CLA-2-04:OT:RR:CTF:TCM H042882 PJG
Area Port Director
United States Customs and Border Protection
301 East Ocean Blvd.
Long Beach, CA 90802
RE: Internal Advice Request No. 08/24; Classification of Easiyo Yogurt Bases
Dear Area Director:
This ruling is in response to a request for internal advice dated September 17, 2008, initiated by Simons & Wiskin (“Counsel”), on behalf of its clients, Easiyo Products Limited (“Easiyo”) and Phase One Trading Group, Inc. (“Phase One”). The request for internal advice concerns the classification of Easiyo yogurt bases under the Harmonized Tariff Schedule of the United States (“HTSUS”). Phase One, as importer of record, has previously entered shipments of Easiyo yogurt bases under subheading 0403.10.5000, HTSUS. However, in its request for internal advice, Counsel avers that the yogurt bases are properly classified under subheading 3002.90.10, HTSUS.
FACTS:
The merchandise referred to as “yogurt bases” are foil packets of powder-like substances used to make yogurt. The yogurt bases come in a variety of flavors, which Counsel divides into four categories: 1) plain yogurt base; 2) low-fat yogurt base; 3) sweet flavored yogurt base; and 4) bio-flavors. The merchandise is a product of New Zealand.
According to the request for internal advice, “the yogurt bases are made principally of milk solids (range 56-98%) which consist of whole and skim milk from which the water has been removed and freeze-dried yogurt cultures (range 1-2%), food coloring, fiber, and de minimis amounts of flavoring” (range .1%-
2%). The yogurt bases may also contain “[l]ecithin derived from soybean . . . used along with a natural emulsifier.” The sweet yogurt contains 28-36% sucrose. Counsel also indicates that the Bio-Life type of yogurt base contains fiber in the form of “Fibrulos or Fructooligosaccharides.” The lactic cultures in the Easiyo yogurt base are L. bulgaricus, S. thermophilus, L. acidophilus, Lacto casei, and bifidobacteria.
Additionally, Counsel states that to make yogurt, “the consumer adds water to the . . . yogurt base and places the jar containing this mixture into the yogurt maker which contains boiling water.” After about two minutes of mixing and at least eight hours of fermenting, the resulting product is one liter of yogurt. The preparation instructions are listed on the back of each Easiyo yogurt base package.
The Easiyo yogurt bases had been previously entered by Phase One with the merchandise classified under subheading 0403.10.5000, HTSUS, which provides for “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: Yogurt: In dry form: Other”. The classification contains a footnote citing to subheadings 9904.04.50-9904.05.01.
Counsel maintains that the Easiyo yogurt bases should be classified under heading 3002, HTSUS. Specifically, Counsel proposes subheading 3002.90.10, HTSUS, which provides for “cultures of micro-organisms (excluding yeasts) and similar products: Other: Ferments”. Counsel bases its conclusion on Headquarters Ruling Letter (“HQ”) 958639, dated May 6, 1996, which Counsel states “classified freeze-dried lactococcus bacteria suspended in nonfat milk used to make yogurt as ‘ferments’ under HTSUS 3002.90.10.”
ISSUE:
What is the classification of Easiyo yogurt bases under the HTSUS?
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. In addition, the Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”), while not binding law, are the “official interpretation” of the Harmonized System at the international level and “provide a commentary on the scope of each heading” of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989); see also, Len-Ron Mfg. Co. v. United States, 334 F.3d 1304, 1309 (Fed. Cir. 2003) (noting that Explanatory Notes are “intended to clarify the scope of HTSUS subheadings and to offer guidance in their interpretation”).
The HTSUS provisions under consideration for classification of the Easiyo yogurt bases are:
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:
0403.10 Yogurt:
In dry form:
0403.10.50 Other
* * * * *
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:
1901.90 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
* * * * *
Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera and other blood fractions and modified immunological products, whether or not obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products:
3002.90 Other:
Ferments
The General EN I(a) to Chapter 4 indicates that the Chapter excludes “[f]ood preparations based on dairy products (in particular, heading 19.01).” EN 04.03 states that the “heading covers . . . all fermented . . . milk . . . and includes yogurt.” Further, the EN states that “[f]ermented milk of this heading may consist of milk powder of heading 04.02 containing small quantities of added lactic ferments, with a view to its use in prepared meat products or as an additive for animal feed.”
EN 19.01 (III) states in relevant part that “[t]he products of this heading may be sweetened.”
Chapter Note 1(a) for Chapter 30 of the HTSUS states that the chapter “does not cover . . . [f]oods or beverages . . ., other than nutritional preparations for intravenous administration.” Additionally, EN 30.02(D)(3) states that “Cultures of micro-organisms (excluding yeasts) . . . . include ferments such as lactic ferments used in the preparation of milk derivatives (kephir, yogurt, lactic acid).”
