CLA-2 OT:RR:CTF:TCM H243087 CkG
Category: Classification
Elliot Belilos
Olsson, Frank, Weeda, Terman, Matz PC
The Watergate
600 New Hampshire Ave NW, Suite 500
Washington, DC 20037
Re: Reconsideration of HQ H209838; classification of malt beverages
Dear Mr. Belilos:
This is in regard to Headquarters Ruling Letter (HQ) H209838, dated December 18, 2012, regarding the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of certain malt beverages In HQ H209838, CBP classified the instant malt beverages in heading 2206, HTSUS, as “other malt beverages”. You request classification of the instant merchandise in heading 2203, HTSUS, as beer. For the reasons set forth below, we find that the classification of the malt beverages in heading 2206, HTSUS, was correct.
FACTS:
The merchandise at issue consists of four different malt beverages: “Green Apple Sparkletini Italian Spumante”; “Raspberry Sparkletini Italian Spumante”; “Peach Sparkletini Italian Spumante; and “Verdi Spumante”. You state that all four products are manufactured by adding different flavoring to a “beer base” that is produced from a mash of malted barley. Each bottle is labeled with the item’s flavor and the product name.
You describe the manufacturing process as follows: “The beer base is produced from a mash of malted barley with not more than 10% non-malted cereals, at least 7.5 lbs of hops (or the equivalent thereof in hops extracts and/or oils) per 100 barrels, and water. After boiling, the wort is cooled, pitched with brewer’s yeast, and fermented. After fermentation, the beer may be filtered and/or clarified. The beer base contains 3-5% alcohol by volume.”
The product data provided further indicates that the beverage base is filtered after fermentation to remove the color and aroma from the malt beverage in order to create a clear, odorless base. The beverages further contain 10-25% natural flavors, including denatured grape wine (color and aroma are removed), added after fermentation, and 3-6% sugar. Roughly 40% of the total alcohol content of the Spumante beverages derives from the wine base. Additional filtration may take place after the flavorings and sugar are added.
ISSUE:
Whether the instant malt beverages are classified under heading 2203, HTSUS, as beer made from malt, or under heading 2206, HTSUS, as other fermented beverages?
LAW AND ANALYSIS:
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI’s). 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 HTSUS provisions under consideration are as follows:
2203 Beer made from malt:
* * *
2206 Other fermented beverages (for example, cider, perry, mead); mixtures of fermented beverages and mixtures of fermented beverages and non-alcoholic beverages, not elsewhere specified or included:
You claim that the instant malt beverages satisfy the definition of “beer” set forth in the regulations of the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury (TTB). You note that the four flavored beer products imported by Carriage House fall within that regulatory definition of beer because (1) each is produced with a beer base brewed from malt; and (2) each derives less than 49% of its alcohol content from the flavorings. You further provide copies of pre-import approval letters from the Advertising, Labeling and Formulation Division of TTB, dated June 19, 2007, December 20, 2010 and February 28, 2011, confirming that the Green Apple, Raspberry and Peach Sparkletini beverages, respectively, are classified by TTB as flavored malt beverages.
Based on the information you provided, the imported beverages appear to be classified by TTB as flavored malt beverages. However, we note that the TTB regulations at issue pertain to the collection of federal excise taxes on alcoholic products, and are not intended as guidance for classification of imported merchandise under the HTSUS. Statutes, regulations and administrative interpretations relating to ‘other than tariff purposes’ are not determinative of CBP classification disputes. See Amersham Corp. v. United States, 5 C.I.T. 49, 56, 564 F.Supp. 813, 817 (1983). Thus, the above-referenced TTB standards and classification determinations are not binding on CBP. However, to the extent that regulations or definitions of other federal agencies may be instructive in a tariff classification decision, we note that TTB regulations refer to both “beer” and “malt beverages” separately; regardless of their tax treatment, TTB clearly acknowledges that not all beverages made from malt are “beer”.
