OT:RR:CTF:FTM H303180 PJG
Mr. Edward Farrell
Olsson Frank Weeda
Terman Matz PC
600 New Hampshire Avenue, NW
Suite No. 500
Washington, D.C. 20037
RE: Revocation of NY N302241; tariff classification of cheese flavor pastes and cultured
cream flavor paste
Dear Mr. Farrell:
This letter pertains to New York Ruling Letter (“NY”) N302241, dated March 1, 2019, which concerned the tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of two cheese flavor pastes (CH403 and CH440) and one cultured cream flavor paste (C742). For the reasons set forth below, we are revoking NY N302241.
FACTS:
You state that the two cheese flavor pastes identified as CH403 and CH440 are “made from…dairy ingredients that have been fermented and enzyme modified to create an intense mature cheddar cheese profile suitable for use as an ingredient in a range of food applications or in the manufacture of such ingredients.” You also state that the cultured cream flavor paste identified as C742 is “made from…cream that has been fermented, enzyme modified, and to which flavor top notes have been added to produce a concentrated cultured cream flavor. It is suitable for use as an ingredient in a range of food and beverage applications or in the manufacture of such ingredients.” Along with your request for reconsideration, you submitted “Product Declaration” sheets describing the composition of the subject merchandise and “Process Flow” charts describing the development of the subject merchandise.
In NY N302241, we stated that if the Cultured Cream Flavor Paste (C742) is entered under quota, it will be classified in subheading 0403.90.9000, HTSUS, but if it is entered outside of the quota, it will be classified in subheading 0403.90.9500, HTSUS. We noted that products classifiable in subheading 0403.90.9500, HTSUS, may also be subject to additional safeguard duties based upon their value, as set forth in subheadings 9904.04.50-9904.05.01, HTSUS.
In NY N302241, we also determined that the Cheese Flavor Pastes (CH403 and CH440), if entered under quota, will be classified in 0405.90.1040, HTSUS, and noted that entry under Additional U.S. Note 14 requires that the importer be the holder of an import license, issued by the U.S. Department of Agriculture, for the goods entered therein. Finally, we stated that if the Cheese Flavor Pastes (CH403 and CH440) are entered outside of the quota, then they are classified in 0405.90.2040, HTSUS, and noted that products classifiable in that subheading may also be subject to additional safeguard duties based upon their value, as set forth in subheadings 9904.05.37-9904.05.47, HTSUS.
ISSUE:
What is the proper classification under the HTSUS for the subject merchandise?
LAW AND ANALYSIS:
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 GRIs may then be applied.
The 2019 HTSUS provisions under consideration are as follows:
0403 Buttermilk, curdled milk and cream, yogurt, kephir and other fermented or acidified milk and cream, whether or not concentrated or containing added sugar or other sweetening matter or flavored or containing added fruit, nuts or cocoa
0405 Butter and other fats and oils derived from milk; dairy spreads
1901 Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included
2106 Food preparations not elsewhere specified or included
General Note 15 provides as follows:
Exclusions. Whenever any agricultural product of chapters 2 through 52, inclusive, is of a type (i) subject to a tariff-rate quota and (ii) subject to the provisions of subchapter IV of chapter 99, entries of such products described in this note shall not be counted against the quantity specified as the in-quota quantity for any such product in such chapters:
such products imported by or for the account of any agency of the U.S. Government;
such products imported for the personal use of the importer, provided that the net quantity of such product in any one shipment does not exceed 5 kilograms;
such products, which will not enter the commerce of the United States, imported as samples for taking orders, for exhibition, display or sampling at a trade fair, for research, for use by embassies of foreign governments or for testing of equipment, provided that written approval of the Secretary of Agriculture or his designated representative the United States Department of Agriculture (USDA) is presented at the time of entry;
blended syrups containing sugars derived from sugar cane or sugar beets, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported, provided that, subject to approval of the Foreign Trade Zones Board, such syrups are manufactured in and entered from a U.S. foreign trade zone by a foreign trade zone user whose facilities were in operation on June 1, 1990, to the extent that the annual quantity entered into the customs territory from such zone does not contain a quantity of sugar of nondomestic origin greater than that authorized by the Foreign Trade Zones Board for processing in the zones during calendar year 1985; and
cotton entered under the provisions of U.S. note 6 to subchapter III of chapter 99 and subheadings 9903.52.00 through 9903.52.26, inclusive.
