CLA-2 CO:R:C:V 554934 DBI
HTSUS (800.00, TSUS)
Mr. Oscar Braslaw
American Import & Export Co. Inc.
P.O. Box 15405
New Orleans, Louisiana 70175
RE: Classification, applicability of the Peanut Quota Act and
applicability of subheading 9802.00.50, HTSUS (item 806.20,
TSUS) and subheading 9801.00.10, HTSUS (item 800.00, TSUS),
to peanuts exported to Mexico to be shelled, roasted and
salted
Dear Sir:
This is in response to your letter dated January 12, 1988,
in which you request a ruling concerning the classification,
applicability of the Peanut Quota Act and applicability of
subheading 9802.00.50, Harmonized Tariff Schedule of the United
States (HTSUS), and subheading 9801.00.10, HTSUS, to U.S. peanuts
exported to Mexico to be shelled, roasted and salted. We regret
the delay in responding to your inquiry.
FACTS:
You advise that U.S.-grown peanuts will be shipped to
Mexico where they will be prepared by shelling, roasting and
salting or otherwise flavoring the peanuts. The peanuts will
then be vacuum packed and returned to the U.S. for sale in the
snack trade.
ISSUE:
(1) Tariff classification of the returned peanuts and
whether they are subject to the Peanut Quota Act.
(2) Whether the peanuts, when returned to the U.S., will
be eligible for the partial exemption from duty in subheading
9802.00.50, HTSUS, or the exemption from duty in subheading
9801.00.10, HTSUS.
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LAW AND ANALYSIS:
According to the U.S. Department of Agriculture, these
products, which are made in Mexico from U.S. grown peanuts and
imported into the U.S., are not subject to the peanut quota.
However, these products may be subject to marketing quota
penalties pursuant to 7 CFR 1446.115 if they are "contract
additional" or "loan additional" peanuts. If you have any
additional questions regarding the quota or marketing quota
penalties, contact Mr. Dallas Smith at the U.S. Department of
Agriculture, Agriculture Stabilization and Conservation System,
Tobacco and Peanuts Division, Room 5750-South Building, P.O. Box
2415, Washington, D.C. 20013 (telephone no. (202) 447-7413)).
As to the tariff classification of these products, we only
address the classification under the HTSUS, which replaced the
Tariff Schedules of the United States (TSUS), on January 1, 1989.
The roasted, salted peanuts; the hot peanuts, which are roasted,
salted, and chile flavored; the Japanese style peanuts, which are
roasted, thinly covered with a flour coating and flavored with a
soybean sauce; and the candied peanuts, which are roasted and
thinly coated with sugar, are classifiable in subheading
2008.11.0060, HTSUS, which provides for "fruit, nuts and other
edible parts of plants, otherwise prepared or preserved, whether
or not containing added sugar or other sweetening matter or
spirit, not elsewhere specified or included: Nuts, peanuts
(ground-nuts) and other seeds, whether or not mixed together:
Peanuts (ground-nuts): Other." These four products are dutiable
at the rate of 6.6 percent per kilogram. The mixed snack product
consisting of shelled pumpkin seeds, peanuts, and Spanish peanuts
is classifiable in subheading 2008.19.85, HTSUS, which provides
for mixtures of nuts, and is dutiable at the rate of 28 percent
ad valorem.
Item 806.20, TSUS, was carried over into the HTSUS as
subheading 9802.00.50, and item 800.00, TSUS, was carried over as
subheading 9801.00.10.
Subheading 9802.00.50, HTSUS, provides for the assessment
of duty on the value of repairs or alterations performed on
articles returned to the U.S. after having been exported for that
purpose. However, the application of this tariff provision is
precluded in circumstances where the operations performed abroad
destroy the identity of the articles or create new or
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commercially different articles. See A.F. Burstrom v. United
States, 44 CCPA 27, C.A.D. 631 (1957); Guardian Industries
Corporation v. United States, 3 CIT 9 (1982). Treatment under
subheading 9802.00.50, HTSUS, is also precluded where the
exported articles are incomplete for their intended use and the
foreign processing operation is a necessary step in the
preparation or manufacture of finished articles. Dolliff and
Company, Inc. v. United States, 66 CCPA 77, C.A.D. 1225, 599 F.2d
1015 (1979).
We have previously held in a ruling dated May 25, 1988 (HQ
554834), that a foreign shelling process which consisted of hand
picking pecan meat pieces from the shell constituted an operation
that exceeded a repair or alteration. We reasoned that the pecan
pieces that were shipped to Mexico were commercially different
from the meat that returned. Additionally, the pecan pieces were
incomplete for their intended use and required a further step in
the preparation of the finished meat product.
In a ruling dated January 19, 1987 (HQ 543869), we held
that the processing of eggs, which consisted of breaking the
shell, separating the yolk and white, and salting and freezing
the yolks, was an intermediate step in the preparation of the
finished product and, as such, could not be characterized as an
alteration.
In the present case, the U.S. grown peanuts that are
shipped to Mexico are commercially different from the peanut
product that returns. Additionally, the shelling, roasting,
salting or otherwise flavoring process constitutes an
intermediate step in the preparation of finished peanut products.
With regard to subheading 9801.00.10, HTSUS, we have
previously held that nuts sent abroad to have the shells cracked
and the meat separated from the shell were not eligible for duty-
free treatment as American goods returned under item 800.00, TSUS
(subheading 9801.00.10, HTSUS). See HQ 554932 (June 3, 1988); HQ
554966 (September 9, 1988).
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HOLDING:
On the basis of the information and samples submitted, it
is our opinion that the products are classifiable in subheadings
2008.11.0060 and 2008.19.85, HTSUS. Additionally, the foreign
processes may not be considered an alteration as that term is
used in subheading 9802.00.50, HTSUS, thereby precluding the
application of that subheading to the returned peanuts.
Additionally, the peanuts are not eligible for duty-free
treatment as American goods returned under subheading 9801.00.10,
HTSUS.
Sincerely,
John Durant
Director, Commercial
Rulings Division