CLA-2 RR:TC:FC 959816K
John M. Peterson, Esq.
Neville, Peterson & Williams
Counsellors At Law
80 Broad Street
34th Floor
New York, New York 10004
RE: Request For a Ruling For a Peanut-Butter Spread;
Reconsideration of New York Ruling
Letter (NYRL) 810462, Dated May 19, 1995; Your File No.
335-01
Dear Sir:
Your request of September 3, 1996, on behalf of CPC
International, Inc., for a tariff classification ruling was
referred to our office by the Director, National Commodity
Specialist Division, for a direct response. Our decision
follows.
FACTS:
The product is described as a peanut-flavored food
preparation which will be manufactured in Canada. In its
condition as imported, the product will have a smooth, creamy
consistency, and, while it can be eaten directly from the jar, it
will be primarily used as a spread for bread, crackers, biscuits
and also potentially capable of use as a baking or cooking
ingredient. The ingredients consist of (ground) peanuts, corn
syrup, sugar, proteins, salt, and vegetable oil.
The product will be marketed as a reduced-fat peanut spread, and
will contain approximately 25 percent less fat than peanut
butter. A sample was submitted in a clear plastic unlabeled jar.
However, the product will be labeled as "Peanut Butter Spread".
A further submission was submitted dated November 27, 1996. A
meeting was requested and one was held on January 24, 1997.
In our opinion, the product as described is similar to a
product described as a peanut spread (or paste) in which Customs
ruled in New York Ruling Letter (NYRL) 810462, dated May 19,
1995, that the product was classified as peanut butter and paste,
in subheading 2008.11.0500, Harmonized Tariff Schedule of the
United States (HTSUS), subject to a tariff rate quota, and, if a
shipment exceeded the quota, it is subject to an over the quota
rate of duty in subheading 2008.11.1500, HTSUS. The product in
NYRL 810462, like the instant product, contains less than 90
percent by weight of ground peanuts. Therefore, you opine that
the products may not meet the standard of identity of the Food
and Drug Administration (FDA) for peanut butter and are not
classified in the tariff schedule as peanut butter. In the
further submission dated November 27, 1996, you opine that
"notwithstanding the substantial differences between the instant
product and the product covered in that ruling, the position
taken in that ruling is erroneous as a matter of law." You
further believe that the instant product is not classified in
heading 2008 and that it is classified as other food preparations
not elsewhere specified or included, in subheading 2106.90.99,
HTSUS, and not subject to a tariff rate quota.
ISSUE:
The issue is whether the product is classified in heading
2008, HTSUS, and subject to a tariff rate quota.
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, taken
in their appropriate order. Accordingly, we first have to
determine whether the products are classified by virtue of GRI 1.
Heading 1202, HTSUS, provides for peanuts (ground nuts), not
roasted or otherwise cooked, whether or not shelled or broken.
Since the instant product consists of peanuts that have been
ground, roasted and prepared or preserved, classification is
precluded from this heading.
However, heading 2008, HTSUS (1996), provides for the
following:
Fruit, nuts and other edible parts of plants, otherwise
prepared or preserved, whether or not containing added
sugar or other sweetening matter or spirit, not
elsewhere specified or included.
Subheading 2008.11, HTSUS, at the six digit level,
specifically provides for prepared or preserved peanuts (ground-nuts), whether or not containing added sugar or other sweetening
matter or spirit, not elsewhere specified or included.
