CLA-2 CO:R:C:F 950489 LPF
Mr. Clark D. Bien
Arbor Foods Incorporated
6018 West Maple Road, Suite 888
West Bloomfield, MI 48322
RE: Modification of NYRL 866708; Cocoa Drink Mixes in subheading
1806.20.7010 and 9904.60.60, HTSUSA
Dear Mr. Bien:
In New York Ruling Letter (NYRL) 866708 issued September 19,
1991, cocoa drink mixes from Canada were classified in subheading
1806.20.8060, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), as "[c]hocolate and other food preparations
containing cocoa: Other preparations in blocks or slabs weighing
more than 2 kg. or in liquid, paste, powder, granular or other
bulk form in containers or immediate packings, of a content
exceeding 2 kg: Other: Other, Subject to quotas established
pursuant to section 22 of the Agricultural Adjustment Act, as
amended: Provided for in subheading 9904.60.60." The special
column one rate of duty was 7 percent ad valorem. Subsequently,
we have reviewed that ruling and have found it to be partially in
error. The correct classification is as follows.
FACTS:
The merchandise at issue consists of two formulations of
cocoa mixes. One product contains 67.89 percent sugar, 15.65
percent whey, 10.44 percent non dairy creamer, 5.22 percent
cocoa and small quantities of flavor, salt and emulsifier. The
other product contains 70.50 percent sugar, 6.50 percent whey,
9.50 percent non dairy creamer, 6.40 percent cocoa, 5.00 percent
skim milk powder, and small quantities of salt, emulsifier and
sodium caseinate.
Both products will be imported from Canada in 2,000 pound
bulk bags and in 100 pound paper bags. The cocoa mixes require
only the addition of water to make a finished beverage.
-2-
ISSUE:
Whether the cocoa mixes are properly classifiable as
chocolate and other food preparations containing cocoa,
containing more than 65 percent of sugar by weight, in subheading
1806.20.7010 or as chocolate and other food preparations
containing cocoa, other than those containing more than 65
percent of sugar by weight, in subheading 1806.20.8060.
LAW AND ANALYSIS:
The General Rules of Interpretation (GRI's) taken in their
appropriate order provide a framework for classification of
merchandise under the HTSUSA. The majority of imported 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 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's may
then be applied. GRI 6 provides that the GRI's apply in the same
fashion to subheadings within the same heading.
The product at issue is classifiable by applying GRI 1, that
is, according to the terms of the applicable heading and
subheading. Heading 1806 provides for chocolate and other food
preparations containing cocoa. Focusing on the applicable
subheading, we note that the cocoa mixes are in containers or
packages of a content exceeding two kilograms and also contain
more than 65 percent by weight of sugar. In addition, in light
of the applicable sugar quota in Chapter 99, we observe that the
subject dried cocoa mixes, requiring only the addition of water,
are not considered capable of being further processed or mixed
with other ingredients. For these reasons the applicable
subheading is 1806.20.7010 subject to the quota provided for in
subheading 9904.60.60.
In addition, assuming the products, imported from Canada,
are "originating goods" as defined by General Note 3(c)(vii)(B),
HTSUSA, they will enjoy certain tariff preferences under the
United States - Canada Free Trade Agreement (CFTA).
-3-
HOLDING:
The cocoa mixes are classifiable in subheading 1806.20.7010,
HTSUSA, as "[c]hocolate and other food preparations containing
cocoa: Other preparations in blocks or slabs weighing more than 2
kg or in liquid, paste, powder, granular or other bulk form in
containers or immediate packings, of a content exceeding 2 kg:
Other: Containing more than 65 percent by weight of sugar,
Provided for in subheading 9904.60.60." Assuming the cocoa mixes
qualify for tariff preferences under the CFTA, the special column
one rate of duty is 7 percent ad valorem.
This notice should be considered a modification of NYRL
866708 pursuant to 19 CFR 177.9(d)(1). It is not to be applied
retroactively to NYRL 866708 (19 CFR 177.9(d)(2)) and will not,
therefore, affect past transactions for the importation of your
merchandise under that ruling. However, for the purposes of
future transactions in merchandise of this type, NYRL 866708 will
not be valid precedent. We recognize that pending transactions
may be adversely affected by this modification, in that current
contracts for importations arriving at a port subsequent to this
decision will be classified pursuant to it. If such a situation
arises, you may, at your discretion, notify this office and apply
for relief from the binding effects of this decision as may be
warranted by the circumstances.
Sincerely,
John Durant, Director
Commercial Rulings Division