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HQ 967780

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October 28, 2005

CLA-2 RR:CTF:TCM 967780

CATEGORY: CLASSIFICATION

TARIFF NO.: 0405.20.3000

Julian B. Heron, Jr.
Tuttle Taylor & Heron
Suite 407 West
1025 Thomas Jefferson St., NW
Washington, DC 20007-5201

RE: Revocation of NY D86228; white sauce

Dear Mr. Heron:

This concerns NY ruling D86228, dated January 20, 1999, on the classification of a product described as “white sauce” under the Harmonized Tariff Schedule of the United States (HTSUS). Upon further review of this matter, and in light of additional information that has come to our attention, we have determined that the classification indicated in the ruling does not apply to that merchandise. This ruling letter sets forth the correct classification of the subject merchandise.

Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of the proposed modification of NY D86228 was published on August 24, 2005 in the Customs Bulletin, Volume 39, Number 35. Comments were received on September 23, 2005 from counsel on behalf of International Custom Products (“ICP”). Our response to those comments is incorporated in the Law and Analysis section below and the notice of final revocation published herewith.

FACTS:

Your request to the National Commodity Specialist Division (NCSD), U.S. Customs and Border Protection (CBP), for a binding ruling, including a sample and content breakdown by percentage range, dated December 21, 1998, identified the product at issue as:

The product known as white sauce is an off-white colored, thick liquid consisting of milkfat, water, vinegar (and/or lactic acid and/or citric acid), zanthan gum, carboxymethelcellulose, sodium phosphate (and/or sodium citrate) packed in 25 Kg. containers. It is used as a base for the commercial production of gourmet sauces and dressings.

On the basis of this description, the Director, NCSD, New York, NY, issued NY D86228 to ICP. The ruling classified the white sauce in subheading 2103.90.9060, HTSUS, as “Sauces and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard: Other: Other: Other” at a duty rate of 6.6% ad valorem (it is currently 6.4%). The file for NY D86228 was destroyed in the World Trade Center tragedy on September 11, 2001.

Thereafter in accordance with its obligations under 19 CFR 117.9(b)(1),

19 C.F.R. § 177.9(b)(1) provides that:

“Each ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.” the Port of Philadelphia requested a laboratory analysis of merchandise which was imported and which was claimed to have been imported pursuant to the ruling, hereafter the “imported product.” According to lab reports, dated January 19, 2001 and October 12, 2004, the imported product consists of 78% milkfat and 21% moisture with very small amounts of additives. At room temperature, the imported product has the appearance of butter and is capable of being spread in a fashion similar to soft butter or mayonnaise. In light of these reports and information that raised concerns about the claimed use of the imported product, the Port requested the advice of the NCSD with respect to the classification of the product on November 17, 2004. A subsequent laboratory analysis dated January 26, 2005, revealed that the product was in the form of a water-in-oil emulsion.

Based on this latest information, the NCSD sought our reconsideration of the classification of the imported product in heading 0405, HTSUS, as a dairy spread. Specifically, the NCSD recommends classification in subheading 0405.20.30, HTSUS, which provides for “Butter and other fats and oils derived from milk; dairy spreads: Dairy spreads: Butter substitutes, whether in liquid or solid state: Containing over 45 percent by weight of butterfat: Other.” Our reconsideration of NY D86228 follows.

ISSUE:

Is the “white sauce” properly classified in heading 0405, HTSUS, covering butter and other fats and oils derived from milk and dairy spreads, or in heading 2103, HTSUS, covering sauces and preparations therefor, mixed condiments and mixed seasonings?

LAW AND ANALYSIS:

Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that classification shall be determined according to the terms of the headings and any relative section or chapter notes and, provided such headings or notes do not otherwise require, according to the remaining GRIs.

The Explanatory Notes (EN) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. The ENs, although neither dispositive nor legally binding, facilitate classification by providing a commentary on the scope of each heading of the HTSUS, and are generally indicative of the proper interpretation of these headings. See T.D. 89-80.

The HTSUS provisions under consideration are as follows:

0405 Butter and other fats and oils derived from milk; dairy spreads:

0405.20 Dairy spreads:
Butter substitutes, whether in liquid or solid state: Containing over 45 percent by weight of butterfat:

0405.20.10 Described in general note 15 of the tariff schedule and entered pursuant to its provisions 0405.20.20 Described in additional U.S. note 14 to this chapter and entered pursuant to its provisions 0405.20.30 Other

Sauces and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard:

Other:

Other:

2103.90.90 Other.

Note 2 to chapter 4 provides as follows:

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 milkfat 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.

