CLA-2 RR:CR:GC 966092 AM
Port Director
U.S. Customs Service
477 Michigan Avenue
Detroit, MI 48226
Re: Protest 4101-02-100322; Arbor Foods Inc., sugar/gelatin blend
Dear Port Director:
This is in regard to protest 4101-02-100322, filed by counsel against your classification of Arbor Foods sugar/gelatin blend (hereinafter "blend") under the Harmonized Tariff Schedule of the United States (HTSUS), and against your liquidation and rate advance for one entry.
FACTS:
The sugar/gelatin blend at issue consists of 2% gelatin and 98% sugar of similar particle size.
The merchandise was entered on July 1, 2001 under subheading 2106.90.58, HTSUS, as an "other food preparation." The entry was liquidated on May 24, 2002, under subheading 1701.99.50 HTSUS, as "sugar" subject to the quota provisions of 9904.17.15. A protest was timely filed on June 12, 2002.
ISSUE:
Whether the blend is classified in subheading 2106.90.58, HTSUS, as an "other food preparation." or in subheading 1701.99.50 HTSUS, as "Cane or beet sugar and chemically pure sucrose, in solid form."
LAW AND ANALYSIS:
Merchandise imported into the U.S. is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context that requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in order. GRI 3 requires that when goods are prima facie classifiable under two or more headings, the most specific description is preferred, and if neither is more specific, that heading which describes the essential character of the merchandise or, if none, occurs last in numerical order is used. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and mutatis mutandis, to the GRIs. In interpreting the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89 80, 54 Fed. Reg. 35127 (August 23, 1989).
GRI 2(b) requires that goods consisting of different materials be classified according to the principles of GRI 3. GRI 3(a) requires that amongst competing headings, the most specific heading be used, but headings that refer to part only of the goods are equally specific. GRI 3(b) provides that composite goods consisting of different materials or made up of different components, shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. Explanatory Note 3(b)(VIII) to GRI 3(b) states that essential character may be determined by "the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods."
The following HTSUS headings are relevant to the classification of this product:
1701: Cane or beet sugar and chemically pure sucrose, in solid form:
* * * * * * * * * * * * *
2106: Food preparations not elsewhere specified or included:
EN 21.06 states, in pertinent part, the following:
…this heading covers:
Preparations for use, either directly or after processing…for human consumption
Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. (emphasis added)
Heading 2106 is a “principal use” provision. When applying a "principal use" provision, Customs must ascertain the class or kind of goods which are involved and decide whether the subject merchandise is a member of that class. See supra Additional US Rule of Interpretation 1 to the HTSUS. E. M. Chemicals v. United States, 20 C.I.T. 382, 923 F. Supp. 202 (1996 Ct. Intl. Trade). The court, in United States v. Carborundum Co., 63 C.C.P.A. 98, 102, 536 F.2d 373, cert. denied, 429 U.S. 979, 50 L. Ed. 2d 587, 97 S. Ct. 490 (1976), listed the following factors used to determine the class or kind of goods a heading describes: "(1) the general physical characteristics of the merchandise; (2) the expectation of the ultimate purchasers; (3) the channels of trade in which the merchandise moves; (4) the environment of the sale (e.g. the manner in which the merchandise is advertised and displayed); (5) the usage of the merchandise; (6) the economic practicality of so using the import; and (7) the recognition in the trade of this use." Id. at 377.
Applying these factors, we see that sugar/gelatin blends useable as such consist of approximately 90-93% sugar to approximately 7-10% gelatin. They are used, as is sugar, in the food industry. The expectation of the ultimate purchaser is that they will both sweeten and thicken or gel the final food product. Protestant has not submitted any evidence that the instant blend will perform as does a sugar/gelatin food preparation. In fact, protestant states that the product is used in gummies and other gelatin containing products. Gummies and gelatin desserts contain substantially more gelatin in relation to the amount of sugar than is contained in protestant’s product. For instance, New York ruling Letter (NY) C81088, dated November 24, 1997, discussed the classification of a 77% sugar, 23% gelatin blend that constituted the major ingredient in gummies. To the extent gummies and gelatin desserts are sweetened, the instant blend is being used as a sweetener as its gelatin content in relation to the finished product is too small to warrant its addition. In short, it is not being used as a sugar/gelatin blend. While an importer may fashion its merchandise in any manner it sees fit to take advantage of a lower duty rate, see Heartland By-Products, Inc. v. U. S., 74 F. Supp. 2d 1324 (Ct. Intl. Trade, 1999), the sugar/gelatin blend here is not fashioned as a member of the class or kind of goods used as food preparations of heading 2106, HTSUS.
In HQ 964379, dated October 22, 2001, we stated, in pertinent part, the following:
Food preparations consisting of a sugar and gelatin blend are used as ingredients in the manufacture of a variety of foods: desserts, dessert mixes, confections, etc. These are generally imported in bulk and used by manufacturers of foods for human consumption, in the condition as imported, as the principle sweetening and stabilizing ingredient in food products. Their composition varies, but sugar is always the primary component by weight, most often between 90 and 93% for blends used in gelatin dessert mixes. Characteristic of this class or kind of merchandise is the uniformity of the blend. The sugar and gelatin are virtually indistinguishable. They are of a similar particle size and, owing to that similarity, separation of the two components is difficult and economically unfeasible.
While the particles here are of similar size and are not separated, the product remains a blend which is unuseable as a sugar/gelatin blend.
