CLA-2 RR:CR:GC 963833ptl
Mr. John M. Peterson
Neville, Peterson & Williams
Counsellors At Law
80 Broad Street, 34th Floor
New York, N.Y. 10004
RE: Creamy Supreme Frosting, Cake Icings
Dear Mr. Peterson:
Your letter of February 28, 2000, requesting a prospective classification ruling on behalf of The Pillsbury Company, was referred by the Director, National Commodity Specialist Division to Headquarters for a direct response. Our decision follows.
FACTS:
The Pillsbury Company obtained New York Ruling Letter (NYRL) C81107, dated November 18, 1997, which held that certain cake icings containing 50-58% of sugar, imported in bulk and repackaged into retail containers, were classified in subheading 2106.90.9997, Harmonized Tariff Schedule of the United States (HTSUS), not subject to tariff rate quotas.
The Pillsbury Company also obtained NYRL F81408, dated January 21, 2000, which held that certain cake icings containing 45-70% of sugar, 15-25% of shortening, 10-20% of water, 5-10% of corn syrup, 2-6% corn starch and less than 1% of other ingredients, imported in retail containers, were classified in subheading 2106.90.9997, HTSUS, not subject to tariff rate quotas. In your letter of February 28, 2000, you requested a ruling that similar cake icings containing 45 to 70% of sugar, imported in bulk for industrial use or imported in bulk and intended for repackaging for retail consumption, were also classified in subheading 2106.90.9997, HTSUS, not subject to tariff rate quotas.
ISSUE:
Whether ready-to-use cake icings containing over 65% of dry weight, or containing over 10% by dry weight, of sugar, that are imported in bulk for industrial use or intended for repackaging into retail containers, are classified in subheading 2106.90.9997, HTSUS.
LAW AND ANALYSIS:
The classification of imported merchandise under the HTSUS is governed by the principles set forth in the General Rules of Interpretation (GRI). GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section and chapter notes and, unless otherwise required, according to the remaining GRI’s, taken in their appropriate order. We are satisfied that the ready to use cake icings are classified by virtue of GRI 1, depending on the interpretations of applicable Additional U.S. Notes.
The pertinent HTSUS provisions are as follows.
Other food preparations not elsewhere specified or included:
Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17:
2106.90.92 Described in additional U.S. note 7 to chapter 17 and
entered pursuant to its provisions.........
2106.90.94 Other 2/
Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17:
2106.90.95 Described in additional U.S. note 8 to chapter 17 and
entered pursuant to its provisions
2106.90.97 Other 3/.
2106.90.99 Other
*******************
Other: Other:
Frozen
Other:
2106.90.9997 Containing sugar derived from sugar
cane and/or sugar beets
1/ See subheadings 9904.17.66-9904.17.84.
2/ See subheadings 9904.17.17-9904.17.48.
3/ See subheadings 9904.17.49-9904.17.65.
Additional U.S. Notes 2 and 3, Chapter 17, HTSUS, state as follows:
2. For the purposes of this schedule, the term "articles containing over 65
percent by dry weight of sugar described in additional U.S. note 2 to chapter 17" means articles containing over 65 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported.
3. For the purposes of this schedule, the term "articles containing over 10
percent by dry weight of sugar described in additional U.S. note 3 to chapter 17" means articles containing over 10 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, except (a) articles not principally of crystalline structure or not in dry amorphous form, the foregoing that are prepared for marketing to the ultimate consumer in the identical form and package in which imported; (b) blended syrups containing sugars derived from sugar cane or sugar beets, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported; (c) articles containing over 65 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported; or (d) cake decorations and similar products to be used in the same condition as imported without any further processing other than the direct application to individual pastries or confections, finely ground or masticated coconut meat or juice thereof mixed with those sugars, and sauces and preparations therefor.
Additional U.S. Note 2, Section lV, HTSUS, defines the terms of Additional U.S. Notes 2 and 3, Chapter 17, HTSUS, as follows:
For the purposes of this section, unless the context otherwise requires--
(a) the term "percent by dry weight" means the sugar content as a percentage of the total solids in the product;
(b) the term "capable of being further processed or mixed with similar or other ingredients" means that the imported product is in such condition or container as to be subject to any additional preparation, treatment or manufacture or to be blended or combined with any additional ingredient, including water or any other liquid, other than processing or mixing with other ingredients performed by the ultimate consumer prior to consumption of the product;
(c) the term "prepared for marketing to the ultimate consumer in the identical form and package in which imported" means that the product is imported in packaging of such sizes and labeling as to be readily identifiable as being intended for retail sale to the ultimate consumer without any alteration in the form of the product or its packaging; and
(d) the term "ultimate consumer" does not include institutions such as hospitals, prisons and military establishments or food service establishments such as restaurants, hotels, bars or bakeries.
