CLA-2 OT:RR:CTF:TCM H009857 IDL
Mr. Bob W. Forbes
Compliance Manager
ROE Logistics
660 Bridge Street
Montreal, Quebec H3K 3K9
Canada
Re: Milk Chocolate Chips (“Milk Chips 2”); Revocation of NY N007481
Dear Mr. Forbes:
This letter concerns New York Ruling Letter (NY) N007481, dated March 16, 2007, issued to you on behalf of your client, Barry Callebaut, Canada, by the National Commodity Specialist Division, U.S. Customs and Border Protection (CBP). At issue in NY N007481 was the correct classification of “Milk Chips 2” milk chocolate chips under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). We have reviewed NY N007481 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 revocation was published in the Customs Bulletin, Volume 42, No. 34, on August 13, 2008. One comment was received in response to the notice.
FACTS:
In NY N007481, the merchandise at issue was described as a milk chocolate chip product intended for use as “decoration on cakes/pastries, in home baking and ready-to-eat.” The product was to be shipped in two forms: packaged for retail sale in 300-gram retail bags and packaged in 25-pound cases to be repackaged after importation. The chocolate chips were further described as being composed of 47.21 percent sugar, 22 percent cocoa paste, 12.59 percent (non-fat) milk powder, 11.07 percent cocoa butter, 0.008 percent vanillin, and 7.10 percent milk fat. The total milk solids content of the chocolate was 19.69 percent, and the total milk fat content of the chocolate was 7.14 percent.
CBP classified the chocolate chips shipped in 25-pound cases under subheading 1806.20.3600, HTSUSA, which provides for: “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: Containing butterfat or other milk solids (excluding articles for consumption at retail as candy or confection): Other: Other: Containing less than 21 percent by weight of milk solids.”
CBP classified the chips shipped in 300-gram retail bags under subheading 1806.90.2800, HTSUSA, which provides for: “Chocolate and other food preparations containing cocoa: Other: Other: Other: Containing butterfat or other milk solids (excluding articles for consumption at retail as candy or confection): Other: Other: Containing less than 21 percent by weight of milk solids.”
CBP took the position in the proposed revocation, cited above, that the milk chocolate chips should be classified under subheading 1806.90.1800, HTSUSA. One commenter opposed the proposed revocation. As a result of the comment, we have reviewed past rulings on substantially similar merchandise, and have decided not to pursue the proposed classification of the chocolate chips in 25-pound cases as set forth in that notice. We now believe that chocolate chips in 25-pound cases are considered an “other bulk form” classifiable in subheading 1806.20, HTSUS. Further, it is CBP’s position that the chocolate chips in 300-gram retail bags are classified in subheading 1806.90.1500, HTSUSA, if the quantitative limits of note 2 to Chapter 18 have not been reached.
ISSUE:
Whether the milk chocolate chips shipped in 25-pound cases are properly classified under subheading 1806.20.2600, HTSUSA, or subheading 1806.20.3600, HTSUSA?
Whether the milk chocolate chips shipped in 300-gram retail bags are classified in subheading 1806.90.1500, HTSUSA, subheading 1806.90.1800, HTSUSA or subheading 1806.90.2800, HTSUSA?
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUSA in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUSA 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:
Containing butterfat or other milk solids (excluding articles for consumption at retail as candy or confection):
Other, containing over 5.5 percent by weight of butterfat:
Other:
1806.20.2600 Containing less than 21 percent by weight of milk solids 1/…..
* * *
Other:
* * *
Other:
1806.20.3600 Containing less than 21 percent by weight of milk solids 1/…..
* * *
Other:
* * *
Other:
* * *
Other:
Containing butterfat or other milk solids (excluding articles for consumption at retail as candy or confection):
Containing over 5.5 percent by weight of butterfat:
1806.90.1500 Described in additional U.S. note 2 to this chapter and entered pursuant to its provisions…..
Other:
1806.90.1800 Containing less than 21 percent by weight of milk solids 1/…..
* * *
Other:
* * *
Other:
1806.90.2800 Containing less than 21 percent by weight of milk solids 1/…..
As stated above, the milk chocolate chips contain sugar, cocoa paste,
cocoa butter, and vanillin (flavoring). We find that the chips meet the requirements of heading 1806, HTSUS. As such, the milk chocolate chips are properly classified in heading 1806, HTSUS.
