Fed Circuit: Mellorine Not an Article of Milk - Tax Law - Federal Circuit
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Fed Circuit: Mellorine Not an Article of Milk

I scream, you scream, we all scream for ... mellorine?

If Arko Foods International's mellorine is your preferred non-dairy, frozen dessert you can rest assured that your favorite treat remains something "other" than "an article of milk."

For those of you who are unfamiliar with the product, mellorine is frozen dessert similar to ice cream, but with vegetable or animal fat substituted for at least some of the butterfat. Arko imports six flavors of mellorine relevant to this case: purple yam, fruit salad, mango, macapuno, (a type of coconut), durian, (a fruit), and Quezo Royale, (a cheese and coconut flavor also known as Quezo Real).

U.S. Customs and Border Patrol liquidated Arko's mellorine after classifying it as an article of milk under the Harmonized Tariff Schedule of the United States (HTSUS). Arko argued that mellorine is a composite good that is prima facie classifiable under Heading 0811 (fruits and nuts) or 2106 (food preparations not elsewhere specified) of HTSUS.

Arko challenged Customs' classification of mellorine in the Court of International Trade (CIT). The CIT granted summary judgment for Arko because there was no dispute between the parties as to the nature of the merchandise, but only as to the legal issue of whether mellorine is an article of milk under the HTSUS. The CIT concluded that the mellorine is not an article of milk but instead properly classified as 2105.00.50 ("other").

Last week, the Federal Circuit Court of Appeals affirmed CIT's decision, finding that mellorine does not have the essential character of an article of milk, and that the "other" classification was appropriate.

The difference in classification between an "article of milk" and "other" affects what tariffs are assessed on the product. Arko's win will preserve lower tariff rates for mellorine, which means lower retail prices for consumers.

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