In applying to USDA for approval under subdivision (c) of this note, the importer must identify the product, quantity and intended use of the goods for which exemption is sought. USDA may seek additional information and specify such conditions of entry as it deems necessary to ensure that the product will not enter the commerce of the United States.
The Secretary of Agriculture shall carry out the provisions of this note in consultation with the United States Trade Representative.
Note 1 to Chapter 4 defines “milk” as “full cream milk or partially or completely skimmed milk.”
Note 2 to Chapter 4 provides as follows:
For the purposes of heading 0405:
The term “butter” means natural butter, whey butter or recombined butter (fresh, salted or rancid, including canned butter) derived exclusively from milk, with a milkfat content of 80 percent or more but not more than 95 percent by weight, a maximum milk solids-not-fat content of 2 percent by weight and a maximum water content of 16 percent by weight. Butter does not contain added emulsifiers, but may contain sodium chloride, food colors, neutralizing salts and cultures of harmless lactic-acid-producing bacteria.
The expression “dairy spreads” means a spreadable emulsion of the water-in-oil type, containing milkfat as the only fat in the product, with a milkfat content of 39 percent or more but less than 80 percent by weight.
Additional U.S. Note 1 to Chapter 4 provides as follows:
For the purposes of this schedule, the term “dairy products described in additional U.S. note 1 to chapter 4” means any of the following goods: malted milk, and articles of milk or cream (except (a) white chocolate and (b) inedible dried milk powders certified to be used for calibrating infrared milk analyzers); articles containing over 5.5 percent by weight of butterfat which are suitable for use as ingredients in the commercial production of edible articles (except articles within the scope of other import quotas provided for in additional U.S. notes 2 and 3 to chapter 18); or, dried milk, whey or buttermilk (of the type provided for in subheadings 0402.10, 0402.21, 0403.90 or 0404.10) which contains not over 5.5 percent by weight of butterfat and which is mixed with other ingredients, including but not limited to sugar, if such mixtures contain over 16 percent milk solids by weight, are capable of being further processed or mixed with similar or other ingredients and are not prepared for marketing to the ultimate consumer in the identical form and package in which imported
The Harmonized Commodity Description and Coding System Explanatory Notes
(“ENs”) constitute the “official interpretation of the Harmonized System” at the international level. See 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). While neither legally binding nor dispositive, the ENs “provide a commentary on the scope of each heading” of the HTSUS and are “generally indicative of [the] proper interpretation” of these headings. See id.
General EN (I) to Chapter 4 states in relevant part as follows:
This Chapter covers:
Dairy products:
Milk, i.e., full cream milk and partially or completely skimmed milk.
Cream.
…
(E) Products consisting of natural milk constituents, not elsewhere specified or included.
…
The products mentioned at Items (A) to (E) above may contain, in addition to natural milk constituents (e.g., milk enriched in vitamins or mineral salts), small quantities of stabilizing agents which serve to maintain the natural consistency of the product during transport in liquid state (disodium phosphate, trisodium citrate and calcium chloride, for instance) as well as very small quantities of anti-oxidants or of vitamins not normally found in the product. Certain of these products may also contain small quantities of chemicals (e.g., sodium bicarbonate) necessary for their processing; products in the form of powder or granules may contain anticaking agents (for example, phospholipids, amorphous silicon dioxide).
…
The chapter also excludes, inter alia, the following:
Food preparations based on dairy products (in particular, heading 19.01).
…
EN to 04.03 states in relevant part as follows:
This heading covers…all fermented…milk and cream…. The products of this heading may be in liquid, paste or solid (including frozen) form and may be concentrated (e.g., evaporated or in blocks, powder or granules) or preserved.
…
Apart from the additives mentioned in the General Explanatory Note to this Chapter, the products of this heading may also contain added sugar or other sweetening matter, flavourings, fruit (including pulp and jams), nuts or cocoa.
EN to 04.05 states in relevant part as follows:
This heading covers :
(A) Butter.
