OT:RR:CTF:FTM H278985 PJG
Port Director
200 East Bay Street
Charleston, South Carolina 29401
Attn: Heather D. Puckhaber, Senior Import Specialist
RE: Application for Further Review of Protest No. 1601-14-100070; Tariff classification of food products
Dear Port Director:
This is in reference to the Application for Further Review (“AFR”) of
Protest No. 1601-14-100070, timely filed on April 17, 2014, on behalf of PreGel America Inc. (“PreGel” or “Protestant”). The AFR concerned the tariff classification of twenty-seven food products under the Harmonized Tariff Schedule of the United States (“HTSUS”). The Port of Charleston agreed with the importer’s classification for eleven of the subject food products. The eleven products for which there is agreement between the port and the Protestant are not addressed herein, pursuant to 19 C.F.R. § 174.26. In an email, dated August 29, 2017, PreGel informed us that they are withdrawing their protest with regard to the fourteen remaining products, except for the Biscotto and the Tenerissimo Vaniglia. Therefore, this decision only addresses the classification of the Biscotto and the Tenerissimo Vaniglia.
FACTS:
The PreGel website describes the Biscotto as a “smooth paste,” packaged in two buckets with a weight of 6.6 lbs. each. The list of ingredients for this product, which was provided by the Protestant in Attachment B of its protest, are as follows: glucose syrup (80 percent); sugar (10 percent); concentrated sugared milk (5 percent); flavours (4 percent); egg yolks (0.8 percent); antioxidant: E 307 alpha-tocopherol (0.1 percent); and peanut oil (0.1 percent). In its supplemental submission, dated July 20, 2017, the Protestant indicates that the Biscotto contains 8 percent by dry weight of sucrose.
The PreGel America website describes the Tenerissimo Vaniglia as an
“instant, powdered mix [that] only requires the addition of water or milk to produce a delicious frozen dessert & beverage similar to soft gelato that boasts a fantastic vanilla spice flavor that accentuates its sweet, woody essence.” The website also describes the packaging as 12 bags with a weight of 1.4 lbs. each. The list of ingredients for this product, which were provided by the Protestant in Attachment B of its protest, are as follows: sugar (45 percent); maltodextrin (30 percent); skimmed milk powder (11 percent); vegetable fat (9 percent); dextrose (4.7 percent); emulsifier: E 471, E 472a, E 472b, E 477 (0.1 percent); flavours (0.1 percent); and certified colour: E 101i, E 160a (0.1 percent). In its supplemental submission, dated July 20, 2017, the Protestant indicates that the Tenerissimo Vaniglia contains 40 percent by dry weight of sucrose.
In an email dated August 29, 2017, the Protestant also supplemented its AFR with the unit price of each of the ingredients in the Tenerissimo Vaniglia and Biscotto products as well as the total price of the ingredients in the product based on the amount of the ingredient used therein. The total price of the amount of skimmed milk powder used in the Tenerissimo Vaniglia is $0.52. The total price of the amount of concentrated sugared milk used in the Biscotto is $0.27. It constitutes 4.3 percent of the total value of the Biscotto and 20 percent of the total value of the Tenerissimo Vaniglia.
The decision protested is the tariff classification of the Biscotto, which was entered on August 18, 2011 and liquidated on November 8, 2013, and the Tenerissimo Vaniglia, which was entered on January 23, 2013 and liquidated on November 1, 2013. U.S Customs and Border Protection (“CBP”) liquidated the entries for the Biscotto and Tenerissimo Vaniglia products under heading 1901, HTSUS.
ISSUE:
What is the proper classification of the Biscotto and Tenerissimo Vaniglia products?
LAW AND ANALYSIS:
Initially, we note that this matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on classification. The protest was timely filed within 180 days of liquidation. See 19 U.S.C. § 1514(c)(3).
