CLA-2 RR:CR:GC 966103ptl
Port Director
U.S. Customs and Border Protection
198 West Service Road
Champlain, NY 12919
RE: Protest 0712-02-100129; Cream Liqueur Concentrate
Dear Port Director:
This is our response to Protest 0712-02-100129, filed by counsel on behalf of Allied Domecq Spirits & Wine USA, Inc., against your classification under the Harmonized Tariff Schedule of the United States (HTSUS), of a product referred to as "cream liqueur concentrate" in subheadings 1901.90.4200, or 1901.90.4300, HTSUS. Those subheadings provide for Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions.
FACTS:
The protest concerns six entries made between October 2001 and January 2002, in which the goods under protest, identified as "cream liqueur concentrate," were entered in subheading 2208.70.0060, HTSUS, as liqueurs in containers each holding over 4 liters. When the entries were liquidated on May 24, 2002, the goods were classified in subheading 1901.90.4200, HTSUS, which provides for food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent
by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions, or subheading 1901.90.4300, HTSUS, the over-quota provision.
Counsel filed a timely protest on July 10, 2002, which argued that the goods are properly classified as a liqueur in heading 2208, HTSUS, as initially claimed. In the alternative, counsel argued that the goods should be classified in subheading 2106.90.12, HTSUS, which provides for other food preparations, not elsewhere specified or included; other; compound alcoholic preparations of an alcoholic strength by volume exceeding 0.5 percent vol., of a kind used for the manufacture of beverages. On April 23, 2003, counsel filed supplemental materials in which further arguments were made supporting the desired classification. In preparing this letter, the contents of both submissions were considered. They were also discussed during an extended telephone conference on December 2, 2003.
According to information provided by the importer, as imported, the liqueur concentrate is composed of: 40 percent cream (35 percent milkfat), 18 percent sucrose, 4 percent milk protein, 10 percent molasses alcohol, as well as maltodextrine, and water. Additional flavors and ingredients (including Kahlua and vodka), are added to the concentrate after importation. The cream liqueur concentrate constitutes only approximately 18 percent by volume of the finished retail product and only 33 percent of its value.
ISSUE:
What is the classification of cream liqueur concentrate?
LAW AND ANALYSIS:
Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs may then be applied in order.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS subheadings under consideration are as follows:
1901 Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included:
* * *
1901.90 Other
Other:
Dairy products described in additional U.S. note 1 to chapter 4:
Dairy preparations containing over 10 percent by weight of milk solids:
* * *
1901.90.4200 Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions
1901.90.4300 Other 1/
Other:
* * *
1901.90.4600 Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions
1901.90.4700 Other 2/
1/ See subheadings 9904.04.50-9904.05.01.
2/ See subheadings 9904.04.50-9904.05.01.
2106 Food preparations not elsewhere specified or included:
2106.90 Other:
Compound alcoholic preparations of an alcoholic strength by volume exceeding 0.5 percent vol., of a kind used for the manufacture of beverages:
2106.90.1200 Containing not over 20 percent of alcohol by weight
2106.90.1500 Containing over 20 percent but not over 50 percent of alcohol by weight
2106.90.1800 Containing over 50 percent of alcohol by weight
2208 Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.; spirits, liqueurs and other spirituous beverages:
* * *
2208.70.00 Liqueurs and cordials
* * *
2208.70.0060 In containers each holding over 4 liters
For support in its contention that the goods are classified in heading 2208, counsel refers to the ENs for that heading which provide, in pertinent part, as follows:
The heading covers, whatever their alcoholic strength :
(A) Spirits produced by distilling wine, cider or other fermented beverages or fermented grain or other vegetable products, without adding flavouring; they retain, wholly or partly, the secondary constituents (esters, aldehydes, acids, higher alcohols, etc.) which give the spirits their peculiar individual flavours and aromas.
