CLA-2 OT:RR:CTF:TCM H068576 JER
Port Director
Port of Miami
U.S. Customs and Border Protection
6601 NW 25th Street
Miami, FL 33122
RE: Application for Further Review of Protest No. 5201-08-100302; Crema Latina dairy topping with palm oil
Dear Port Director:
This is our decision regarding the Application for Further Review of Protest No. 5201-08-100302, filed on behalf of Rio Grande Foods, Inc., (“Rio Grande”), concerning the classification of Crema Latina dairy topping under the Harmonized Tariff Schedule of the United States (“HTSUS”) and preferential duty treatment under the Dominican Republic-Central America-United States Free Trade Agreement (“DR-CAFTA”).
FACTS:
The subject merchandise is described as “Crema Latina Dairy Topping with Palm Oil,” a product of Nicaragua. The product is a semi-solid material composed of pasteurized milk and cream, hydrogenated palm oil, milk solids, stabilzers, emulsifiers, salt, lactic culture, and color (92% milk derivatives and 5% hydrogenated palm oil). CBP Laboratory Report (SV20060798), dated August 23, 2006, indicates that by weight the product consists of 68% Moisture (83% non-fatty matters); 18% Total Fat (56% moisture free basis); 12% Butter Fat (38% moisture free basis); and contains 6% Lactose, 12% Non-Fat Milk Solid and 24% Milk Solids (non-fat milk solid + butter fat). The CBP Laboratory Report further indicates that the product is an “Oil-in-Water” type emulsion. In a subsequent discussion with CBP, counsel for the Protestant acknowledged that the product contains non-originating powdered milk from the U.S.
The merchandise covered by this protest consists of 121 entries made between November 2, 2004, and February 5, 2008 and liquidated between September 16, 2008 and June 27, 2008 in headings 0405 and 1517, HTSUS. In submissions dated, July 9, 2008 and September 30, 2008, counsel for the Protestant concedes that subheading 1901.90, HTSUS, is the correct subheading. According to the entry documents, the importer entered the instant products using the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA) prefix (“P or P+”). Between September 16, 2005, and June 27, 2008, the Port reclassified and liquidated the subject Crema Latina Dairy Topping with Palm Oil under subheading 1901.90.43, HTSUS.
ISSUES:
Whether the subject merchandise is classifiable under subheading 1901.90.42, HTSUS, or under subheading 1901.90.43, HTSUS, and whether the subject merchandise satisfies the quota requirements under U.S. Note 10 to Chapter 4, HTSUS, or is eligible for preferential treatment under DR-CAFTA.
LAW AND ANALYSIS:
The protest is properly filed under 19 U.S.C. § 1514(a)(2) as a decision on classification and the amount dutiable. The protest was filed on July 15, 2008, within 180 days of liquidation of the entries made on or after January 17, 2008. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub.L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Entries liquidated before that date for which the protest was untimely filed, were addressed in Headquarters Ruling Letter (HQ) H045436 dated January 21, 2009. Hence, consideration of the present request shall be limited to entries liquidated on or after January 17, 2008.
Further Review of Protest No. 5201-08-100302 was properly accorded to protestant pursuant to 19 C.F.R. § 174.24 because the decision against which the protest was filed is alleged to be inconsistent with a ruling of the Commissioner of Customs or his designee. Specifically, Protestant alleges that the action of the Port is inconsistent with New York Ruling Letter(s) (“NY”) N023733, dated June 23, 2008, NY R04228, dated July 3, 2006, and NY M83963, dated June 14, 2006, in which CBP classified substantially similar products under subheading(s) 1901.90.42, HTSUS, and 1901.90.43, HTSUS.
The DR-CAFTA was signed on August 5, 2004, and includes as parties the United States, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and Costa Rica. The provisions of the DR-CAFTA were adopted by the U.S. in the Dominican Republic Central America Free Trade Agreement Implementation Act, Public Law 109-53 (2005). General Note 29, (“GN 29”), HTSUS sets forth the rules of origin for the DR-CAFTA. Interim regulations for the DR-CAFTA are set forth in 73 FR 33673, dated June 13, 2008, and are found at 19 CFR 10.581 et seq.
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order.
GRI 6 provides that the classification of goods in the subheadings of a heading shall be determined according to the terms of those subheadings and any related subheading notes and, mutatis mutandis, to the above rules, on the understanding that only those subheadings at the same level are comparable.
The HTSUS provisions under consideration are as follows:
* * *
1901 Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of heading 04301 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included:
1901.90 Other:
Other:
Dairy products described in additional U.S. note 1 to chapter 4:
Dairy preparations containing over 10 percent by weight of milk solids:
1901.90.42
Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions
1901.90.43 Other 1/
1/ See subheadings 9904.04.50-9904.05.01
Dairy products described in additional U.S. note 1 to chapter 4, provided for in subheadings 0402.29.50, 0402.99.90, 0403.10.50, 0403.90.95….1901.90.43…:
If entered during the effective period of safeguards based upon value:
Provided for in subheadings 0404.90.50, 1901.90.43, 1901.90.47, or 2105.00.40:
9904.04.74 Valued $ 1.50/kg or more
U.S. Note 2 to Subchapter XV to Chapter 99, HTSUS, provides as follows:
For purposes of this subchapter, the term “goods described in U.S. note 2 to this subchapter” means goods entered under subheadings 9915.02.05 through 9915.21.20, inclusive. Such goods must satisfy the requirements of general note 29(a) to the tariff schedule, except that operations performed in, or material obtained from, the United States shall be considered as if the operations were performed in, and the material was obtained from, a country that is not a party to the Agreement as defined in general note 29(a) to the tariff schedule. For purposes of determining which country-specific tariff-rate quota applies to such a good, the nonpreferential rules of origin used in the normal course of trade shall be applied.
Additional U.S. Note 10 to Chapter 4, HTSUS, provides as follows:
The aggregate quantity of dairy products described in additional U.S. note 1 to chapter 4, entered under subheadings 0402.29.10, 0402.99.70, 0403.10.10, 0403.90.90, 0404.10.11, 0404.90.30, 0405.20.60, 1517.90.50, 1704.90.54, 1806.20.81, 1806.32.60, 1806.90.05, 1901.10.35, 1901.10.80, 1901.20.05, 1901.20.45, 1901.90.42, 1901.90.46, 2105.00.30, 2106.90.06, 2106.90.64, 2106.90.85 and 2202.90.24 in any calendar year shall not exceed 4,105,000 kilograms (articles the product of Mexico shall not be permitted or included under the aforementioned quantitative limitation and no such articles shall be classifiable therein).
* * *
CLASSIFICATION
There is no dispute regarding the classification of the goods at the six digit level in subheading 1901.90, HTSUS. Protestant claims that some of the liquidations covered by the protest occurred before the quota was filled. However, of the 121 enteries covered by the protest, only those liquidated on or after January 17, 2008 are timely. We therefore cannot consider the entries liquidated before that date. Further, according to the Year-End Commodity Status Report the 2008 quota for Dairy Products under Additional U.S Note 10 to Chapter 4 was filled from any country other than Australia, Belgium or Denmark, on January 2, 2008 at 12:00 pm. Therefore, the entries timely covered by the protest are classified in 1901.90.43, HTSUS, the subheading for the over quota merchandise, in accordance with the rulings cited by protestant. See NY N023733, dated June 23, 2008, NY R04228, dated July 3, 2006, and NY M83963, dated June 14, 2006.
Subheading 1901.90.43, HTSUS, refers to subheadings 9904.04.50 to 9904.05.01, HTSUS, by footnote for further classification considerations. Under the facts presented, subheading 9904.04.74, HTSUS, applies based on the value of the merchandise and describes “no additional duty.”