Protestant alleges that Further Review of Protest No. 1601-141-00070 should be accorded pursuant to 19 C.F.R. § 174.24(a), because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of CBP or his designee, or with a decision made by CBP with respect to the same or substantially similar merchandise, or alternatively, 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts. The Protestant alleges that the liquidation decisions at issue are inconsistent with the following rulings: Headquarters Ruling Letter (“HQ”) 956100, dated February 7, 1995; HQ 965474, dated July 30, 2002; HQ 965859, dated March 7, 2003; New York Ruling Letter (“NY”) K81647, dated December 11, 2003;
NY N007407, dated March 2, 2007; and, NY N080927, dated January 21, 2010. We find that Further Review of Protest No. 1601-141-00070 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b).
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI”). GRI 1 provides that the classification of goods shall be determined 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.
The 2011 HTSUS provisions 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:
The 2013 HTSUS provisions under consideration are as follows:
2106 Food preparations not elsewhere specified or included:
Note 1 to Chapter 4, HTSUS, states that “[t]he expression ‘milk’ means full cream milk or partially or completely skimmed milk.”
Additional U.S. Note 1 to Chapter 4, HTSUS, provides as follows:
For the purposes of this schedule, the term “dairy products described in additional U.S. note 1 to chapter 4” means any of the following goods: malted milk, and articles of milk or cream (except (a) white chocolate and (b) inedible dried milk powders certified to be used for calibrating infrared milk analyzers); articles containing over 5.5 percent by weight of butterfat which are suitable for use as ingredients in the commercial production of edible articles (except articles within the scope of other import quotas provided for in additional U.S. notes 2 and 3 to chapter 18); or, dried milk, whey or buttermilk (of the type provided for in subheadings 0402.10, 0402.21, 0403.90 or 0404.10) which contains not over 5.5 percent by weight of butterfat and which is mixed with other ingredients, including but not limited to sugar, if such mixtures contain over 16 percent milk solids by weight, are capable of being further processed or mixed with similar or other ingredients and are not prepared for marketing to the ultimate consumer in the identical form and package in which imported.
Additional U.S. Note 2 to Section IV, HTSUS, states 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.
Additional U.S. Note 3 to Chapter 17, HTSUS, provides as follows:
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 8 to Chapter 17, HTSUS, provides as follows:
The aggregate quantity of articles containing over 10 percent by dry weight of sugars described in additional U.S. note 3 to chapter 17, entered under subheadings 1701.91.54, 1704.90.74, 1806.20.75, 1806.20.95, 1806.90.55, 1901.90.56, 2101.12.54, 2101.20.54, 2106.90.78 and 2106.90.95 during the 12-month period from October 1 in any year to the following September 30, inclusive, shall not exceed 64,709 metric tons (articles the product of Mexico shall not be permitted or included under this quantitative limitation and no such articles shall be classifiable therein).
The Harmonized Commodity Description and Coding System Explanatory Notes
(“ENs”) constitute the “official interpretation of the Harmonized System” at the international level. See 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). While neither legally binding nor dispositive, the ENs “provide a commentary on the scope of each heading” of the HTSUS and are “generally indicative of [the] proper interpretation” of these headings. See id.
General EN(I) to Chapter 4 states, in pertinent part:
* * *
The Chapter also excludes, inter alia, the following :
Food preparations based on dairy products (in particular, heading 19.01).
* * *
The EN to 19.01 states, in pertinent part:
* * *
(III) Food preparations of goods of headings 04.01 to 04.04, not containing cocoa or containing less than 5 % by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included.
The 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. Thus heading 19.01 includes, for example :
(1) Preparations in powder or liquid form used as infant food or for dietetic purposes and consisting of milk to which secondary ingredients (e.g., cereal groats, yeast) have been added.
(2) Milk preparations obtained by replacing one or more constituents of milk (e.g., butyric fats) by another substance (e.g., oleic fats).
The products of this heading may be sweetened and may contain cocoa. However, the heading excludes products having the character of sugar confectionery (heading 17.04) and products containing 5 % or more by weight of cocoa calculated on a totally defatted basis (see the General Explanatory Note to this Chapter) (heading 18.06) and beverages (Chapter 22).
