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NY L85066




September 1, 2005

CLA-2-04:RR:NC:2:231 L85066

CATEGORY: CLASSIFICATION

TARIFF NO.: 0405.10.2000; 0405.90.2040

Mr. Saul Rosenberg
Gerber California, Inc.
6404 Nancy Ridge Drive
San Diego, CA 92121

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of “GerCreme” from Mexico; Article 509

Dear Mr. Rosenberg:

In your letter dated May 17, 2005, you requested a ruling on the status of “GereCreme” from Mexico under the NAFTA.

“GerCreme,” as described in your letter, is a high butterfat blend, with a minimum of 90 percent by weight of milk fat, milk solids and salt or sugar. The product is made in three steps. The end product of the first step is designated Blend A. Blend A will be produced in Australia, Chile, Guatemala or New Zealand.

Blend A will consist of a mixture of 95 to 99 percent anhydrous milk fat (AMF) and 1 to 5 percent by weight of either salt or sugar. The possible sources of this milk fat may include Argentina, Australia, Canada, a member country of the European Union, New Zealand and Uruguay. Blend A will be packed in 210 kg metal drums or 900 kg totes, and will be used as an ingredient in the manufacture of “GerCreme” in Mexico. When imported into Mexico, Blend A will be classifiable in heading 2106, HTS.

The final two steps of the process will occur in Mexico.

First, a condensed nonfat milk solution of from 15 to 25 percent nonfat milk solids will be produced in Mexico. Three to 5 percent of this solution will be blended with 95 to 97 percent of the anhydrous butterfat/salt or sugar mixture, in a controlled-temperature process, to form a water-in-oil emulsion. The emulsified product will be called “GerCreme.”

It is stated that “GerCreme” will have the following composition by weight:

Component Minimum – Maximum
(percent by weight)

Milk fat 90 - 93
Milk solids non-fat 1 - 2
Salt or Sugar 1 - 3
Moisture 3 - 10

The CBP Laboratory at New York analyzed a sample of “GerCreme”. The Laboratory Report described the sample as “a yellow oily soft block.” In the opinion of the Laboratory, the sample was a water-in-oil type emulsion, containing 90.6 percent fat and 7.94 percent moisture, with the balance consisting of nonfat milk solids and salt.

Note 2(a) in Chapter 4 describes butter as the following product:

2. For the purposes of heading 0405:

(a) The term “butter” means natural butter, whey butter or recombined butter (fresh, salted or rancid, including canned butter) derived exclusively from milk, with a milk fat content of 80 percent or more but not more than 95 percent by weight, a maximum milk solids-not-fat content of 2 percent by weight and a maximum water content of 16 percent by weight. Butter does not contain added emulsifiers, but may contain sodium chloride, food colors, neutralizing salts and cultures of harmless lactic-acid-producing bacteria.”

Based on the processing description presented in your letter, “GerCreme,” containing added salt, would appear to be a recombined butter, classifiable in subheading 0405.10, HTS. “GerCreme,” with added sugar, would not be “butter” for tariff purposes, since the above definition does not provide for sugar as a butter additive. The Explanatory Notes to heading 04.05, HTS, place “products consisting of a mixture of butter and small quantities of herbs, spices, flavorings, garlic, etc.” under the category “Other fats and oils derived from milk,” provided these products retain the character of the products falling this heading. In the instant case, we believe that “GerCreme,” with added sugar, retains the character of the goods of heading 04.05.

The applicable tariff provision for “GerCreme,” with added salt, will be 0405.10.2000, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for butter, other. The general rate of duty will be $1.541 per kilogram.

The applicable tariff provision for “GerCreme,” with added sugar, will be 0405.90.2040, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for butter and other fats and oils derived from milk; dairy spreads: other, other. The general rate of duty will be $1.865 per kilogram + 8.5 percent ad valorem.

General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or

Based on the facts provided, the goods described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUSA General Note 12(b)(ii)(A), HTSUS, and qualify to be marked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when imported into the customs territory of the United States. The goods will therefore be entitled to a Free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Thomas P. Brady at 646-733-3030.

Sincerely,

Robert B. Swierupski
Director,

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