HQ 0088880 - Decision on Application for Further Review of Protest No. 1401-90-000216, on the entry of certain chocolate products - United States International Trade Commision Rulings

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HQ 088880

March 19, 1992

CLA-2 CO:R:C:F 088880 RFC/PH

CATEGORY: CLASSIFICATION ENTRY

TARIFF NO.: 1806.90.0020; 1806.90.0078; 9904.10.66; chocolate

District Director
U.S. Customs Service
101 East Main Street
Norfolk, VA 23510

RE: Decision on Application for Further Review of Protest No. 1401-90-000216, on the entry of certain chocolate products

Dear Sir:

This is a decision on application for further review of a protest timely filed on behalf of Holland American Food Company, on December 17, 1990, against your notice of redelivery and decision in the tariff classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) of certain chocolate products. There were two entries of the products. The first entry was on March 30, 1990. The second entry was on August 3, 1990. Neither of the two entries was liquidated.

NOTICE OF REDELIVERY

FACTS:

As indicated above, the protestant entered the merchandise on March 30, 1990 and August 3, 1990. Immediate delivery was authorized for the first entry on March 30, 1990, and, we understand, for the second on August 6, 1990. Information and samples with regard to the March 30, 1990, entry were requested by Customs (on Customs' Form 28) on April 25, 1990. The information and samples were provided to Customs by communication dated May 11, 1990. We understand that the samples were sent to the Customs' laboratory on July 9, 1990. According to laboratory reports in the file, the laboratory received two of the samples on July 12, 1990. The dates of the two laboratory reports for these samples are August 29, 1990. Because of what it believed to be a discrepancy in one of those laboratory reports, re-analysis of one of the reports was requested. A supplemental laboratory report in response to this request is dated October 10, 1990. No information or samples were requested by Customs with regard to the August 3, 1990, entry, nor were any samples sent for analysis with regard to this entry. A notice of redelivery for certain of the merchandise entered in the March 30, 1990, entry was sent to the importer of record on October 30, 1990. We understand that on the same date a notice of redelivery for certain of the merchandise entered in the August 3, 1990, entry was sent to the importer of record on the same date. The protest under consideration was filed on December 17, 1990. On December 24, 1990, a notice of liquidated damages for failure to redeliver the merchandise was sent to the importer of record with regard to the March 30, 1990, entry. We understand that such a notice was also sent with regard to the August 3, 1990, entry on the same date. According to Customs' records, the March 30, 1990, entry was liquidated on May 17, 1991 (the August 3, 1990, entry has not been liquidated, liquidation having been extended by notice dated May 4, 1991).

The protestant claims that the notices of redelivery involved were untimely, in that they were not received until seven months after the original entry. The protestant contends that because of the time after the original entry which it took to issue the notices of redelivery, the original importer was led to assume that there were no more problems with these items. Further, the protestant states that during this time period the original importer of record was sold and the purchaser was unaware of any "hold of any inventory" and sold the merchandise in the normal course of business. Consequently, the protestant states, the merchandise cannot be returned as ordered.

ISSUES:

Is a notice of redelivery timely when:

(a) It is issued more than 30 days after authorization for immediate delivery and no request for information (CF 28) is issued or any other action is taken to establish a conditional release period?

(b) A request for information (CF 28) is issued within 30 days of entry and authorization for immediate delivery, the information and samples requested are timely provided to Customs, the samples are sent to the Customs' laboratory for analysis more than 30 days after receipt by Customs, laboratory reports are initially issued for the merchandise more than 30 days after the samples were sent to the Customs' laboratory, a second analysis of the merchandise by the Customs' laboratory is provided more than 30 days after the date of the first laboratory report, and the notice of redelivery is issued within 30 days of this last laboratory report (but 7 months after the date of entry and authorization for immediate delivery and more than 5 months after the information and samples requested were provided to Customs)?

LAW AND ANALYSIS:

Initially, we note that the protest, with application for further review, was timely filed under the statutory and regulatory provisions for protests (see 19 U.S.C. 1514 and 19 CFR Part 174). We also note that the decision to issue a notice of redelivery is protestable under the Customs' protest statute (see 19 U.S.C.

The Customs' regulations governing this issue are found in 19 CFR 141.113 and 113.62. Under paragraph (b) of section 141.113:

If at any time after entry the district director finds that any merchandise contained in an importation is not entitled to admission into the commerce of the United States for any reason not enumerated in paragraph (a) of this section [relating to various marking and labeling requirements], he shall promptly demand the return to Customs' custody of any such merchandise which has been released.

Paragraph (f) of section 141.113 contains a time limitation for demands for the return of merchandise to Customs' custody under section 141.113. Under this provision:

A demand for the return of merchandise to Customs' custody shall not be made after the liquidation of the entry covering such merchandise shall become final.