Heading 2203, HTSUS, is an eo nomine provision, which “describes a commodity by a specific name, usually one well known to commerce." See United States v. Bruckmann, 65 C.C.P.A. 90, C.A.D. 1211, 582 F.2d 622, 625 n.8 (1978)). “The clear weight of the authorities on the subject is that an eo nomine statutory designation of an article, without limitations or a shown contrary legislative intent, judicial decision, or administrative practice to the contrary, and without proof of commercial designation, will include all forms of said article.” Nootka Packing Co. v. United States, 22 C.C.P.A. 464, 470, T.D. 47464 (1935); see also Lynteq, Inc. v. United States, 976 F.2d 693, 697 (Fed. Cir. 1992) ("Tariff terms contained in the statutory language "are to be construed in accordance with their common and popular meaning, in the absence of contrary legislative intent.'") (Citation omitted).
The Harmonized Commodity Description and Coding System Explanatory Notes
(ENs) 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).
In its discussion of the scope of heading 2203, HTSUS, EN 22.03 states, in pertinent part, that beer is “…obtained by fermenting a liquor (wort) prepared from malted barley or wheat, water and (usually) hops”. Notably, EN 22.03 indicates that flavoring matter may be added to the beer product, stating, in pertinent part that, “[c]herries or other flavouring substances are sometimes added during fermentation. Sugar (particularly glucose), colouring matter, carbon dioxide and other substances may also be added.” (Emphasis added).
EN 22.03 indicates that flavoring can be added during the fermentation process without causing the beverage to fall outside the scope of the heading. However, in the instant case, the flavoring is added to the “beer base” in steps subsequent to the fermentation process. In HQ H209838, we concluded that based on the EN to heading 2203, HTSUS, and a prior CBP ruling HQ 084708, dated July 21, 1989, flavoring added after the fermentation process precludes classification in heading 2203, HTSUS.
The EN is silent on whether flavoring added after the fermentation process automatically excludes a product from heading 2203, HTSUS. Thus the EN does not definitely preclude classification of a fermented malt beverage with flavoring added after fermentation in heading 2203, HTSUS. Furthermore, the following sentence (“sugar (particularly glucose), colouring matter, carbon dioxide and other substances may also be added”) does not contain any restriction or limitation with regard to the timing of such additions. Thus, the time the flavoring is added, by itself, is not determinative of classification in heading 2203, HTSUS. Rather, we find that the instant beverages are precluded from classification in heading 2203, HTSUS, because they are entirely distinct from beer and are not marketed, sold, or advertised as beer.
The instant spumante beverages are distinct from beer because they do not have the taste, aroma, character or appearance of beer. The beverage base is filtered after fermentation to remove the color and aroma—and consequently, any trace of “beer” characteristics or flavor—from the final product. Furthermore, approximately 40% of the total alcohol content of the finished product is derived from the wine base. The instant products are altered during the manufacturing process via filtering and the addition of wine base so as to fundamentally change their character; the finished products are no longer “beer”, or even flavored beer, within the scope of heading 2203, HTSUS.
The instant products also have a distinct commercial identity. In HQ H209838, we noted that the instant malt beverages are sold in a variety of channels, many of which sell wine and other alcoholic beverages. While heading 2203, HTSUS, is an eo nomine provision, use is one of the factors to be considered in determining whether merchandise falls within the scope of an eo nomine tariff provision. See Quon Quon Co. v. United States, 46 CCPA 70, 72 (1959); CamelBak Products, LLC v. United States, 649 F.3d 1361, 1368-69 (Fed. Cir. 2011) (citing Quon Quon). Our research confirms that the principal use of the beverages at issue and other “spumante” alcoholic beverages is that of a wine or wine cooler rather than beer. The instant products are labelled, bottled, advertised and displayed in the manner of wine and wine coolers in an effort to compete in the wine cooler market. Wine coolers are similarly made form malt and other alcohols, but are not classified in heading 2203, HTSUS. Neither wine coolers nor the instant spumante beverages are commercially or commonly known as beer.
You contend that the distribution channels of the subject beverages more closely mirror that of beer than wine and other spirits. You note that in states where all three are permitted to be sold in the same distribution channels, spumante is sold alongside beer, wine and other alcoholic beverages, but that in states which permit only beer to be sold in grocery stores or other private enterprises, and limit the sale of wine and other spirits to liquor stores, Verdi spumante and the Sparkletini beverages are typically sold alongside beer. However, our research indicates that the instant spumante beverages are not marketed as beer or commonly displayed with or sold as beer.