(b) The expression “dairy spreads” means a spreadable emulsion of the water-in-oil type, containing milkfat as the only fat in the product, with a milkfat content of 39 percent or more but less than 80 percent by weight.

The Explanatory Notes to heading 04.05 describes the term “dairy spread” as follows:

This heading covers:

(B) Dairy spreads.

This group covers dairy spreads, i.e., spreadable emulsions of the water-in-oil type, containing milkfat as the only fat in the product, and having a milkfat content of 39% or more but less than 80% by weight (see Note 2(b) to this Chapter). Dairy spreads may contain optional ingredients such as cultures of harmless lactic-acid producing bacteria, vitamins, sodium chloride, sugars, gelatine, starches; food colours; flavours; emulsifiers; thickening agents and preservatives.

The imported product meets all of the requirements of a dairy spread in heading 0405.

An examination of the imported product reveals that it falls squarely within the terms of note 2(b) to chapter 4. It meets each of the requirements of that note as verified by CBP laboratory analysis. It is a spreadable emulsion of the water-in-oil type, contains milkfat as the only fat, and has a milkfat content within the specified range of the product. It thus meets the terms of the legal text for dairy spreads.

In addition to the milkfat and water, according to the commenter, the imported product contains small amounts of additives, vinegar (and/or lactic acid and/or citric acid), zanthan gum, carboxymethylcellulose, sodium phosphate (and/or sodium citrate). The Explanatory Notes to heading 0405 expressly allow for dairy spreads to contain certain additives as optional ingredients. Some of these commonly found additives include flavours; emulsifiers; thickening agents and preservatives. The additives mentioned by the commenter are consistent with the description in the Explanatory Notes of additives for dairy spreads. For example, xanthan gum and carboxymethylcellulose are thickeners and stabilizers. Sodium citrate is an emulsifier and a stabililizer. These additives enable the milkfat and water to remain in mixture and to be transported and maintained in storage. Moreover, the additives in the imported product are of the kind identified in the Explanatory Notes as those commonly found in dairy spreads.

In a footnote to its comments, the commenter states that it does not concede that the imported product meets the terms of heading 0405. However, the commenter has provided no argument, information or rationale for why the imported product does not satisfy the requirements for that heading.

As indicated above, our conclusion is that on the basis of GRI 1, the product is prima facie classifiable in heading 0405. We shall determine whether any other heading merits consideration under the GRIs.

Heading 2103 definition of sauce

Heading 2103 covers both sauces and preparations for making sauces. In the instant case, the commenter argues that the imported product is classifiable in heading 2103 as a preparation for sauces.

The courts have had occasion to construe these terms for tariff purposes. In Nestle Refrigerated Food Co v. United States, 18 C.I.T. 661, 668 (1994), the court concluded that the common meaning of "other tomato sauces" is based on the common meaning of the term "sauce." The Nestle court stated, “In 1894, the U.S. Supreme Court reviewed the common meaning of the term "sauce" and determined that: “The word "sauce," as commonly used, designates a condiment, generally but not always of liquid form, eaten as an addition to and together with a dish of food, to give it flavor and make it more palatable; and is not applied to anything which is eaten, alone or with a bit of bread, either for its own sake only, or to stimulate the appetite for other food to be eaten afterwards.” Bogle v. Magone, 152 U.S. 623, 625-26 (1894) (subsequently followed by Del Gaizo Distrib. Corp. v. United States, 24 CCPA 64, T.D. 48,376 (1936); United States v. Neuman & Schwiers Co., 18 CCPA 1, T.D. 43,971 (1930)).

The court in Nestle, following the seminal Bogle case and its progeny, determined that in ascertaining whether a product fits within the common meaning of sauce, the court will “examine a variety of key features, including its ingredients, flavor, aroma, texture, consistency, actual and intended use, and marketing.” See, e.g., Neuman & Schwiers Co, 18 CCPA at 3. The court further concluded that of these key features, actual and intended use are of paramount importance and that a product is a sauce if it can be used "as is," that is, if it may be eaten as an accompaniment to other foods to make such foods more flavorful and palatable. “Whether a product is fit for use as a sauce depends upon more than the mere possibility of use; rather, substantial actual use as a sauce must be demonstrated. See Wah Shang Co. v. United States, 44 CCPA 155, 159, C.A.D. 654 (1957). Also, according to Nestle, a product's physical features are also considered in light of their effect on the product's ability to be used as a sauce.

