops, a survey has been conducted on brown rice, of which grains are 1.7 mm or thicker and of which quality is of the third or higher class under the Agricultural Crop Inspection Standards, as a standard for the yield of brown rice, but the survey is designed to gain an understanding of the amount of rice that can be supplied as table rice nationwide. On the other hand, contrary to the Statistics on Crops, brown rice under the HS Convention includes "immatures (poorly ripened brown rice)" subject to the complaint, and it is thus not appropriate to argue that "being immatures" can be a ground for being classified in 2302.20 (Bran, sharps and other residues). As mentioned above, however, part of immatures may be classified in Chapter 23, and it is therefore necessary to consider what immatures are classified in Chapter 10 or in Chapter 23. Seen from the viewpoint of whether immatures can be supplied as table rice in consideration of their characteristics in determining this classification, the Ministry of Agriculture, Forestry and Fisheries' Statistics on Crops stipulate that the quality of cereal grains is lower than that of "rice that can be supplied as table rice" if cereal grains are of 1.7mm or smaller. The grains of imported products in question are of 1.7 mm or smaller and the products thus should be classified in Chapter 23 not in Chapter 10. (2) It is obvious that "poorly ripened brown rice of U.S. origin" that the complainant plans to import does not fall into "Husked (brown) rice" classified in HS1006.20, due to its developmental process and descriptions. 3. Conclusion The Ministry of Finance's opinion that "there is no need to venture to create classification standards for immatures" shows the ministry's attitude of forcibly applying the current law to "residues" resulting from the ordinary sifting process. We must say that the ministry intends to force a wrong extended interpretation. (1) The ministry should prepare and publish specific customs tariff classification standards for "immatures" with high transparency in thorough consideration of the purpose of use and economic value. (2) The ministry should conduct appropriate customs tariff classification since "poorly ripened brown rice of U.S. origin," which we plan to import, is considered as "residues" stipulated in the Explanation Note to HS2302.20. | ||
| Details of Measures |
1. The ministry forwarded its reply as follows: (A reply on December 13, 2004) 1. Since Japan has adopted the HS, commodity classification is conducted based on the Annex to the HS Convention (Nomenclature) and the Explanatory Notes on the interpretation of the HS Convention (Explanation of the Nomenclature). 2. "Husked (brown) rice" classified into 1006.20 is clearly stipulated in the provisos of Notes 1(a) and (b) of Chapter 10 in the Nomenclature, the General Rules for Chapter 10 in Explanation of the Nomenclature and the provision of 10.06(2). In addition, the Nomenclature and Explanation thereof are available to the public. 3. Since the General Rules for Chapter 10 in Explanation of the Nomenclature provide that "Grain obtained from cereals cut before maturity and still complete with husks is classified with ordinary grain," immature grains obtained from immature cereals are classified in the same heading as mature grains. In addition, Note 1(a) of Chapter 10 in the Nomenclature stipulates "The products specified in the headings of this Chapter are to be classified in those headings only if grains are present, whether or not in the ear or on the stalk." Therefore, immature grains are classified in the same heading as mature grains if grains are present. Consequently, "immatures" (immature grains, etc. that made it through a sifter of 1.7 mm aperture) subject to the complaint are a mixture of husked brown rice, which contains grains, and its fragments, and they are classified in 10.06 (1006.20) in which mature grains are classified. (A reply on January 7, 2005) 1. (1) Since Japan has adopted the HS, commodity classification is conducted based on the Annex to the HS Convention (Nomenclature) and the Explanatory Notes on the interpretation of the HS Convention (Explanation of the Nomenclature). (2) "Husked (brown) rice" classified into 1006.20 is clearly stipulated in the provisos of Notes 1(a) and (b) of Chapter 10 in the Nomenclature, the General Rules for Chapter 10 in Explanation of the Nomenclature and the provision of 10.06(2). In addition, the Nomenclature and Explanation thereof are available to the public. (3) Since the General Rules for Chapter 10 in Explanation of the Nomenclature provide that "Grain obtained from cereals cut before maturity and still complete with husks is classified with ordinary grain," immature grains obtained from immature cereals are classified in the same