CLA-2 CO:R:C:F 089858 ALS
Ms. Sandra L. Marshanke
C. J. Tower Inc.
Customs Brokers
128 Dearborn Street
Buffalo, New York 14207-3198
RE: Mixture of Pretzel Sticks and Roasted Split-Blanched Peanuts
Dear Ms. Marshanke:
This is in reference to your request of May 3, 1991,
requesting a tariff classification ruling as to a mixture of
pretzels and peanuts. You submitted a supplementary letter dated
June 3, 1991, pursuant to a request by the Area Director, New
York Seaport, as to the nature of the processing which takes
place in Canada. A sample of the mixture was submitted with the
supplementary letter.
FACTS:
The article under consideration is a mixture of 62 percent
pretzels sticks and 38 percent roasted split blanched peanuts.
The pretzels sticks are approximately 1 inch long and 1/4 inch in
diameter, shiny golden brown in color with a nutty, salty flavor.
They are produced in Canada with ingredients, as we understand,
of Canadian origin. The peanuts, which are from Argentina or
China (PRC), imported into Canada as raw, shelled, red skinned
peanuts, are roasted, split-blanched, cleaned and boxed in
Canada. Each box, which contains 40-50 pounds of the pretzel and
peanut mixture, is labeled with the supplier's name, plant of
manufacture or lot number, product name, ingredient statements,
- 2 -
code name, new weight and country of origin.
ISSUE:
1. What is the proper classification for the pretzel and peanut
mixture?
2. Is the mixture subject to the quota restrictions applicable
to peanuts when imported into the United States?
3. Is the mixture eligible for treatment under the United
States - Canada Free Trade Agreement (CFTA)?
LAW AND ANALYSIS:
Classification of merchandise under the Harmonized Tariff
Schedule of the United States Annotated (HTSUSA) is governed by
the General Rules of Interpretation (GRI's) taken in order.
GRI 1 provides that the classification is determined first in
accordance with the terms of the heading and any relative section
and chapter notes. If GRI 1 fails to classify the goods, and if
the heading and legal notes do not otherwise require, the
remaining GRI's are applied, taken in order.
ISSUE 1:
In considering the classification matter we noted that the
mixture is composed of pretzels, which are classifiable under
heading 1905, Harmonized Tariff Schedule of the United States
Annotated (HTSUSA), and peanuts, prepared or preserved, which are
classifiable under heading 2008, HTSUSA. These two commodities,
although mixed together in the article under consideration,
maintain their original identity.
Each commodity remains complete and recognizable and is not
subordinated into a new product merely by the act of mixing with
the other. The final product remains a pretzels/peanut mixture
and will be marketed as such.
Since the article is classifiable under two headings because
it consists of more than one substance, it is pursuant to GRI
2(b), to be classified according to the principles of GRI 3, we
referred to that GRI. Since the two possible headings are
equally specific, we found that the mixture is not classifiable
in accordance with GRI 3(a). Although the article is composed of
mixed or combined materials, pursuant to GRI 3(b), that GRI is
- 3 -
not applicable since neither commodity gives the mixture its
essential character. We, therefore, turned to GRI 3(c) which
provides:
(c) When goods cannot be classified by reference to 3(a) or
3(b), they shall be classified under the heading which
occurs last in numerical order among those which
equally merit consideration.
Based thereon, we believe that the article should be
classified under the provisions for peanuts rather than the
provisions for pretzels.
ISSUE 2:
The classification for peanuts, prepared or preserved,
subheading 2008.11.00, HTSUSA, is footnoted for reference to
subheading 9904.20.20, HTSUSA, which provides for an absolute
quantitative limitation for peanuts classifiable under subheading
2008.11, HTSUSA, and other subheadings.
ISSUE 3:
General Note 3(c)(vii) of the HTSUSA provides the rules
which determine what products imported into the United States
from Canada are entitled to special duty treatment under the
CFTA. Eligible goods must be "goods originating in Canada", as
stated in General Note 3(c)(vii)(A), HTSUSA.
Pursuant to General Note 3(c)(vii)(B), HTSUSA, goods
imported into the Customs territory of the United States are
eligible for treatment as "goods originating in the territory of
Canada" only if--
(1) they are goods wholly obtained or produced in the
territory of Canada and/or the United States,
(2) they have been transformed in the territory of Canada
and/or the United States, so as to be subject--
(I) to a change in tariff classification as described
in the rules of subdivision (c)(vii)(R) of this
note...
- 4 -
The pretzels, manufactured in Canada with Canadian origin
ingredients, are considered Canadian origin goods pursuant to
General Note 3(c)(vii)(B)(1), HTSUSA. The peanuts in question
are not wholly obtained or produced in Canada and/or the United
States since the peanuts will come from Argentina or China (PRC).
Therefore, they do not originate in Canada under General Note
3(c)(vii)(B)(1), HTSUSA.
The question then arises as to whether they are transformed
in Canada, as described in General Note 3(c)(vii)(B)(2), HTSUSA.
We noted that the peanuts are roasted, split-blanched, cleaned
and packaged in Canada. They are, based on that processing,
classifiable under heading 2008, in the condition as exported to
the United States, rather than heading 1202, in the condition at
the time of the importation into Canada.
We next considered whether the peanuts are eligible for
treatment under the CFTA in accordance with General Note
(c)(vii)(R), HTSUSA. In this regard we noted that General Note
3(c)(vii)(R)(4), HTSUSA, provides that preparations of chapter
20, HTSUSA, which:
"have been prepared or preserved merely by freezing, by
packing (including canning) in water, brine, or in natural
juices, or by roasting, either dry or in oil (including
processing incidental to freezing, packing, or roasting),
shall be treated as a good of the country in which the fresh
good was produced."
The peanuts in question have been processed further than merely
freezing, packing or roasting. Thus, they are considered "goods
originating in Canada."
HOLDING:
A mixture of pretzels of subheading 1905.90, HTSUSA, and
peanuts, prepared or preserved, of subheading 2008.11, HTSUSA,
are, pursuant to GRI 3(c), classifiable under the latter
occurring subheading. The article is subject to a general rate
of duty of 6.6/kg.
The article, classifiable under subheading 2008.11, HTSUSA,
is subject to the quantitative restrictions specified by
subheading 9904.20.20, HTSUSA.
- 5 -
The article, goods originating in Canada in accordance with
General Note 3(c)(vii)(B), HTSUSA, may be eligible for a reduced
rate of duty upon compliance with the provisions of the CFTA and
section 10.301 et seq., Customs Regulations (19 CFR 10.301 et
seq.).
Sincerely,
John Durant, Director
Commercial Rulings Division
6cc: AD NYSEAPORT
089858 Peanut and Pretzels
ALSARASKY 10/1/91