OT:RR:CTF:FTM H305744 CDM
Port Director
Port of San Francisco
U.S. Customs and Border Protection
555 Battery Street
San Francisco, CA 94111
RE: Application for Further Review of Protest No. 2809-19-101151; Classification of Martell Blue Swift Spirits Drink
Dear Port Director:
This is in reference to the Application for Further Review (“AFR”) of Protest Number 2809-19-101151 (“Protest”), timely filed on September 3, 3019, by Mr. Kevin J. Horgan of deKieffer & Horgan, on behalf of Pernod Ricard USA, LLC (“Protestant” or “Pernod Ricard”), contesting U.S. Customs and Border Protection’s (“CBP”) tariff classification of Martell Blue Swift Spirits Drink under the Harmonized Tariff Schedule of the United States (“HTSUS”). Per the Protestant’s request in its AFR, we held a conference call with counsel for Protestant on March 25, 2020. Our decision is set forth below.
FACTS:
The product covered in this Protest is Martell Blue Swift Spirits Drink (“Martell Blue”), which is described by Protestant as “an innovative new product.” Protestant describes the production process of Martell Blue as beginning with “Martell Cognac VSOP [Very Superior Old Pale], a cognac manufactured in accordance with traditional methods that [Pernod Ricard] has been using to produce cognac for more than 300 years. Grapes from the Charente region’s four main growing areas: Grande Champagne, Petite Champagne, Borderies and Fins Bois, are used to produce grape wine. [Pernod Ricard] double distills the clear grape wines in copper stills to extract the wine’s essence, referred to as ‘eau-de-vie.’ The eau-de-vie is aged for several years in new, fine-grain oak barrels that have been lightly toasted. Each cognac is created using a blend of eaux-de-vie from various vintages and growing areas. The cellar master carefully selects and blends the various vintages in order to consistently obtain the unique, high-quality taste of Martell Cognac VSOP. Martell Cognac VSOP is a stand-alone commercial product that is sold by Pernod Ricard throughout the world.” Martell Blue is produced from the Martell Cognac VSOP by placing it in bourbon casks for a period of time that can last up to several months. The result is a spirituous drink that has the delicate notes of candied fruit and plum typical of Martell Cognac VSOP along with the subtle sweetness of vanilla and toasted oak flavors that result from finishing the cognac in bourbon barrels. Martell Blue has an alcoholic strength by volume of 40 percent and will be imported into the United States in 750ml bottles.
In NY N304278, CBP classified Martell Blue in subheading 2208.20.4000, HTSUSA, which provides for “…spirits, liqueurs and other spirituous beverages: spirits obtained by distilling grape wine or grape marc (grape brandy): in containers each holding not over 4 liters: valued over $3.43/liter.” This was the desired tariff classification of the requestor Pernod Ricard at that time. Protestant entered its products in accordance with NY N304278.
Protestant now asserts that Martell Blue should be classified in subheading 2208.90.7500, HTSUSA, as “other” spirits because the United States Alcohol & Tobacco Tax & Trade Bureau (“TTB”) and French regulations prevent Pernod Ricard from classifying Martell Blue as a cognac since the product is finished in bourbon barrels.
ISSUE:
What is the tariff classification of the product “Martell Blue Swift Spirits Drink?”
LAW AND ANALYSIS:
We first note that the 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 of the entry. See 19 U.S.C. § 1514(c)(3).
Classification under the Harmonized Tariff Schedule of the United States (“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 GRI may then be applied in order. Pursuant to GRI 6, classification at the subheading level uses the same rules, mutatis mutandis, as classification at the heading level.
The 2019 HTSUS provisions under consideration are the following:
2208 Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.; spirits, liqueurs and other spirituous beverages:
* * *
2208.20 Spirits obtained by distilling grape wine or grape marc (grape brandy):
* * *
2208.20.40 Other:
In containers each holding not over 4 liters
* * *
2208.90 Other:
* * *
2208.90.75 Other:
Spirits:
Other
The Harmonized Commodity Description and Coding System Explanatory Notes (“EN”) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, and therefore not dispositive, the ENs provide a commentary on the scope of each heading of the Harmonized System and are thus useful in ascertaining the classification of merchandise under the System. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989). The relevant EN 22.08 provides examples of “Spirits obtained by distilling grape wine or grape marc,” listing eo nomine “Cognac, Armagnac, brandy, grappa, pisco, singani, etc.”
There is no question that Martell Blue is prima facie classifiable in heading 2208, HTSUS, as a spirit or spirituous beverage. The issue arises at the six-digit heading subheading level: whether Martell Blue is classifiable as a spirit obtained by distilling grape wine or grape marc, or as an “other” spirit in a basket provision. We find that Martell Blue is prima facie classifiable in subheading 2208.20, HTSUS, as a spirit “obtained by distilling grape wine or grape marc (grape brandy).” This is supported by EN 22.08, which indicates, in pertinent part, that:
22.08 Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 % vol; spirits, liqueurs and other spirituous beverages.
2208.20 Spirits obtained by distilling grape wine or grape marc
Protestant argues that the process of finishing the Martell Blue in a bourbon cask removes it from the cognac classification to other because it is a “innovative new product.” In support of its argument, Protestant relies on the TTB regulations, which provide in pertinent part, “‘Harmless coloring, flavoring, and blending materials’ shall not include . . . any material, other than caramel, infusion of oak chips, and sugar, in the case of Cognac brandy” see 27 C.F.R. § 5.23(a)(3)(ii), deference to French alcohol laws regarding the designation of cognac, see 27 C.F.R. § 2.55(d)(2). Neither the French alcohol laws nor the TTB regulations are intended as guidance for classification of imported merchandise under the HTSUS , but they do set the standards of identity for the purposes of alcohol labeling and advertising. We note that the TTB regulations do not consider Martell Blue a cognac.
We agree with the Protestant that the finishing process of placing Martell Blue in bourbon casks removes it from the cognac category. However, cognac is only one type of spirit obtained by distilling grape wine, and this finishing process does not remove Martell Blue from the more expansive grape brandy category. 27 C.F.R. § 5.22(d) defines brandy as “an alcoholic distillate from the fermented juice, mash, or wine of fruit, or from the residue thereof, produced at less than 190° proof in such manner that the distillate possesses the taste, aroma, and characteristics generally attributed to the product, and bottled at not less than 80° proof. Brandy, or mixtures thereof, not conforming to any of the standards in paragraphs (d) (1) through (9) of this section shall be designated as “brandy.’” EN 22.08 provides additional support for this decision in its sample list of “Spirits obtained by distilling grape wine or grape marc,” by including eo nomine both cognac and brandy as a spirit obtained by distilling grape wine. Hence, while not a cognac, Martell Blue is a grape brandy. In addition, Protestant has stated that no flavouring has been added and thus flavouring notes do not apply.
Because Martell Blue fits within the relatively broad definition of “Spirits obtained by distilling grape wine or grape marc,” also known as grape brandy, it is thus prima facie classifiable under subheading 2208.20, HTSUS. The proper tariff classification for Martell Blue is subheading 2208.20.4000, HTSUSA.
HOLDING:
Martell Blue is classified in subheading 2208.20.4000, HTSUSA. Accordingly, you are instructed to deny the Protest.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), 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 Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division