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HQ W968294

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January 18, 2007

CLA-2 RR:CTF:TCM W968294 HkP

CATEGORY: CLASSIFICATION

TARIFF NO.: 2106.90.64 or
2109.90.66

John P. Smirnow, Esq.
Pisani & Roll, Attorneys at Law
1717 K Street, NW
Suite 600
Washington, DC 20036

RE: Reconsideration of NY M81261; white chocolate base

Dear Mr. Smirnow:

This is in reference to your letter dated July 3, 2006, requesting reconsideration of New York Ruling Letter (“NY”) M81261, issued to you on April 11, 2006, on behalf of your client Fonterra (USA) Inc. (“Fonterra”), in which the tariff classification of a certain white chocolate base was determined under the Harmonized Tariff Schedule of the United States (“HTSUS”). CBP classified the white chocolate base in heading 2106, HTSUS, as food preparations not elsewhere specified or included, with applicable subheading depending on import quantities. You contend that the white chocolate base is properly classified in heading 1704, HTSUS, as sugar confectionery not containing cocoa.

In reaching our decision we have taken into consideration your additional submissions, dated September 5, and October 15, 2006. For the reasons set forth below, we hereby affirm NY M81261.

FACTS:

You describe the product at issue as a “white chocolate base” that will be used in the manufacture of white and milk chocolate that is comprised of:

Anhydrous milk fat 79.10
Cocoa butter 20%
Sugar 0.46%
Non-fat dry milk powder 0.35%
Lactose 0.08%
Lecithin 0.01%
Vanillin (flavoring agent) 0.0004%

You state that the white chocolate base is manufactured by blending the cocoa butter, sugar, milk powder, vanillin, and lactose with the anhydrous milk fat. The white chocolate base is then packaged and imported into the U.S. in either 25 kg cartons or 1,000 kg bulk containers.

ISSUE:

Whether the white chocolate base is properly classified in heading 1704, HTSUS, which provides for: ”Sugar confectionery (including white chocolate), not containing cocoa”, or in heading 2106, HTSUS, which provides for: “Food preparations not elsewhere specified or included.”

LAW AND ANALYSIS:

Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined 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 2 through 6 may then be applied in order.

The HTSUS provisions under consideration are as follows:

1704 Sugar confectionery (including white chocolate), not containing cocoa: 1704.90 Other:
Other:
Other:
Dairy products described in additional U.S. note 1 to chapter 4:

1704.90.5400 Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions .. 1704.90.5800 Other ..

2106 Food preparations not elsewhere specified or included: 2106.90 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 ..

Additional U.S. Notes 1 and 10 to Chapter 4, HTSUS, are quota provisions.

Heading 1704, HTSUS, provides for sugar confectionery (including white chocolate) not containing cocoa. The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the HTSUS. While not legally binding nor dispositive, the ENs provide 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. EN 17.04 explains, in relevant part:

This heading covers most of the sugar preparations which are marketed in a solid or semi-solid form, generally suitable for immediate consumption and collectively referred to as sweetmeats, confectionery or candies.

It includes, inter alia:

(vi) White chocolate composed of sugar, cocoa butter, milk powder and flavoring agents, not containing more than mere traces of cocoa (cocoa butter is not regard as cocoa).

The heading excludes:

(d) Sweets, gums and the like ; pastes based on sugar, containing added fat in a relatively large proportion and, sometimes, milk or nuts, not suitable for transformation directly into sugar confectionery (heading 21.06).

(Original emphases.)

You contend that, based on the definition provided in the ENs, the subject white chocolate base is classifiable in heading 1704, HTSUS because it is “comprised of sugar, cocoa butter, milk powder and flavoring agents.”

In addition, you cite Food and Drug Administration (FDA) Regulations (19 CFR §163.124) that define “white chocolate” as a product containing: (1) not less than 20% by weight of cocoa fat; (2) not less than 14% by weight of total milk solids; and (3) not more than 55% by weight nutritive carbohydrate sweetener. You point out that while the regulations set minimum content requirements for cocoa fat and milk fat, there is no such minimum content requirement for sweetener.

As an initial matter, we note that CBP need not consider other agency’s regulations in defining tariff terms. Sabritas S.A. de C.V. v. United States, 998 F. Supp. 1123 (CIT 1998).

For purposes of classification under the HTSUS, white chocolate classified in heading 1704, HTSUS, must be a sugar preparation. CBP takes this position because of the legal structure of that heading. Specifically, we note that “including white chocolate” is parenthetical information. “Parenthesis” is “an amplifying or explanatory word, phrase or sentence inserted in a passage from which it is usually set off by punctuation.” Merriam-Webster’s Collegiate Dictionary, 10th ed. Based on the rules of grammar, we find that the phrase “including white chocolate” enclosed in parentheses is an explanation that white chocolate must be a sugar confectionery to be classified in heading 1704, HTSUS. The ENs support this understanding; they explain that heading 1704, HTSUS, covers sugar preparations marketed in a solid or semi-solid form, generally suitable for immediate consumption, and that white chocolate is included in this heading. “Confectionery” is defined as “sweet foods (as candy or pastry).” Id. We therefore find the phrase “sugar confectionery” to mean candy or pastry made of sugar. The dominant ingredients in the white chocolate base under consideration are anhydrous milk fat (79.1%) and cocoa butter (20%). Other non-sugar ingredients combined make up approximately 0.44% of the base (vanillin – 0.0004%, non-fat dry milk powder – 0.35%, lactose 0.08% and lecithin – 0.01%). All told, approximately 99.54% of the ingredients of the white chocolate base are not sugar. Consequently, we find that the subject white chocolate base is not classifiable in heading 1704, HTSUS, because it is not a sugar preparation. In addition, we note that CBP has consistently found that products classified in heading 1704, HTSUS, have sugar as the dominant ingredient; however, there is no threshold sugar content required for this heading. See Headquarters Ruling Letter (“HQ”) 085206, dated February 23, 1990, in which sugar was the dominant ingredient in the three varieties of white chocolate under consideration that were ultimately classified in heading 1704, HTSUS. The same holds true for rulings NY G89089, dated May 1, 2001, and NY A84794, dated July 3, 1996. See also HQ 968138, dated March 29, 2006.

