CLA-2 CO:R:C:F 956100 LPF
F. Gordon Lee, Esq.
O'Connor & Hannan
Suite 800
1919 Pennsylvania Ave., NW
Washington, D.C. 20006-3483
RE: Classification of yogurt and chocolate flavored confectionery
coatings; Heading 2106, food preparations; Heading 1806, food
preparations containing cocoa; Wilsey Foods, Inc.; Cake decorations under subheading 9904.60.60; NYRL 890302
Dear Mr. Lee:
This is in response to your as well as your client's letters
concerning the classification of yogurt and chocolate flavored
confectionery coatings under the Harmonized Tariff Schedule of
the United States Annotated (HTSUSA).
FACTS:
Two of the products at issue, yogurt flavored coatings
(Product codes 40901 and 40903) imported as wafers (flat discs
measuring approximately 7/8 inch in diameter) or in liquid form
were the subject of New York Ruling Letter (NYRL) 890302, issued
September 27, 1993. The imported product is used by an
industrial manufacturer of candy bars which are sold at retail to
grocery stores and the like. The wafers are imported in 50 pound
bags on refrigerated trucks, while the liquid products are
imported in 45,000 pound tankers. In its condition as imported,
the product in liquid form is ready for use as a confection
filling or coating, while the wafers need only be melted for such
application. Product #40901 consists of granulated sugar,
vegetable oil, skim milk solids, whey solids, yogurt powder,
titanium dioxide, soy lecithin, and vanilla flavor. Product
#40903 consists of sugar, vegetable oil, whey solids, skim milk
solids, yogurt powder, titanium dioxide, soy lecithin, and
vanilla flavor. As discussed with counsel, we have agreed not to
incorporate the breakdown by weight or percent of the products'
ingredients in this decision.
In NYRL 890302, supra, product #40901 was classified in
subheading 1901.90.3030, HTSUSA, as food preparations of goods of
headings 0401 to 0404, other, articles of milk or cream not
specially provided for, dairy preparations containing over 10
percent by weight of milk solids, provided for in subheading
9904.10.60. Products classifiable in 1901.90.3030 were dutiable
at 17.5 percent ad valorem and subject to an annual quota
quantity restriction of 2,721 kilograms pursuant to subheading
9904.10.60. Product #40903 was classified in subheading
1901.90.9095, HTSUSA, as food preparations of goods of heading
0401 to 0404, other, other, other, other, other, dutiable at a
rate of 10 percent ad valorem.
In addition, you now request the classification of a new
product, a chocolate flavored coating (Product code 40902), which
is imported in wafer and liquid form and used, by the industrial
manufacturer, in the same manner as the other products.
Similarly, in its condition as imported, the product in liquid
form is ready for use as a confection filling or coating, while
the wafers need only be melted for such application. The product
consists of sugar, vegetable oil, cocoa powder, whey solids, skim
milk solids, whole milk solids, soya lecithin, salt, and flavor.
For the reasons explained below, we will consider your
entire ruling request to involve a prospective transaction in
accordance with section 177.1, Customs Regulations (19 CFR
177.1). However, due to the changes in the relevant chapters of
the HTSUS, our response will be limited to the provisions
applicable through December 31, 1994.
ISSUE:
Whether the yogurt and chocolate flavored confectionery
coatings are classifiable within heading 1901 as food
preparations of goods of headings 0401 to 0404, heading 1806 as
food preparations containing cocoa, or heading 2106 as food
preparations not elsewhere specified or included.
LAW AND ANALYSIS:
In Wilsey Foods, Inc. v. United States, Slip Op. 94-46 (Ct.
Int'l Trade, decided March 16, 1994), the court addressed the
tariff classification of products called "white truffel" and
"non-temp white chips" used to coat confections and/or pastries.
The white truffel was composed of: vegetable oil (46%), sugar
(39%), skim milk powder (15%), and lecithin, vanillin, and BHA
(less than 1%). The non-temp white chips were composed of:
vegetable oil (46%), sugar (45%), skim milk powder (9%), and
lecithin, vanillin, and BHA (less than 1%).
Customs had classified the products in subheading
1901.90.3030, HTSUSA, as food preparations of milk or cream,
subject to quota restrictions pursuant to subheading 9904.10.60.
The court held that the products were appropriately classified in
subheading 2106.90.6097, HTSUSA, as food preparations not
elsewhere specified or included, containing sugar derived from
sugar cane and/or sugar beets and not subject to quota. The
court found that milk or cream was not the essential ingredient,
not the ingredient of chief value, nor the preponderant
ingredient in the products. In addition, evidence elicited at
the court indicated that the coatings were comprised chiefly of
vegetable fat and sugar and were not considered milk or cream
products in the industry.
