December 5, 2007 CBP Bulletin Notice on Low Fat Butter Substitutes

Withdrawl of proposed revocation of rulings and treatment.CBP is withdrawing its proposed rulings to revoke the classification of certain low fat butter substitutes. CBP is also withdrawing its intent to revoke any treatment previously accorded by CBP to substantially identical transactions.

Low fat butter substitutes. The product described in NYB80051 is 51-53% water, 39-41% butterfat, 4.5% milk proteins, 2% modified starch, 0.6% emulsifier (monodiglyceride), 0.3% lactic acid, 0.2% salt, 0.1% potassium sorbate, and 0.002% beta carotene from Belgium. The product is packed in 227 gram cups. The product described in NYB85495 is 48-51% water, 42-44% butterfat (milkfat), 4-5% milk proteins, 2% lactose, 0.6% emulsifiers, 0.1% salt, and 0.001% flavoring from Canada. The product is packed in 40 pound boxes with polyliners.

CBP was proposing to issue HQ 968239 and HQ 968240 in order to revoke NY B80051 and NY B85495, respectively, and reclassify the products under 0405.20.6000 (10%, subject to tariff rate quota) as "other dairy spreads," rather than under 0405.20.4000 (13.1 cents/kg), as "butter substitutes containing less than 45% by weight of butterfat."

CBP's initial position was that these products were not correctly classified in NY B80051 and NY B85495 because under the court decision in Rudolph Faehndrich v. United States, 49 Cust. Ct. 1 (1962), a butter substitute must be able to take the place of butter in substantially all respects and substantially all conditions and the low fat butter substitutes are not recommended for baking and frying.

However, compelling arguments were made by two commenters. Citing the court in Bausch & Lomb v.United States, 148 F.3d 1363 (1998) and in Lonza, Inc. v. United States, 46 F3d 1098, it was argued that the 1962 Faehndrich case does not control the meaning of the term "butter substitutes" under the HTS; rather, the legal language of the tariff itself should be determinative. There have been significant changes to the nomenclature from the Trade Act of 1930, to the Tariff Schedule of the U.S. (TSUS), to the HTS, and the legal language in the tariff now explicitly provides for butter substitutes containing less than 45% butterfat. This brings the issue back to whether the instant product can be considered a "substitute" or not.

To ascertain the common meaning of a tariff term, courts may refer to dictionaries, scientific authorities, and similarly reliable resources (See, The Mead Corp. v. United States, 283 F.3d 1342, 1346 (Fed. Cir. 2002)).

CBP cites the Oxford English Dictionary, in which the word "substitute" when describing an object, rather than a person, is defined as: "A thing put in the place of another." Additional evidence was submitted by one commenter that their product can be used in a one-to-one substitution with butter in the production of iced confections and baked goods, and both commenters submitted evidence that the light butter substitutes would fry eggs in butter's stead, although these products are not typically used commercially in this manner.

For these reasons, CBP determined that the low fat butter substitutes at issue should remain classified as ''other butter substitutes'' in subheading 0405.20.40.

No change in classification: 0405.20.4000, 13.1 cents/kg

(See ITT's Online Archives or 02/21/07 news, (Ref: 07022145), for BP summary of proposed HQ 968239 and HQ 968240.)

December 5, 2007 CBP Bulletin (Vol. 41, No. 50) available at http://www.cbp.gov/xp/cgov/toolbox/legal/bulletins_decisions/bulletins_2007/