CLA-2 OT:RR:CTF:TCM H008517 IDL
Mr. Bob Forbes
ROE Logistics
660 Bridge Street
Montreal, Quebec H3K 3K9
Canada
Re: Liquid Chocolate; Revocation of NY N005039
Dear Mr. Forbes:
This letter concerns NY N005039, dated January 22, 2007, issued to you on behalf of your client, Barry Callebaut Canada, Inc., by the National Commodity Specialist Division, U.S. Customs and Border Protection (CBP). At issue in that ruling was the correct classification of “liquid chocolate” (Product No. LSH 484) under the Harmonized Tariff Schedule of the United States (HTSUS). We have reviewed NY N005039 and have found that it is incorrect.
Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. § 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed modification was published in the Customs Bulletin, Volume 42, No. 29, on July 9, 2008. No comments were received in response to the notice.
FACTS:
In NY N005039, CBP described the liquid chocolate at issue as Product No. LSH 484, which contained 63.70 percent sugar, 25.80 percent cocoa liquor, 9.8 percent cocoa butter, 0.30 percent soya lecithin, 0.20 percent salt hydrade, and 0.20 percent admul emulsifier. According to the information submitted, the liquid chocolate was to be shipped in bulk in tanker trucks. The product was used for enrobing and panning cakes, pastries and confectionery.
CBP previously classified the product at issue under subheading 1806.20.5000, HTSUSA. We now believe that the liquid chocolate was classified incorrectly and that the correct classification is under subheading 1806.20.9900, HTSUSA.
ISSUE:
Whether the liquid chocolate described above is correctly classified under subheading 1806.20.5000 or under subheading 1806.20.9900, HTSUSA?
LAW AND ANALYSIS:
Merchandise is classifiable under the 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 2 through 6 may then be applied in order.
The HTSUSA provisions under consideration are as follows:
1806 Chocolate and other food preparations containing cocoa:
* * *
Other preparations in blocks, slabs or bars, 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:
Preparations consisting wholly of ground cocoa beans, with or without added cocoa fat, flavoring or emulsifying agents, and containing not more than 32 percent by weight of butterfat or other milk solids and not more than 60 percent by weight of sugar:
* * *
Other:
* * *
1806.20.5000 Other…..
* * *
Other:
* * *
Other:
* * *
Other:
* * *
Other:
* * *
Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17:
1806.20.9500 Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions
1806.20.9800 Other 2/
1806.20.9900 Other…..
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The 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).
EN 18.06 provides the following:
Chocolate is composed essentially of cocoa paste and sugar or other sweetening matter, usually with the addition of flavouring and cocoa butter; in some cases, cocoa powder and vegetable oil may be substituted for cocoa paste.
* * *
The heading also includes all sugar confectionery containing cocoa in any proportion (including chocolate nougat), sweetened cocoa powder, chocolate powder, chocolate spreads, and, in general, all food preparations containing cocoa (other than those excluded in the General Explanatory Note to this Chapter).
As stated above, the liquid chocolate contains ingredients that
include sugar, cocoa liquor, and cocoa butter. Therefore, it meets the requirements of heading 1806, HTSUS, and the description provided in EN 18.06. As such, the liquid chocolate is properly classified in heading 1806, HTSUS. Further, subheading 1806.20, HTSUS, provides for preparations containing cocoa, of more than 2 kg, in liquid form, in containers or immediate packings. As stated above, the liquid chocolate is shipped in bulk in tankers. It is the understanding of CBP that the normal capacity of a commercial tanker far exceeds 2 kgs. On this basis, we find that the liquid chocolate meets the requirements of subheading 1806.20, HTSUS.
At the eight-digit level, we find that, contrary to CBP’s decision in NY
N005039, the liquid chocolate is precluded from classification under subheading 1806.20.5000, HTSUSA. According to the terms of that subheading, the sugar content of any cocoa preparation falling under that provision may not exceed 60 percent by weight. As described above, the liquid chocolate at issue contains 63.70 percent sugar, exceeding the stated limit.
Further, we note that in order to be classified under subheading
1806.20.9500 or 1806.20.9800, HTSUSA, the liquid chocolate would have to contain “over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17”, as provided by the corresponding article description in the HTSUS. Although the liquid chocolate in the instant case does contain over 10 percent by dry weight of sugar, we find that it is excluded from classification in subheading 1806.20.95/98, HTSUS, by Additional U.S. Note 3 to Chapter 17, which provides, in pertinent part, the following:
For 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 … (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.
Since the liquid chocolate was intended for use in enrobing and panning cakes, pastries and confectionery, it falls under the “cake decoration and similar products“ exception listed in subsection (d) of Additional U.S. Note 3 to Chapter 17. Accordingly, we find that the liquid chocolate is classified under subheading 1806.20.9900, HTSUSA. CBP has previously classified chocolate products containing over 10 percent by dry weight of sugars and used for enrobing desserts under subheadings 1806.20.9900, HTSUSA. See NY I89145 (January 9, 2003) and NY I89812 (January 24, 2003).
HOLDING:
By application of GRI 1, the liquid chocolate is classified in heading 1806, HTSUS, and is specifically provided for under subheading 1806.20.9900, HTSUSA, as “Chocolate and other food preparations containing cocoa: Other preparations … in liquid … or other bulk form in containers or immediate packings, of a content exceeding 2 kg: Other … Other … Other … Other … Other.” The 2008 column one, general rate of duty is 8.5% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at http://www.usitc.gov/tata/hts/.
This merchandise is subject to the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling the FDA, at (301) 575-0156, or from the World Wide Web at http://www.fda.gov/oc/bioterrorism/bioact.html.
EFFECT ON OTHER RULINGS:
NY N005039, dated January 22, 2007, is hereby revoked. In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division