While the imported product is referred to repeatedly by the commenter as white sauce, there appears to be no issue that the imported product is not a finished sauce for purposes of heading 2103 since it is not usable in its imported condition as a sauce The commenter refers to the imported product as “white sauce.” Websters’s Third New International Dictionary, 1993, defines a white sauce as: A sauce in which the thickening agent (as flour) has not been browned, which consists essentially of milk, cream, or stock with flour and seasoning and which forms the basis for various sauces A similar definition is presented in The American Heritage Dictionary of the English Language: Fourth Edition, 2000: A sauce made with butter, flour, and milk, cream, or stock, used as a base for other sauces. A host of other references to “white sauce” yield similar results, for example:

Béchamel sauce, also known as white sauce, is a basic sauce that is used as the base for other sauces.This basic sauce, one of the mother sauces of French cuisine, is usually made today by whisking scalded milk gradually into a white flour-butter roux, though it can also be made by whisking a kneaded flour-butter beurre manie into scalded milk. www.edinformatics.com/culinaryarts/food_encyclopedia/bechamel_sauce.htm

White Sauce – A term for light white or blond sauces. In its simplest form, white sauce is cream or milk mixed into a white roux (a combination of butter and flour which isn’t browned). This basic French sauce is called “béchamel.” www.nutribase.com/sauces.shtml

The most basic white sauce, from which numerous other sauces stem. White sauce is made with a roux of butter and flour mixed with milk and cooked over a gentle heat until smooth and slightly thick. www.bbc.co.uk/food/glossary/w.shtml?white_sauce

The imported product does not contain the roux described in the white sauces above. Accordingly, the imported product is not a white sauce as commonly understood and described above. . It is undisputed that in its condition as imported, the instant product is not usable as a sauce. Accordingly, under the test developed by the courts, the instant product does not meet the above criteria for being a sauce.

Definition of a “preparation” for sauce

In addition to covering sauces, heading 2103 also includes preparations for use in making a sauce. The commenter contends that this term properly describes the instant product. In Nestle Refrigerated Food Co v. United States, cited above, the court provided important insight into the meaning of the term “preparation” for sauce. The court stated that because the term "preparation” for sauce is not defined by the HTSUS, the term should be understood on the basis of its common meaning which “refers to a product that is produced from raw material by a definite series of steps, and is specifically made to be used as a substantially advanced base or intermediate of a sauce.” See Nestle, 18 C.I.T. 674 (1994) (Emphasis added).

The court further stated that sauce preparations are substantially finished products that lack an ingredient (i.e., milk or water), or require further processing such as mixing, and serve as a base in order to become what is commonly understood to be a sauce. See also Del Gaizo Distrib. Corp., 24 CCPA at 67. Accordingly, the appropriate test is whether the imported product is a substantially finished food preparation, rather than merely an ingredient in sauce or any other food preparations.

The commenter argues that CBP has misread the Nestle case as requiring that the preparation be substantially advanced. In the commenter’s view, CBP has injected a legal requirement that is not present in the tariff. We do not agree. As discussed above, the Nestle court specifically emphasized that a preparation for sauce must be substantially advanced. There is nothing about the context of the Nestle case that detracts from this holding.

In our proposed revocation we identified CBP’s previous rulings and examined a number of white sauce products, which demonstrate the physical characteristics of sauces and sauce preparations in contrast to the imported product. These products all contained substantial ingredients in addition to fat and water For instance, see the following rulings concerning sauces: NY J84280, dated May 28, 2003; NY J80559, dated February 27, 2003; NY H85465, dated September 6, 2001; NY J84280, dated May 28, 2003; and NY 892563, dated December 9, 1993. The white sauce of NY J84280 contained over 64 percent water, approximately 12 percent fat, and various other ingredients (flour, starch, beef extract, and spice). The white sauce of NY J80559 contained a minimum of 69 percent moisture, between 10.0 and 11.5 percent fat and other ingredients such as butter oil, flour, starch, vegetable oil, salt, and pepper. The white sauce of NY H85465 was composed of butter, cream, mushrooms, walnuts, cheese, truffles, salt, garlic, and flavoring. The powdered white sauce preparation of NY 892563 consisted of salt, sugar, starch, maltodextrin, chicken fat, flavors, spices, and other ingredients.. The commenter argues that these products in the previous rulings are different in composition from one another and that therefore they cannot be representative of sauce preparations. We disagree. These products all represented archetypal sauces and sauce preparations (i.e., finished or substantially finished food products in fluid or powder form, ready to use as sauces or only requiring dilution with a liquid to create the sauce). By contrast, the imported product requires substantial amounts of vital additional ingredients and contains nothing more than ingredients found in a dairy spread.

