CLA-2 RR:CR:GC 964707 nel /JGB
Mr. George Kampouris
G. Van Kam Trading Co., Ltd.
4920 De Maisonneuve W., #11
Montreal, Quebec H3Z 1N1
Canada
RE: Revocation of NY B82737; modification of NY D82481; butterfat mixtures
Dear Mr. Kampouris:
This letter is in regard to New York Ruling Letters (NY) B82737, dated March 7, 1997, and NY D82481, dated October 13, 1998, issued to you by the Customs National Commodity Specialist Division regarding classification of certain anhydrous milkfat or butteroil or butterfat mixtures under the Harmonized Tariff Schedule of the United States (HTSUS). After extensive review of the classification of similar merchandise under the HTSUS, we have reconsidered NY B82737 and NY D82481 and believe that the classification of some of the products therein is incorrect.
Pursuant to section 625(c)(1) Tariff Act of 1930 (19 U.S.C. 1625(c)(1)) as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-82, 107 Stat. 2057, 2186), notice of the proposed revocation of NY B82737 was published on January 3, 2001, in the Customs Bulletin, Volume 35, Number 1. As explained in the notice published on February 21, 2001 in Vol. 35, No. 8 of the Customs Bulletin, the period within which to submit comments on this proposal was extended to March 23, 2001. NY D 82481 was identified as an additional ruling that would fall under the principle of the ruling proposed to be modified and this letter provides you additional notice of that fact. That ruling is being modified by this letter as indicated herein. No additional comments were received in response to this notice.
FACTS:
NY B82737 dated March 7, 1997, classified certain anhydrous milkfat and butterfat mixtures, which were to be imported from Canada, Australia, New Zealand, Belgium and the Netherlands, to be used as ingredients for the manufacture of confectionery or other food items. These products, each with a maximum moisture content of 0.5%, have ingredient breakdowns as follows:
Confectionery AMF 95S – 95% anhydrous milkfat or butteroil, 5% sucrose.
Confectionery AMF 95L – 95% anhydrous milkfat or butteroil, 5% lactose.
Salted AMF 95N – 95% anhydrous milkfat or butteroil, 5% salt.
Milky AMF 95/5 – 95% anhydrous milkfat or butteroil, 5% non-fat dry milk.
AMF-PRO 95/5 – 95% anhydrous milkfat or butteroil, 5% caseinate.
All of these products were classified under subheadings 0405.90.1020 and .2020, HTSUS, the in- and over-quota provisions for: Butter and other fats and oils derived from milk; dairy spreads: Other: Described in additional U.S. note 14 to chapter 4 and entered pursuant to its provisions; Anhydrous milk fat.
In NY D82481, the products identified as Confectionery AMF 88 and Confectionery Butter 88, were classified under subheadings 2106.90.64 and .66, HTSUS, the in- and over-quota provisions for: Food preparations not elsewhere specified or included: … Other: Containing over 10 percent by weight of milk solids: Other, dairy products described in additional U.S. note 1 to chapter 4: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions.
ISSUE:
With respect to the products of NY B82737, whether anhydrous milkfat or butteroil products, which consist predominantly of some form of milkfat mixed with other ingredients, are included within the scope of heading 0405, HTSUS, which provides for: Butter and other fats and oils from milk; dairy spreads. If these products are not specifically provided for in heading 0405, HTSUS, or another heading, they are classified in heading 2106, HTSUS, which provides for: Food preparations not elsewhere specified or included.
With respect to the products of NY D82481, whether the classification for one of the named products, Confectionery Butter 88, is in the provision for other food preparations not elsewhere specified or included or specifically provided for in heading 0405 as butter or dairy spreads.
LAW & ANALYSIS:
The General Rules of Interpretation (GRIs) taken in their appropriate order provide a framework for classification of merchandise under the HTSUS. The majority of imported goods are classified by application of GRI 1; that is, according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, then the remaining GRIs may be applied.
The Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System constitute the official interpretation of the tariff system at the international level. Though not dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS. Customs believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The HTSUS headings under consideration are as follows:
0405 Butter and other fats and oils derived from milk; dairy spreads:
and
Food preparations not elsewhere specified or included.
