HQ 0088165 - Internal Advice Request 66/90 regarding classification of Dog and Cat Treats, Snacks and Biscuits; Subheading 9903.23.35; Subheading 2309.10.00; HRL 086640; HRL 087627; Retail Sale; Bulk Shipments - United States International Trade Commision Rulings

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HQ 088165

February 5, 1991

CLA-2 CO:R:C:G 088165 WAW

CATEGORY: CLASSIFICATION

TARIFF NO.: 2309.90.9000

District Director of Customs
610 South Canal Street
Chicago, IL 60607

RE: Internal Advice Request 66/90 regarding classification of Dog and Cat Treats, Snacks and Biscuits; Subheading 9903.23.35; Subheading 2309.10.00; HRL 086640; HRL 087627; Retail Sale; Bulk Shipments

Dear Sir:

This request for internal advice was initiated by the law firm of Patton, Boggs & Blow, on behalf of their client Mardel Laboratories, Inc., regarding the classification of dog and cat treats, snacks and biscuits from England under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). This request was forwarded to our office for final determination. We had the opportunity to meet with the importer, counsel for the importer, and other representatives from DeAngelus & Schaffer to discuss this matter on Friday, December 7, 1990.

FACTS:

The merchandise at issue is described as dog treats which are imported in cartons of 22 and 27.5 pounds with plastic weigh out bags in every fourth carton. The weigh out bags are used to package the imported snacks into smaller quantities and are marked with ingredients, analysis and a feeding guide. The imported product consists of more than 6 percent by weight of grain or grain products and is an admixture of grains and feedstuffs. The accompanying literature advertising this product shows a picture of an open container of pet treats with the following statement: "New Marrowbone is now available in bulk for your customers who prefer to buy this way. The 27.5 pound case comes with free weigh-out bags and a colorful attention- getting header card."

On July 17, 1990, the importer, Mardel Laboratories, Inc., received a reject slip requiring a 100 percent deposit of duties on the dog and cat treats. This notice was subsequently followed by a Form 29, Notice of Action, dated July 27, 1990, which was applied to a number of 1989 and 1990 entries of the pet treats. On August 30, 1990, counsel for the importer submitted a request for internal advice to your office regarding the classification of pet treats and snacks imported from England. The request was forwarded to this office for our final determination in this matter.

Counsel for the importer maintains that Customs has erroneously classified the subject merchandise as dog and cat food in subheading 2309.10.00, HTSUSA, based on the reasons set forth below.

First, counsel argues that under subheading 9903.23.35, HTSUSA, pet food products from the EEC may be subject to 100 percent rate of duty only if they would otherwise be classified in subheading 2309.10, HTSUSA. Subheading 2309.10, HTSUSA, applies generally to "dog or cat food, put up for retail sale." However, counsel for the importer states that dog or cat food must be classified under subheading 2309.90.10, HTSUSA, as "mixed feeds or mixed feed ingredients," if it satisfies the definition of "mixed feed or mixed feed ingredients" set forth in Additional U.S. Note 1 to Chapter 23, HTSUSA. Additional U.S. Note 1 states the following:

The term "mixed feed and mixed feed ingredients" in subheading 2309.90.10 embraces products of heading 2309, which are admixtures of grains (or products, including by-products, obtained in milling grains) with molasses, . . ., and which consist of not less than 6 percent by weight of grain or grain products.

Based on Note 1, counsel for the importer claims that any product of Heading 2309 which satisfies the definition of mixed feed or mixed feed ingredients must be classified in subheading 2309.90.10, HTSUSA. Counsel maintains that this is true even of dog food and cat food, since the definition of "mixed feed and mixed feed ingredients" explicitly states that it embraces products of Heading 2309. Dog food and cat food are both included under Heading 2309. Thus, counsel for the importer states that if a dog food or cat food put up for retail sale fulfills the definition of "mixed feed and mixed feed ingredients," it is properly classified in subheading 2309.90.10, HTSUSA.