The imported product is 78% milkfat and 21% moisture together with a very small amount of additives. In fact, but for 2 percent less milkfat and 5 percent more water, this product is butter and its composition is no more than a dairy spread. It is not a substantially advanced base for the manufacture of sauce. Rather, the imported product is a multipurpose versatile common ingredient suitable for use in any number of food preparations. It is a processed product, but so are many food products, including the dairy spreads of heading 0405. Accordingly, the imported product fails to meet the criteria articulated by the court for a sauce preparation of heading 2103.

Therefore, we conclude that on the basis of GRI 1, the imported product does not satisfy the requirements of heading 2103 as a sauce preparation. Since we have already concluded that the product does meet the terms of heading 0405, our classification is complete at the four-digit level. Therefore, it is not necessary for us to address the extensive comments by the commenter about the use of the imported product in support of classification in heading 2103. However, in order to provide as much analysis as possible we will address those comments.

Commenter’s contentions about the class or kind of goods to which the imported product belongs

In addition to the Nestle requirement that a preparation must be a substantially advanced base for the making of sauces, the court has held that the term "preparations for sauces” is a use provision insofar as heading 2103 provides for preparations for sauces. Orlando Food Corp. v. United States, 140 F.3d 1437, 1441 (Fed. Cir. 1998). Accordingly, in addition to demonstrating that the imported product is sufficiently advanced to be classifiable in heading 2103, the evidence must show that the imported product is part of a class or kind of product that is principally used in the making of sauces. Given its contention, it is the commenter’s burden to provide evidence proving that the imported product is a member of such class or kind of product. See, Universal Elecs. v. United States, 112 F.3d 488, 491 (Fed. Cir. 1997)

Additional Rule of Interpretation (ARI) 1(a), HTSUS, states that in the absence of special language or context which otherwise requires, a tariff classification controlled by use (other than actual use) is to be determined in accordance with the use in the United States at, or immediately prior to, the date of importation, of goods of that class or kind to which the imported goods belong, and the controlling use is the principal use. Accordingly, whether the instant merchandise meets the terms of heading 2103 depends on the principal use in the United States of goods of that class or kind to which the imported goods belong at or immediately prior to the date of the importation. Lenox Coll. v. United States, 20 CIT 194 (1996). Furthermore, in determining the class or kind of goods to which an article belongs, CBP may consider all pertinent evidence presented by the importer as to use. These factors may include: (1) the general physical characteristics of the merchandise; (2) the expectation of the ultimate purchaser; (3) the channels of trade in which the merchandise moves; (4) the environment of sale (accompanying accessories, manner of advertisement and display); and (5) the usage of the merchandise. United States v. Carborundum Company, 63 CCPA 98, C.A.D. 1172, 536 F.2d 373 (1976), cert. denied, 429 U.S. 979.

The commenter’s basic contention is that the imported product belongs to the class or kind of “fat-based preparations” used to make sauces and dressings. We shall examine this contention in light of the Carborundum factors above.

General physical characteristics of the merchandise

The commenter states that the composition of the imported product is consistent with the type of products that are traditionally used in the manufacture of sauces. The commenter concludes that the physical characteristics of the product are of that class or kind.

The imported product is a water-in-oil type emulsion comprised of 78% milkfat and 21% moisture. At room temperature the product has the appearance of butter and is capable of being spread in a fashion similar to soft butter or mayonnaise. The consistency, texture, fat content and composition, in short, all of the general physical characteristics of this product, mirror the physical characteristics of dairy spreads. Thus, while we do not dispute that dairy spreads can be used as an ingredient to make sauces of heading 2103, we conclude that there is nothing in the composition and physical characteristics of the imported product which identifies it as being of a kind used in the production of sauces. On the contrary, its composition is consistent with use in a wide variety of products including bakers’ wares of chapter 19, ice cream, confectionery products, and other dairy products.