This group covers natural butter, whey butter and recombined butter (fresh, salted or rancid, including canned butter). Butter must be derived exclusively from milk and must have a milkfat content of 80 % or more but not more than 95 % by weight, a maximum milk solids-not-fat content of 2 % by weight and a maximum water content of 16 % by weight. Butter contains no added emulsifiers, but may contain sodium chloride, food colours, neutralising salts and cultures of harmless lactic-acid-producing bacteria. (See Note 2 (a) to this Chapter).
Butter obtained from goat’s or sheep’s milk is also covered by this group.
(B) Dairy spreads.
This group covers dairy spreads, i.e., spreadable emulsions of the water-in-oil type, containing milkfat as the only fat in the product, and having a milkfat content of 39 % or more but less than 80 % by weight (see Note 2 (b) to this Chapter). Dairy spreads may contain optional ingredients such as cultures of harmless lactic-acid-producing bacteria, vitamins, sodium chloride, sugars, gelatine, starches; food colours; flavours; emulsifiers; thickening agents and preservatives.
(C) Other fats and oils derived from milk.
This group covers fats and oils derived from milk (e.g., milkfat, butterfat and butteroil). Butteroil is the product obtained by extracting the water and non-fat content from butter or cream.
This group further includes dehydrated butter and ghee (a kind of butter made most commonly from the milk of buffaloes or cows), as well as products consisting of a mixture of butter and small quantities of herbs, spices, flavourings, garlic, etc. (provided they retain the character of the products falling in this heading).
EN (III) to 19.01 states as follows:
(III) Food preparations of goods of headings 04.01 to 04.04, not containing cocoa or containing less than 5% by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included.
The preparations of this heading may be distinguished from the products of headings 04.01 to 04.04 in that they contain, in addition to natural milk constituents, other ingredients not permitted in the products of those earlier headings. Thus heading 19.01 includes, for example:
Preparations in powder or liquid form used as food suitable for infants or young children or for dietetic purposes and consisting of milk to which secondary ingredients (e.g., cereal groats, yeast) have been added.
Milk preparations obtained by replacing one or more constituents of milk (e.g., butyric fats) by another substance (e.g., oleic fats).
The products of this heading may be sweetened and may contain cocoa. However, the heading excludes products having the character of sugar confectionary (heading 17.04) and products containing 5% or more by weight of cocoa calculated on a totally defatted basis (see the General Explanatory Note to this Chapter) (heading 18.06) and beverages (Chapter 22).
The heading also covers mixes and bases (e.g., powders) for making ice cream but it excludes ice cream and other edible ice based on milk constituents (heading 21.05).
The introductory language of EN 21.06 states “[p]rovided that they are not covered by any other heading of the Nomenclature, this heading covers: [a list of exemplars follows].” Therefore, before classifying the products in Chapter 21, we must first determine whether they can be classified in any other heading.
According to the description that you provided, the two cheese flavor pastes (CH403 and CH440) are enzyme modified, fermented dairy products. In NY N302241, CBP erroneously indicated that these products are classifiable under heading 0405, HTSUS. These products are not classifiable under heading 0405, HTSUS, because they do not meet the description of “[b]utter and other fats and oils derived from milk” or “dairy spreads.” See Note 2 to Chapter 4; see also EN to 04.05. According to the CH403 and CH440 “Product Declaration” sheets that you provided, CH403 has a milkfat content of 30.1 percent and CH440 has a milkfat content of 27.1 percent, therefore, neither product meets the definition for “butter” or “dairy spreads.” Furthermore, CH403 and CH440 are not included in the scope of “other fats and oils derived from milk” because they are not butter, as determined above, and they include enzymes as an additive, which is impermissible for products that are considered anhydrous milkfat, butterfat, butteroil, or ghee. See EN to 04.05; see also Headquarters Ruling Letter (“HQ”) 964377, dated April 30, 2001.
As fermented dairy, CH403 and CH440 would be classifiable in heading 0403, HTSUS, however, in accordance with General EN (I) to Chapter 4 and EN to 04.03, the addition of the enzymes precludes them from classification in that heading because enzymes are not included in the list of additional ingredients that are permissible for products of Chapter 4 or heading 0403, HTSUS. See also NY R00963 (Nov. 18, 2004) (classifying in heading 1901, HTSUS, an enzyme-modified cream, described as being composed of 98.5 percent pasteurized cream and 1.5 percent enzyme preparation) and NY R00962 (Nov. 9, 2004) (classifying in heading 1901, HTSUS, a fermented and hydrolyzed product composed of approximately 77 percent cream, 22 percent milk protein, one percent salt, and less than one percent enzyme and cultures). Accordingly, we must consider classification of the two cheese flavor pastes (CH403 and CH440) in heading 1901, HTSUS.
