HQ H157219
OT:RR:CTF:FTM H157219 TSM
Mr. John M. Peterson
Mr. Curtis W. Knauss
Neville Peterson LLP
80 Broad Street, 34th Floor
New York, N.Y. 10004
RE: Revocation of HQ 964497, HQ 967563, NY 805860, NY 807382, NY 806349, NY A81526, NY B83306, NY B86542, NY D80530, NY D83344, NY D83345, NY F89359, NY H82031, NY H85600, NY L82138, NY N015991, NY N019259, NY N045475, NY N073508, NY R01312, NY N251352, NY N235188, NY 803800, NY N238296, NY 870767, NY 883426, NY 863959, NY N015994 and HQ 083698; Modification of HQ 963668, NY 807225, NY N042679, NY 818773, NY B86441, NY G89465, NY L88611, NY A86301, NY C82414, NY C82415, NY I87369, NY R01313, NY N158039, NY 860227, NY 804357, HQ 951849, NY 869626, NY C82572, NY C89506, NY A87589, NY A89697 and NY B80099; Classification of drink mixes.
Dear Messrs. Peterson and Knauss:
This letter concerns Headquarters Ruling Letter (“HQ”) 963668, which U.S. Customs and Border Protection (“CBP”) issued to you on June 23, 2000, pertaining to the classification of “KLASS Aguas Frescas” Flavored Powdered Drink Mixes, imported packaged for retail sale and containing between 79% and 90% of sucrose, fructose or dextrose, under the Harmonized Tariff Schedule of the United States (“HTSUS”). This letter also concerns the following rulings:
HQ 964497, dated January 23, 2001 (classifying cherry and orange drink mixes, imported in 24-ounce packages and containing between 87% and 96% sugar, intended for sale in supermarkets);
HQ 967563, dated November 4, 2005 (classifying drink mixes containing between 80% and 85% sugar, imported in 2,400 to 2,700 pound bulk bags and repackaged into various sizes for industrial, food service and retail sale after importation);
New York Ruling Letter (“NY”) 805860, dated January 25, 1995 (classifying drink mixes containing over 85% sugar, imported in containers ranging from 19 ounces net weight to 5 pounds 3 ounces net weight and sold to grocery stores and warehouse clubs);
NY 807382, dated February 28, 1995 (classifying drink mixes containing over 85% sugar, imported in containers ranging from 19 ounces net weight to 5 pounds 3 ounces net weight and sold to grocery stores and warehouse clubs);
NY 806349, dated January 31, 1995 (classifying drink mixes containing between 90% and 96% sugar, imported in 2000 pound drums and packaged into smaller packages for retail sale after importation);
NY 807225, dated February 28, 1995 (classifying fruit flavored beverage crystals containing 94% sugar, imported in retail packages weighing between 240 and 300 grams, in food service packages for restaurants weighing between 450 and 500 grams and in food service packages for cafeterias in 25 pound cartons);
NY 818773, dated February 22, 1996 (classifying various grape flavored drink mixes, containing between 95% and 98% sugar: Grape Aid 0, Grape Aid 51, and Grape Aid 35, which are packaged for retail sale);
NY A81526, dated April 2, 1996 (classifying “Flavour Crystals” containing 95% sugar, imported in a foil package containing 480 grams that is mixed with water to produce 4.55 liters of a finished beverage);
NY A86301, dated August 19, 1996 (classifying a lemonade mix containing 64.82% sugar, imported into the United States in bulk to be repackaged for retail sale);
NY B83306, dated March 25, 1997 (classifying powdered drink mixes containing between 75% and 95% sugar, imported in 2000 pound bags);
NY B86542, dated June 24, 1997 (classifying a variety of powdered, fruit-flavored drink mixes containing unspecified amounts of sugar, imported in two pound packages shipped 15 to a case, or in one ton tote bags which will be repackaged for retail sale);
NY B86441, dated June 26, 1997 (classifying crystal drink mixes containing unspecified amounts of sugar and imported in individual packages);
NY C82414, December 8, 1997 (classifying powdered instant beverage products in four flavors, containing unspecified amounts of sugar and imported in retail containers);
NY C82415, December 8, 1997 (classifying powdered instant beverage products in four flavors, containing unspecified amounts of sugar and imported in retail containers);