The heading also covers mixes and bases (e.g., powders) for making ice cream but it excludes ice cream and other edible ice based on milk constituents (heading 21.05).
The EN to 21.05 states as follows:
This heading covers ice cream, which is usually prepared with a basis of milk or cream, and other edible ice (e.g., sherbet, iced lollipops), whether or not containing cocoa in any proportion. However, the heading excludes mixes and bases for ice cream which are classified according to their essential constituents (e.g., heading 18.06, 19.01 or 21.06).
The EN to 21.06 states as follows:
Provided that they are not covered by any other heading of the Nomenclature, this heading covers:
(A) Preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk, etc.), for human consumption.
(B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38).
However, the heading does not cover enzymatic preparations containing foodstuffs (e.g., meat tenderisers consisting of a proteolytic enzyme with added dextrose or other foodstuffs). Such preparations fall in heading 35.07 provided that they are not covered by a more specific heading in the Nomenclature.
* * *
Protestant argues that the Tenerissimo Vaniglia should be classified in subheading 2106.90.82, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Containing over 10 percent by weight of milk solids: Other: Other.” Further, the Protestant argues that the Biscotto should be classified in subheading 2106.90.99, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Other.” CBP liquidated both products in heading 1901, HTSUS.
As heading 2106, HTSUS, provides for “[f]ood preparations not elsewhere specified or included,” the initial determination is whether the subject merchandise is classifiable in another heading in the HTSUS. As set forth supra, heading 1901, HTSUS, provides for, in pertinent part, “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.” EN 19.01(III) states that “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.” Moreover, General EN(I)(a) to Chapter 4 states that Chapter 4 excludes “[f]ood preparations based on dairy products (in particular, heading 19.01).” In Orlando Food Corp. v. United States, the U.S. Court of Appeals for the Federal Circuit reasoned that “[i]nherent in the term ‘preparation’ is the notion that the object involved is destined for a specific use.” See Orlando Food Corp. v. United States, 140 F.3d 1437, 1441 (Fed. Cir. 1998). Moreover, the court referred to The Oxford English Dictionary definition of “preparation” which is “‘a substance specially prepared, or made up for its appropriate use or application.’” Id. (citing The Oxford English Dictionary 374 (2d. ed. 1989)). Both products at issue are “preparation” within the court prescribed meaning of this term. The Biscotto is specially made up to be used as a paste in desserts, and the Tenerissimo Vaniglia is a substance that is specially made up to be mixed with “water or milk to produce a delicious frozen dessert & beverage.”
The next determination is whether the subject preparations are “goods of headings 0401 to 0404,” for purposes of classification in heading 1901, HTSUS. Note 1 to Chapter 4 states that “[t]he expression ‘milk’ means full cream milk or partially or completely skimmed milk.” The CIT explained in Arko Foods Int’l, Inc. that “in determining if an item is an article of milk or cream, the Court will consider whether milk or cream is the essential ingredient, the ingredient of chief value, and the preponderant ingredient” and will also “consider any evidence” of whether the product “is considered an article of milk or cream within the industry.” Arko Foods Int’l, Inc. v. United States, 33 Ct. Int’l Trade 1891, 1901 (2009) (citing Wilsey Foods, Inc. v. United States, 18 Ct. Int’l Trade 212, 213 (1994), aff’d, 654 F.3d 1361 (2011)). Moreover, the CIT stated that the existence of milk-derived products in an article does not mean that the article becomes an “‘article[] of milk or cream’ within the meaning of additional U.S. note 1 to chapter 4.” Id. at 1902.