(B) Liqueurs and cordials, being spirituous beverages to which sugar, honey or other natural sweeteners and extracts or essencesses have been added (e.g., spirituous beverages produced by distilling, or by mixing, ethyl alcohol or distilled spirits, with one or more of the following: fruits, flowers or other parts of plants, essences, essential oils or juices, whether or not concentrated). These products also include liqueurs and cordials containing sugar crystals, fruit juice liqueurs, egg liqueurs, berry liqueurs, spice liqueurs, tea liqueurs, chocolate liqueurs, milk liqueurs and honey liqueurs.
(C) All other spirituous beverages not falling in any preceding heading of this Chapter.
Provided that their alcoholic strength by volume is less than 80 % vol, the heading also covers undenatured spirits (ethyl alcohol and neutral spirits) which, contrary to those at (A), (B) and (C) above, are characterized by the absence of secondary constituents giving a flavour or aroma. These spirits remain in the heading whether intended for human consumption or for industrial purposes.
In addition to undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 % vol, the heading includes, inter alia :
* * *
(6) Spirituous beverages (generally known as liqueurs), such as anisette (obtained from green anise and badian), curaçao (manufactured with the peel of the bitter orange), kummel (flavoured with caraway or cumin seeds).
(7) The liqueurs known as “crèmes ”, because of their consistency or colour. They are generally of relatively low alcoholic content and very sweet (for example, creams of cocoa, bananas, vanilla, coffee). The heading also covers spirits consisting of emulsions of spirit with products such as egg yolk, cream.
Counsel states: "[t]he cream liqueur in question we believe is provided for in part (C) above as a spirituous beverage having an alcoholic strength by volume which is less than 80% and characterized by the absence of secondary constituents such as flavor or aroma elements." In support of this statement, counsel cites HQ 086612, dated June 4, 1990, in which four products that were alcoholic distillates used in the preparation of food related items were classified in heading 2008, HTSUS.
We believe counsel has misread both the EN and HQ 086612. The cream liqueur concentrate is not a spirit produced by distilling wine, cider or other fermented beverages or fermented grain or other vegetable products, without added flavoring. Counsel cites to the language of HQ 086612 which provides that "spirits" are "the liquid containing ethyl alcohol and water that is distilled from an alcoholic liquid or mash." The cream liqueur concentrate is not a liquid containing ethyl alcohol and water, produced by distillation. The concentrate has been produced by combining cream, alcohol, sucrose, maltodextrine, sodium caseinate and water. As such, it is not a "spirit." Additionally, because of its composition, it does not satisfy the requirements to be considered a spirituous beverage. "Spirituous" is defined in the Unabridged Edition of the Random House Dictionary of the English Language (1973) as: "adj 1. Containing, of the nature of, or pertaining to alcohol; alcoholic. 2. (of alcoholic beverages) distilled, rather than fermented." In order to be considered a beverage for tariff purposes, a product must have an actual, substantial use as a beverage, and not be diluted or principally used as an ingredient. (See, Strohmeyer & Arpe Co. v. U.S., 28 C.C.P.A. 34; CAD 121 (1940) and Wah Shang Co. v. U.S., 44 C.C.P.A. 155; CAD 654 (1957))
As entered, the cream liqueur concentrate is not intended for consumption as a beverage. In HQ 950299, dated December 30, 1991, Customs reiterated the language of Strohmeyer & Arpe , and stated "For tariff purposes, a beverage is a product which is drinkable in its condition as imported. However, this does not indicate that all potable liquids are necessarily considered beverages under the HTSUSA." The cream liqueur concentrate has been prepared for use as a base to which water, milk, small amounts of Kahlua, vodka, and natural and artificial flavors will be added after importation in order to produce a finished product. Thus, it cannot be a spirituous beverage within the context of EN paragraph (C).
Based on the above discussion, the cream liqueur concentrate is not a spirit or spirituous beverage of heading 2208, HTSUS.