Finally, counsel for the importer maintains that if these pet treats are classified in subheading 2309.10, HTSUSA, as pet food they cannot be subject to the higher EEC duties under subheading 9903.23.35, HTSUSA, since they are not "put up for retail sale." Subheading 9903.23.35, HTSUSA, states the following:

Pet food packaged for retail sale, of byproducts obtained from the milling of grains, mixed feeds, and mixed-feed ingredients (provided for in subheading 2309.10)

Counsel notes that subheading 9903.23.35, HTSUSA, only applies to pet food which is packaged for retail sale. At issue are pet snacks that are imported in cartons of 22 and 27.5 pounds with plastic weigh out bags in every fourth carton. A survey conducted by the importer detailing bulk product sales, demonstrates that pet stores which purchase these treats typically display a small quantity in a plastic bin or container, while keeping the larger imported carton in storage. In addition, counsel for the importer states that the 22 and 27.5 pound boxes do not qualify as intermediate retail products since they are not packaged or marketed in the same manner as the retail units. Counsel claims that the "finished retail consumer-sized packaging" is the shelf-sized packages or the smaller plastic bags filled from the 22 and 27.5 pound bulk containers. Thus, it is counsel for the importer's position that these pet treats are imported in bulk and not subject to the higher EEC duties imposed by subheading 9903.23.35, HTSUSA.

Two of the competing provisions at issue in this case are the following:

2309.10.00 Preparations of a kind used in animal feeding: Dog or cat food, put up for retail sale

2309.90.10 Preparations of a king used in animal feeding: Other: Mixed feeds or mixed feed ingredients

ISSUE:

Whether the dog and cat treats are classified in subheading 2309.10.00, HTSUSA, as dog or cat food, put up for retail sale, or rather in subheading 2309.90.90, HTSUSA, as preparations of a kind used in animal feeding: Other: Other: Other: Other.

LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) set forth the manner in which merchandise is to be classified under the HTSUSA. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff and any relative section or chapter notes and, unless otherwise required, according to the remaining GRI's, taken in order.

In a prior Headquarters Ruling Letter (HRL) 086640, dated June 12, 1990, (modified in HRL 087627, dated August 6, 1990), Customs issued a ruling classifying cat food and dog treats. In HRL 086640, the dog treats were described as consisting of "high energy meat flavored treat, made with vegetable grain products and packed in 30 gram size airtight, cellophane packs." This ruling held that pet food or pet treats which meet the definition for mixed feeds and mixed feed ingredients, set out in Additional U.S. Legal Note 1 to Chapter 23, should be covered by the wording of subheading 9903.23.35, HTSUSA, if packaged for retail sale. The ruling further stated that subheading 2309.10.00, HTSUSA, was intended to include not only complete meals but also snacks. In HRL 086640, Customs concluded that the dog treats did not meet the definition of "mixed feed and mixed feed ingredients" and therefore, the EEC duties should not be applied. However, in a decision modifying this ruling, (HRL 087627), Customs stated that the dog treats are an admixture of grains combined with a feedstuff (meat meal) which consists of over 6 percent by weight of grain thereby satisfying the definition of mixed feed ingredients. Accordingly, Customs held that the dog treat in HRL 086640, a product made of mixed feed ingredients classifiable in subheading 2309.10, HTSUSA, should be subject to the 100 percent duty rate as dictated by subheading 9903.23.35, HTSUSA.

Based on HRL 086640 and 087627, it is our position that dog and cat treats, snacks and biscuits which meet the definition of "mixed feed and mixed feed ingredients" should be classified in subheading 2309.10.00, HTSUSA, if they are "put up for retail sale." The products imported by Mardel satisfy this exacting definition of "mixed feeds and mixed feed ingredients." Specifically, based on information provided by the importer on the component breakdown of the ingredients by weight, it is clear that the dog treats consist of more than 6 percent by weight of grain or grain products and is an admixture of grains and feedstuffs. Thus, the dog treats will be classified in this subheading only if they are also "put up for retail sale." Pet treats, whether or not of mixed-feed ingredients, which do not meet the definition of "put up for retail sale" will be classified in subheading 2309.90.90, HTSUSA.

