HQ 0950489 - Modification of NYRL 866708; Cocoa Drink Mixes in subheading 1806.20.7010 and 9904.60.60, HTSUSA - United States International Trade Commision Rulings

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HQ 950489

February 10, 1992

CLA-2 CO:R:C:F 950489 LPF

CATEGORY: CLASSIFICATION

TARIFF NO.: 1806.20.7010; 9904.60.60

Mr. Clark D. Bien
Arbor Foods Incorporated
6018 West Maple Road, Suite 888
West Bloomfield, MI 48322

RE: Modification of NYRL 866708; Cocoa Drink Mixes in subheading 1806.20.7010 and 9904.60.60, HTSUSA

Dear Mr. Bien:

In New York Ruling Letter (NYRL) 866708 issued September 19, 1991, cocoa drink mixes from Canada were classified in subheading 1806.20.8060, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), as "[c]hocolate and other food preparations containing cocoa: Other preparations in blocks or slabs weighing more than 2 kg. or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg: Other: Other, Subject to quotas established pursuant to section 22 of the Agricultural Adjustment Act, as amended: Provided for in subheading 9904.60.60." The special column one rate of duty was 7 percent ad valorem. Subsequently, we have reviewed that ruling and have found it to be partially in error. The correct classification is as follows.

FACTS:

The merchandise at issue consists of two formulations of cocoa mixes. One product contains 67.89 percent sugar, 15.65 percent whey, 10.44 percent non dairy creamer, 5.22 percent cocoa and small quantities of flavor, salt and emulsifier. The other product contains 70.50 percent sugar, 6.50 percent whey, 9.50 percent non dairy creamer, 6.40 percent cocoa, 5.00 percent skim milk powder, and small quantities of salt, emulsifier and sodium caseinate.

Both products will be imported from Canada in 2,000 pound bulk bags and in 100 pound paper bags. The cocoa mixes require only the addition of water to make a finished beverage.

ISSUE:

Whether the cocoa mixes are properly classifiable as chocolate and other food preparations containing cocoa, containing more than 65 percent of sugar by weight, in subheading 1806.20.7010 or as chocolate and other food preparations containing cocoa, other than those containing more than 65 percent of sugar by weight, in subheading 1806.20.8060.

LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) taken in their appropriate order provide a framework for classification of merchandise under the HTSUSA. The majority of imported 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 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 GRI's may then be applied. GRI 6 provides that the GRI's apply in the same fashion to subheadings within the same heading.

The product at issue is classifiable by applying GRI 1, that is, according to the terms of the applicable heading and subheading. Heading 1806 provides for chocolate and other food preparations containing cocoa. Focusing on the applicable subheading, we note that the cocoa mixes are in containers or packages of a content exceeding two kilograms and also contain more than 65 percent by weight of sugar. In addition, in light of the applicable sugar quota in Chapter 99, we observe that the subject dried cocoa mixes, requiring only the addition of water, are not considered capable of being further processed or mixed with other ingredients. For these reasons the applicable subheading is 1806.20.7010 subject to the quota provided for in subheading 9904.60.60.

In addition, assuming the products, imported from Canada, are "originating goods" as defined by General Note 3(c)(vii)(B), HTSUSA, they will enjoy certain tariff preferences under the United States - Canada Free Trade Agreement (CFTA).

HOLDING:

The cocoa mixes are classifiable in subheading 1806.20.7010, HTSUSA, as "[c]hocolate and other food preparations containing cocoa: Other preparations in blocks or slabs weighing more than 2 kg or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg: Other: Containing more than 65 percent by weight of sugar, Provided for in subheading 9904.60.60." Assuming the cocoa mixes qualify for tariff preferences under the CFTA, the special column one rate of duty is 7 percent ad valorem.

This notice should be considered a modification of NYRL 866708 pursuant to 19 CFR 177.9(d)(1). It is not to be applied retroactively to NYRL 866708 (19 CFR 177.9(d)(2)) and will not, therefore, affect past transactions for the importation of your merchandise under that ruling. However, for the purposes of future transactions in merchandise of this type, NYRL 866708 will not be valid precedent. We recognize that pending transactions may be adversely affected by this modification, in that current contracts for importations arriving at a port subsequent to this decision will be classified pursuant to it. If such a situation arises, you may, at your discretion, notify this office and apply for relief from the binding effects of this decision as may be warranted by the circumstances.

Sincerely,

John Durant, Director
Commercial Rulings Division

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