HQ 953675 - Classification of Chocolate-Flavored Chips and Real Milk Chocolate Chips under the Harmonized Tariff Schedule of the United States (HTSUS). - United States International Trade Commision Rulings

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HQ 953675

September 15,1993

CLA-2 CO:R:C:F 953675 JGH

CATEGORY: CLASSIFICATION

TARIFF NO.: 1806.90.0073

William J. Maloney, Esq.
Rode & Qualey
295 Madison Ave.
New York, New York 10017

RE: Classification of Chocolate-Flavored Chips and Real Milk Chocolate Chips under the Harmonized Tariff Schedule of the United States (HTSUS).

Dear Mr. Maloney:

Your letter of March 25, 1993, in behalf of Kraft General Foods, Inc., concerns the classification of two different types of Baker's chocolate chips made in Canada.

FACTS:

The two types of chocolate chips are Baker's Chocolate Flavored Chips and Baker's Real Chocolate (Milk Chocolate) Chips. Samples of the domestically produced, retail packaged products were submitted.

The chocolate flavored chips are said to be made from sugar (less than 60% by weight), partially hydrogenated palm kernel oil with 1% palm stearate, whey solids from mozzarella, cocoa, lecithin, and natural and artificial vanilla flavor. The butterfat content, present in the whey (which can not as a practical matter be removed), is said to be 0.11 to 0.14% by weight. The chocolate flavored chips are said to contain neither cocoa butter nor chocolate liquor.

The milk chocolate chips are said to contain sugar (less than 60% by weight), cocoa butter, dried whole milk, chocolate liquor, non-fat dried milk, lecithin, salt and natural and artificial vanilla flavor, with approximately 3.9% by weight butterfat.

The wrappings for both sample packages contain recipes for different types of chocolate chip cookies. - 2 -

ISSUE:

Classification and quota status of chocolate flavored chips and milk chocolate chips under the HTSUS.

LAW & ANALYSIS:

Although it is acknowledged that classification as other Chocolate and other food preparations containing cocoa in subheading 1806.90.00, HTSUS, may subject the products to quota restraints, it is argued that as the chocolate flavored chips do not contain over 5.5 percent by weight butterfat and are retail packaged, they are exempt from quota. Also as they do not contain chocolate and are not produced from chocolate crumb, it is claimed that for tariff purposes they can not be considered chocolate. The subheadings listed in the quota provision 9904.10.66, HTSUS, apply to "Chocolate, provided for in subheadings 1806.20.40, 1806.32.20, and 1806.90, and low fat chocolate crumb, provided for in subheadings 1806.20.80 and 1806.90, containing 5.5 percent or less by weight of butterfat (except articles for consumption at retail as candy or confection):..." Also the preparations listed in the subheadings subject to quota are those "consisting wholly of ground cocoa beans, with or without added cocoa fat, flavoring or emulsifying agents, and containing not more than 32 percent by weight of butterfat or other milk solids and not more than 60 percent by weight of sugar."

Since the chocolate flavored chips contain partially hydrogenated palm kernel oil, they are not chocolate for the purposes of the quota. Thus, the de minimis issue raised on the amount of milk solids present is not pertinent to the classification of this product. Of course, as conceded, the real milk chocolate chips would be considered chocolate, based on their composition, for quota purposes.

The other issue for consideration is whether both the chocolate flavored chips and the real milk chocolate chips are exempt from quota because they are candy or confections. It is argued that because the chips are retail packaged and ready to eat, they are exempt from quota as candy confections. However, the test applied by Customs is whether the product is chiefly or predominantly used as a candy or confection. Chocolate chips are commonly and commercially known as baking ingredients, and the fact that they may be eaten without any additional preparation does not make them candy. The examples given of candy bars and chocolate "kisses" convincingly makes this point: both of these chocolate products are packaged and marketed as candy, which chocolate chips are not; they, just as the bars of baking chocolate, are not "articles for consumption at retail as candy or confection". - 3 -

As the court noted in Leaf Brands Inc. v. United States 70 Cust. Ct. 66, (C.D. 4409), it is the use of the article, rather than the shape or texture which determines its classification. Thus, a product which the court acknowledged chemically was flavored sugar was, primarily because of its use and also its merchandising, a candy or confection.

HOLDING:

Baker's Chocolate flavored Chips are classifiable as other food preparations containing cocoa, put up for retail sale, in subheading 1806.90.0073, HTSUS, and if a product of Canada, dutiable at 3.5 percent ad valorem.

Baker's Real Milk Chocolate Chips are chocolate for the purposes of the quota, and as they contain 3.9 percent butter fat, would be classifiable in subheading 1806.90.0020, HTSUS, and subject to the quota restraints of subheading 9904.10.66, HTSUS.

Sincerely,

John Durant, Director

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