Counsel's alternate classification is in subheading 2106.90.12, HTSUS. The ENs for this subheading provide, in relevant part, as follows:
This heading covers:
* * *
(7) Non-alcoholic or alcoholic preparations (not based on odoriferous substances) of a kind used in the manufacture of various non-alcoholic or alcoholic beverages. These preparations can be obtained by compounding vegetable extracts of heading 13.02 with lactic acid, tartaric acid, citric acid, phosphoric acid, preserving agents, foaming agents, fruit juices, etc. The preparations contain (in whole or in part) the flavouring ingredients which characterize a particular beverage. As a result, the beverage in question can usually be obtained simply by diluting the preparation with water, wine or alcohol, with or without the addition, for example, of sugar or carbon dioxide gas. Some of these products are specially prepared for domestic use; they are also widely used in industry in order to avoid the unnecessary transport of large quantities of water, alcohol, etc. As presented, these preparations are not intended for consumption as beverages and thus can be distinguished from the beverages of Chapter 22.
The heading excludes preparations of a kind used for the manufacture of beverages, based on one or more odoriferous substances (heading 33.02).
Counsel cites as a precedent for this classification, HQ 953327, dated June 4, 1993, which classified a non-fat dairy base rum liqueur which was to be used for the manufacture of beverages in subheading 2208.90.80, HTSUS. (Subsequent to the issuance of this ruling, the HSC deleted this subheading from Chapter 22 and created a new subheading in Chapter 21 to provide for non-alcoholic and alcoholic preparations (not based on odoriferous substances) of a kind used in the manufacture of various non-alcoholic and alcoholic beverages.) However, the product in HQ 953327 can be distinguished from the subject cream liqueur concentrate in that, as imported, it contained the particular flavoring ingredients which characterized the particular beverage for which it was the base ingredient. In the case of the product of HQ 953327, that flavor was rum.
The cream liqueur concentrate under consideration does not meet the parameters of the EN. It is not a beverage base that contains the flavoring ingredients that characterize the particular beverage. As stated above, the cream liqueur concentrate constitutes only approximately 18 percent by volume of the finished retail product and only 33 percent of its value. The concentrate is not a product composed of vegetable extracts or other flavoring ingredients compounded with other ingredients. It does not contain any of the specific flavoring ingredients that would characterize a particular beverage, and it will not yield the finished beverage simply by dilution.
To support classification of the cream liqueur concentrate in heading 2106, HTSUS, counsel also cites NY H82695, dated August 1, 2001, concerning a Tequila/Agave flavoring and NY C88658, dated June 4, 1998, which also classified a cider concentrate in that heading. However, these products differ significantly from counsel's cream concentrate. Both products were essentially complete, needing only dilution to yield the finished beverage and both contained flavoring ingredients that characterized the finished beverage. Further, both products contain a flavoring ingredient that characterized the beverage for which they were created.
Counsel cites NY A80165, dated March 6, 1996 which classified a beverage sweetener in heading 2106.90.12, HTSUS. However that ruling was revoked by
HQ 965609, dated October 30, 2002, which comprehensively discussed the criteria which must be met by products in order to be classified in heading 2106. As stated above, the cream liqueur concentrate is lacking the flavoring characteristics and relative completeness which is necessary for products classified as compound alcoholic preparations of subheading 2106.90.12 through 2106.90.18, HTSUS.
The cream liqueur concentrate at issue is composed of 40 percent cream which is more than twice the amount of any other component. The cream is a product of heading 0402, HTSUS. The addition of alcohol and other ingredients precludes the product from classification in Chapter 4. However, pursuant to GRI 1, the product is described by the terms of heading 1901, HTSUS, as a food preparation of goods of headings 0401 to 0404, …, not elsewhere specified or included. The ENs to heading 1901 provide that "[T]he preparations of this heading may be distinguished from the products of headings 04.01 to 04.04 in that they contain, in addition to natural milk constituents, other ingredients not permitted in the products of those earlier headings." (Emphasis added) This language clearly describes the composition of the cream liqueur concentrate under consideration. Accordingly, the cream liqueur concentrate is properly classified in heading 1901, HTSUS.
HOLDING:
The cream liqueur concentrate is classified in subheading 1901.90.42 or 1901.90.43, HTSUS, as appropriate, which are the in or over-quota subheadings for food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included.
The protest should be DENIED. 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 CPB personnel, and to the public on the CBP Home Page on the World Wide Web at www.dhs.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial Rulings Division