Subheading 1806.20, HTSUS, provides for food preparations containing cocoa in “bulk form…of a content exceeding 2 kg”. Chocolate chips are a bulk form similar to the exemplars listed therein and fall under the provisions of 1806.20, HTSUS. Further, the chocolate chips shipped in 25-pound cases, meet the minimum weight requirements of subheading 1806.20, HTSUS. Therefore, the chocolate chips shipped in bulk quantities are classified in subheading 1806.20, HTSUS. The chocolate chips shipped in 25-pound cases which contain over 5.5 percent by weight of butterfat and less than 21 percent by weight of milk solids meet the provisions of subheading 1806.20.2600, HTSUSA, and are classified therein.
The chocolate chips shipped in 300-gram retail bags are classifiable as “other” food preparations containing cocoa under subheading 1806.90, HTSUS inasmuch as they do not meet the minimum quantitative weight limit set forth in subheading 1806.20, HTSUS. The milk chocolate chips shipped in 300-gram retail bags which contain over 5.5 percent by weight of butterfat and less than 21 percent by weight of milk solids will be classified in subheading 1806.90.1500, HTSUSA, if imported in quantities that fall within the limits described in additional U.S. note 2 to chapter 18. If the quantitative limits of additional U.S. note 2 to chapter 18 have been reached, the chocolate chips in 300-gram bags are classified under subheading 1806.90.1800, HTSUSA. In addition, products classified in subheadings 1806.90.1800, HTSUSA, will be subject to additional duties based on their value as described in subheadings 9904.18.09 to 9904.18.14, HTSUS.
HOLDING:
By application of GRI 1, the milk chocolate chips shipped in 25-pound cases are classified in heading 1806, HTSUS, and are specifically provided for under subheading 1806.20.2600, HTSUSA, as: “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: Containing butterfat or other milk solids (excluding articles for consumption at retail as candy or confection): Other, containing over 5.5 percent by weight of butterfat: Other: Containing less than 21 percent by weight of milk solids.” The general, column one rate of duty is 37.2 cents/kg + 4.3% ad valorem.
The milk chocolate chips shipped in 300-gram retail bags are classified in heading 1806, HTSUS, and, provided that the quantitative limits in additional U.S. note 2 to chapter 18 have not been exceeded, are specifically provided for under subheading 1806.90.1500, HTSUSA, as “Chocolate and other food preparations containing cocoa: Other: Other: Other: Containing butterfat or other milk solids (excluding articles for consumption at retail as candy or confection): Other, containing over 5.5 percent by weight of butterfat: Described in additional U.S. note 2 to chapter 18 and entered pursuant to its provisions” with a general, column one rate of duty of 3.5 percent ad valorem. If the limits of the note have been exceeded, the milk chocolate chips shipped in 300-gram retail bags are classified in subheading 1806.90.1800, HTSUSA, as: “Chocolate and other food preparations containing cocoa: Other: Other: Other: Containing butterfat or other milk solids (excluding articles for consumption at retail a candy or confection): Containing over 5.5 percent by weight of butterfat: Other: Containing less than 21 percent by weight of milk solids” with a general, column one rate of duty of 37.2 cents/kg + 6% ad valorem. If classified in subheading 1806.90.1800, HTSUSA, the chocolate chips imported in 300-gram bags will be subject to additional duties based on their value as described in subheadings 9904.18.09 to 9904.18.14, HTSUS.
EFFECT ON OTHER RULINGS:
NY N007481, dated March 16, 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