CLA-2 RR:CR:GC 960583 JGB

Mark S. Zolno, Esq.
David M. Dunbar, Esq.
Katten Muchin & Zavis
Suite 1600
525 West Monroe Street
Chicago, IL 60661-3693

RE: Powdered Cheese Sauce Base

Dear Messrs. Zolno and Dunbar:

This is in reference to your letter of March 25, 1997, on behalf of Kerry Ingredients, to the Customs National Commodity Specialist Division, New York, requesting the classification of a powdered cheese sauce base, under the Harmonized Tariff Schedule of the United States (HTSUS). Your letter was forwarded to this office for response. In preparing this decision consideration was also given to your letters of June 30, 1998, and March 4, 1999, following your meeting at Headquarters on May 6, 1998.

FACTS:

The product consists principally of a mixture of powdered cheese of the Oxahaca and Manchego varieties. The balance of the product, between a fifth and a quarter, by weight, is composed of chilies, bell pepper, onion, salt, starch, flavoring, preservatives and coloring. You state that the product will be imported in 50 pound bags or 1000 pound totes after which a processor would reconstitute it with water at about 10 to 15 percent solids. The processor would add the following ingredients to complete the desired combination: frozen diced green and red bell peppers; food starch or food starch and vegetable oil, and, optionally, jalapeño dices.

ISSUE: Whether the powdered cheese mix is classified as a grated or powdered cheese product of subheading 0406.20, HTSUS, or as a preparation for a sauce in subheading 2103.90.90, HTSUS. LAW AND ANALYSIS:

Merchandise imported into the U.S. is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.

GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order. The Explanatory Notes (ENs) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification of the HTSUS by offering guidance in understanding the scope of the headings and the GRIs.

Heading 0406, HTSUS, provides for cheese and curd, while subheading 0406.20 provides for grated or powdered cheese, of all kinds. Depending on whether the product contains cow’s milk or no cow’s milk, it would be classified in subheading 0406.20.91 or 0406.20.95, respectively. GRI 2(b) provides:

Any reference in a heading to a material or substance shall be taken to include a reference to mixtures or combinations of that material or substance with other materials or substances. Any reference to goods of a given material or substance shall be taken to include a reference to goods consisting wholly or partly of such material or substance.

An application of GRI 2(b) would allow the inclusion of dried chopped vegetables, seasonings, and other preservatives with the predominant amount of powdered cheese in this product and still keep the classification in heading 0406. As the EN (XII) to GRI 2(b) states, the rule does not widen the heading to the point where “the addition of another material or substance deprives the goods of the character of goods of the kind mentioned in the heading.” Therefore, in this case, only if the inclusion of the stated dried ingredients deprived the product of its character as cheese, would those dried ingredients preclude classification of the product in heading 0406.

Heading 2103, HTSUS, provides for “Sauces and preparations therefor; mixed condiments and mixed seasonings; ....” The ENs to this heading state:

(A) . . . This heading covers preparations, generally of a highly spiced character, used to flavor certain dishes (meat, fish, salads, etc.), and made from various ingredients (eggs, vegetables, meat, fruit, flours, starches, oil, vinegar, sugar, spices, mustard, flavorings, etc.). Sauces are generally in liquid form and preparations for sauces are usually in the form of powders to which only milk, water, etc. need to be added to obtain a sauce. (Emphasis added.)

Therefore, according to the EN the scope of this heading could include the powder under consideration here. It might be argued that the powder could still be a useful commercial product if it were reconstituted with only water. The bell pepper dice added by the processor could be considered optional in that peppers are already present in the powder and the additions would provide better texture. We note that you have presented evidence that the product is dedicated to use as a sauce as you state that pureflow starch will be added to the cheese powder prior to importation. We do not dispute your claim that the presence of starch would be inconsistent with any other use than as a preparation for a sauce.

In Orlando Food Corp. v. United States, 140 F.3d 1437 (Fed. Cir. 1998), the Court of Appeals for the Federal Circuit, in affirming the decision of the Court of International Trade, considered the scope of heading 2103, in particular, the “sauces and preparations therefor” portion of the heading. The court concluded that the scope was a function of the use characteristics of the provision; that is, as long as the product is used in a manner consistent with a preparation for a sauce, the amount or type of ingredients is a secondary consideration. When the court reasoned that the tomato product was prima facie classified in the tomatoes provision, as well as the advanced base or preparations for a sauce provision, the use provision prevailed.

In the present case, at Customs request, you have provided this office with information that would confirm that the product will be used as the base or preparation for a sauce. Also, from examination of the characteristics of the product, it appears to fall within a class of goods principally used as sauce bases or preparations for a sauce. See Additional U.S. Rule of Interpretation 1(a). Therefore, the product appears to meet the standards of heading 2103. Under these circumstances, we would necessarily follow the Orlando court’s principle and conclude under GRI 3(a) that the product is more specifically provided for under the use provision of heading 2103, HTSUS, than under the eo nomine provision of heading 0406, HTSUS, that merely describes the product. The court cited the commonly used rationale that “a product described by both a use provision and an eo nomine provision is generally more specifically provided for under the use provision” (citing Siemens Am., 653 F. 2d 471 at 478.) In this case, that rationale must be equally applicable, because it is more difficult to satisfy the conditions for use as a preparation for a sauce than to satisfy the provisions for “cheese and curd.”

HOLDING:

The product is classified in subheading 2103.90.90, HTSUS, the provision for “Sauces and preparations therefor; ... : Other: Other: Other, Other.”


Sincerely,

John Durant, Director
Commercial Rulings Division