NY D80530, dated August 7, 1998 (classifying drink crystals containing 95% sugar, in four flavors that are imported 450 gram, 540 gram and 900 gram pouches, or tins for sale to the retail consumer);
NY D83344, dated October 30, 1998 (classifying powdered drink mixes, containing at least 75 percent sugar with no less than 12 percent fructose, imported with a net weight of 19 ounces);
NY D83345, dated October 27, 1998 (classifying powdered drink mixes containing at least 87% sugar, imported in packages of 24 ounces);
NY F89359, dated August 2, 2000 (classifying a powdered beverage mix containing an unspecified amount of sugar, imported for retail sale in 250-gram packages);
NY G89465, dated April 30, 2001 (classifying “Xuky,” a milkshake powder in five flavors: vanilla, pineapple, strawberry and coconut, containing 97% sugar);
NY H82031, dated June 5, 2001 (classifying two types of powdered fruit or vegetable juices: (1) “Zuko” juice, containing 87.19% sugar and imported in 45 gram sachets and 405 gram bags; and (2) “Zuko Diet” juice, containing 75.29% maltodextrin and imported in 20 gram pouches);
NY H85600, dated November 6, 2001 (classifying powdered soft drinks containing over 89% sugar, imported packaged for retail sale in foil packs having a net weight of 110 grams);
NY I87369, dated November 19, 2002 (classifying a beverage mix containing 85.6% sugar, packaged in cans, jars, and pouches for retail sale, and in larger bulk containers for the food service industry);
NY L82138, dated February 14, 2005 (classifying a powdered drink mix containing 79% sugar and imported in foil packets containing 50 grams each);
NY L88611, dated December 5, 2005 (classifying “Xuky” products - milkshake powders in four flavors: vanilla, strawberry, coconut and pineapple, containing 86% to 97% sugar and imported in 450-gram plastic containers);
NY N015991, dated September 10, 2007 (classifying Instant Strawberry artificial flavored powder imported in pouches in two sizes, 7 ounces (200 grams) and 14 ounces (400 grams), and containing 87.82% sugar);
NY N019259, dated November 20, 2007 (classifying an “Apple Cider” powdered beverage mix, imported in a 2 pound bag and containing an unspecified amount of sugar);
NY N042679, dated November 26, 2008 (classifying “Ice Ade” powder soft drink mixes, imported in flavors cherry, tropical punch, orange and lemonade, packaged for retail sale in 15-ounce, multi colored plastic canisters, and containing between 93% and 96% sugar depending on the flavor);
NY N045475, dated November 26, 2008 (classifying powdered drink mixes containing 92.66% sugar, imported into the United States in plastic lined super sacks (totes), scaled out to 1075 kilograms per super sack and packaged in the United States into 0.74 ounce bags for retail);
NY N073508, dated September 29, 2009 (classifying a “powder soft drink mix” packaged for retail sale and containing 95.43% sugar);
NY R01312, dated February 2, 2005 (classifying drink mixes containing 80% to 85% sugar and imported in 2,400 pound to 2,700 pound bulk bags);
NY R01313, dated February 9, 2005 (classifying drink mixes containing 80% to 85% sugar and imported in 2,400 pound to 2,700 pound bulk bags);
NY N158039, dated May 13, 2011 (classifying drink mixes containing, depending on drink variety, either 56% (“Zuko Naranja”) or 66% (“Zuko Tamarindo”) dextrose, 9% sucrose, 1% or less, each, aspartame and acesulfame-K, and imported packaged for retail sale in pouches containing 20 grams (0.7 ounces) net weight);
NY N251352, dated April 8, 2014 (classifying drink mixes containing sucrose and artificial sweeteners, and imported packaged for retail sale);
NY N235188, dated December 10, 2012 (classifying drink mixes containing sucrose and artificial sweeteners, and packaged for retail sale);
NY N238296, dated February 27, 2013 (classifying drink mixes containing 84% sugar and packaged for retail sale);
NY N015994, dated September 10, 2007 (classifying drink mixes containing over 87% sugar and 9% maltodextrin, imported in fifty pound bags);
NY C82572, dated December 15, 1997 (classifying drink mixes containing between 93.5% and 95% sugar, imported in bulk for retail packaging in the United States);
