Reconsideration of NY A85882; flavored syrup

HQ 964265 April 2, 2001 CLA-2 RR:CR:GC 964265 nel/JGB CATEGORY: Classification TARIFF NO.: 2106.90.99 Mr. Jean Marc Gallerie P.O. Box 460003 Glendale, CO 80246 RE: Reconsideration of NY A85882; flavored syrup Dear Mr. Gallerie: This is in reply to your facsimile transmissions of May 18 and 30, 2000, requesting reconsideration of New York Ruling Letter (NY) A85882 dated August 19, 1996, which concerned the tariff classification of flavored, blended syrups under the Harmonized Tariff Schedule of the United States (HTSUS). We have reconsidered NY A85882 and believe that the classification set forth is incorrect. 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. 103-82, 107 Stat. 2057, 2186), notice of the proposed revocation of NY A85882 was published on December 27, 2000, in the Customs Bulletin, Volume 34, Number 52. As explained in the notice published on February 21, 2001 in Vol. 35, No. 8 of the Customs Bulletin, the period within which to submit comments on this proposal was extended to March 23, 2001. No comments were received in response to this notice. FACTS: The merchandise was described as “1883 de Philibert Routin” brand syrups, composed of liquid sucrose, liquid fructose, water, natural extracts, and flavors, put up in glass bottles containing 700 milliliters. All of the 21 different products, for which ingredient breakdowns were provided, were said to contain over 10 percent but not over 65 percent, by dry weight, cane or beet sugar and were intended for sale to gourmet coffee and food distributors for use as flavoring ingredients in coffee, water, soda, ice cream, yogurt, pastries, and cocktails. All were classified in subheading 2106.90.95 or 2106.90.97, HTSUS, the in- and over-quota provisions for other food preparations not elsewhere specified or included, containing over 10 percent, by dry weight, of sugars derived from sugar cane and/or sugar beets. In the request for reconsideration, it was stated that the imported product is sold in two markets in the United States: foodservice, as described in NY A85882, and at retail, to specialty food shops and supermarkets. Approximately 80 percent of the sales are to foodservice customers, and 20 percent are retail sales. Furthermore, the 700-ml bottle, regardless of the market in which it is sold, is the same product and bears the same label. ISSUE: Whether the Routin product syrups are “prepared for marketing to the ultimate consumer in the identical form and package in which imported” within the meaning of Section IV, Additional U.S. Notes 2(c) and (d), HTSUS. LAW AND ANALYSIS: The classification of merchandise under the HTSUS is governed by the General Rules of Interpretation (GRIs). GRI 1, HTSUS, provides, in part, that “for legal purposes, classification shall be determined according to terms of the headings and any relative section or chapter notes[.]” The HTSUS headings and subheadings under consideration are as follows: 2106 Food preparations not elsewhere specified or included: Other: *** Other: Articles containing over 10 per cent by dry weight of sugar described in additional U.S. note 3 to chapter 17: 2106.90.95 Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions 2106.90.97 Other 2106.90.99 Other The Routin products were classified in subheading 2106.90.95/97, HTSUS, based on the information provided with the ruling request. These products conformed with all requirements of Additional U.S. Note 3 to Chapter 17, since they contained “over 10 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients,” and did not fall into any of the exceptions provided for in that Note. Information provided at the time of the ruling request suggested the Routin goods were only sold to foodservice customers, a class of purchaser expressly excluded by Section IV, Additional U.S. Note 2(d) from consideration as an “ultimate consumer.” However, the request for reconsideration provided information regarding retail sales. The critical issue, the one relied upon in NY A85882, and that now compels modification of that ruling, is whether the merchandise fell into exception (a) of Additional U.S. Note 3 to Chapter 17, and was “prepared for marketing to the ultimate consumer in the identical form and package in which imported.” This phrase is defined in Section IV, Additional U.S. Note 2(c) as meaning: … the product is imported in packaging of such sizes and labeling as to be readily identifiable as being intended for retail sale to the ultimate consumer without any alteration in the form or its packaging[.] In the facts now provided, there is only one type of 700-ml bottle, and it is labeled in only one manner. That bottle, bearing that label, is sold to both foodservice and retail consumers. Retail sales comprise approximately 20 percent of the sales of the bottle. The sales to retail consumers are neither fugitive nor de minimus. The product meets exception (a) to Additional U.S. Note 3 to Chapter 17, and therefore is not specifically described in subheadings 2106.90.95 and .97, HTSUS. The Routin products are, in fact, “… imported in packaging of such sizes and labeling as to be readily identifiable for retail sale to the ultimate consumer.” There is no requirement in Section IV, Additional U.S. Note 2(c) that the merchandise be sold principally to the ultimate consumer. What is required is that the imported package and label are of a type unmistakably intended for retail sales, and, when retail sales occur, the merchandise is, in fact, sold unaltered in the imported package. HOLDING: The Routin products in 700-ml bottles are properly classified in subheading 2106.90.9972, HTSUS, as: Food preparations not elsewhere specified or included … Other: Preparations for the manufacture of beverages: Containing sugar derived from sugar cane and/or sugar beets. This provision is not subject to any sugar quota. EFFECT ON OTHER RULINGS: NY A85882, dated August 19, 1996, is hereby 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, John Durant, Director Commercial Rulings Division