Even assuming, arguendo, that milk is the essential ingredient in the Biscotto and Tenerissimo Vaniglia products, the products do not meet the other two court prescribed standards (i.e., the ingredient of chief value and the preponderant ingredient). Milk is not the “ingredient of chief value” in either of these products based on the pricing information provided for each of the ingredients and the total value of each product. Milk is also not the preponderant ingredient in either of these products based on the quantities of each ingredient provided by the Protestant. Finally, we do not have any evidence supporting or disproving that any of these products are considered articles of milk or cream by the industry. On the basis of these factors, the Biscotto and Tenerissimo Vaniglia products are not classifiable under heading 1901, HTSUS, as “food preparations of goods of headings 0401 to 0404.” Instead, they are classifiable under heading 2106, HTSUS, as “[f]ood preparations not elsewhere specified or included.”
Protestant indicates that the Tenerissimo Vaniglia contains over 10 percent by weight of milk solids. Moreover, in its supplemental submission, the Protestant indicates that the Tenerissimo Vaniglia contains 40 percent by dry weight of sucrose. Therefore, the Tenerissimo Vaniglia satisfies the quantitative sugar criterion set forth in Additional U.S. Note 3 to Chapter 17, HTSUS, in that in contains “over 10 percent by dry weight of sugar.” The Protestant asserts that the Tenerissimo Vaniglia is a topping and is therefore excluded from Additional U.S. Note 3 to Chapter 17, HTSUS. We note that the PreGel website describes the Tenerissimo Vaniglia as an “instant, powdered mix [that] only requires the addition of water or milk to produce a delicious frozen dessert & beverage similar to soft gelato that boasts a fantastic vanilla spice flavor that accentuates its sweet, woody essence.” Based on the description of the merchandise on the PreGel website, we do not agree that this product is a topping as described in paragraph (d) of Additional U.S. Note 3 to Chapter 17, HTSUS, because it is not a cake decoration or a similar product that is to be used without further processing for application to individual pastries or confections. Moreover, the product is also not subject to any of the other exceptions in Additional U.S. Note 3 to Chapter 17, HTSUS. Based on the foregoing, we find that the product is not classified in subheading 2106.90.82, HTSUS, as originally claimed by the Protestant, or in subheading 2106.90.95, HTSUS, which is where the Protestant indicates that it has been classifying the merchandise. Instead, the Tenerissimo Vaniglia is classified in subheading 2106.90.78, HTSUS, and if the quantitative limits of Additional U.S. Note 8 to Chapter 17, HTSUS, have been reached, then it is classified in subheading 2106.90.80, HTSUS, and will be subject to additional duties based on its value, as described in subheadings 9904.17.49 to 9904.17.65, HTSUS.
In its supplemental submission, the Protestant indicated that the Biscotto contains 8 percent by dry weight of sucrose, therefore, it is not classifiable in subheadings 2106.90.95, HTSUS, or 2106.90.97, HTSUS, both of which provide, in relevant part, for “[a]rticles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17.” Accordingly, we find that the product is classified in subheading 2106.90.99, HTSUS.
HOLDING:
The Tenerissimo Vaniglia product is classified under heading 2106, HTSUS, and specifically, in subheading 2106.90.78, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Containing over 10 percent by weight of milk solids: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions.” If the quantitative limits of Additional U.S. Note 8 to Chapter 17, HTSUS, have been reached, then they are classified in subheading 2106.90.80, HTSUS, and will be subject to additional duties based on its value, as described in subheadings 9904.17.49 to 9904.17.65, HTSUS. The 2013 column one, general rate of duty is 10 percent ad valorem, and 70.4 ?/kg plus 8.5 percent ad valorem, respectively.
The Biscotto product is classified under heading 2106, HTSUS, and specifically, in subheading 2106.90.99, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Other.” The 2011 column one, general rate of duty is 6.4 percent ad valorem.
Duty rates are provided for convenience and are subject to change.
With regard to the Biscotto and the Tenerissimo Vaniglia, you are instructed to DENY the protest, except to the extent reclassification of the merchandise as indicated above results in a net duty reduction and partial allowance. You are also instructed to DENY the protest with regard to the fourteen remaining products that were the subject of the protest on the basis of the Protestant’s withdrawal.
In accordance with sections IV and VI of the CBP Protest/Petition Processing Handbook, you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any re-liquidation 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 Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page at http://www.cbp.gov by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division