Note 2(a) to chapter 4 defines “butter” as “… derived exclusively from milk, with a milkfat content of 80 percent or more but not more than 95 percent by weight, a maximum milk solids-not-fat content of 2 percent by weight and a maximum water content of 16 percent by weight. Butter does not contain added emulsifiers, but may contain sodium chloride, food colors, neutralizing salts and cultures of harmless … bacteria.”
Note 2(b) to chapter 4 defines “dairy spreads” as “a spreadable emulsion of the water-in-oil type, containing milkfat as the only fat in the product, and having a milkfat content of 39 percent or more but less than 80 percent by weight.” According to EN 04.05(B), dairy spreads “may contain optional ingredients such as cultures of harmless … bacteria, vitamins, sodium chloride, sugar, gelatine, starches; food colours; flavours; emulsifiers; thickening agents and preservatives.”
The composition of the goods classified in heading 0405, HTSUS, is discussed in the EN 04.05. It is in these notes that “other fats and oils derived from milk” are described.
This group covers fats and oils derived from milk (e.g., milkfat, butterfat and butteroil). Butteroil is the product obtained by extracting the water and non-fat content from butter or cream.
This group further includes dehydrated butter and ghee (a kind of butter made most commonly from the milk of buffaloes or cows), as well as products consisting of a mixture of butter and small quantities of herbs, spices, flavourings, garlic, etc. (provided they retain the character of the products falling in this heading).”
Milkfat, butterfat, butteroil, and ghee are virtually pure fatty substances. Subheading note 2 to chapter 4 specifically excludes dehydrated butter and ghee from subheading 0405.10, HTSUS, which provides for: Butter, and places these anhydrous milkfat products under subheading 0405.90, HTSUS.
The General Explanatory Note (I) to chapter 4 lists the various dairy products provided for in the chapter. It also specifies the dairy products which, in addition to natural milk constituents, may contain certain additives, such as, stabilizing agents, antioxidants, vitamins not normally found in these products, processing chemicals and anti-caking agents. Butter, other fats and oils derived from milk, and dairy spreads of heading 0405, HTSUS, are not included in the list of products that may contain these additives.
In summary, heading 0405, HTSUS, based on the definitions above, includes “butter,” a spreadable emulsion which may contain a small number of permitted additives; “dairy spreads,” which are spreadable water-in-oil type emulsions containing a larger range of permitted additive ingredients; and “other fats and oils derived from milk,” which – except for flavored butter -- are virtually pure milkfat substances. Thus, it appears that within heading 0405, HTSUS, only certain additives are permitted and those additives are permitted only in spreadable emulsions such as butter, dairy spreads, and flavored butter. The requisite purity of the fat content precludes any additives in anhydrous milkfat, butterfat, butteroil, or ghee.
Heading 2106, HTSUS, provides for: Food preparations not elsewhere specified or included, and may be considered only when a more specific provision is not available. The ENs to the heading permit the inclusion of certain milkfat products “[p]rovided that they are not covered by any other heading of the Nomenclature, [for example]: … (3) Preparations based on butter or other fats or oils derived from milk and used, e.g., in bakers’ wares.”
The milkfat mixtures under consideration in NY B82737 consist of anhydrous milkfat or butteroil and added ingredients. These are not the water-in-oil type emulsions, which by the terms of their definitions, are permitted additives under heading 0405, HTSUS. Accordingly, mixtures of anhydrous milkfat or butteroil with salts, sweeteners, or other non-milkfat ingredients are precluded from classification within heading 0405, HTSUS.
Our decision to reclassify these products is also based on a comparison of these products with two rulings issued by the Harmonized System Committee of the World Customs Organization (HSC). These two rulings from the Compendium of Classification Opinions, issued by and reflecting the consensus of the HSC on the classification of butterfat mixtures in the Harmonized Tariff System (HTS), are useful to illustrate this interpretation of heading 0405.
0405.20 1. Butterfat mixture in the form of a water-in-oil type spreadable emulsion and used in the food industry, consisting of, by weight, 68.75% butteroil, 17% sugar, 13% water and 1.25% casein. See also Opinion 2106.90/18.
2106.90 18. Butterfat mixture in the form of a yellowish paste and used in the food industry, consisting of, by weight, 67.5% butterfat, 14% skimmed milk and 18.5% sugar. See also Opinion 0405.20/1.
