HQ 0083882 - Applicability of Federal Excise Tax to Fruit concentrates and essences. - United States International Trade Commision Rulings

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HQ 083882

APRIL 17,1990

CLA -2 CO: R: C: G: 083882 JGH

CATEGORY: CLASSIFICATION

TARIFF NO.: 450.30, TSUS

District Director
U.S. Customs Service
511 N.W. Broadway Fed. Bldg.
Suite 198
Portland, Oregon

RE: Applicability of Federal Excise Tax to Fruit concentrates and essences.

Dear Sir:

The protest involves the assessment of a federal excise tax on fruit flavors and extracts from Austria.

FACTS:

The merchandise, raspberry essence, was entered in November 1986. The essence is described as a natural product produced during the concentration of raspberry juice by heat. When the juice is heated the volatile flavoring boils off, and is then trapped and added back to the concentrate when it is diluted to single strength for bottling. The essence is said to be made up of dozens of flavor elements, such as alcohols, esters, aldehydes, and ketones. The usual ethanol content of the raspberry product is said to range from 2 to 4 percent. The imports are sold to juice bottlers who use them to restore the flavor lost during the concentration. A statement from the Bureau of Alcohol, Tobacco and Firearms (BATF) is that a sample of raspberry ester had an ethanol content of 6.9 percent by volume and, further, it was concluded that the product was unfit for beverage use..

ISSUE:

Whether the federal excise tax is applicable to these products.

LAW AND ANALYSIS:

Essentially, it is the port's position that because the fruit essence or concentrates contain alcohol, they are subject to the federal excise taxes, unless it is proven that the alcohcol was not added. BATF regulations recognize that fruit concentrates or essences of this type naturally contain some alcohol. The excise tax applies if these products are beverages or can be used for beverage purposes. Since the imports are used as flavors for juices, they are not in themselves beverages, or fit for beverage use, and, therefore would not be subject to the excise tax. It was BATF's, conclusion that the imports were not subject to the excise tax.

HOLDING:

The protest should be allowed in full.

A copy of this decision should be provided the protestant along with the copy of Form 19 Notice of Action.

Sincerely,

Jerry Laderberg, Acting Director

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