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HQ 965771

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October 17, 2002

CLA-2 RR:CR:GC 965771

CATEGORY: CLASSIFICATION

TARIFF NO.: 2106.90.6400/2106.90.6600

Ms. Darlene DiBernardo
Deringer Logistics Consulting Group
1 Lincoln Boulevard
Suite 225
Rouses Point, NY 12979

RE: Malchoc-W, White Chocolate with Sweetener

Dear Ms. DiBernardo:

This is in response to your letter of June 14, 2002, on behalf of Barry Callebaut Inc., to the Director, Customs National Commodity Specialist Division, in New York, in which you requested the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of a product referred to as Malchoc – W: White Chocolate with Sweetener. Your letter and product samples were forwarded to this office for reply. We regret the delay.

FACTS:

The product under consideration, Malchoc – W, White Chocolate with Sweetener, is stated to be composed of cocoa butter, whole milk powder, emulsifier (soya lecithin), natural vanilla, with the sweetener being maltitol. The milkfat content of the product is stated to be 6.2% +/- 0.5%. The product will be imported in solid form, 5-kilogram blocks and will be used primarily for enrobing and molding in the US.

In your request, you state that you believe the product would be classifiable in subheading 2106.90.8200, HTSUS. ISSUE:

What is the classification of Malchoc –W: White Chocolate with Sweetener?

LAW AND ANALYSIS:

Merchandise is classifiable under the Harmonized Tariff Schedule of the United States (HTSUS) in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that virtually all 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 may then be applied in order.

In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes may be utilized. The Explanatory Notes (ENs), although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).

The HTSUS headings under consideration are as follows:

1704 Sugar confectionery (including white chocolate), not containing cocoa:

2106 Food preparations not elsewhere specified or included

Other
Other
Other:
Containing over 10 percent by weight of milk solids:

Other, dairy products described in additional U.S. note 1 to chapter 4:

2106.90.6400 Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions

2106.90.6600 Other 1/

1/ See subheadings 9904.04.50-9904.05.01.

Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17:

2106.90.7800 Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions

2106.90.8000 Other

2106.90.8200 Other

In your letter, you state that you believe that the product would be excluded from classification in subheadings 2106.90.6400 or 2106.90.6600, HTSUS, based on the "language in Additional U.S. Note 1 to Chapter 4 that states white chocolate is exempted from the definition of products falling subject to this note."

Additional U.S. Note 1 to Chapter 4 provides as follows:

"1. For the purposes of this schedule, the term "dairy products described in additional U.S. note 1 to chapter 4" means any of the following goods: malted milk, and articles of milk or cream (except (a) white chocolate and (b) inedible dried milk powders certified to be used for calibrating infrared milk analyzers); articles containing over 5.5 percent by weight of butterfat which are suitable for use as ingredients in the commercial production of edible articles (except articles within the scope of other import quotas provided for in additional U.S. notes 2 and 3 to chapter 18); or, dried milk, whey or buttermilk (of the type provided for in subheadings 0402.10, 0402.21, 0403.90 or 0404.10) which contains not over 5.5 percent by weight of butterfat and which is mixed with other ingredients, including but not limited to sugar, if such mixtures contain over 16 percent milk solids by weight, are capable of being further processed or mixed with similar or other ingredients and are not prepared for marketing to the ultimate consumer in the identical form and package in which imported."

To understand the scope of Additional U.S. Note 1 to Chapter 4, one must analyze it as written by Congress, paying particular attention to the punctuation.

The Note begins by stating that the term "dairy products described in additional U.S. note 1 to chapter 4" is intended to apply to any goods in the list which follows the colon. What follows is a listing of three distinct types of goods, each of which is separated from the other by semi-colons.

