MAR-05 RR:CR:SM 563143 KKV
Mr. Peter W. Klestadt
Mr. Hal I. Loring
Grunfeld, Desiderio, Lebowitz
Silverman & Klestadt, LLP
399 Park Avenue, 25th Floor
New York, NY 10022-4877
RE: Country of origin marking requirements applicable to imported crabmeat and eligibility for NAFTA duty preference; Article 401; wholly obtained or produced; tariff shift
Dear Mr. Klestadt and Mr. Loring:
This is in response to your letter dated November 1, 2004 (and subsequent submittal dated November 15, 2004), on behalf of your client, which requests a binding ruling with regard to the country of origin marking requirements applicable to imported crabmeat and its eligibility for preferential tariff treatment under the North American Free Trade Agreement (NAFTA).
FACTS:
We are informed that live crabs will be caught in U.S. territorial waters by U.S.-flag vessels. The crabs will be weighed at the docks, washed, graded, chilled and then steam cooked under pressure (12 psi) for 12 to 15 minutes, then cooled for 8-10 hours. The crabs will be loaded onto refrigerated trucks and transported to Mexico, where the meat will be picked from the cooked crabs and placed into 8-ounce or 16-ounce airtight or non-airtight containers.
The airtight containers will be subjected to heat treatment (pasteurization) by heating in a water bath for approximately 120 to 140 minutes, until the core of center of the product reaches a temperature of 32 degrees Fahrenheit, and then packed in ice or refrigerated to maintain the 32-degree temperature. The non-airtight containers will not be subjected to heat treatment, but will also be packed in ice or refrigerated to maintain a 32-degree temperature. The containers will be packed in master cartons (6, 12, or 20 to a carton), which are sealed and shipped to the U.S. by refrigerated truck. The crabmeat will be sold mainly in the food service industry (e.g., the restaurant trade). The pasteurized airtight containers will primarily be sold to large companies and the non-pasteurized, non-airtight containers will be sold to smaller distributors. In either case, no ingredients or substances will be added to the crabmeat at any time during their processing. Crabmeat will be the only ingredient.
ISSUE:
Whether the imported crabmeat will be eligible for preferential tariff treatment under the North American Free Trade Agreement.
LAW AND ANALYSIS:
Article 401 of NAFTA is incorporated into General Note 12, HTSUS. General Note 12(a) provides, in pertinent part, that:
(ii) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Mexico under the terms of the marking rules ....and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “MX” in parentheses, are eligible for such duty rate....
Thus, by operation of General Note 12(a)(ii), for an article to be eligible for NAFTA preference, two criteria must be satisfied. Firstly, the article in question must be “originating” under the terms of that General Note and secondly, the article must qualify to be marked as a “good of Mexico” under the NAFTA Marking Rules set forth in Part 102 of the Code of Federal Regulations (19 CFR 102).
With regard to the first criteria, General Note 12(b), HTSUS, provides, in pertinent part, as follows:
For 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
they have been transformed in the territory of Canada, Mexico, and/or the United States so that
except as provided in subdivision (f) of this note, each of the non originating material 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
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
they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials.
In the instant case, the crabmeat is an originating good, for purposes of GN 12(b), since it is a good wholly obtained or produced entirely in the NAFTA territory, pursuant to GN 12(b)(i)), HTSUS.
With regard to the second requirement, 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:
The good is wholly obtained or produced;
The good is produced exclusively from domestic materials; or
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 crabs processed in Mexico are neither wholly obtained or produced, nor produced exclusively from domestic materials. Because 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....” We are advised by the National Commodity Specialists Division, New York, and the General Classification Branch, Headquarters, that upon exportation to Mexico, the cooked unshelled crabs are classifiable under subheading 0306.24, Harmonized Tariff Schedule of the United States (HTSUS), which covers:
0306 Crustaceans, whether in shell or not, live, fresh, chilled, frozen, dried, salted
or in brine; crustaceans, in shell, cooked by steaming or by boiling in water, whether or not chilled, frozen, dried, salted or in brine; flours, meals and pellets of crustaceans, fit for human consumption:
…
Not frozen:
Crab:
0306.24.4000 Other
We are further advised that the product returned to the U.S. in its condition as imported, is crabmeat, which has been cooked by steaming under pressure, and packed in 8-ounce or 16-ounce containers, either airtight or nonairtight. As a cooked, shelled product, classification in chapter 3 would be precluded by the language of the heading. Following the General Explanatory Note (EN) to chapter 3, which excludes cooked products (with some exceptions) from that chapter, and legal note 1 to chapter 16 (which provides for goods prepared or preserved by processes not permitted for goods of chapter 2) , classification would fall in chapter 16. Heading 1605 provides for the instant crabmeat under two rate lines,--viz., as “crabmeat”:
1605 Crustaceans, molluscs and other aquatic invertebrates, prepared or preserved:
Crab:
Other:
Crabmeat:
1605.10.20 In airtight containers.
Other.
Thus, upon reimportation into the U.S., the cooked, shelled crabmeat is classifiable under subheading 1605.10.20, HTSUS, if packaged in an airtight container or under subheading 1605.10.40, HTSUS, for crabmeat not packaged in an airtight container.
The applicable tariff shift rule, found in section 102.20(d), Section IV: Chapters 16 through 25, provides as follows:
1601-1605 A change to heading 1601 through 1605 from any other chapter.
Upon importation into Mexico, the crabs are a product of the U.S., thus qualifying as “foreign materials” subject to the rule set forth above. Under the facts provided, cooked unshelled crabs initially classified under subheading 0306.24, HTSUS are subsequently classified under subheading 1605.10.20 or 1605.10.40, HTSUS, as a result of processing operations performed in Mexico. Consequently, inasmuch as the foreign material undergoes the applicable tariff shift, the country of origin of the returned crabmeat is Mexico, pursuant to 19 CFR 102.11(a)(3), and the returned crabmeat must be marked accordingly.
HOLDING:
Based on the information presented, the crabmeat is an originating good, for purposes of GN 12(b), since it is a good wholly obtained or produced entirely in NAFTA territory, pursuant to GN 12(b)(i)), HTSUS, and is considered to be a good of Mexico under the NAFTA Marking Rules, pursuant to 19 CFR 102.11(a)(3). Accordingly, the returned crabmeat will be eligible for NAFTA tariff preference upon reimportation into the U.S.
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
Myles B. Harmon
Director
Commercial Rulings Division