OT:RR:CTF:VS H131645 KSG
Daniel E. Waltz
Patton Boggs Attorneys at Law
2550 M Street, NW
Washington, D.C. 20037-1350
Re: Modification of New York ruling N025726; NAFTA eligibility; sugar
Dear Mr. Waltz:
This is in response to your letter dated April 4, 2008, which CBP addressed in New York Ruling N025726, dated April 30, 2008, dealing with imported refined sugar.
FACTS:
Mexican-origin raw sugar will be processed at sugar refining facilities in Canada to produce refined cane sugar. The polarity of the sugar is 99.9 degrees and will be packaged in 50 lb. bags and/or 1 metric ton tote bags.
CBP held in NY Ruling N025726, that the cane sugar would be an “originating” good under the North American Free Trade Agreement (“NAFTA”) because it was wholly obtained or produced in Mexico.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI, a notice of proposed action was published on May 25, 2011, in the Customs Bulletin, Vol. 45, No. 22. No comments were received.
ISSUE:
Is the imported refined cane sugar eligible for preferential tariff preference under the North American Free Trade Agreement (“NAFTA”)?
LAW AND ANALYSIS:
Pursuant to General Note (“GN”) 12, HTSUS, for an article to be eligible for NAFTA preference, two criteria must be satisfied. First, the article in question must be “originating” under the terms of GN 12 and second, the article must qualify to be marked as a good of a NAFTA country under the NAFTA Marking Rules contained in 19 CFR 102.20.
With regard to the first criteria, GN 12(b) provides, in pertinent part, as follows:
For purposes of this note, goods imported into the customs territory of the U.S. 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 in the territory of Canada, Mexico and/or the U.S.; or (ii) they have been transformed in the territory of Canada, Mexico, and/or the U.S. so that 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 U.S. exclusively from originating materials.
As stated in the facts above, the refined sugar is not wholly produced or obtained in Mexico. However, it would be wholly obtained or produced entirely in the territory of Canada and Mexico as set forth in GN 12(b)(i), and therefore, an originating good under GN 12.
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 quota category. 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.
In this case, the sugar is not wholly obtained or produced exclusively from domestic materials. Therefore, we must proceed to 10 CFR 102.11(a)(3).
We assume for the purposes of this ruling that the imported refined sugar is classified in subheading 1701.99, HTSUS and the raw sugar is classified in subheading 1701.11, HTSUS.
The tariff shift rule set forth in 19 CFR 102.20 for goods of headings 1701-1702 is as follows:
A change to 1701 through 1702 from any other chapter.
Clearly, no chapter change takes place in this case. Therefore, we proceed to 19 CFR 102.11(b), which states that the country of origin of the single material that imparts the essential character to the good would determine the country of origin of the good. Pursuant to 19 CFR 102.18(b)(iii), if there is only one material that does not make the tariff shift, that single material would represent the essential character to the good under 19 CFR 102.11. In this case, the Mexican raw sugar would impart the essential character to the good. Therefore, the country of origin of the good would be considered Mexico.
The imported refined sugar would be an originating good for the purposes of the NAFTA and would be considered a product of Mexico for purposes of country of origin marking, rate of duty, and quota purposes.
HOLDING:
The imported refined sugar will be considered an originating good under the NAFTA because it is wholly obtained or produced entirely in the NAFTA territories. The country of origin of the imported refined sugar would be Mexico for purposes of country of origin marking, rate of duty, and for quota purposes.
EFFECT ON OTHER RULINGS:
NY Ruling N025726, dated April 30, 2008, is modified with respect to the analysis. The imported refined sugar is considered an originating good because it is wholly obtained or produced entirely in the NAFTA territories.
In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon
Director, Commercial & Trade Facilitation Division