NY C89506, dated July 8, 1998 (classifying drink mixes (imported in five flavors) containing between 75% and 95% sugar, and between 0% and 18% fructose depending on flavor, and imported in 2,000 pound sacks for retail packaging in the United States);
NY A87589, dated September 23, 1996 (classifying drink mixes (imported in five flavors) containing between 75% and 95% sugar, and between 0% and 18% fructose depending on flavor, and imported in 2,000 pound sacks for retail packaging in the United States);
NY A89697, dated November 27, 1996 (classifying drink mixes containing 95% sugar and imported in one metric ton bags for retail packaging in the United States);
NY B80099, dated December 10, 1996 (classifying drink mixes containing over 96% sugar and 0.79% maltodextrin, imported in 2,000 pound bulk bags and 100 pound paper bags, to be repackaged for retail sale upon importation);
NY 863959, dated July 13, 1991 (classifying drink mixes containing between 89% and 97% sugar, depending on the flavor, and imported either packaged for retail sale or in one metric ton containers to be repackaged upon importation);
NY 883426, dated March 9, 1993 (classifying drink mixes containing 91.4% sugar and packaged for retail sale in 890 gram cardboard canisters);
NY 804357, dated November 22, 1994 (classifying drink mixes containing between 90% and 93% sugar and packaged for retail sale in sachets, jars and canisters);
HQ 083698, dated June 1, 1989 (classifying a drink base mix containing 97.61% sugar and imported in industrial packaging such as 2,000 pound totes and 100 pound bags);
NY 803800, dated November 9, 1994 (classifying drink mixes containing sugar and imported packaged for retail sale in 18 ounce, 27 ounce or 40.5 ounce jars, depending on flavor);
NY 870767, dated January 29, 1992 (classifying drink mixes containing 89% sugar and imported in one ton tote bags);
NY 860227, dated February 20, 1991 (classifying drink mixes containing between 83.28% and 90.13% of either sugar alone or sugar with maltodextrin and corn syrup, depending on the drink mix’s flavor, all packaged for retail sale);
HQ 951849, dated August 11, 1992 (classifying drink mixes either sweetened by sugar or unsweetened, depending on the flavor) and
NY 869626, dated January 2, 1992 (classifying drink mixes containing 91.3% sugar and imported in bulk).
In these rulings, various types of drink mixes consisting of sugar and other ingredients were classified in heading 1701, HTSUS, as “Cane or beet sugar and chemically pure sucrose, in solid form,” or in heading 1702, HTSUS, as “Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel.” We have reconsidered these rulings and now believe that they are incorrect. For the reasons that follow, we hereby revoke HQ 964497, HQ 967563, NY 805860, NY 807382, NY 806349, NY A81526, NY B83306, NY B86542, NY D80530, NY D83344, NY D83345, NY F89359, NY H82031, NY H85600, NY L82138, NY N015991, NY N019259, NY N045475, NY N073508, NY R01312, NY N251352, NY N235188, NY 803800, NY N238296, NY 870767, NY 883426, NY 863959, NY N015994 and HQ 083698, and modify HQ 963668, NY 807225, NY N042679, NY 818773, NY B86441, NY G89465, NY L88611, NY A86301, NY C82414, NY C82415, NY I87369, NY R01313, NY N158039, NY 860227, NY 804357, HQ 951849, NY 869626, NY C82572, NY C89506, NY A87589, NY A89697 and NY B80099.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625 (c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice was published in the Customs Bulletin, Volume 54, No. 4, on February 4, 2020, proposing to revoke the rulings cited above, and to revoke any treatment accorded to substantially identical transactions. One comment in support of the proposed action was received on or before March 6, 2020.
FACTS:
The subject merchandise consists of various types of drink mixes that are imported in the form of a powder. Water is added post-importation to turn the mixes into beverages. The mixes come in various flavors, such as lemonade, lemon-lime, orange, grape, mixed berry, cherry, and fruit punch, among others, but all have a similar ingredient list. The largest ingredient in these mixes is sugar. The majority of these mixes contain 80% sugar or more; the rest contain between 60% and 80%. Some of the subject mixes contain sucrose, others dextrose, and others fructose.
The mixes also contain a range of other ingredients, such as flavoring, coloring, citric acid, malic acid, pectin, and silicon dioxide, among other things. Given the amount of sugar in these mixes, these other ingredients make up small but varying percentages of the total ingredients. Most of the mixes are imported packaged for retail sale.
In the rulings at issue, CBP classified these mixes according to their sugar content, in either heading 1701, HTSUS, which provides for “Cane or beet sugar and chemically pure sucrose, in solid form,” or in heading 1702, HTSUS, which provides for “Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel.”
ISSUE:
Whether beverage mixes whose ingredients consist of sugar and other ingredients should be classified according to their sugar content in either heading 1701, HTSUS, or heading 1702, HTSUS, or in heading 2106, HTSUS, as “Food preparations not elsewhere specified or included.”
LAW AND ANALYSIS:
Classification of goods under the HTSUS is governed by the General Rules of Interpretation (“GRI”). GRI 1 provides that classification shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
The HTSUS headings at issue are as follows:
1701 Cane or beet sugar and chemically pure sucrose, in solid form:
* * *
1702 Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel:
* * *
2106 Food preparations not elsewhere specified or included:
2106.90 Other:
Other:
Other:
Other:
Other:
Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17:
2106.90.92 Described in additional U.S. note 7 to chapter 17 and entered pursuant to its provisions
2106.90.94 Other
Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17:
2106.90.95 Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions
2106.90.97 Other
2106.90.98 Other
Additional U.S. Note 2 to Chapter 17, HTSUS, reads the following:
For the purposes of this schedule, the term “articles containing over 65 percent by dry weight of sugar described in additional U.S. Note 2 to chapter 17” means articles containing over 65 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported.
Additional U.S. Note 3 to Chapter 17, HTSUS, reads the following:
For the purposes of this schedule, the term “articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17” means articles containing over 10 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, except (a) articles not principally of crystalline structure or not in dry amorphous form, the foregoing that are prepared for marketing to the ultimate consumer in the identical form and package in which imported; (b) blended syrups containing sugars derived from sugar cane or sugar beets, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported; (c) articles containing over 65 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported; or (d) cake decorations and similar products to be used in the same condition as imported without any further processing other than the direct application to individual pastries or confections, finely ground or masticated coconut meat or juice thereof mixed with those sugars, and sauces and preparations therefor.
Additional U.S. Note 7 to Chapter 17, HTSUS, reads the following:
The aggregate quantity of articles containing over 65 percent by dry weight of sugars described in additional U.S. note 2 to chapter 17, entered under subheadings 1701.91.44, 1702.90.64, 1704.90.64, 1806.10.24, 1806.10.45, 1806.20.71, 1806.90.45, 1901.20.20, 1901.20.55, 1901.90.52, 2101.12.44, 2101.20.44, 2106.90.74 and 2106.90.92 during the 12-month period from October 1 in any year to the following September 30, inclusive, shall be none and no such articles shall be classifiable therein.
Additional U.S. Note 8 to Chapter 17, HTSUS, reads the following:
The aggregate quantity of articles containing over 10 percent by dry weight of sugars described in additional U.S. note 3 to chapter 17, entered under subheadings 1701.91.54, 1704.90.74, 1806.20.75, 1806.20.95, 1806.90.55, 1901.90.56, 2101.12.54, 2101.20.54, 2106.90.78 and 2106.90.95 during the 12-month period from October 1 in any year to the following September 30, inclusive, shall not exceed 64,709 metric tons (articles the product of Mexico shall not be permitted or included under this quantitative limitation and no such articles shall be classifiable therein).
Additional U.S. Note 2 (b) to Section IV, HTSUS, reads the following:
For the purposes of this section, unless the context otherwise requires, the term “capable of being further processed or mixed with similar or other ingredients” means that the imported product is in such condition or container as to be subject to any additional preparation, treatment or manufacture or to be blended or combined with any additional ingredient, including water or any other liquid, other than processing or mixing with other ingredients performed by the ultimate consumer prior to consumption of the product.
The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System. While not dispositive or legally binding, the ENs provide a commentary on the scope of each heading of the Harmonized System at the international level. CBP believes the ENs should always be consulted. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The EN to heading 1701, HTSUS, states, in pertinent part, the following:
It should be noted that cane and beet sugar fall in this heading only when in the solid form (including powders); such sugar may contain added flavouring or colouring matter.
Sugar syrups of cane or beet sugar, consisting of aqueous solutions of sugars, are classified in heading 17.02 when not containing added flavouring or colouring matter and otherwise in heading 21.06.
The heading further excludes preparations in solid form (including granules or powders) which have lost the character of sugar, of a kind used for making beverages (heading 21.06).
The heading also includes chemically pure sucrose in solid form, whatever its origin. Sucrose (other than chemically pure sucrose) obtained from sources other than sugar cane or sugar beet is excluded (heading 17.02).
The EN to heading 1702, HTSUS, states, in pertinent part, the following:
This heading covers other sugars in solid form, sugar syrups and also artificial honey and caramel.
(A) OTHER SUGARS
This part covers sugars, other than sugars of heading 17.01 or chemically pure sugars of heading 29.40, in solid form (including powders), whether or not containing added flavouring or colouring matter. The principal sugars of this heading are:…
(6) Malto-dextrins (or dextri-maltoses), obtained by the same process as commercial glucose. They contain maltose and polysaccharides in variable proportions. However, they are less hydrolysed and therefore have a lower reducing sugar content than commercial glucose. The heading covers only such products with a reducing sugar content, expressed as dextrose on the dry substance, exceeding 10 % (but less than 20 %). Those with a reducing sugar content not exceeding 10 % fall in heading 35.05. Malto-dextrins are generally in the form of white powders, but they are also marketed in the form of a syrup (see Part (B)). They are used chiefly in the manufacture of baby food and low-calory dietetic foods, as extenders for flavouring substances or food colouring agents, and in the pharmaceutical industry as carriers.
(7) Maltose (C12H22O11) which is produced industrially from starch by hydrolysis with malt diastase and is produced in the form of a white crystalline powder. It is used in the brewing industry. This heading covers both commercial and chemically pure maltose.
The EN to heading 2106, HTSUS, states, in pertinent part, the following:
Provided that they are not covered by any other heading of the Nomenclature, this heading covers:…
Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38)….
The heading includes, inter alia:
Powders for table creams, jellies, ice creams or similar preparations, whether or not sweetened.
Powders based on flour, meal, starch, malt extract or goods of headings 04.01 to 04.04, whether or not containing added cocoa, fall in heading 18.06 or 19.01 according to their cocoa content (see the General Explanatory Note to Chapter 19). The other powders are classified in heading 18.06 if they contain cocoa. Powders which have the character of flavoured or coloured sugars used for the preparation of lemonade and the like fall in heading 17.01 or 17.02 as the case may be.
Flavouring powders for making beverages, whether or not sweetened, with a basis of sodium bicarbonate and glycyrrhizin or liquorice extract (sold as “Cocoa powder”)…
* * *
Preparations for the manufacture of lemonades or other beverages, consisting, for example, of:
flavoured or coloured syrups, being sugar solutions with natural or artificial substances added to give them the flavour of, for example, certain fruits or plants (raspberry, blackcurrant, lemon, mint, etc.), whether or not containing added citric acid and preservatives;….
Such preparations are intended to be consumed as beverages after simple dilution with water or after further treatment. Certain preparations of this kind are intended for adding to other food preparations.
In classifying the subject mixes in either heading 1701, HTSUS, or in heading 1702, HTSUS, CBP relied on the language of EN 21.06, which states, in pertinent part, that “Powders which have the character of flavoured or coloured sugars used for the preparation of lemonade and the like fall in heading 17.01 or 17.02.” Citing this language, we reasoned that the subject drink mixes were excluded from classification in heading 2106, HTSUS, in favor of heading 1701 or 1702, HTSUS.
Upon reconsideration, we now believe that the subject drink mixes do not have the character of sugar of Chapter 17, HTSUS. It is undisputed that they are not pure or raw sugar. In addition, whereas Chapter 17, HTSUS, allows for the addition of coloring and flavoring, the subject drink mixes also contain ingredients that make them more than merely flavored or colored sugars. For example, the drink mixes at issue contain ingredients such as citric acid, malic acid, ascorbic acid, turmeric, cinnamon, condensed milk substitute, corn starch, calcium phosphate, potassium phosphate, sodium phosphate, tricalcium phosphate, silicon dioxide, vitamin C, various emulsifiers, preservatives, neutralizing agents, stabilizers and anti-caking agents. As imported, they only require the addition of water to become a complete beverage. As such, they are not mere sweeteners and fall outside the scope of headings 1701 and 1702, HTSUS.
Heading 2106, HTSUS, covers preparations for human consumption. Its exemplars include preparations for the manufacture of lemonades or other beverages, such as those containing sugar solutions with natural or artificial substances added to give them the flavor of certain fruits or plants such as raspberry, blackcurrant, lemon, mint, etc. They may contain citric acid and other ingredients. See EN 21.06. Specifically, paragraph 12 to EN 21.06 further describes merchandise that is classified in heading 2106, HTSUS, and includes preparations for the manufacture of lemonades or other beverages. See EN 21.06. The subject drink mixes are deliberately mixed preparations for human consumption in that they are intended to be drunk as beverages. Thus, they are similar to the exemplars of heading 2106, HTSUS. As such, they are described by the terms of heading 2106, HTSUS. As a result, we find that the subject merchandise is classified in this heading.
We note that the classification of these drink mixes in heading 2106, HTSUS, is consistent with the practice of the World Customs Organization (“WCO”). See Classification Opinion 2106.90/16; Classification Opinion 2106.90/26.
Lastly, we note that several of the rulings at issue in this revocation examined whether their merchandise was eligible for preference under the North American Free Trade Agreement (“NAFTA”). To be eligible for tariff preferences under NAFTA, goods must be “originating goods” within the rules of origin found in General Note 12(b), HTSUS, which provides that “goods originating in the territory of a NAFTA party” are: (i) goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or (ii) goods transformed in the territory of Canada, Mexico and/or the United States. In NY I87369, NY R01313, NY B80099, NY C82572, NY A87589 and NY A89697, the instant merchandise was granted NAFTA preference because it was wholly obtained or produced entirely in one or more of the NAFTA parties. The above analysis modifying and/or revoking NY I87369, NY R01313, NY B80099, NY C82572, NY A87589 and NY A89697 with regard to the classification of the merchandise at issue, does not affect its wholly obtained status. As such, the merchandise at issue in those rulings retains its NAFTA preference. Likewise, in NY A86301, one of the mixes at issue, Lemonade Mix A was found to be wholly originating or produced entirely in one or more NAFTA countries, and received NAFTA preference. The merchandise of NY C82414, NY C82415 and NY C89506 contained cane sugar, beet sugar or fructose that was of United States origin, but the balance of its ingredients may be from the United States, Canada, or non-NAFTA countries. There, CBP found that where the imported merchandise contained ingredients solely from the NAFTA parties, the merchandise qualified for preference as being wholly obtained or produced entirely within the NAFTA countries. We adhere to this analysis. Thus, the Lemonade Mix A that was classified in NY A86301 and the merchandise of NY C82414, NY C82415 and NY C89506 that are made solely with ingredients obtained in the NAFTA parties retain their NAFTA preference.
However, the Lemonade Mix B classified in NY A86301 contained non-originating ingredients. As such, it had to meet the NAFTA tariff-shift rules to qualify for preference. The same was true of certain scenarios of NY C82414, NY C82415 and NY C89506, which used beet sugar and fructose produced in Canada or in the United States, and a variety of other non-originating materials. As such, we reexamine whether this merchandise meets NAFTA’s tariff-shift rules given the proposed classification in subheadings 2106.90.97 and 2106.90.98, HTSUS. The relevant tariff shift rule allows for “a change to heading 2106 from any other chapter.” See General Note 12(t). The non-originating ingredients in these mixes make the tariff shift. For example, citric acid is classified in heading 2918, HTSUS. See, e.g., NY N145129, dated February 17, 2011; NY N130878, dated November 18, 2010; NY N106199, dated June 4, 2010. Ascorbic acid is classified in heading 2936, HTSUS. See, e.g., NY R02835, dated November 22, 2005; NY M86354, dated September 14, 2006. Furthermore, while flavoring and coloring are classified in different headings based on their composition, they are both classified outside heading 2106, HTSUS. See, e.g., NY N072388, dated October 9, 2009 (classifying butter flavoring in heading 3302, HTSUS); NY H81464, dated May 30, 2001 (classifying pistachio flavoring and coconut flavoring in heading 2008, HTSUS); NY N003346, dated December 13, 2006 (classifying an Easter egg coloring kit in heading 3212, HTSUS); NY N127059, dated October 20, 2010 (classifying various pigments in headings 3202 and 3204, HTSUS). As such, the subject merchandise retains its NAFTA preference despite the proposed change in classification, and we modify NY I87369, NY R01313, NY A86301, NY C82414 and NY C82415, NY B80099, NY C82572, NY A87589, NY A89697 and NY C89506 only with respect to the classification of the merchandise specified therein.
HOLDING:
Under the authority of GRI 1, the subject drink mixes are provided for in heading 2106, HTSUS. Specifically, they are classified as follows:
Drink mixes containing over 65% sugar, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported, are classified in subheading 2106.90.92, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Other: Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17: Described in additional U.S. note 7 to chapter 17 and entered pursuant to its provisions.” The column one, general rate of duty is 10% ad valorem. If the quota described in Additional U.S. Note 7 to Chapter 17, HTSUS, is already filled, the subject mixes are classified in subheading 2106.90.94, HTSUS, which provides for “Food preparations not elsewhere specified or included: Food preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17: Other.” The column one, general rate of duty is 28.8¢/kg + 8.5% ad valorem. In addition, if classified in subheading 2106.90.94, HTSUS, the subject drink mixes are subject to additional duties provided for in subheading 9904.17.17- 9904.17.48, HTSUS, as appropriate.
Drink mixes containing over 10% sugar and prepared for marketing to the ultimate consumer in the identical form and package in which imported, as well as drink mixes containing over 10% sugar and below 65% sugar, not prepared for marketing to the ultimate consumer in the identical form and package in which imported, are classified in subheading 2106.90.95, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions.” The column one, general rate of duty is 10% ad valorem. If the quota described in Additional U.S. Note 8 to Chapter 17, HTSUS, is already filled, the subject mixes are classified in subheading 2106.90.97, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Other.” The column one, general rate of duty is 28.8¢/kg + 8.5% ad valorem. In addition, if classified in subheading 2106.90.97, HTSUS, the subject drink mixes are subject to additional duties provided for in subheading 9904.17.49- 9904.17.65, HTSUS, as appropriate.
If any of the subject drink mixes are found to contain below 10% sugar and/or are sweetened by artificial sweeteners, and otherwise fail to meet the terms of Additional U.S. Notes 2 and 3 to Chapter 17, HTSUS, they should be classified in subheading 2106.90.98, HTSUS, which provides for “Food preparations not elsewhere specified or included: Other: Other: Other: Other: Other.” The column one, general rate of duty is 6.4% ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the Internet at www.usitc.gov/tata/hts/.
EFFECT ON OTHER RULINGS:
HQ 964497, HQ 967563, NY 805860, NY 807382, NY 806349, NY A81526, NY B83306, NY B86542, NY D80530, NY D83344, NY D83345, NY F89359, NY H82031, NY H85600, NY L82138, NY N015991, NY N019259, NY N045475, NY N073508, NY R01312, NY N251352, NY N235188, NY 803800, NY N238296, NY 870767, NY 883426, NY 863959, NY N015994 and HQ 083698 are REVOKED.
HQ 963668, NY 807225, NY N042679, NY 818773, NY B86441, NY G89465, NY L88611, NY A86301, NY C82414, NY C82415, NY I87369, NY R01313, NY N158039, NY 860227, NY 804357, HQ 951849, NY 869626, NY C82572, NY C89506, NY A87589, NY A89697 and NY B80099 are MODIFIED.
In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Craig T. Clark, Director
Commercial and Trade Facilitation Division