In your additional submission of October 15, 2005, you quote HQ 085206, which states in part, “the ENs allow for products which are not ‘confectionery’ to fall within this subheading [1704.90.40] even though ‘confectionery’ is stated in the heading. At issue was the classification of white chocolate imported in 5 kg (11 lbs) blocks. Based on this ruling you reiterate your belief that your client’s product is classified in subheading 1704.90.54 or 1704.90.58, HTSUS. CBP considers the quoted language to be a misstatement of the scope of heading 1704. It is a long standing principle that a tariff heading cannot be limited or expanded by ENs or by a subheading. To be classified in a subheading of any tariff heading a product must first meet the terms of the heading, so that, as is the case with heading 1704, even if it is classified as “other” than “confections or sweetmeats ready for consumption”, it still must be sugar confectionery. This is supported by the ENs which explain that heading 1704 covers sugar preparations generally suitable for immediate consumption and collectively referred to as sweetmeats, confectionery or candies. We note that the ENs list some non-confectionery items (licorice extract containing more than 10% by weight of sucrose (item vii), and pastes based on sugar containing little or no added fat and suitable for transformation directly into sugar confectionery that may also be used as filling for products of other headings (item ix)) as examples of covered items. We are aware that these products are often used to make sugar confectionery (candy or pastry made of sugar). Nevertheless, in HQ 085206 the dominant ingredient in all the products under consideration was sugar (54.06%, 48.52% and 41.01%). In your product, sugar is not the dominant ingredient. We find that this ruling is not applicable to your merchandise because of this dissimilarity.

In your letter dated September 5, 2006, you bring to our attention two rulings in which products that did not have sugar as their dominant ingredient were classified in heading 1704, HTSUS. In NY E81512, dated May 28, 1999, CBP classified a yogurt snack bar containing 19.5% almond, 19% each of apricot, yogurt compound (yogurt, raw sugar, palm kernel oil, and lecithin), coconut and honey, 2.5% brown rice syrup, and 2% brown puffed rice in heading 1704. Taking the totality of the nature of the yogurt snack bar and your product into account, we find these products are not substantially similar to each other; therefore, NY E81512 is inapplicable to your product. Similarly, in HQ 956769, dated February 2, 1996, CBP classified crunchy granola bars containing 55% rolled oats, 22% brown sugar, 13.5% vegetable oil, 3% sliced almonds, 3% honey, 1.5% sesame seeds, 1.5% wheat germ, and less than 1% each of salt and vanilla extract under heading 1704, HTSUS. As with NY E81512, we find these goods to be dissimilar to the merchandise at issue. We find HQ 956769 to be inapplicable to your merchandise.

In addition, we note that the ENs to heading 1704, HTSUS, explain that pastes based on sugar, containing added fat in a relatively large proportion and not suitable for transformation directly into sugar confectionery are classified in heading 2106, HTSUS. Your product contains a total of 99.10% fat (79.1% milk fat and 20% cocoa butter) and 0.46% sugar and is not suitable for transformation directly into sugar confectionery. The Exclusionary Note in the ENs reinforces our view that your product is precluded from classification in heading 1704 and is instead classified in heading 2106, HTSUS.

Heading 2106, HTSUS, provides for “Food preparations not elsewhere specified or included.” EN 21.06 states, in relevant part, “provided that they are not covered by any other heading of the Nomenclature, this heading covers: preparations for use, either directly or after processing for human consumption.” This indicates that heading 2106, HTSUS, is a “basket” provision, in that, merchandise may only be classified in this heading if not covered by any other heading of the HTSUS. Based on the foregoing, we find that the white chocolate base under consideration is classified in heading 2106, HTSUS, because it not covered by any other heading.

HOLDING:

By application of GRI 1, the white chocolate base is correctly classified under heading 2106, HTSUS, and is specifically provided for in subheading 2106.90, HTSUS, which provides for: “Food preparations not elsewhere specified or included: Other”, with further classification to take place based on the quantity of the product imported.

EFFECT ON OTHER RULINGS:

NY M81261, dated April 11, 2006, is hereby affirmed.

Sincerely,

Myles B. Harmon, Director
Commercial and Trade Facilitation Division

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See also:

• Tariff No.: 1704.90.54 - Sugar confectionery nesoi, w/o cocoa, dairy products subject to add. US note 1 to chap. 4: subject to add US note 10 to chapter 4
• Tariff No.: 1704.90.58 - Sugar confectionery nesoi, w/o cocoa, dairy products subject to add. US note 1 to chap. 4: not subject to add US note 10 to chapter 4
• 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