Note that the composition of both products is very similar. However, the product, described as a “water-in-oil spreadable emulsion,” was classified in heading 0405, HTS, while the second product, described as a mixture of butterfat with other ingredients, was classified in heading 2106, HTS. The second product was not butter or a dairy spread (i.e., not a spreadable water-in-oil emulsion) and was determined to be “more than” other fats and oils derived from milk, since the product contained additional, non-butterfat, ingredients.
The decision in NY B82737 to classify the anhydrous milkfat or butteroil products identified as Confectionery AMF 95S, Confectionery AMF 95L, Salted AMF 95N, Milky AMF 95/5, and AMF-PRO 95/5 under heading 0405, HTSUS, is in conflict with the HSC rulings cited above. These anhydrous products are not “water-in-oil type spreadable emulsions” and are not butter, dairy spreads, or other fats and oils derived from milk as defined in heading 0405, HTSUS. As in Classification Opinion 2106.90/18, where the HSC classified a butterfat mixture, not believed to be a water-in-oil type emulsion, containing skim milk and sugar as additional ingredients, in heading 2106.90, the products described in NY B82737 must similarly be classified in 2106, HTSUS. These milkfat mixtures are properly classifiable under subheading 2106.90.6400 and .6600, HTSUS, the in- and over-quota provisions for: Food preparations not elsewhere specified or included: Other: Other: Other: Containing over 10 percent by weight of milk solids: Other, dairy products described in additional U.S. note 1 to chapter 4.
The milkfat mixtures at issue here are similar to products that were classified in two other rulings issued by the Customs National Commodity Specialist Division and should be classified in the same heading of the HTSUS. NY E84547 dated August 3, 1999, classified the following four milkfat mixtures: 89% anhydrous milkfat with 11% sugar, 95% anhydrous milkfat with 5% sugar, 89% anhydrous milkfat with 11% skim milk powder, and 95% anhydrous milkfat with 5% skim milk powder, in subheadings 2106.90.6400 and .6600, depending on quota availability. In NY E89271 dated December 17, 1999, (modified by HQ 964706) two milkfat mixtures, 89% anhydrous milkfat with 11% sugar and 89% anhydrous milkfat with 11% salt, were classified in subheadings 2106.90.6400 and .6600, depending on quota availability.
NY D82481 classified Confectionery Butter 88 in subheadings 2105.90.6400 or 2106.90.66, depending on whether in or out of quota, prompting our modification of NY D82481 in this document. While it appears from the product description that the stated moisture content of the product would not permit classification in heading 2106 and indicate heading 0405, HTSUS, the exact content of the product is not apparent. For a ruling on this product you are requested to communicate directly with the Director, National Commodity Specialist Division, U. S. Customs Service, 6 World Trade Center, New York, NY 10048 where a new ruling will be issued on an expedited basis. Please include a copy of this notice with your ruling request. We appreciate your cooperation with this reissuance process.
HOLDING:
The anhydrous milkfat or butteroil products identified as Confectionery AMF 95S, Confectionery AMF 95L, Salted AMF 95N, Milky AMF 95/5, and AMF-PRO 95/5 are classified under subheading 2106.90.6400, HTSUS, which provides for: Food preparations not elsewhere specified or included: Other: Other: Other: Containing over 10 percent by weight of milk solids: Other, dairy products described in additional U.S. note 1 to chapter 4: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions. If entered after the quantity limitations of the tariff rate have been reached, these products are classifiable in subheading 2106.90.6600, HTSUS, the residual subheading for the quota provisions. Further, goods which are classifiable in subheading 2106.90.6600 are subject to additional safeguard duties listed in subheadings 9904.04.50 – 9904.05.01, HTSUS.
The product identified as Confectionery Butter 88 in NY D82481 is not correctly classified in heading 2106 and will be classified elsewhere, depending on the information provided.
EFFECT ON OTHER RULINGS:
NY B82737 dated March 7, 1997, is REVOKED.
NY D82481, dated October 13, 1998, is MODIFIED with respect to the classification of "Confectionery Butter 88."
In accordance with 19 U.S.C. §1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
John Durant, Director
Commercial Rulings Division