CLA-2 RR:CR:GC 963834ptl
Mr. James A. Wiant
General Manager
CSP
23240 Chagrin Boulevard, Suite 810
Beachwood, OH 44122
RE: Modification of New York Ruling Letter (NYRL) E86861; Vanilla Icings
Dear Mr. Wiant:
In your letter dated February 9, 2000, you requested reconsideration of NYRL E86861, dated January 27, 2000, issued in response to your request for a ruling on August 31, 1999. NYRL E86861 held that vanilla cake icings from Canada that contained 78% sucrose by dry weight and imported in bulk, were classified in subheading 2106.90.9400, Harmonized Tariff Schedule of the United States (HTSUS), a tariff rate quota provision, as other food preparations not elsewhere specified or included, containing over 65% by dry weight of sugar. When imported in one-ounce cup retail containers, it was held that the icings were classified in subheading 2106.90.9997, HTSUS, a provision not subject to a tariff rate quota. You indicate that the bulk shipments are intended to be repackaged in the United States into retail containers and therefore they are also classifiable in subheading 2106.90.9997, HTSUS. Our decision follows.
Pursuant to section 625(c), Tariff Act of 1930, as amended (19 U.S.C. 1625(c)), notice of the proposed modification of NYRL E86861 was published on February 21, 2001, in the Customs Bulletin, Vol. 35, No. 8. No comments were received.
FACTS:
A vanilla cake icing was described in NYRL E86861 as a soft, white, spreadable paste said to be composed of 55-65% liquid sugar, 20-25% icing sugar, 3-8% water, 3-5% dextrose, and other ingredients. A Customs laboratory analysis of a sample, indicated that the icing contained 78% sucrose by dry weight. The product is stated to be ready for use without further preparation. The product will be imported either in one-ounce cups for distribution to retail consumers or imported in bulk containers for repackaging into one-ounce cups for distribution to retail consumers. In your letter of February 9, 2000, you stated as follows:
The product packaged in a tote will be used to subsequently pack into small cups in the United States. There is no further processing of the icing. It is not an industrial ingredient, rather a consumer ingredient shipped in bulk. A U.S. firm will pump the icing into a hopper and pack it into small portions.
ISSUE:
Whether under Additional U.S. Note 2, Section lV, HTSUS, and Additional U.S. Notes 2 and 3, Chapter 17, HTSUS, imported bulk shipments of cake icings containing over 65% sucrose, intended for repackaging in the U.S. into one-ounce cup 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 provisions of the tariff 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:
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 the icings 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 are imported in bulk. 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 bakers 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, the icings that meet the three requirements are classified in subheadings 2106.90.92 and 2106.90.94, HTSUS, as held in HQs 960694 and 963649.
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 percent 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, the vanilla cake icings imported in one-ounce cups containing over 65% cane or beet sugar by dry weight as described in NYRL E86861 were classified in subheading 2106.90.9997, HTSUS, as other articles containing cane or beet sugar, not subject to quota. You request the same classification treatment for the bulk importations that are repackaged in the U.S. into retail containers.
The other product is vanilla cake icings containing over 65% by dry weight of sugar and imported in bulk rather than for marketing to the ultimate consumer. These bulk packages meet two of the three requirements for Additional U.S. Note 2, Chapter 17. However, they fail to meet the third requirement, that is “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, in HQ 960694, affirmed by HQ 963649, that icing for “untopped” donuts, pastries, etc., is an "ingredient,” 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 icing from the quota. The exception exists when the processing or mixing is performed by the ultimate consumer prior to consumption of the product. When icing containing over 65 percent sugar is 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, the icings, when repackaged in the United States into retail containers, are classified in subheading 2106.90.9997, HTSUS, not subject to tariff rate quotas. See NYRL 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.
HOLDING:
Ready- to-use imported bulk shipments of cake icings containing over 65% 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.
NYRL E86861 dated January 27, 2000, is modified. 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