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HQ 085206

February 23, 1990

CLA-2:CO:R:C:G 085206 SER


TARIFF NO.: 1704.90.40

Ritchie T. Thomas, Esquire
Squire, Sanders & Dempsey
1201 Pennsylvania Avenue, N.W.
P.O. Box 407
Washington, D.C. 20044

RE: Reconsideration of HRL 083700, dated June 7, 1989; White Chocolate

Dear Mr. Thomas:

This is in reference to your letters of July 20, 1989, and September 27, 1989, requesting the reconsideration of Headquarters Ruling Letter (HRL) 083700, dated June 7, 1989, concerning the tariff classification of white chocolate from Belgium, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).


The white chocolate at issue is imported by Callebaut of Belgium, in blocks of 5 kilograms (11 lbs.). In addition, the inquirer states that the product might be imported in 500 gram (1.1 lb.) bars, and that Callebaut has the molds for production of this size of product. The product at issue is used by the confectionery industry for a variety of purposes. The inquirer states that the white chocolate is purchased in the United States by confectioners, bakers and confectionery distributors. The inquirer also states that the distributors resell the white chocolate to candy retailers, bakers and small confectioners.

The white chocolate will be imported in three varieties by Callebaut. The percentage composition by weight of the three varieties is as follows:


Cocoa Butter 30.59 26.61 27.79
Sugar 54.06 48.52 41.01
Full Milk Powder 14.92 24.43 30.79
Lecithin and Vanillin 0.43 0.44 0.41


Is the white chocolate product an article within the definition of "confections ready for consumption."


Classification of goods under the HTSUSA is governed by the General Rules of Interpretation (GRI), taken in order. The Harmonized System is a complete product classification system, and the goal of the Harmonized System is to place all goods that are imported into the specific classifications. In this context the word "goods" is used in its broadest sense to include all merchandise. The systematic detail is such that virtually all goods are classifiable by application of GRI 1, that is, according to the terms of the Headings and any relative Section or Chapter Notes. After the proper classification subheading has been determined, the rate of duty and quota restrictions, if any, will then be determined.

The product at issue is covered in Heading 1704, which provides for "sugar confectionery (including white chocolate)." The Explanatory Notes, which constitute the official interpretation of the tariff at the international level, provide for Heading 17.04 that "(t)his 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." The main categorization of this Heading, as concerns the merchandise at issue, is between the subheading which provides for: "other: confections or sweetmeats ready for consumption", and "other." The main issue to be resolved is whether the merchandise is "a confection ready for consumption."

Customs position is that "confections ready for consumption" means that a product, as it is marketed, and in its condition as imported, must be ready for immediate consumption at retail as a confectionery, and is not, for example, merchandise which will be used as an ingredient in the baking industry. This is the pervasive concern in Leaf Brands, Inc. v. United States, 70 Cust. Ct. 66 (1973). That case was decided under the TSUS, but is instructive in the classification of confections in the HTSUSA. Leaf Brands provided that whether an article is a confectionery is determined by its chief use, not by the fact that it is edible, which would include numerous articles. Use as a confection, said the Leaf court, may be evidenced by its manner of sale and its character and design. The Court utilizes the standard, and cites several cases which hold, in part, that confectionery articles are usually sold in confectionery outlets. The Court considered favorably the fact that the product at issue
was distributed through "candy brokers." Although the importer indicates that broken pieces of the white chocolate are sold at retail candy outlets, the information submitted indicates that such sales do not comprise the chief use of the imported white chocolate. Moreover, the form of the product, in 5 kilogram blocks or 500 gram bars, suggests that the use of this product is that of a material which is used as an ingredient in the manufacture of other items by bakers and confectioners. These findings are indicative of the condition of the product at importation.

It was noted by the inquirer, at the meeting between Customs and the inquirer, that under the provision in subheading 1704.90.20, HTSUS, for confections or sweetmeats ready for consumption other than candied meats, there are further subheadings which provide for "put up for retail sale" and "other." As stated at that meeting, and reiterated in this ruling, the "put up for retail sale" subheading is for packaged articles. The "other" subheading is for those articles which are imported and then to be immediately packaged. Again, the condition of the article is the dispositive factor. Since the white chocolate at issue is not confections ready for consumption, it cannot be classified within this subheading.

Subheading 1704.90.40, HTSUS, provides for sugar confectionery other than confections or sweetmeats ready for consumption. The Explanatory Notes allow for products which are not "confectionery" to fall within this subheading even though "confectionery" is stated in the heading. Thus, it is clear from the tariff and the Explanatory Notes that white chocolate (having not more than trace amounts of cocoa) is classified under heading 1704, HTSUS. It is equally clear that the white chocolate need not necessarily be confections ready for consumption.

Subheading 1704.90.40, HTSUS, provides for other than confections or sweetmeats ready for consumption: articles of milk or cream. This is the most accurate subheading for the product at issue. The drafters of the HTSUSA clearly included this provision for an article such as the product at issue. There are virtually no other products other than white chocolate which can be placed under this subheading. The ingredient which distinguishes this product from other articles is imparted by the full milk powder, because this is the ingredient which provides the dominant characteristic. An industry source: Chocolate Production and Use, by Russell Cook (Harcourt, Brace & Jovanovich, Inc., 1982) page 251, discusses various products known as "white chocolate," and states:

The formulating problems encountered in making white cocoa butter coatings center around giving them some flavor other than just sweetness, [emphasis added]. This is customarily accomplished by using high quantities of good quality milk and well balanced flavors such as vanilla . . .

In summary, most confectionery products of the nature of the white chocolate consist of sugar and cocoa butter, it is the milk which sets this product apart.


The white chocolate at issue is properly classified under subheading 1704.90.40, HTSUS, which provides for sugar confectionery other than confections or sweetmeats ready for consumption: other: articles of milk or cream. The rate of duty is 17.5 percent ad valorem. Goods classified under this subheading are also subject to quota restraints under subheading 9904.10.60, HTSUS.


John Durant, Director
Commercial Rulings Division

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