Section 113.62 contains the basic importation and entry bond conditions. Under paragraph (c) of this provision:

It is understood that any demand for redelivery will be made no later than 30 days after the date that the merchandise was released or 30 days after the end of the conditional release period (whichever is later).

Our interpretation of these provisions is that a notice of redelivery must be "promptly" issued, that is, it must be issued either: (1) no later than 30 days after the date the merchandise is released if there is no occurrence establishing a conditional release period; or (2) if there is an occurrence establishing a conditional release period (e.g., see 19 CFR 12.80(e)(2), 19 CFR 134.3, and 19 CFR 151.11), no later than 30 days after the end of that period (see Customs Service Decision (C.S.D.) 86-21). A notice of redelivery may never be issued after liquidation becomes final (United States v. Utex International Inc., 6 Fed. Cir. (T) 166 (1988)).

In the case of the August 3, 1990, entry, there was no occurrence establishing a conditional release. The notice of redelivery was issued more than 30 days after the date the merchandise was released. Therefore, the protest against the notice of redelivery for this entry must be granted (see C.S.D. 89-100).

In the case of the March 30, 1990, entry, there was an occurrence establishing a conditional release (i.e., the issuance of the request for information (CF 28)) and that occurrence was within 30 days after the date the merchandise was released. However, the notice of redelivery was not issued until more than 5 months after the date that the information and samples requested in the request for information were provided. The samples were not sent to the Customs' laboratory until more than 30 days after the date the samples were provided and the final laboratory report was not issued until more than 3 months after the samples were sent to the Customs' laboratory. This does not meet the requirement in 19 CFR 141.113(b) that a notice of redelivery be "promptly" issued (see C.S.D. 90-99). Therefore, the protest against the notice of redelivery for this entry must be granted.

HOLDING:

A notice of redelivery is not timely when:

(a) It is issued more than 30 days after entry and authorization for immediate delivery and no request for information (CF 28) is issued or any other action is taken to establish a conditional release period.

(b) A request for information (CF 28) is issued within 30 days of entry and authorization for immediate delivery, the information and samples requested are timely provided to Customs, the samples are sent to the Customs' laboratory for analysis more than 30 days after receipt by Customs, laboratory reports are initially issued for the merchandise more than 30 days after the samples were sent to the Customs' laboratory, a second analysis of the merchandise by the Customs' laboratory is provided more than 30 days after the date of the first laboratory reports, and the notice of redelivery is issued within 30 days of this last laboratory report (but 7 months after the date of entry and authorization for immediate delivery and more than 5 months after the information and samples requested were provided to Customs).

In light of the above, the protest is granted as to the notice of redelivery.

CLASSIFICATION

The foregoing determination moots the classification issue presented in this protest. The following discussion, however, is offered for your information and assistance in the classification and liquidation of any open entries on the merchandise and in ruling on any other open protests on the classification of the merchandise.

FACTS:

Three products are identified: Ruyter Chocolate Hail-Milk, Ruyter Chocolate Hail-Mocha, and Ruyter Chocolate Flakes-Milk. The first two products are described as "chocolate sprinkles," and the third product is described as "chocolate shavings." The two chocolate-sprinkle products are said to contain the same ingredients with the "mocha" chocolate-sprinkle product also containing coffee flavoring.

Laboratory analysis of a sample of the chocolate sprinkles shows that it contains, among other things, cocoa and 5.5 percent or less by weight of butterfat. Similar analysis of a sample of the chocolate shavings shows that it contains, among other things, cocoa but no butterfat.

The protestant contends that the three products are classified under the statistical-reporting numbers 1806.90.0075 or 1806.90.0078. On the other hand, Customs has classified all three of the products under the statistical-reporting number 1806.90.0020.

ISSUES:

(1) What is the proper tariff classification under the HTSUSA of "chocolate sprinkles" that contain, among other things, cocoa and 5.5 percent or less by weight of butterfat?

(2) What is the proper tariff classification under the HTSUSA of "chocolate shavings" that contain, among other things, cocoa but no butterfat?

LAW AND ANALYSIS:

Merchandise imported into the United States is classified under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA). The tariff classification of merchandise under the HTSUSA 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 HTSUSA and are to be considered statutory provisions of law for all purposes. See Sections 1204(a) and 1204(c) of the Omnibus Trade and Competitiveness Act of 1988 (19 U.S.C. 1204(a) and 1204(c)).

GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule (i.e., (1) merchandise is to be classified under the 4-digit heading that most specifically describes the merchandise; (2) only 4-digit headings are comparable; and (3) merchandise must first satisfy the provisions of a 4-digit heading before consideration is given to classification under a subheading within this 4-digit heading) and any relative section or chapter notes and, provided such headings or notes do not otherwise require, then according to the other GRIs.