Subheading 2008.11, has further breakouts at the eight digit
levels, subheadings 2008.11.02 through subheadings 2008.11.60,
containing tariff rate quotas for peanut butter and paste,
blanched peanuts, other prepared or preserved peanut products as
follows:
Rates of Duty (1996)
General Special 2
2008.11 Peanuts (ground-nuts):
Peanut butter and paste:
2008.11.02 Described in general
note 15 of the tariff
schedule and entered
pursuant to its provisions..... 1.3›/kg Free
(E,IL,J,MX) 15›/kg
1.3›/kg (CA) (s) 1/
2008.11.05 Described in additional
U.S. note 5 to this
chapter and entered
pursuant to its provisions..... 1.3›/kg Free (E,IL,J) 15›/kg
1.3›/kg (CA)(s)
1/
2008.11.15 Other 2/............................. 147.3% 4.6›/kg (MX) 155%
Blanched peanuts:
2008.11.22 Described in general
note 15 of the tariff
schedule and entered
pursuant to its provisions..... 6.6›/kg Free
(E,IL,J,MX) 15›/kg
1.3›/kg (CA)
2008.11.25 Described in additional
U.S. note 2 to chapter 12
and entered pursuant to
its provisions................. 6.6›/kg Free (E,IL,J) 15›/kg
1.3›/kg (CA)
2008.11.35 Other 3/........................... 147.3% See
9906.20.03- 155%
9906.20.05 (MX)
Other:
2008.11.42 Described in general
note 15 of the tariff
schedule and entered
pursuant to its provisions..... 6.6›/kg Free
(E,IL,J,MX) 15›/kg
1.3›/kg (CA)
2008.11.45 Described in additional
U.S. note 2 to chapter 12
and entered pursuant to
its provisions................. 6.6›/kg Free (E,IL,J) 15›/kg
1.3›/kg (CA)
2008.11.60 Other 3/........................ 147.3% See
9906.20.03- 155%
9906.20.05 (MX)
1/ Rate suspended. See General Note 3(c)(iv).
2/ See subheadings 9904.20.01-9904.20.10.
3/ See subheadings 9904.12.01-9904.12.19.
Heading 2008 provides for prepared or preserved nuts, not
elsewhere specified or included and further provides for the
addition of sugar or other sweetening matter. Subheading
2008.11 specifically provides for peanuts (ground nuts) that have
been prepared or preserved. We need to go no further. The
product consists of prepared or preserved ground peanuts not
elsewhere specified or included and is classified in subheading
2008.11, HTSUS.
The FDA standard of identity for peanut butter, section
164.150 of Title 21, Code of Federal Regulations (CFR), defines
peanut butter as the food prepared by grinding roasted peanuts to
which may be added safe and suitable seasoning and stabilizing
ingredients that do not in the aggregate exceed 10 percent of the
weight of the finished food. Counsel, as stated, opines that
since the peanut butter spread contains more than 10 percent of
ingredients other than ground peanuts, the product cannot be
classified as peanut butter and paste in subheading 2008.11,
HTSUS. One of the purposes of the standards of identities is to
promote honesty and fair dealing in the interest of consumers by
truthful and informative labeling of food products. A standard
of identity is helpful in defining a product but it is not
controlling in determining the classification of merchandise
under the Harmonize Tariff Schedule of the United States. As
stated, under GRI 1, we must first determine if the product is
covered by a heading and chapter notes and we have concluded that
the peanut butter spread is classified in heading 2008 by virtue
of GRI 1.
The standards of identities of the FDA also has a definition
for "peanut spread" found in 21 CFR 102.23, in part, as follows:
The common or usual name of a spreadable peanut product that
does not conform to 21 CFR 164. 150, and more than 10
percent of which consists of nonpeanut ingredients, shall
consist of the term "peanut spread" and a statement of the
percentage by weight of the peanuts in the product...shall
be based on the amount of peanuts used to make the finished
food product...
The peanuts in a peanut spread (21 CFR 102.23) and the
peanuts in peanut butter (21 CFR 164.150), both consist of
roasted ground peanuts and both are spreadable by the consumer
on bread, crackers, and biscuits. We do not see a difference in
calling a product peanut butter, peanut butter and paste, or a
peanut butter spread for purposes of subheadings 2008.11.02 and
2008.11.05, HTSUS. The question is whether the product is
classifiable under the tariff schedule as peanut butter and
paste. Counsel does not claim that the instant product is
covered by the standard of identity for peanut spread. This
standard does not permit the product to be labeled as "Peanut
Butter" or as a "Peanut Butter Spread". The standard permits the
product to be labeled as a "Peanut Spread", not as a Peanut
Butter Spread. Counsel does claim that the instant product does
not meet the standard of identity for peanut butter in 21 CFR
164.150. Yet, counsel states that his client has an agreement
with FDA authorizing the labeling of the instant product as a
"Peanut Butter Spread". This is further evidence that the
instant product is a modified form of peanut butter. It is a
contradiction to label a product as peanut butter, albeit, with
the added word of spread, and contend that the product is not
peanut butter.