First, the word “spumante” itself is synonymous with sparkling wine. See http://dictionary.reference.com/browse/spumante. The name of the beverages clearly sets them apart from beer and suggests that they are not marketed or sold as a beer. To the contrary, the instant beverages are marketed as sparkling wine, are generally sold by wine sellers, and are intended to compete with sweet, inexpensive sparkling wines and wine coolers. For example, news articles prominently featured on the manufacturer’s website group the Verdi and Sparkletini beverages together with sparkling wines when analyzing their role in the market for sparkling wine. See http://www.verdispumante.com/assets/2012/05/VerdiArticle_WineSpectator11.pdf (“Impact Databank Exclusive: Top Italian Labels Driving Imported Sparklers In U.S.”); http://www.verdispumante.com/assets/2012/05/VerdiArticleWIneSpectator10.pdf (“Americans are Bubbly About Sparkling Wine”); http://www.verdispumante.com/assets/2012/05/VerdiArticle_ShankenNewsDaily.pdf (“Big Wine Brands Lead Growth in U.S. Market”).
National grocery chains Harris Teeter and Piggy Wiggly and retailers such as Target and Amazon.com sell the Verdi and Sparkletini beverages alongside wine in the wine section of their websites. See e.g., http://www.target.com/p/verdi-spumante-malt-beverage-750-ml/-/A-14765729; http://grocery.harristeeter.com/pd/Bosca/Verdi-Spumante/25-40-fl-oz/038075202302/; http://www.amazon.com/VERDI-Verdi-Spumante-187ML/dp/B008QR8MPY; http://grocery.thepig.net/pd/Bosca/Verdi-Spumante/25-40-fl-oz/038075202302/. Verdi Spumante and Sparkletini are also featured and sold online by wine and spirits distributors, but do not appear to be commonly sold in the beer section of liquor vendors. See e.g., http://www.wine-searcher.com/find/ bosca+verdi+green+ apple+sparkletini+spumante+italy; http://www.wine-searcher.com/find/bosca+verdi+ peach+sparkletini+spumante+italy; http://www.winechateau.com/sku1316276_VERDI-RASPBERRY-SPARKLETINI-1.50L?utm_source=shopzilla&utm_medium=feed&utm_ campaign=Verdi-Raspberry-Sparkletini; https://www.ultimatewineshop.com/wines/Verdi-Spumanti-w9445567tz?utm_source=Shopzilla&utm_medium=Feed; http://www.totalwine.com/eng/product/verdi-spumante/4405187; https://www.danmurphys.com.au/product/DM_85261/bosca-verdi-spumante.jsp?bmUID =kj_pm5Y.
Finally, the Verdi and Sparkletini beverages are packaged and presented like champagne or sparkling wine—in larger, corked bottles, with colorful labels. The Verdi spumante, for example, is described on the label alternately as “wine specialty with natural flavors” or as “white wine with natural flavors.”
We find that the name, appearance, character and use of the Verdi Spumante, Green Apple Sparkletini Italian Spumante, Raspberry Sparkletini Italian Spumante, and Peach Sparkletini Italian Spumante are distinct from those products which are labeled, marketed and sold as “beer”, “ale”, “stout”, etc. As fermented beverages not falling within the scope of headings 2203 to 2205, they are classified in heading 2206, HTSUS.
HOLDING:
In accordance with GRI 1, the “Green Apple Sparkletini Italian Spumante”; “Raspberry Sparkletini Italian Spumante”; “Peach Sparkletini Italian Spumante; and “Verdi Spumante” malt beverages, are classified in heading 2206, HTSUS, specifically in subheading 2206.00.90, HTSUS, which provides for, in pertinent part: “[o]ther fermented beverages…: Other: Other….” The 2014 general, column one rate of duty is 4.2¢ per liter.
Duty rates are provided for convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided online at http://www.usitc.gov/tata/hts/.
You are to mail this decision to the internal advice requester no later than 60 days from the date of the decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public online at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
EFFECT ON OTHER RULINGS:
HQ H209838, dated December 18, 2012, is affirmed.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division