Purchaser expectations

The commenter states that commercial food producers expect white sauce to be used as a base for the production of sauces. White sauces, according to the commenter, provide characteristics such as flavor and texture to the finished sauce.

As indicated above, the imported product does not contain the attributes of white sauce. See footnote 2, infra. Moreover, because of its high milkfat content, this product is suitable for many other applications besides sauce. It would appear to be virtually interchangeable with butter in its commercial applications. Similar products, classified as dairy spreads, have been imported for use in various sections of the food processing industry. See, for example, NY R00313, May 24, 2004, which classified in subheading 0405.20, HTSUS, a dairy spread from Canada, containing 76-78 percent butterfat, 15 percent moisture, 5 percent added salt or sugar and 1.5-2.0 percent non-fat milk solids. This product was intended for use “in bakery, confectionery and other food applications.” NY H81047, May 21, 2001, similarly classified another dairy spread from Singapore, containing 78.9 percent milkfat, 15 percent moisture, 5 percent sugar and 1.1 percent non-fat milk solids, imported for sale at the wholesale level to be used as an ingredient in baking bread.

In short, there is nothing in the composition of the imported product that would limit the purchasers’ expectations to use in the making of sauces as opposed to other food products. Again, the customers of the instant product could be manufacturers or processors in the various segments of the food industry (i.e., producers of bakery, confectionery, dairy, and numerous other food products that utilize butter or milkfat as an ingredient in their products). In fact, information of which we are aware is that a customer of ICP viewed the product it was purchasing as milkfat for use in making cheese.

Channels of trade, recognition in the trade

The commenter concedes that in the United States most major food producers have an integrated production process to make sauce. However, the commenter states that other manufacturers purchase white sauce rather than make the sauce themselves. As discussed above, there is nothing in the commenter’s submission that indicates that commercially the product is limited to the making of sauce. Therefore, the evidence falls short of that needed to establish the claimed class or kind.

Environment of sale

The commenter states that white sauce is not typically advertised. Rather sales are made via a sales force. Accordingly, this does not represent supporting evidence of the commenter’s claimed class or kind.

The use of the merchandise

With respect to the use of the imported product, the commenter merely indicates that production has not yet begun for its manufacturing facility. It presents no information about actual use other than a reference to the fact that a customer is “evidently manufacturing cheese products” from the imported product.

On this issue, information has come to our attention in this case which indicates that the instant merchandise is actually used to make cheese, rather than as an ingredient in the preparation of sauces. In fact, the only documented evidence of commercial use of the importer’s merchandise is as an ingredient in cheese making. While the actual use of the merchandise is not dispositive of the principal use of the class or kind to which the merchandise belongs, it is important evidence both in determining the class or kind to which the imported product belongs and in determining principal use. See Carborundum, supra.

For the reasons discussed above, the evidence presented by the commenter falls short of demonstrating that the imported product belongs to what is referred to as the class or kind of fat based preparations used in the manufacture of sauces. This is due to the fact that the physical characteristics of the merchandise strongly indicate the identity of the product as a dairy spread and none of the claimed information about purchasers’ expectations or channels of trade provides any basis to exclude the product from being considered a dairy spread. Finally, the only information about actual use of the merchandise is not consistent with the commenter’s claimed class or kind. We conclude that the burden of linking this product to the class or kind of fat based preparations used to make sauce has not been met.

Principal Use of the class to which the imported product belongs

Because we have concluded that the commenter has failed to demonstrate that the imported product belongs to a class or kind of products known as fat based sauce preparations, it is not necessary for us to address the principal use of the claimed class or kind. Nevertheless, once more, in the interest of providing a complete analysis, we will comment on the information provided.

As we understand the commenter’s submission, the commenter’s conclusion that the imported product is principally used to make sauce proceeds from the following lengthy set of assumptions. The commenter estimated the total industrial use of fat based preparations by “working back from the current consumption of sauces, dressings and related products.” Thereafter five categories of products were identified as manufactured from “such sauce preparations.” This was supposed to yield the annual industrial consumption of fat from fat based sauce preparations used to make sauces, dressings, etc. This is said to have yielded, conservatively, 1.345 billion pounds for the industrial use of fat based food preparations.