The yogurt flavored coatings of NYRL 890302, supra, as well
as the chocolate flavored coatings are very similar in form,
composition, and use to the Wilsey products. We also note that
the coatings contain less milk than the Wilsey white truffel
product. Accordingly, pursuant to the Wilsey decision the
instant yogurt and chocolate flavored coatings are not
classifiable within heading 1901, as food preparations of milk or
cream, but rather within heading 2106, as food preparations not
elsewhere specified or included and within heading 1806, as food
preparations containing cocoa, respectively. The appropriate
subheadings at the six digit level for the products are 2106.90
and 1806.20.
With regard to quota treatment for products classifiable
within these subheadings, we note that the court did not find the
Wilsey products subject to quota in accordance with the import
restrictions established pursuant to Section 22 of the
Agricultural Adjustment Act ("Section 22"). In particular, we
note that the quota provided for in subheading 9904.60.60,
covering certain products containing over 10 percent by dry
weight of sugars derived from sugar cane or sugar beets, excepts,
inter alia, "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."
We have consulted with the Foreign Agricultural Service of
the Department of Agriculture, concerning the definition of "cake
decorations and similar products" as provided for in subheading
9904.60.60 and, consistent with existing Customs ruling
decisions, Customs understands the cake decoration exception to
mean the following:
For purposes of subheading 9904.60.60, the phrase
"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" means 1)
products used in their imported condition to coat
or fill pastries or confections, or 2) products
used to coat or fill pastries or confections after
a change in form (e.g., melting or heating, reduction
in size), insofar as the product itself need not
undergo a necessary, additional preparation,
treatment, or manufacture nor a blending or combining
with any ingredients, in order to become a finished
product.
Because it is our understanding that the instant products are
used in their imported condition, that is, the product in liquid
form is ready for use as a confection filling or coating, while
the wafers need only be melted for such application, they fit
within the parameters of the cake decoration exception as
provided above. The products were exempt from the 9904.60.60
quota in 1994.
Accordingly, at the ten digit statistical subdivision, the
yogurt flavored coatings are provided for in subheading
2106.90.6197. However, because the inquirer has not provided
information concerning the fat content of the cocoa powder, we
are unable to determine whether the chocolate flavored coatings
are provided for in subheading 1806.20.6000 or 1806.20.8095.
HOLDING:
The yogurt flavored confectionery coatings (Product #40901
and # 40903) are classifiable in subheading 2106.90.6197, HTSUSA,
as "Food preparations not elsewhere specified or included: Other:
Other: Other: Other: Other: Containing over 10 percent by weight
of milk solids, Other: Other: Other: Containing sugar derived
from sugar cane and/or sugar beets." The general column one rate
of duty was 10 percent ad valorem in 1994. Products classifiable
within subheading 2106.90.6197 were not subject to Section 22
import restrictions in 1994.
If the chocolate flavored confectionery coatings (Product #
40902) contain not less than 6.8 percent non-fat solids of the
cocoa bean nib, they are classifiable in subheading 1806.20.60,
HTSUSA, as "Chocolate and other food preparations containing
cocoa: Other preparations...in liquid paste, powder, granular or
other bulk form in containers or immediate packings, of a content
exceeding 2 kg: Confectioners' coatings and other products
(except confectionery) containing by weight not less than 6.8
percent non-fat solids of the cocoa bean nib and not less than 15
percent of vegetable fats other than cocoa butter." The general
column one rate of duty was 2.5 percent ad valorem in 1994.
If the chocolate flavored confectionery coatings contain
less than 6.8 percent non-fat solids of the cocoa bean nib, they
are classifiable in subheading 1806.20.8095, HTSUSA, as
"Chocolate and other food preparations containing cocoa: Other
preparations...in liquid, paste, powder, granular or other bulk
form in containers or immediate packings, of a content exceeding
2 kg: Other: Other, Other. The general column one rate of duty
was 10 percent ad valorem in 1994. Products classifiable within
either subheading 1806.20.60 or 1806.20.8095 were not subject to
Section 22 import restrictions in 1994.
In light of the Wilsey decision rendered by the Court of
International Trade, by operation of law NYRL 890302, supra, no
longer has any effect for purposes of tariff classification. As
such, no action need be taken by this office in this regard.
We have considered your entire ruling request to involve a
prospective transaction in accordance with section 177.1, Customs
Regulations (19 CFR 177.1). We note that in accordance with
section 152.16, Customs Regulations (19 CFR 152.16) the Wilsey
decision, "shall be applied to unliquidated entries and protested
entries which have not been denied in whole or in part and in
which the same issue is involved as soon as the time within which
an application for a rehearing or review may be filed has expired
without such application having been made."
Sincerely,
John Durant, Director
Commercial Rulings Division