The first type of good listed in the Note is: "malted milk, and articles of milk or cream (except (a) white chocolate and (b) inedible dried milk powders certified to be used for calibrating infrared milk analyzers)." This is the reference to white chocolate you cited. The white chocolate excluded from the quota for articles of milk or cream in additional U.S. note 1 to chapter 4 is the product described in the ENs to chapter 17, page 150, item (iv) "White chocolate composed of sugar, cocoa butter, milk powder and flavoring agents ." Malchoc-W does not contain sugar, and is thus not the "white chocolate" excluded from the additional Note. However, the Malchoc-W is not an article of milk or cream because, according to information you supplied, it contains more vegetable oil and sweetener than milk powder. The Court of International Trade has ruled in Wilsey Foods, Inc., v. U.S., (CIT Slip Op. 94-46 (1994), that products which are comprised chiefly of vegetable fat and sugar are not to be classified as articles of milk or cream. Thus, Malchoc-W is not included within the first type of good listed.

The Note continues and lists additional goods which are to be included within the scope of the quota.

The second type of good is: "articles containing over 5.5 percent by weight of butterfat which are suitable for use as ingredients in the commercial production of edible articles (except articles within the scope of other import quotas provided for in additional U.S. notes 2 and 3 to chapter 18)." The Malchoc-W is described by this provision. It contains over 5.5 percent butterfat and is to be used (enrobing and molding) as an ingredient in the commercial production of edible articles. Thus, the Malchoc-W falls within the term "dairy products described in additional U.S. note 1 to chapter 4."

The third type of goods included within the scope of the Note are "dried milk, whey or buttermilk (of the type provided for in subheadings 0402.10, 0402.21, 0403.90 or 0404.10) which contains not over 5.5 percent by weight of butterfat and which is mixed with other ingredients, including but not limited to sugar, if such mixtures contain over 16 percent milk solids by weight, are capable of being further processed or mixed with similar or other ingredients and are not prepared for marketing to the ultimate consumer in the identical form and package in which imported." Malchoc-W is not described by the language of this provision.

Because the maltitol sweetened Malchoc-W does not contain sugar, it cannot be classified in Chapter 17. Additionally, because it contains a high vegetable oil content, it is not an article of milk or cream. However, because the Malchoc-W contains over 5.5 percent butterfat and will be used as an ingredient in the commercial production of edible articles, it is described in the quota provisions of additional U.S. note 1 to chapter 4. Malchoc-W is properly classified in heading 2106, HTSUS, which provides for food preparations not elsewhere specified or included.

HOLDING:

Malchoc-W: White Chocolate with Sweetener, if imported in quantities that fall within the limits described in additional U.S. note 10 to chapter 4, will be classified in subheading 2106.90.6400, HTSUS, which provides for food preparations not elsewhere specified or included other other containing over 10 percent by weight milk solids other, dairy products described in additional U.S. note 1 to chapter 4 described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions. If the quantitative limits of additional U.S. note 10 to chapter 4 have been reached, Malchoc-W will be classified in subheading 2106.90.6600, HTSUS.

Sincerely,

Myles B. Harmon, Acting Director

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See also:

• Tariff No.: 2106.90.64 - Food preps, nesoi, o/10% by wt of milk solids, dairy prods, descr. in add US note 1 to Ch.4: subject to add US note 10 to Ch.4, not GN15
• Tariff No.: 2106.90.66 - Food preps, nesoi, o/10% by wt of milk solids, dairy prods, descr. in add US note 1 to Ch.4: not subject to Ch4 US note 10, not GN15
• Tariff No.: 2106.90.78 - Food preps, nesoi, o/10% milk solids, o/10% sugar, descr. in add US note 3 to Ch.17, subject to add US note 8 to Ch. 17, not GN15
• Tariff No.: 2106.90.80 - Food preps, nesoi, o/10% milk solids, o/10% sugar, descr. in add US note 3 to Ch.17, not subject to add US note 8 to Ch. 17, not GN15
• Tariff No.: 2106.90.82 - Food preps, nesoi, o/10% milk solids, neosi
• Tariff No.: 9904.04.50 - Dairy prod. in 0402.29.50 & .99.90, 0403.10.50 & .90.95, 1901.10.40 & .85, & 2202.90.28, entered value safe. period, under $0.65/kg
• Tariff No.: 9904.05.01 - Dairy prod. in Ch. 4 addl US note 1, in 2202.90.28 entered in quantity safeguard period