With respect to the retail sector, the commenter picked eight product categories, analyzed ingredient labels to determine the amount of fat in the products sold in grocery stores and derived an amount of 856 million pounds to the retail market. When added to the figure for industrial use of fat-based preparations, the result is 2.201 billion pounds.

This latest figure is compared to the 77 million pounds that ICP sells annually to the customer that is “evidently manufacturing cheese products”. Since two billion is 30 times more than 77 million, the commenter believes its principal use argument is made.

To the extent that we are able to follow the commenter’s analysis, we believe that the commenter’s analysis is fatally flawed for two important reasons. The first is that the commenter assumes that since products sold at retail and for commercial use contain fat as an ingredient, one can conclude that the volume of fat based sauce preparations equals the amount of fat found in the final product. This seems fanciful since there is no showing that these products were all produced from fat based preparations. In fact, the commenter concedes that most companies make their own sauce and do not purchase fat based preparations. Secondly, the commenter appears to have undertaken no research with respect to the volume of products such as the imported product used as dairy spreads or as an ingredient in the making of cheese, ice cream or other food products other than sauces. Instead, the product categories are limited to sauce preparations. There is also no showing that the fat used in all of the surveyed products is similar to that present in the imported product.

Of course, there is no dispute that fats and oils are ingredients in making sauce. They are also ingredients in many other products. The commenter’s argument proves too much: following this reasoning it could be logically suggested that butter is a fat based preparation classified in heading 2103, rather than in heading 0405. This is a distortion of the principal use analysis. In short, ICP’s white sauce is no more a member of a unique class of goods known as the “fat phase” of sauce production or “fat-based preparations used to create sauces and dressings” than is vegetable oil, butter, or any number of high-fat products. In other words, there is nothing in the composition of the product that limits it to making sauce.

For these reasons, we reject the commenter’s contention that the principal use of the class or kind to which the imported product belongs is as sauce preparations. In light of the above, we again reaffirm that classification in heading 2103 does not merit consideration.

Relative specificity of headings 0405 and 2103

For the reasons described above, the imported product does not meet the requirements for classification in heading 2103. Nonetheless, if analysis were required at GRI 3(a), it provides that if merchandise is prima facie classifiable in two or more headings, a heading which more specifically describes a good takes precedence over a more general provision. Under this so-called rule of relative specificity, we look to the provision with requirements that are more difficult to satisfy and that describe the article with the greatest degree of accuracy and certainty. Accordingly, for purposes of this issue and assuming, without conceding, that the merchandise at issue is prima facie classifiable in both headings 0405 and 2103, a comparison of the terms of heading 2103 and heading 0405 is in order.

Heading 0405 describes the imported product by name while heading 2103 is a use provision. Absent legislative intent to the contrary, a product described by both a use provision and an eo nomine provision is generally more specifically provided for under the use provision. However, this principle applies where the competing provisions are otherwise in balance. (Emphasis provided.) Orlando Food Corp. v. United States, 140 F.3d 1437, 1441 (Fed. Cir. 1998). In Orlando, the court applied this principle and concluded that the competing eo nomine and use provisions (i.e., HTSUS, heading 2002, as “Tomatoes prepared or preserved” and heading 2103, as “Sauces and preparations therefor,” respectively) were in balance.

The commenter submits that CBP’s “otherwise in balance” analysis is flawed because it is not based on the descriptive character of the competing provision, but rather on which heading is more specific. GRI 3(a) requires a relative specificity test. Our analysis is fully consistent with that requirement

The commenter cites to HQ 964846, dated September 11, 2002, where we classified a food preparation known as “Preparation 101” which serves as the base for cheese sauces and dressings. The commenter states that in that ruling we found that heading 2103 and heading 0406, HTSUS, “Cheese and curd,” were equally descriptive and thus, the use provision was more specific. The commenter asks how it is possible that heading 0406 was considered to be less specific than 2103 in our previous ruling while heading 0405 is considered more specific. The commenter also notes that classification of cheese involves a legal note to chapter 4, which defines whey cheese, just as there is a legal note that describes dairy spreads.

We find the instant case to be distinguishable from that presented in our previous ruling. The legal note cited by the commenter, which governs whey cheese, was not at all involved in our previous ruling. Rather the ruling presented the question of the meaning of cheese, which has no legal note definition in the tariff. By contrast the legal note defining dairy spreads is very much at issue in the classification of the imported product since it covers and describes it completely.