The Easiyo Yogurt Bases do not meet the terms of heading 0403, HTSUS. Classification is based upon the condition of articles at the time of importation. See United States v. Citroen, 223 U.S. 407 (1911). At the time the bases are imported, they are not described by the heading. The articles are neither a yogurt nor fermented until they are imported, mixed with water, and set aside to ferment for at least eight hours. Additionally, the subject merchandise, which is a powder used to prepare yogurt and consists of 56-98% milk solids, cannot be classified under Chapter 4 of the HTSUS because, according to General EN I to Chapter 4, the Chapter excludes “[f]ood preparations based on dairy products (in particular, heading 19.01).” In Orlando Food Corp. v. United States, the U.S. Court of Appeals for the Federal Circuit reasoned that “[i]nherent in the term ‘preparation’ is the notion that the object involved is destined for a specific use.” 140 F.3d 1437, 1441 (Fed. Cir. 1998). Moreover, the court referred to The Oxford English Dictionary definition of “preparation” which is “‘a substance specially prepared, or made up for its appropriate use or application.’” Id. (citing The Oxford English Dictionary 374 (2d. ed. 1989)). The Easiyo yogurt bases are used specifically for making yogurt; therefore, they are “food preparations” based on the reasoning in Orlando Food Corp. v. United States, and as such, they are excluded from classification under heading 0403, HTSUS.
The subject merchandise is also not classified under heading 3002, HTSUS as “cultures of micro-organisms (excluding yeasts) and similar products” because Chapter Note 1(a) to Chapter 30, HTSUS, indicates that the chapter “does not cover . . . [f]oods or beverages . . ., other than nutritional preparations for intravenous administration.” Although the yogurt bases are food preparations that contain cultures of micro-organisms, they are not designed for intravenous administration. Moreover, the merchandise classified in HQ 958639, which was cited by Counsel to support its argument that the subject merchandise should be classified under heading 3002, HTSUS, is distinguishable from the case at issue. The merchandise classified in HQ 958639 involved “freeze-dried lactoccocus” which is a ferment “commonly used in the production of cottage cheese and yogurt”, whereas the subject merchandise is not a ferment, it is a food preparation consisting of various ingredients used by a consumer to make a liter of yogurt. Therefore, based on the language of heading 3002, HTSUS, and Chapter Note 1(a), the subject merchandise is not classified under heading 3002, HTSUS.
The subject merchandise is classified under heading 1901, HTSUS, as “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.” The subject merchandise is a food preparation, as defined and analyzed earlier, and if the instructions listed on the back of each package of the subject merchandise are properly executed, the final product will be yogurt, which is classified under 0403.10.90, HTSUS. Moreover, according to EN III to heading 19.01, goods classified under heading 1901 “may be sweetened,” therefore, the de minimis amounts of sweetener in the yogurt bases do not preclude the subject merchandise from being classified under heading 1901.
The subject merchandise is specifically classified in subheading 1901.90.42, HTSUS because it is an article of milk, as described in Additional U.S. Note 1 to Chapter 4 and defined by the United States Court of International Trade. Arko Foods Int’l, Inc. v. United States, 2009 Ct. Int’l. Trade Lexis 155, 22-23 (2009) (citing Wilsey Foods, Inc. v. United States, 18 Ct. Int’l Trade 212, 213 (1994) (the court determined whether the product was an “article of milk or cream” by “consider[ing] whether milk or cream [was] the essential ingredient, the ingredient of chief value, and the preponderant ingredient” and whether the product was “an article of milk or cream within the industry”). Milk may not be the essential ingredient for the yogurt bases, since the yogurt bases require other ingredients (e.g., lactic cultures, food coloring, fiber, flavoring) as well; however, milk is the “ingredient of chief value” because all of the yogurt bases are comprised of 56 to 98 percent of milk solids. Given that the milk solids comprise more than fifty percent of the ingredients in the yogurt bases, milk is also considered a “preponderant ingredient” of the subject merchandise.
Based on the foregoing analysis, we find that the yogurt bases are classified under subheading 1901.90.42, HTSUS, and are subject to the restrictions of Additional U.S. Note 10 to Chapter 4.
HOLDING:
The Easiyo yogurt bases are classified under heading 1901, HTSUS. Specifically, they are provided for in subheading 1901.90.42, HTSUS, which provides for “food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of 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 2010 general, column one rate of duty is 16%.
Once the quantitative limits of Additional U.S. Note 10 to Chapter 4 have been reached, the product will be classified under subheading 1901.90.43, HTSUS, which provides for “food preparations of goods of headings 0401 to 0404, not containing cocoa or containing less than 5 percent by weight of 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 2010 general, column one rate of duty is $1.035 per kilogram plus 13.6 percent ad valorem. Merchandise classified under subheading 1901.90.43, HTSUS will also be subject to additional duties as described in subheadings 9904.04.50-9904.05.01.
You are to mail this decision to the internal advice requester no later than sixty days from the date of the decision. At that time, Regulations and Rulings of the Office of International Trade will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division