EN (III) to 19.01 states that the heading includes “products of headings 04.01 to 04.04” that also “contain, in addition to natural milk constituents, other ingredients not permitted in the products of those earlier headings.” As noted above, enzymes are not a permissible ingredient in products of heading 0403, HTSUS, therefore, the two cheese flavor pastes (CH403 and CH440) are classifiable in heading 1901, HTSUS, as “food preparations of goods of heading 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included.”
The “Product Declaration” sheets that you submitted state that CH403 consists of 15.2% milk solids per 100 grams of the product and CH440 consists of 14.5% milk solids per 100 grams of the product. Moreover, CH403 and CH440 are “dairy products described in additional U.S. note 1 to chapter 4” because they are “articles of milk or cream.” See Additional U.S. Note 1 to Chapter 4. The subject products are not within the scope of the exclusions delineated in General Note 15 of the tariff schedule. Accordingly, CH403 and CH440 are classified in subheading 1901.90.61, HTSUS, which provides, in relevant part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions.”
If entered outside the quota, the applicable subheading for CH403 and CH440 will be 1901.90.62, HTSUS, which provides, in relevant part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Other.”
According to the description that you provided, the cultured cream flavor paste (C742) is an enzyme modified, fermented cream product. In NY N302241, CBP erroneously indicated that this product is classifiable under heading 0403, HTSUS. As fermented cream, it would be classifiable in heading 0403, HTSUS; however, in accordance with General EN (I) to Chapter 4 and EN to 04.03, the addition of the enzymes precludes it from classification in that heading because enzymes are not included in the list of additional ingredients that are permissible for products of Chapter 4 or heading 0403, HTSUS. Accordingly, we must consider classification of the cultured cream flavor paste (C742) in heading 1901, HTSUS.
EN (III) to 19.01 states that the heading includes “products of headings 04.01 to 04.04” that also “contain, in addition to natural milk constituents, other ingredients not permitted in the products of those earlier headings.” As noted above, enzymes are not a permissible ingredient in products of heading 0403, HTSUS, therefore, the cultured cream flavor paste (C742) is classifiable in heading 1901, HTSUS, as “food preparations of goods of heading 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included.”
The “Product Declaration” sheet that you submitted for the cultured cream flavor paste (C742) does not provide milk solids in the list of ingredients. Moreover, C742 is a “dairy product[] described in additional U.S. note 1 to chapter 4” because it is an “article[] of milk or cream.” See Additional U.S. Note 1 to Chapter 4. The subject product is not within the scope of the exclusions delineated in General Note 15 of the tariff schedule. Accordingly, C742 is classified in subheading 1901.90.64, HTSUS, which provides, in relevant part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Other: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions.”
If entered outside the quota, the applicable subheading for C742 will be 1901.90.65, HTSUS, which provides, in relevant part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Other: Other.”
HOLDING:
By application GRI 1, CH403 and CH440 are classified in subheading 1901.90.61, HTSUS, which provides, in relevant part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions.” The column one, general rate of duty is 16 percent ad valorem.
If entered outside the quota, the applicable subheading for CH403 and CH440 will be 1901.90.62, HTSUS, which provides, in relevant part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Other.” The column one, general rate of duty is $1.035/kg + 13.6 percent ad valorem.
By application GRI 1, C742 is classified in subheading 1901.90.64, HTSUS, which provides, in relevant part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Other: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions.” The column one, general rate of duty is 16 percent ad valorem.
If entered outside the quota, the applicable subheading for C742 will be 1901.90.65, HTSUS, which provides, in relevant part, for “[F]ood preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Other: Other.” The column one, general rate of duty is $1.035/kg + 13.6 percent ad valorem.
Duty rates are provided for your convenience and subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.
EFFECT ON OTHER RULINGS:
NY N302241, dated March 1, 2019, is hereby REVOKED.
This revocation of treatment is not subject to the notice and comment provisions of
19 U.S.C. § 1625(c) because NY N302241 has been in effect for less than 60 days.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division