GRI 6 prescribes that, for legal purposes, GRIs 1 to 5 shall govern, mutatis mutandis, classification at subheading levels within the same heading. Therefore, merchandise is to be classified at equal subheading levels (i.e., at the same digit level) within the same 4-digit heading under the subheading that most specifically describes or identifies the merchandise.

A review of the schedule reveals that the instant products may be classified in chapter 18. This chapter covers "cocoa and cocoa preparations." Of special significance to the instant classification analysis is note 2 to chapter 18. This note states that:

Heading 1806 includes sugar confectionery containing cocoa, and, subject to note 1 to this chapter, other food preparations containing cocoa.

Turning to heading 1806, one finds that it provides for "chocolate and other food preparations containing cocoa." As the instant products are food preparations containing cocoa, then the products are properly classified under heading 1806.

The instant products have been found to be properly classified under heading 1806. Consideration must now be given to the proper subheading in heading 1806 in which to classify the products. Of significance to classification of the instant products in heading 1806, however, is the issue of whether any of the products is a "confection" or "confectionery."

The terms "confection" and "confectionery" refer to and describe products that are ready for consumption as an end product (e.g., candy bars) and not for use in the production of another product (e.g., decorations for cakes or pies). See Webster's Ninth New Collegiate Dictionary 274 (1989) (confection is "a fancy dish or sweetmeat; also: a sweet food" and confectionery are "sweet foods (as candy or pastry)"); Webster's Third International Dictionary 475 (1986) (confection is a "delicacy; usu: a preparation of fruits, nuts, roots, or other morsels with sugar: sweetmeat, preserve, candy" and confectionery are "sweet edibles (as candy, cake, pastry, candied fruits, ice cream)..."); The Random House Dictionary of the English Language 307 (1983) (confection is "a sweet preparation of fruit or the like, as a preserve or candy" or "a piece of candy; bonbon" and confectionery are "confections or sweetmeats collectively"). The instant products are all for use in the making of an end product (i.e., decorations for pies, cakes, etc.) rather than as an end product in themselves. Accordingly, one can only conclude that none of the instant products is either a "confection" or "confectionery."

In light of their ingredients and of the fact that they are not considered to be a confection or confectionery, the instant products are classified as follow: The "chocolate sprinkles" are classified under the statistical-reporting number 1806.90.0020 and the "chocolate shavings" are classified under the statistical- reporting number 1806.90.0078.

HOLDING:

Ruyter Chocolate Hail-Milk

The product identified above as "Ruyter Chocolate Hail-Milk" and described as "chocolate sprinkles" is properly classified under the statistical-reporting number 1806.90.0020, which provides for chocolate and other food preparations containing cocoa, other, subject to quota established pursuant to section 22 of the Agricultural Adjustment Act, as amended: provided for in subheading 9904.10.66. The general rate of duty for the year 1990 is 7 percent ad valorem.

Products provided for in the statistical-reporting number 1806.90.0020 are subject for the year 1990 to the quota restrictions of 9904.10.66. Under this subheading, with the exception of such goods originating from the United Kingdom, Ireland, and New Zealand, there exists a total ban or embargo on the importation of goods provided for in 1806.90.0020 into the United States (i.e., none can be imported into the United States).

Ruyter Chocolate Hail-Mocha

The product identified above as "Ruyter Chocolate Hail-Mocha" and described as "chocolate sprinkles" is properly classified under the statistical-reporting number 1806.90.0020, which provides for chocolate and other food preparations containing cocoa, other, subject to quota established pursuant to section 22 of the Agricultural Adjustment Act, as amended: provided for in subheading 9904.10.66. The general rate of duty for the year 1990 is 7 percent ad valorem.

Products provided for in the statistical-reporting number 1806.90.0020 are subject for the year 1990 to the quota restrictions of 9904.10.66. Under this subheading, with the exception of such goods originating from the United Kingdom, Ireland, and New Zealand, there exists a total ban or embargo on the importation of goods provided for in 1806.90.0020 into the United States (i.e., none can be imported into the United States).

Ruyter Chocolate Flakes-Milk

The product identified above as "Ruyter Chocolate Flakes- Milk" and described as "chocolate flakes" is properly classified under the statistical-reporting number 1806.90.0078, which provides for chocolate and other preparations containing cocoa, other, other, other put up for retail sale, other. The general rate of duty for the year 1990 is 7 percent ad valorem. Products classified under the statistical-reporting number 1806.90.0078 for the year 1990 are not subject to a quota restriction.

A copy of this decision should be furnished to the protestant with the Form 19 notice of action.

Sincerely,

John Durant, Director
Commercial Rulings Division

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