heading as mature grains. In addition, Note 1(a) of Chapter 10 in the Nomenclature stipulates "The products specified in the headings of this Chapter are to be classified in those headings only if grains are present, whether or not in the ear or on the stalk." Therefore, immature grains are classified in the same heading as mature grains if grains are present. Consequently, "immatures" (immature grains, etc. that made it through a sifter of 1.7 mm aperture) subject to the complaint are a mixture of husked brown rice, which contains grains, and its fragments, and they are classified in 10.06 (1006.20) in which mature grains are classified. Therefore, there is no need to venture to create classification standards for "immatures" because it is obvious that immature grains are classified in the same heading as mature grains under the HS Classification if grains are present. 2. (1) In the Ministry of Agriculture, Forestry and Fisheries' Statistics on Crops, a survey has been conducted on brown rice, of which grains are 1.7 mm or thicker and of which quality is of the third or higher class under the Agricultural Crop Inspection Standards, as a standard for the yield of brown rice, but the survey is designed to gain an understanding of the amount of rice that can be supplied as table rice nationwide. On the other hand, contrary to the Statistics on Crops, brown rice under the HS Convention includes "immatures (poorly ripened brown rice)" subject to the complaint, and it is thus not appropriate to argue that "being immatures" can be a ground for being classified in 2302.20 (Bran, sharps and other residues). (2) In addition, Japan confirms the presence of grains in the state as products were presented. On the other hand, it has become obvious as a result of careful examination of the U.S. response that the written reply from the United States is about cargoes exported from Japan to be imported in the United States and that the written reply on the relevant customs tariff classification is not pursuant to the provision of the above-mentioned HS Convention but is based on the U.S. domestic standards in light of explanation by the inquirer that subject immatures are for animal feeding. Consequently, the ministry decided not to conduct an additional survey. (A reply on March 31, 2005) (1) Since Japan has adopted the HS, commodity classification is conducted based on the Annex to the HS Convention (Nomenclature) and the Explanatory Notes on the interpretation of the HS Convention (Explanation of the Nomenclature). (2) "Husked (brown) rice" classified into 1006.20 is clearly stipulated in the provisos of Notes 1(a) and (b) of Chapter 10 in the Nomenclature, the General Rules for Chapter 10 in Explanation of the Nomenclature and the provision of 10.06(2). In addition, the Nomenclature and Explanation thereof are available to the public. In addition, commodity classification is determined based on the state as products are presented. (3) Since the General Rules for Chapter 10 in Explanation of the Nomenclature provide that "Grain obtained from cereals cut before maturity and still complete with husks is classified with ordinary grain," immature grains obtained from immature cereals are classified in the same heading as mature grains. In addition, Note 1(a) of Chapter 10 in the Nomenclature stipulates "The products specified in the headings of this Chapter are to be classified in those headings only if grains are present, whether or not in the ear or on the stalk." Therefore, immature grains are classified in the same heading as mature grains if grains are present. Consequently, "immatures" (immature grains, etc. that made it through a sifter of 1.7 mm aperture) subject to the complaint are a mixture of husked brown rice, which contains grains, and its fragments, and they are classified in 10.06 (1006.20) in which mature grains are classified. Therefore, there is no need to venture to create classification standards for "immatures" because it is obvious that immature grains are classified in the same heading as mature grains under the HS Classification if grains are present. Products resulting from the sifting or other working of cereal grains, which are classified in "Bran, sharps and other residues" of 23.02, are as provided in 23.02(B) of the Explanation of the Nomenclature. Since "immatures" subject to the complaint are a mixture of husked brown rice, which contains grains, they are not regarded as being classified in 23.02. |
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| Classification of Processing | Pending | Directions | I-b |
| Remarks |
A written reply was made on December 13, 2004. A written reply was made on January 7, 2005. A written reply was made on March 31, 2005. |
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