DR-CAFTA
As an initial matter, 19 U.S.C. §1520 (d) provides that an importer has one year from the date of entry to submit a Post-Importation Claim (CBP Form 520 (d)). In the instant case, the Protestant did not file a Post-Importation Claim to support their claim for DR-CAFTA eligibility. As such, our decision is limited to the facts presented herein.
GN 29(a) DR-CAFTA provides that goods entered under “Special” subcolumn of column 1 followed by the symbol (P or P+) in parentheses indicates application of a special rate of duty for goods imported from the “parties to the Agreement” which include: Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and the United States. Subheading 1901.90.43 HTSUS, lists a P+ in the Special subcolumn associated with it and thus indicates that merchandise eligible for classification in the listed Chapter 99 provisions is also eligible for duty and quota treatment under DR-CAFTA.
Merchandise from Nicaragua entered under subheading 1901.90.43, HTSUS, may be eligible for preferential treatment per quota requirements as set forth in GN 29, HTSUS and the U.S. Notes of Subchapter XV, to Ch. 99, HTSUS. However, classification under subheading 1901.90.43, HTSUS, does not afford goods automatic preferential treatment under DR-CAFTA. In order for goods classified under subheading 1901.90.43, HTSUS, to receive DR-CAFTA treatment, the goods must be eligible for classification under subheadings 9915.04.30, 9915.04.50 or 9915.04.70, HTSUS, pursuant to U.S. Note 2 to Subchapter XV to Chapter 99, HTSUS, and the goods must also satisfy the requirements for DR-CAFTA eligibility pursuant to GN 29, HTSUS.
GN 29 (a)(ii) provides that for goods entered under P+, materials from the U.S. shall be considered as if the material was obtained from a country which is not a party to the Agreement. Protestant advised CBP that the subject dairy product contains powdered milk from the United States. Pursuant to GN 29 (a)(ii), powdered milk originating in the U.S. is deemed to be obtained from a country which is not party to the Agreement, and is therefore nonoriginating. See also, U.S. Note 2 to Subchapter XV to Chapter 99, HTSUS.
Under GN 29 (n) Ch. 19 (3), to be eligible for DR-CAFTA treatment goods must undergo a tariff shift “to subheading 1901.90 from any other chapter, provided that a good of subheading 1901.90 containing over 10 percent by weight of milk solids does not contain a nonoriginating dairy good of chapter 4.” As previously noted, the subject dairy topping contains 36% milk solids and nonorginating powdered milk (from the U.S.) which is prima facie classifiable in Chapter 4, HTSUS. Therefore, the goods do not undergo a tariff shift from another HTSUS Chapter to subheading 1901.90, HTSUS.
HOLDING:
By application of GRI 1, Note 10 to Chapter 4, HTSUS and GN 29(n) the subject Crema Latina Dairy Topping with Palm Oil is classified under heading 1901, HTSUS and is not eligible for preferential treatment under the DR-CAFTA. It is specifically provided for in subheading 1901.90.43, HTSUS, which provides for: “Malt extract; food preparations of flour, groats, meal, starch or malt extract, not containing cocoa or containing less than 40 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included; food preparations of goods of heading 04301 to 0404, not containing cocoa or containing less than 5 percent by weight of cocoa calculated on a totally defatted basis, not elsewhere specified or included: Other: Other: Dairy products described in additional U.S. note 1 to chapter 4: Dairy preparations containing over 10 percent by weight of milk solids: Described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions: Other.” For purposes of Chapter 99, HTSUS, indicated by the footnote (1/) to subheading 1901.90.43, HTSUS, the instant product falls to be further classified under subheading 9904.04.74, HTSUS. The 2008 column one, general rate of duty is $1.035/kg + 13.6% compound ad valorem. No additional duties shall be assessed.
Since the rate of duty under the classification indicated is the same as the liquidated rate, you are instructed to deny the protest in full. In accordance with the Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision no later than 60 days from the date of this letter, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP homepage on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division