Subheading 9903.23.35, HTSUSA, indicates that pet food packaged for retail sale, of byproducts obtained from the milling of grains, mixed feeds, and mixed-feed ingredients (provided for in 2309.10) which are the product of the European Economic Community (Belgium, Denmark, France, the Federal Republic of Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, and the United Kingdom), are subject to a 100 percent duty rate. Thus, if the subject merchandise meets the definition for "dog or cat food" in subheading 2309.10.00, HTSUSA, it will be subject to 100 percent duty rate only if it is found to be packaged for retail sale.

Absent a clear statement of congressional intent, tariff terms are construed in accordance with their common and commercial meanings, which are presumed to be the same. Nippon Kogaku (USA) Inc. v. United States, 673 F.2d 380 (1982). Congress is presumed to know the language of commerce and to have framed tariff acts so as to classify commodities according to general usage and denomination of the trade. Nylos Trading Company v. United States, 37 CCPA 71, C.A.D. 422 (1949). To ascertain the common [and commercial] meaning [of a tariff term], in addition to relying upon its own understanding of the terms used, the courts may consult dictionaries, lexicons, the testimony of record, and other reliable sources of information as an aid to its knowledge. Pistorino & Co., Inc. v. United States, 461 F. Supp. 331, 334 (1978).

After careful analysis by this office and the International Nomenclature Staff, Office of Regulations and Rulings, we have concluded that the term "retail sale" is not specifically defined in either the Legal Notes or the Explanatory Notes to the tariff schedule. Thus, we may consult representative dictionary definitions to derive the common and commercial meaning of the term "retail sale." Black's Law Dictionary, Fifth Edition, 1979, defines the term "retail sale" as: "A sale in small quantities or direct to consumer, as distinguished from sale at "wholesale" in large quantity to one who intends to resell." The term "retailer" is defined in Black's Law Dictionary, Fifth Edition, 1979, as follows: "A person engaged in making sales to ultimate consumers." The term "retail" has been defined by the Customs Court as "sales in small quantities to ultimate consumers." See Ed Alexander v. United States, 78 Cust. Ct. 137, C.D. 4699 (1977).

It is a well settled principle of Customs law that, in the absence of deception, disguise, or artifice resorted to for the purpose of perpetrating a fraud upon the revenue, imported merchandise must be classified with reference to its condition when imported. See United States v. Citroen, 223 U.S. 407 (1911). The term "condition when imported" has been interpreted by the courts to mean the condition of the goods when they are brought within the jurisdiction of the United States with intent to unlade. See Roser Customs Service, a/c Continental Ore Corporation et al. v. United States, 64 Cust. Ct. 20, C.D. 3953 (1970). Here, the dog treats are being imported into the jurisdiction of the United States in plain, unmarked, 22 and 27.5 pound cartons without plastic bags. These 22 and 27.5 pound boxes of pet snacks each contain approximately 2,100 items. The dog treats are not put up in individual packages. The merchandise is later repackaged into marked boxes which are shipped to pet stores. Most consumers do not purchase 22 or 27.5 pound cartons of pet treats, but rather, will buy much smaller quantities of treats in the weigh out bags provided by the importer. Thus, at the time of importation, the merchandise is shipped in large, unmarked boxes which are intended to be the source from which smaller quanitites of dog treats will be sold.

Based on the facts in this specific case, we have determined that the condition of the merchandise when it enters the United States constitutes bulk shipments, rather than retail packages. Moreover, the fact that the ultimate consumer will purchase a smaller quantity of the dog treats at the time of sale does not affect classification of the merchandise when imported. These goods, however, are distinguishable from those dog and cat treats imported by Mardel which are already individually packaged in small pouches suitable for retail sale when they enter the United States. The latter dog and cat treats would be classified in subheading 2309.10.00, HTSUSA, and subject to the 100 percent rate of duty under subheading 9903.23.35, HTSUSA.

HOLDING:

Based on the foregoing analysis, the dog treats being imported into the United States in 22 and 27.5 pound cartons are considered bulk shipments, and should be classified in subheading 2309.90.90, HTSUSA, as preparations of a kind used in animal feeding: Other: Other: Other: Other. Merchandise classified under this subheading is subject to a 3 percent rate of duty.

Sincerely,

John Durant, Director

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