Combine first 8 ingredients. Form into 40 bite-size meatballs, using a rounded teaspoon for each. Brown meatballs in oil. Cover; cook over low heat for 5 minutes. Drain excess fat.
Combine chili sauce and jelly; pour over meatballs. Heat stirring occasionally, until jelly melted. Simmer 10-12 minutes until sauce has thickened, basting occasionally.