For that matter, we are not satisfied that the instant
product does not conform to the standard of identity for peanut
butter, 21 CFR 164.150 as a reduced-fat modified form of peanut
butter under the FDA interpretation of 21 CFR 130.10. The
statement that the FDA has given approval to label the instant
product as a peanut butter spread confirms that the FDA considers
the product to be a modified form of peanut butter under 21 CFR
164.150 and 21 CFR 130.10.
Assuming (and we do not agree ) that the instant product is
not classified as peanut butter and paste in subheadings
2008.11.02 and 2008.11.05, HTSUS, the instant product consists of
prepared (roasted) ground peanuts and would be classified as
other prepared or preserved peanuts (ground-nuts), in subheadings
2008.11.42, 2008.11.45 or 2008.11.60, HTSUS, which also have
tariff rate quotas. In Headquarters Ruling Letter (HRL) 083352
dated October 17, 1989, a product composed of 90 percent roasted
peanuts used as a food topping for baked goods, ice cream, or
fillings in cakes or candy, was classified in subheading
2008.11.00, HTSUS (1989), then in effect for prepared or
preserved peanuts (ground-nuts). However, it was classified
with the statistical break out for other prepared or preserved
peanuts (ground-nuts), subheading 2008.11.0060.
In HRL 557994 dated October 25, 1994, it was held that
imported "peanut slurry" from Canada classified in subheading
2008.11.90, HTSUS (1994) to be used to make finished peanut
butter classified in subheading 2008.11.10, HTSUS, did not meet
tariff shift requirements for NAFTA marking purposes. This
ruling is another example in which prepared ground peanuts not
classified as peanut butter was still referred to as being
classified under the other provision for prepared ground peanuts
in subheading 2008.11, HTSUS. See also HRLs 089650, dated July
31, 1991, involving cooked peanuts with a thin coating of wheat
flour, and 089858 dated October 1, 1991, involving a mixture of
pretzel sticks and roasted split-blanched peanuts, that held that
the products were classified as other prepared peanuts in heading
2008.
We have considered all of the NYRLs and HRLs cited in your
submission and are satisfied that the instant merchandise is
classified as peanut butter and paste in subheading 2008.11.10,
HTSUS. As an eo nomine provision, it includes all forms of the
merchandise. We need not consider the claim for classification
under the basket provision for other food preparations not
elsewhere specified or included, in subheading 2106.90.99, HTSUS,
and not subject to a tariff rate quota.
HOLDING:
A product described as a "Reduced Fat Peanut Butter Spread"
and labeled as a "Peanut Butter Spread", which consists of
roasted ground peanuts and other sweetening matter and
stabilizers, used by the consumer to be spread on bread,
crackers, and biscuits in the same manner as peanut butter, is
classified as peanut butter and paste in subheading 2008.11.0500,
HTSUS, if imported in quantities that fall within the limits
described in additional U.S. note 5 to chapter 20, and dutiable
at the 1996 general rate of duty of 1.3 cents per kilogram. If
the quantitative limits of additional U.S. note 5 to chapter 20
have been reached, the product will be classified in subheading
2008.11.1500, HTSUS, and dutiable at the 1996 general rate of
147 percent ad valorem. In addition, products classified in
subheading 2008.11.1500, HTSUS, will be subject to additional
duties based on their value, as described in subheadings
9904.20.01 - 9904.20.10, HTSUS (1996).
NYRL 810462 dated May 19, 1995, is affirmed.
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division