# NY H85634

December 5, 2001

CLA-2-04:RR:NC:2:231 H85634

CATEGORY: Classification

TARIFF NO.: 0404.90.3000; 0404.90.5000

Mr. Louis Shoichet, Esq.

Tompkins and Davidson, LLP

One Astor Plaza

New York, NY 10036-8901

RE: The tariff classification and status under the North American Free
Trade Agreement (NAFTA) of an ultrafiltered milk product from Canada;
Article 509

Dear Mr. Shoichet:

In your letter, dated November 2, 2001, on behalf of your client, Douwe
Egberts Coffee Systems (DECS), a division of the Sara Lee Corporation,
Itasca, IL, you requested a ruling on the status of an ultrafiltered
milk product from Canada under the NAFTA.

The merchandise is an ultrafiltered milk product that is designed to be
used with the Cafitesse® Coffee Beverage System (CCBS). CCBS combines a
liquid coffee concentrate product with the ultrafiltered milk product to
make portion-controlled cups of cappuccino or latté beverages. Your
client will purchase the milk product from Natrel, Inc., a Canadian
producer.

The ultrafiltered milk product will be produced from raw milk of
Canadian origin, and it will be collected at Canadian farms. The milk
will be stored at a temperature of 39^o^-43^o^ Fahrenheit (4^o^-6^o^
Centigrade), and it will be collected for shipment to Natrel. At the
dairy, the milk will be standardized for fat content at a temperature of
122^o^-140^o^ Fahrenheit (50^o^-60^o^ Centigrade) for 10-20 seconds.
Then the milk will be pasteurized in a high temperature, short time
(HTST) process at 167^o^ Fahrenheit (75^o^ Centigrade) for 15 seconds.
Immediately following initial pasteurization, the milk will be
ultrafiltrated at a temperature of 122^o^ Fahrenheit (50^o^ Centigrade)
and standardized for a specified dry matter and fat level.

The product will be produced by means of an ultrafiltration process
wherein the milk is pumped into membrane tubes under high pressure. The
membrane used is semi-permeable for water and for small molecules
(including lactose and some minerals). The pressure used during the
ultrafiltration process is controlled to reach the specified
concentration of the retentate. After ultrafiltration, commercially
obtained lactose of Canadian origin is added back to the retentate.

The milk product is then ultra-pasteurized at a temperature of 284^o^
Fahrenheit (140^o^ Centigrade) for a period of 6.2 seconds. The
ultra-pasteurization process results in an F-value of 8.21. Finally, the
product is aseptically chilled and stored at 39^o^ Fahrenheit (4^o^
Centigrade).

After processing, the milk product will contain 28 percent total solids,
12 percent lactose, 9 percent protein, 6-8 percent milk fat, and 1
percent minerals (e.g., calcium).

Following pasteurization and ultrafiltration, the product will be
packaged in airtight, sterilized, two liter bags equipped with a
patented doser that permits the in-line mixing of the milk product with
the concentrated coffee. The bag is placed in a two liter, paper carton
that has been wrapped in foil (to keep moisture out of the box). It is
kept refrigerated until used in the Cafitesse® Coffee Beverage System.

In your correspondence you indicate that the merchandise will be
produced entirely in Canada from raw milk of Canadian origin and
Canadian produced lactose (an added ingredient).

The applicable subheading for the ultrafiltered milk product, if entered
under quota, will be 0404.90.3000, Harmonized Tariff Schedule of the
United States (HTS), which provides for whey, whether or not
concentrated or containing added sugar or other sweetening matter;
products consisting of natural milk constituents, whether or not
containing added sugar or other sweetening matter, not elsewhere
specified or included, other, other, dairy products described in
additional U.S. note 1 to chapter 4, described in additional U.S. note
10 to chapter 4 and entered pursuant to its provisions. The general rate
of duty will be 14.5 percent ad valorem. In 2002 the rate of duty will
remain the same.

The applicable subheading for the ultrafiltered milk product, if entered
outside the quota, will be 0404.90.5000, HTS, which provides for whey,
whether or not concentrated or containing added sugar or other
sweetening matter; products consisting of natural milk constituents,
whether or not containing added sugar or other sweetening matter, not
elsewhere specified or included, other, other, dairy products described
in additional U.S. note 1 to chapter 4, other. The general rate of duty
will be \$1.189 per kilogram, plus 8.5 percent ad valorem. In 2002 the
rate of duty will remain the same. In addition, products classified in
subheading 0404.90.5000, HTS, are subject to additional safeguard duties
based on their value, as described in subheadings 9904.04.50 --
9904.05.01, subchapter IV, chapter 99. However, U.S. Note 1 to
subchapter IV in chapter 99 states, "Goods of Canada or Mexico imported
into the United States shall not be subject to any of the provisions,
duties or limitations of this subchapter." Accordingly, if a product of
Canada, the safeguard duties will not apply.

Products classifiable in subheading 0404.90.3000, HTS, being wholly
obtained or produced entirely in the territory of Canada, will meet the
requirements of HTSUSA General Note 12(b)(i), and will therefore by
entitled to a free rate of duty under the NAFTA upon compliance with all
applicable laws, regulations, and agreements.

Importations of milk and milk products are subject to import regulations
administered by various U.S. agencies. Requests for information
regarding applicable regulations administered by the U.S. Food and Drug
Administration may be addressed to that agency at the following
locations:

U.S. Food and Drug Administration

Division of Regulatory Guidance

HFF 314, 200 C Street, S.W.

Washington, DC 20204

Requests for information regarding applicable regulations administered
by the U.S. Department of Agriculture may be addressed to that agency at
the following location:

A.P.H.I.S., Veterinary Services

Federal Building, Room 756

6505 Belcrest Road

Hyattsville, MD 20782

This ruling is being issued under the provisions of Part 181 of the
Customs Regulations (19 CFR 181).

This ruling letter is binding only as to the party to whom it is issued
and may be relied on only by that party.

A copy of the ruling or the control number indicated above should be
provided with the entry documents filed at the time this merchandise is
imported. If you have any questions regarding the ruling, contact
National Import Specialist Thomas Brady at (646) 733-3030.

Sincerely,

Robert B. Swierupski

Director

National Commodity

Specialist Division