Furthermore, protestant claims that marshmallows, prepared jellies, nougat, soufflés, mousses and chiffon pies contain 2% or less gelatin. This fact is irrelevant to the situation at hand. Many finished products contain less than 2% gelatin. However, protestant is not importing a finished product. Rather, protestant imports a sugar gelatin blend. “The largest use of edible gelatin, however, is in the preparation of gelatin desserts in 1.5-2.5% concentrations. The gelatin is sold either premixed with sugar and flavorings or as unflavored gelatin.” Encyclopedia of Food Science and Technology, v.2, Y.H. Hui, Editor-in-Chief, p. 1288 (John Wiley & Sons, Inc, 1992). Since a finished gelatin dessert contains 1.5-2.5% gelatin, as a ratio to just the sugar in the dessert, the gelatin must be substantially larger than 1.5-2.5%. This supports our finding that sugar/gelatin blends useable in commerce as such, contain approximately 90-93% gelatin. We find no evidence for the suggestion that the instant blend is useable as a food preparation as imported. Rather, it is useable only as the sugar sweetener in the food preparation to which it is added.
Protestant states that Customs has found food preparations of more than 98% sugar to be classified as food preparations in heading 2106, HTSUS. In HQ 961927, dated October 13, 1999, Customs found that a mixture of sugar and aspartame, another sweetener, used as imported without the addition of more aspartame, was a food preparation. This case is not analogous to the present situation. There, the sugar was co-crystallized with the aspartame producing a new and complete low calorie sugar product. Similarly, in NY 868618, dated December 2, 1991, a 98% sugar, 1% pectin and 1% citric acid product sold as is for use in making jams and jellies was classified in heading 2106, HTSUS, as a food preparation. Again, this product was a complete preparation with a legitimate function as such.
Furthermore, a plethora of rulings support our interpretation of the HTSUS. Sugar blends classified in heading 2106, HTSUS, had commercial identities as useable preparations. For instance, NY895327, dated March 22, 1994, found that a 90% sugar, 10% gelatin blend used in dessert mixes was classified in 2106. This product is an example of typical sugar/gelatin blends used in dessert mixes. HQ955870, dated December 16, 1994, classified a 80% sugar, 20% coconut fat blend used in making ice cream as a food preparation of heading 2106, HTSUS, because the ENs describe just such complete fat/sugar blends as belonging in that heading. No such description exists for the instant sugar/gelatin blend.
Protestant states that EN 21.06 (B), listing preparations consisting wholly of foodstuffs, mandates that the instant blend be classified in heading 2106, HTSUS. We disagree. The EN simply begs the question of whether the blend is a food preparation. The cases protestant cites on this point do not support its position either. HQ962921, dated December 11, 2000 and HQ962766, dated January 23, 2001 found that capsules containing a myriad of chemicals in a gelatin capsule qualified as a food preparation rather than a medicament or single chemical compound because they were prepared products containing at least one foodstuff, including gelatin, and were chemical mixtures without therapeutic uses. These cases do not mandate that a 98% sugar product be classified as a food preparation simply because a sprinkling of other foodstuff is added to it.
Instead, classification proceeds according to the remaining GRIs. While the product consists of two components, sugar of heading 1701, HTSUS, and gelatin, of heading 3503, HTSUS, it is specifically described at GRI 3(a) as sugar. The merchandise is used as sugar. The amount of gelatin in the product is irrelevant to its use as shown by the need for the addition of a substantial amount of gelatin. Arguendo, an essential character analysis is warranted using GRI 3(b), the sugar imparts the essential character of the product because it comprises a much larger percentage of the product. Furthermore, the role of the sugar is far greater in relation to the role of the product than is the gelatin. The product is used for its sugar content as a sweetener. Hence, in the instant blend, as well as in several other cases, the sugar imparts the essential character to the blend as imported. (See Headquarters ruling letters 082230, dated January 12, 1989, 085105, dated July 31, 1989, 087088 and 087089, dated May 16, 1990).
Protestant also claims that heading 1701, HTSUS, to the extent it allows any additions to the sugar, applies only to sugars flavored or colored. While this may be true using a GRI 1 analysis, the product here, as explained above, requires a GRI 3 analysis. No heading describes the substance at GRI 1. GRI 2(b) allows for the expansion of headings. We have consistently classified such blends in heading 1701, HTSUS. For example, see NYG86340, dated January 29, 2001, 99% sugar, 1% gelatin; NYG86384, dated February 8, 2001, 95% sugar, 5% gelatin; NYG86512, dated February 12, 2001, 99% sugar, 1% dried apple juice; NYH82796, dated July 12, 2001, 99.5% sugar, .5% cocoa, and NYI86961, dated October 30, 2002, cinnamon sugar and vanilla sugar blends.
Using GRI 6, the blend is classified under subheading 1701.99.50, HTSUS, the provision for "[C]ane or beet sugar and chemically pure sucrose, in solid form: [O]ther: [O]ther."
HOLDING:
The protest is DENIED. Arbor Foods sugar/gelatin blend is classified under subheading 1701.99.50, HTSUS, the provision for "[C]ane or beet sugar and chemically pure sucrose, in solid form: [O]ther: [O]ther." The product is subject to the quota provisions of subheading 9904.17.15, HTSUS.
In accordance with Section 3A(11)(b) of Customs Directive 099 3550 065, dated August 4, 1993, Subject: Revised Protest Directive, you are to mail this decision, together with the Customs Form 19, to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Regulations and Rulings will make the decision available to Customs personnel, and to the public on the Customs Home Page on the World Wide Web at www.customs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division