CLA-2: CO:R:C:F 952685 LPF
Mr. Tom Vasile
Bay Trading Co., Inc.
The Fairty Group
Cape Ann Industrial Park
P.O. Box 141
Gloucester, MA 01930
RE: Crabmeat and crab claws; Heading 1605, HTSUSA, crustaceans,
molluscs and other aquatic invertebrates, prepared or
preserved; Not 0306, crustaceans, in shell, cooked by
steaming or by boiling in water; Applicability of duty
exemption under subheadings 9801.00.10 and 9802.00.50; HRL's
051909 and 072991
Dear Mr. Vasile:
This is in response to your letter of August 21, 1992,
requesting the proper classification of frozen red crabmeat and
frozen red crab claws under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA). This ruling also addresses the
issues raised in your inquiry concerning the applicability of
subheadings 9801.00.10 and 9802.00.50, HTSUSA. Your question
regarding the proper marking of your product has been forwarded
to the Value and Marking Branch, for their direct reply.
FACTS:
Red crabs (Geryon quinquedens), caught in U.S. waters by U.S.
fishing boats, are taken to the U.S. Fishery Conservation Zone,
outside the three mile U.S. territorial limit. After harvesting,
the crabs are gutted (cleaned) and cut into sections (i.e., into
claws with arms and into bodies). At the U.S. plant, they are
cooked, graded, frozen and packed for shipment to China for
further processing.
After shipment to China, the crabs are thawed and the meat is
extracted from the body. The extracted body meat is frozen into
blocks packed in coated boxes with a polyethylene sheet and
cover, in either 6 five pound blocks or 10 two pound blocks per
master carton, for re-export to the U.S. These boxes are not
airtight containers.
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In processing the crab bodies, the claws, with arms attached,
are removed from the bodies before they are processed. The
detached claws are then processed by cutting them into cocktail
claws. The cap, or upper portion, of the claw shell is cut away,
exposing the crab meat of the claw. These claws are individually
frozen, then packed in polyethylene bags, 2 to 3 mils in
thickness, in master cartons ranging from 1 to 20 pounds, for re-
export. The smaller size bags of 1 or 2 pounds are heat sealed.
The larger bags are unsealed.
ISSUE:
Whether the crabmeat and crab claws are classifiable in
heading 0306 as crustaceans, in shell, cooked by steaming or by
boiling in water, or in heading 1605 as crustaceans, molluscs and
other aquatic invertebrates, prepared or preserved; and whether
they will be eligible for the duty exemption available under
either subheading 9801.00.10 or 9802.00.50.
LAW AND ANALYSIS:
Tariff Classification
The General Rules of Interpretation (GRI's) taken in their
appropriate order provide a framework for classification of
merchandise under the HTSUSA. Most imported goods are classified
by application of GRI 1, that is, according to the terms of the
headings of the tariff schedule and any relative section or
chapter notes. The Explanatory Notes (EN's) to the Harmonized
Commodity Description and Coding System, which represent the
official interpretation of the tariff at the international level,
facilitate classification under the HTSUSA by offering guidance
in understanding the scope of the headings and GRI's.
Heading 0306 provides, inter alia, for crustaceans, in shell,
cooked by steaming or by boiling in water, whether or not chilled
or frozen, while heading 1605 provides, inter alia, for
crustaceans, molluscs and other aquatic invertebrates, prepared
or preserved. Because the crabmeat and crab claws are cooked,
but are not in their shell, they are not classifiable in 0306,
but rather in 1605. We note that it has been Customs position
that crab claws are classifiable as "crabmeat." See Headquarters
Ruling Letter (HRL) 072991, issued April 17, 1984.
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Applicability of Subheadings 9801.00.10 and 9802.00.50
Chapter 98, Subchapter II, HTSUSA, incorporates provisions
that apply to articles which are exported and then returned to
the U.S. Subheading 9801.00.10 provides for duty-free entry of
U.S. products that are exported and returned without having been
advanced in value or improved in condition by a process of
manufacture or any other means while abroad. Articles satisfying
the above conditions of the statute will be afforded duty-free
treatment, provided the documentary requirements of section 10.1,
Customs Regulations (19 CFR 10.1), are met. Although some change
in the condition of the product while it is abroad is
permissible, operations which either advance the value or improve
the condition of the exported product render it ineligible for
duty-free entry upon return to the U.S. See Border Brokerage
Company Inc. v. United States, 65 Cust. Ct. 50, C.D. 4052, 314 F.
Supp. 788 (1970), appeal dismissed, 58 CCPA 165 (1970).
In this case, both the picking of the crabmeat, from the
crabs' bodies, and the cutting of the shell cap from the crab
claws to produce traditional cocktail claws, improve the
condition of the product. We note that these processes make the
crab more commercially marketable as well as easier to eat.
Therefore, the crabmeat and crab claws entering the U.S. are not
eligible for the duty exemption available under subheading
9801.00.10.
Subheading 9802.00.50 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 commercially different
articles. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D.
631 (1956), aff'd, C.D. 1752, 36 Cust. Ct. 46 (1956); and
Guardian Industries Corporation v. United States, 3 CIT 9 (1982),
Slip Op. 82-4 (Jan. 5, 1982). Application of subheading
9802.00.50 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. See Dolliff & Company, Inc. v. United
States, 81 Cust. Ct. 1, C.D. 4755, 455 F. Supp. 618 (1978),
aff'd, 66 CCPA 77, C.A.D. 1225, 599 F. 2d 1015 (1979).
In HRL 051909, issued June 29, 1977, it was determined that
snow crab clusters, or crabs in shells, which were exported
abroad for extraction of the crabmeat from the shell, did not
qualify for a partial duty exemption under item 806.20, Tariff
Schedules of the United States (TSUS), (the precursor provision
to subheading 9802.00.50). In that ruling Customs stated:
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[i]n the circumstances described, the operations
performed...involving a change of merchandise from
one form to another are beyond the meaning of item
806.20, TSUS. The crab-in-shell product that goes
out is commercially different from the extracted
crab meat product that returns.
Further, the foreign processing of the crab product
described is neither a repair nor alteration of an
exported product but a process that results in a new
and different product, beyond the scope of this
tariff provision.
Because this is also the case regarding the processes undergone
by the subject crabmeat and crab claws, the products are not
eligible for the duty exemption available under subheading
9802.00.50.
HOLDING:
The appropriate subheading for the frozen crabmeat or crab
claws, not in airtight containers, is 1605.10.4020, HTSUSA,
providing for, "Crustaceans, molluscs and other aquatic
invertebrates, prepared or preserved: Crab: Other: Crabmeat:
Other, Frozen: Other." The general column one rate of duty is 5
percent ad valorem.
The appropriate subheading for the frozen crabmeat or crab
claws, in airtight containers, is 1605.10.2040, HTSUSA, providing
for, "Crustaceans, molluscs and other aquatic invertebrates,
prepared or preserved: Crab: Other: Crabmeat: In airtight
containers, Other." The general column one rate of duty is 11
percent ad valorem.
Based on the information provided, it is our opinion that the
crabmeat and crab claws will be improved in condition abroad,
and, therefore, the duty exemption available under 9801.00.10,
HTSUSA, is precluded. Additionally, the foreign operations,
whereby the crabmeat is picked and the crab claws are capped,
creates a new and commercially different article, excluding the
products from the partial duty exemption available under
subheading 9802.00.50, HTSUSA.
Sincerely,
John Durant, Director