We first have to consider whether cake icings imported in bulk for industrial use such as by bakeries (see Additional U.S. Note 2(d) Section IV, HTSUS), containing over 65% by weight of dry sugar are classified in the tariff rate quota provisions of subheadings 2106.90.92 and 2106.90.94, HTSUS, as articles containing over 65% by weight of sugar as described in Additional U.S. Note 2, Chapter 17. The Note requires that articles must contain over 65% cane or beet sugar, must be capable of being further processed or mixed with other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported. The icings contain over 65% sugar by dry weight and may be imported in bulk for industrial use by food service establishments such as bakeries. In Headquarters Ruling Letter (HQ) 960694, dated March 20, 1998, affirmed by HQ 963649, dated May 9, 2000, Customs concluded that icings and glazes used by commercial bakeries that were combined with cakes and pastries satisfied the “capable of being further processed” requirement of Additional U.S. Note 2(b), Section lV, HTSUS. Thus, cake icings containing over 65 % by dry weight of sugar that meet the three requirements of Additional U.S. Note 2, Chapter 17 are classified in subheadings 2106.90.92 and 2106.90.94, HTSUS, quota rate provisions, as held in HQs 960694 and 963649.
Note that cake icings containing over 65% by dry weight of sugar imported in retail containers, do not meet the three requirements of Additional U.S. Note 2, Chapter 17, HTSUS, and are not classified in subheadings 2106.90.92 and 2106.90.40, HTSUS. Specifically, they fail the requirement that they not be “prepared for marketing to the ultimate consumer in the identical form and package in which imported.” Although not described by the tariff rate quota of Additional U.S. Note 2, Chapter 17, articles containing over 10% by dry weight of sugar may be classified in the tariff rate quota subheadings 2106.90.95 and 2106.90.97, HTSUS, if described by Additional U.S. Note 3 of Chapter 17. However, Additional U.S. Note 3(d), Chapter 17 (not applicable for articles classified in subheadings 2106.90.92 and 2106.90.94) excludes from subheadings 2106.90.95 and 2106.90.97, HTSUS, “cake decorations and similar products to be used in the same condition as imported without any further processing other than the direct application to individual pastries or confections…”.
Such articles are classified in subheading 2106.90.9997, HTSUS, not subject to tariff rate quotas. Thus, cake icings imported in retail containers containing over 65% or over 10 % by dry weight of sugar are classified in subheading 2106.90.9997, HTSUS, as other articles containing cane or beet sugar, not subject to tariff rate quotas.
We next have to consider whether cake icings containing over 65% by dry weight of sugar that are imported in bulk and intended for repackaging into retail containers for use by the ultimate consumer (not bakeries etc) are classified in subheadings 2106.90.92 and 2106.90.94, HTSUS, tariff rate quota provisions. Although the cake icings may contain over 65% by dry weight of sugar and are imported in bulk rather than for marketing to the ultimate consumer in the imported packages meet two of the three requirements for Additional U.S. Note 2, Chapter 17, they fail to meet a third requirement “capable of being further processed”. The phrase “capable of being further processed or mixed with similar or other ingredients” is defined in Additional U.S. Note 2(b), Section lV, HTSUS, as meaning: the imported product is in such condition or container as to be subject to any additional preparation, treatment or manufacture or to be blended or combined with any additional ingredient, including water or any other liquid, other than processing or mixing with other ingredients performed by the ultimate consumer prior to consumption of the product. (Emphasis added.)
As noted above, HQ 960694, affirmed by HQ 963649, held that icings and “untopped” donuts, pastries, etc., are ‘ingredients,” for purposes of this Note, and applying icing to such products is an operation that falls within the scope of the quota. However, the Note also provides an exception to this sort of processing, an exception that would remove bulk icings from the quota. The exception exists when the processing or mixing is performed by the ultimate consumer (see Additional U.S. Note 2(b) Section IV, HTSUS) prior to consumption of the product. When cake icings containing over 65% by dry weight of sugar are imported and repackaged in the United States into retail units, the “mixing with other ingredients” will be performed by the retail consumer, the “ultimate consumer.” This is the very exception Additional U.S. Note 2(b), Section lV, provides. Accordingly, imported bulk cake icings that are repackaged in the United States into retail containers, are classified in subheading 2106.90.9997, HTSUS, not subject to tariff rate quotas. See NY C81107, dated November 18,1997.
In such repackaging of bulk icings after importation for retail use, we have, in effect, “actual use” situations as defined in Additional U.S. Rules of Interpretation, HTSUS, Note 1(b). The regulatory procedures for actual use are contained in 19 CFR 10.131-10.139. The procedures safeguard against the possibility that an importer may import in bulk with a claim for repackaging into retail containers and then use the merchandise in industrial use to avoid the quota without penalty. This ruling is consistent with HQ 963834, dated March 28, 2001.
HOLDING:
Ready-to-use bulk shipments of cake icings containing over 65% by dry weight of sugar imported for industrial use (by bakeries etc.) are classified in subheading 2106.90.9400, HTSUS, as other articles of food preparations not elsewhere specified or included containing over 65 percent by weight of sugar described in Additional U.S. Note 2 to Chapter 17, HTSUS, an over the tariff rate quota provision, in accordance with Additional U.S. Note 7 to Chapter 17, HTSUS.
Ready- to-use imported bulk shipments of cake icings containing over 65% by dry weight of sugar, or over 10% by dry weight of sugar that are intended for repackaging in the U.S. into retail containers for use by the ultimate consumer (other than bakeries, etc.), are classified as other articles containing sugar derived from sugar cane or sugar beets, in subheading 2106.90.9997, HTSUS, not subject to quota, upon compliance with the actual use procedures of 19 CFR 10.131-10.139.
Sincerely,
John Durant, Director
Commercial Rulings Division