The commenter further states that the term “preparations” for sauce under heading 2103 is more difficult to satisfy and describes its “white sauce” with the greatest degree of accuracy and certainty. A preparation, the commenter states, involves some degree of processing or addition of ingredients and implies a specific or intended purpose. In this regard, the commenter cites to CBP’s Informed Compliance Publication and states that under Rule 3(a) a more specific description generally occurs when a description "more clearly identifies a product". U.S. Customs and Border Protection, What Every Member of the Trade Community Should Know About: Tariff Classification at 17 (May 2004).

We do not agree that heading 2103 more clearly identifies the imported product than does heading 0405. The commenter has itself argued that heading 2103 is very broad and encompasses any preparation used in the making of sauces. By contrast, a dairy spread of heading 0405 must meet very precise compositional requirements set forth in note 2(b) to chapter 4. In this respect, the provision can be distinguished from heading 2002, the provision at issue in Orlando. Moreover, the physical characteristics of the instant merchandise (i.e, the water-in-oil emulsion and butterfat content) are compellingly more stringent and difficult to satisfy than the eo nomine requirements of heading 2002, HTSUS, for prepared or preserved tomatoes. Accordingly, because of the specific eo nomine requirements set forth in heading 0405, HTSUS, and Legal Note 2 (b) to chapter 4, the competing headings are not in balance, as they are in Orlando. Heading 0405 is the more specific provision, is more difficult to satisfy and best describes the imported product. Accordingly, on the basis of GRI 3(a), even if the imported product were considered to meet the requirements of heading 2103 which we do not so find, the goods would nevertheless be classifiable in heading 0405, HTSUS.

Proper classification of the product at issue

In light of its composition and physical state, the imported product meets all the requirements of note 2(b) to Chapter 4 to be a dairy spread enumerated at the four-digit level as classifiable in heading 0405, at GRI 1. Having discussed and chosen the proper heading of the merchandise, we turn our attention to the appropriate subheading. Subheading 0405.20.1000, HTSUS, provides for goods otherwise subject to quota at low tier tariff rate quota duty rates, without meeting quota requirements or being subject to other quota restrictions. Goods entered under this subheading are generally entered for non-commercial uses and do not enter the commerce of the United States. Because the white sauce was entered for commercial purposes into the United States, the terms of this subheading are not met.

Subheading 0405.20.2000, HTSUS, provides for entry at the low tier tariff rate quota duty rate for goods that meet the requirements of additional U.S. note 14 to chapter 4. One requirement of additional U.S. note 14 is that the merchandise be entered under an import license issued to the importer by the U.S. Department of Agriculture. Because the instant goods were not entered under such an import license, the terms of this subheading are not met.

Subheading 0405.20.3000, HTSUS, provides for goods which are subject to quota but must be entered under the high tier duty rate associated with this provision because (like the instant white sauce product) they are entered without an import license. The instant merchandise is fully described by this provision.

HOLDING:

At GRI 1, and in view of the above facts and analysis, the white sauce is classified under heading 0405, specifically subheading 0405.20.3000, HTSUS, which provides for “Butter and other fats and oils derived from milk; dairy spreads: Dairy spreads: Butter substitutes, whether in liquid or solid state: Containing over 45 percent by weight of butterfat: Other.” Goods imported under this subheading are subject to duty at $1.996 per kilogram and an additional safeguard duty under tariff subheadings 9904.05.37-.47, based on the CIF price per kilogram.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov.

EFFECT ON OTHER RULINGS:

NY D86228 dated January 20, 1999 is REVOKED. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin. Sincerely,


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See also:

• Tariff No.: 0405.20.10 - Butter substitute dairy spreads, over 45% butterfat weight, subject to general note 15 (outside quota)
• Tariff No.: 0405.20.20 - Butter substitute dairy spreads, over 45% butterfat weight, subject to quota pursuant to chapter 4 additional US note 14
• Tariff No.: 0405.20.30 - Butter substitute dairy spreads, over 45% butterfat weight, not subj to gen note 15 and in excess of quota in ch. 4 additional US note 14
• Tariff No.: 2103.90.90 - Sauces and preparations therefor, neosi
• Tariff No.: 9904.05.37 - Butter substitutes > 45% butterfat, in 0405.00.90, 2106.90.26 & 2106.90.36, entered in value safeguard period, under $0.60/kg