CLA-2:CO:R:C:G 086101 SER
Ms. Dana Sather
K & L Associates, Inc.
1710 Clavinia Ave.
Deerfield, IL 60015
RE: Peanut-flavored Chips
Dear Ms. Sather:
This is in reference to your request of November 27, 1989,
for the tariff classification of peanut-flavored chips under the
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA).
FACTS:
The product at issue will be used as an ingredient in Peanut
Butter cookies. The ingredients and percentages of those
ingredients of the peanut-flavored chips is as follows:
1. Sugar- 34.5 percent
2. Partially Hydrogenated Palm Kernel oil- 29.5 percent
3. Roasted Peanut Meal- 27.5 percent
4. Whole Milk- 3 percent
5. Non-fat Milk Powder- 3 percent
6. Artificial Flavor
7. Salt
8. Artificial color
9. Yellow dye # 5
10. Yellow dye # 6
11. Blue dye # 2
ISSUE:
What is the proper classification of the peanut-flavored
chips under the HTSUSA?
-2-
LAW AND ANALYSIS:
Classification of goods under the HTSUSA is governed by the
General Rules of Interpretation (GRI), taken in order. GRI 1
provides that classification shall be determined according to the
terms of the headings and any relative section or chapter notes.
One possible classification is Heading 1704, HTSUS, which
provides for sugar confectionery (including white chocolate), not
containing cocoa. Whether an article was "confectionery" was the
focus of Leaf Brands, Inc. v. United States, C.D. 4409, 70 Cust.
Ct. 66 (1973). That case was decided under the Tariff Schedules
of the United States (TSUS), but is instructive in the
classification of confections in the HTSUSA. Leaf Brands
provided that whether an article is a confectionery is determined
by its chief use, not by the fact that it is edible, which would
include numerous articles. Use as a confection, said the Leaf
court, may be evidenced by its manner of sale and its character
and design. The Court utilizes the standard, and cites several
cases which hold, in part, that confectionery articles are
usually sold in confectionery outlets. The Court considered
favorably the fact that the product at issue was distributed
through "candy brokers." In summary, Customs position is that
confections means a product, as it is marketed, and in its
condition as imported, must be ready for immediate consumption at
retail as a confectionery, and is not, for example, merchandise
which will be used as an ingredient in the baking industry. The
product at issue is not generally marketed in confectionery
outlets, is not considered a confection, and is, therefore,
precluded from classification in Heading 1704, HTSUS.
Another possible Heading is 1202, HTSUS, which provides for
ground-nuts, not roasted or otherwise cooked, whether or not
shelled or broken. In examining the Explanatory Notes, which
constitute the official interpretation of the tariff at the
international level, the product at issue is clearly beyond the
scope of this Heading. The product at issue is a processed
article with numerous ingredients added, and peanuts are not the
primary ingredient. Classification in this Heading is precluded.
Subheading 2008.11.0020, HTSUSA, provides for peanuts:
peanut butter. The product at issue is clearly not peanut
butter. Customs has consistently held that a peanut butter
product consists primarily of peanuts and peanut meal and only
minimal additives, such as sugar or dextrose. Again, the product
at issue is primarily comprised of sugar, and thus, is precluded
from classification in this subheading.
-3-
Absent a more specific provision, the merchandise at issue
would be properly classified in Heading 2106, HTSUS, which
provides for food preparations not elsewhere specified or
included. Under the former tariff law, item 958.18, TSUS,
applied a quota to products of this type which were classified in
item 183.05, TSUS, which were not retail packaged for consumers
and contained over 10 percent by weight of sugar. The exceptions
to this quota, as authorized by item 3 (a) of Presidential
Proclamation 5340, are cake decorations and similar products
which are used as in the same condition as imported without
further processing other than the direct application to
individual pastries or confections. The exceptions to the quota
were broadened to include confectioner specialty items: articles
which are not imported principally for extraction of their sugar
content, and which do not compete as a substitute for domestic
sugar. The product at issue would be included within this
exception, and thus, there are no applicable quota restrictions.
HOLDING:
The product at issue, peanut-flavored chips, is properly
classified in subheading 2106.90.6097, HTSUSA, which provides for
food preparations not elsewhere specified: other. The rate of
duty is 10 percent ad valorem. This product is not subject to
quota restrictions.
Sincerely,
John Durant, Director
Commercial Rulings Division