CLA-2 OT:RR:CTF:VS H030641KSG
John B. Pellegrini, Esq.
McGuire Woods
1345 Avenue of the Americas
Seventh Floor
N.Y.C. NY 10105-0106
Re: Eligibility of rum for duty-free entry under subheading 9817.22.05, HTSUS
Dear Mr. Pelligrini:
This is in reply to your letter dated April 16, 2008, on behalf of Diageo North America, Inc., concerning the eligibility of certain rum imported from Canada for duty-free treatment under subheading 9817.22.05 of the Harmonized Tariff Schedule of the United States (“HTSUS”).
FACTS:
This case involves rum that is distilled in Jamaica and then shipped in bulk to Canada. In Canada, the alcohol content will be reduced from 80 percent by volume to 70 percent and placed in barrels for aging for one to four years.
You propose three different scenarios for the Canadian processing. In scenario one, after aging, the rum will be blended with other Jamaican rums and shipped in bulk directly to the U.S. The alcohol content will be 70 percent by volume.
In scenario two, after aging, the rum will be blended with other Jamaican rums, a flavor enhancer (neutral grain spirits, quinine, propylene glycol and water), and Canadian fortified wine. The flavor enhancer and fortified wine will represent less than 3.5 percent by volume of the finished blend. The alcohol content will be 70 percent by volume. The finished product will then be shipped directly from Canada to the U.S.
In scenario three, after aging, the rum will be blended with other Jamaican rums, a flavor enhancer, and Canadian fortified wine. The finished blend is then filtered and reduced to bottling strength of 40 percent alcohol by volume. The finished product is then shipped directly from Canada to the U.S. The subject products have alcohol content by volume ranging from 40 percent to 70 percent. The rum accounts for virtually all of the alcohol content; less than one percent of neutral grain spirits are added to the three products.
In all three scenarios, the rum will have a value in excess of $.069 per proof liter. The National Import Specialist has classified all three products in subheading 2208.40, HTSUS in NY Ruling N039812.
ISSUE:
Whether certain rum distilled in Jamaica and then processed in Canada is eligible for duty-free treatment in accordance with subheading 9817.22.05, HTSUS?
LAW AND ANALYSIS:
Subheading 9817.22.05, HTSUS, provides duty-free treatment for certain rum and other alcoholic beverages that are described in U.S. note 6 to the subchapter.
U.S. Note 6 of Chapter 98, Subchapter XVII, HTSUS, provides as follows:
For purposes of heading 9817.22.05, the duty-free treatment shall apply to liqueurs and spirituous beverages produced in the territory of Canada from rum if—
such rum is the growth, product, or manufacture of a designated Caribbean Basin Economic Recovery Act (“CBERA”) beneficiary country enumerated in General Note 7(a) of the tariff schedule or of the Virgin Islands of the U.S.;
such rum is imported directly from a designated CBERA beneficiary country enumerated in general note 7(a) to the tariff schedule or from the Virgin Islands of the United States into the territory of Canada and such liqueurs and spirituous beverages are imported directly from the territory of Canada into the customs territory of the U.S.;
when imported into the customs territory of the U.S., such liqueurs and spirituous beverages are classified in subheading 2208.40 or 2208.90 of the tariff schedule; and
such rum accounts for at least 90 percent by volume of the alcoholic content of such liqueurs and spirituous beverages.
The rum contained in the three products described above are the growth, product or manufacture of Jamaica, a designated CBERA country enumerated in GN 7(a) and are imported from Jamaica to Canada and then shipped directly from Canada to the U.S. All three products are classified in subheading 2208.40 HTSUS.
Counsel argues that the proper interpretation of U.S. Note 6(iv) is that the CBERA origin rum account for at least 90 percent of the total alcohol content of the finished product and not that the strength of the alcohol of the finished product be at least 90 percent. In fact, subheading 2208.40 and 2208.90 provide for spirits having an alcoholic strength by volume of less than 80 percent. We concur with counsel on this point. We find that more than 90 percent of the alcohol for all three products is represented by the Jamaican rum.
Accordingly, all three products as described above would be eligible for duty-free treatment under subheading 9817.22.05, HTSUS, pursuant to U.S. note 6, Chapter 98, Subchapter XVII, HTSUS.
HOLDING:
Based on the information provided, the imported rum in all three scenarios would be eligible for duty-free treatment in accordance with subheading 9817.22.05, HTSUS.
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 official handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch