MAR-2 RR:CR:SM 561749 KSG
Joseph J. Wilson
Port Director
U.S. Customs Service
111 W. Huron Street
Buffalo, New York 14202
RE: Request for internal advice; applicability of NAFTA preferential tariff treatment to imported mushrooms; Article 509; 19 CFR 102.20, Chapter 20 Note, HTSUS; canning; country of origin
Dear Mr. Wilson:
This is in response to your memorandum of May 9, 2000, requesting internal advice regarding the country of origin marking of imported mushrooms grown in Chile that are canned and processed in Canada.
FACTS:
Whole mushrooms are grown in Chile. They are then packed in barrels and provisionally preserved in a solution of brine and are transported in bond through the U.S. to Canada. In Canada, the mushrooms are washed to remove the brine, sized and graded, cut into pieces and stems and preserved in cans. The canned mushrooms are then imported into the U.S.
You state that the whole mushrooms are classified in subheading 0711.90 of the Harmonized Tariff Schedule of the United States (“HTSUS”) and the canned mushrooms are classified in subheading 2003.10, HTSUS. You also state that the whole mushrooms are subject to Antidumping Order # A-337-804.
ISSUES:
What is the proper country of origin marking for the imported canned mushrooms?
Whether the imported canned mushrooms are eligible for a duty preference under NAFTA.
LAW AND ANALYSIS:
1. Country of origin marking issue
The first issue presented is whether Canada or Chile is the country of origin of the canned mushrooms for marking purposes. Pursuant to 19 CFR 134.1(g), an article for which the country of origin is Canada, Mexico, or the U.S., as determined under the NAFTA Marking Rules, is a good of a NAFTA country. The NAFTA Marking Rules are set forth at 19 CFR 102.
Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2. Paragraph (a) of this section states that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
“Foreign material” is defined in 19 CFR 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the canned mushrooms are neither wholly obtained or produced, nor produced exclusively from domestic materials. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3).
Section 102.11(a)(3) provides that the country of origin is the country in which “each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20....”
The imported canned mushrooms are classified in subheading 2003.10.25, HTSUS. The applicable tariff shift rule found in section 102.20(d) provides as follows:
HTSUS Tariff Shift and/or other requirements
2001-2007..... A change to heading 2001 through 2007
from any other chapter.
The Chapter 20 Note provides that “Notwithstanding the specific rules of this chapter, fruit, nut and vegetable preparations of Chapter 20 that have been prepared or preserved merely by freezing, by packing (including canning) in water, brine or 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.”
In this case, the imported canned mushrooms meet the applicable tariff shift rule set forth in section 102.20(d), as they change from subheading 0711.90, HTSUS (in their condition as imported into Canada), to subheading 2003.10, HTSUS (in their condition as imported into the U.S.). However, this change in tariff classification results solely from the canning process performed in Canada. Therefore, pursuant to the Chapter 20 Note, the vegetable preparation “shall be treated as a good of the country in which the fresh good was produced,” which in this case is Chile. Thus, under 19 CFR 102.11(a)(3), the country of origin of the imported canned mushrooms is Chile.
2. Originating goods issue
General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part:
(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate, in accordance with section 201 of the NAFTA Implementation Act.
Accordingly, the mushrooms will be eligible for the “Special” “CA” rate of duty provided they are NAFTA “originating” goods under General Note 12(b), HTSUS, and qualify to be marked as a product of Canada under the marking rules. General Note 12(b), HTSUS, provides, in pertinent part:
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as goods originating in the territory of a NAFTA party only if—
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and /or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that—
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or
(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials.
Pursuant to the tariff shift rule set forth in GN 12(t), a change to headings 2001 through 2007 from any other chapter would be sufficient. In this case, there is a change to heading 2003, HTSUS, from another chapter (subheading 0711.90, HTSUS).
However, General Note 12(s) provides as follows:
(s) (ii) Fruit, nut and vegetable preparations of chapter 20 that have been prepared or preserved merely by freezing, by packing (including canning) in water, brine, or natural juices, or by roasting, either dry or in oil (including processing incidental to freezing, packing or roasting), shall be treated as an originating good only if the fresh good was wholly produced or obtained entirely in the territory or one or more of the NAFTA parties.
Since the mushrooms in this case are classified in subheading 2003.10.25, HTSUS ( a vegetable preparation of chapter 20), and they were not harvested in the territory of a NAFTA country, the mushrooms do not qualify as originating goods under NAFTA. The NAFTA preference override set forth at 19 CFR 102.19(a) would not apply since the imported canned mushrooms are not originating under GN 12, HTSUS.
HOLDING:
Pursuant to the NAFTA Marking Rules, the country of origin of the imported canned mushrooms is Chile.
The imported canned mushrooms are not eligible for a duty preference under NAFTA.
This decision should be mailed by your office to the internal advice requester no late than sixth days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel and to
the public on the Customs Home Page on the World Wide Web at
www.customs.ustreas.gov, by means of the Freedom of Information Act, and other means of public distribution.
Sincerely,
John Durant
Director
Commercial Rulings Division