CLA-2: OT:RR:CTF:TCM H187779 ARM
Tariff No: 1702./90.10/20; 1702.90.40
Roberto Tejada, President
Caribbean Liquid Sugar, LLC
81 Doncaster Trail
Rochester, NY 14586
RE: Eligibility of liquid sugar products for preferential treatment under the
DR-CAFTA.
Dear Mr. Tejada:
This letter is in response to your request of June 2, 2011, in which you request a prospective ruling on the tariff classification and eligibility of certain liquid sugar products for preferential tariff treatment under the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA).
FACTS:
The merchandise at issue is known as Nesugar, Nesugar Light 50% reduced calories and Nesugar Light 75% reduced calories. All three Nesugar products are cane sugar syrups produced in the Dominican Republic by acidifying, with tartaric acid, high purity sugar syrup. The finished products are packaged in 8 and 12 oz glass bottles. The Nesugar Light products contain an additional chemical named rebaudioside A, from China.
The white refined sugar used to manufacture the syrup is obtained from Guatemala. The water used in the production is obtained from the Dominican Republic. The Invertase enzyme is a product of France, the tartaric acid is of U.S. origin.
CBP Laboratory Report, NY20111628, dated September 15, 2011, analyzing Nesugar, states, in pertinent part, the following:
THE SAMPLE, A LIGHT BROWN VISCOUS LIQUID PACKAGED IN A PLASTIC BOTTLELABELED" NESUGAR,FRUCTOSE AND GLUCOSE SYRUP,75% BRIX, LOT # 9210R2", CONTAINS 37.2% OF FRUCTOSE AND 39.5% OF GLUCOSE ON AN AS IS BASIS (45.5% OF FRUCTOSE AND 48.3% OF GLUCOSE ON A DRY BASIS).
THE SAMPLE HAS A BRIX OF 76.7 (20 DEGREE C).
THE SAMPLE DOES NOT CONTAIN ANY NON-SUGAR SOLUBLE SOLIDS.
THE SAMPLE CONTAINS 18.2% OF WATER.
CBP Laboratory Report, NY20111280, dated September 15, 2011, analyzing Nesugar Light 75%, states, in pertinent part, the following:
THE SAMPLE, A LIGHT BROWN VISCOUS LIQUID PACKAGED IN A PLASTIC BOTTLE
LABELED "NESUGAR REDUCED CALORIES, 75% BRIX, LOT # 11061L", CONTAINS 34.6% OF FRUCTOSE AND 36.9% OF GLUCOSE ON AN AS IS BASIS (44.0% OF FRUCTOSE AND 46.9%OF GLUCOSE ON A DRY BASIS).
THE SAMPLE HAS A BRIX OF 73.8 (20 DEGREE C).
THE PERCENTAGE OF NON-SUGAR SOLUBLE SOLIDS IN TOTAL SOLUBLE SOLIDS IS 3.12%.
THE SAMPLE CONTAINS 21.3% OF WATER.
ISSUES:
The Classification of the liquid sugar products under the HTSUS.
Whether the liquid sugar products qualify for preferential treatment under the DR-CAFTA.
LAW AND ANALYSIS:
Classification:
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRI's). 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 GRI’s 2 through 6 may then be applied in order.
In understanding the language of the HTSUS, the Explanatory Notes (ENs) of the Harmonized Commodity Description and Coding System may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the HTSUS. See T.D. 89-80, 54 Fed. Reg. 35127 (August 23, 1989).
The HTSUS provisions at issue are as follows:
1702 Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel:
1702.90 Other, including invert sugar and other sugar and sugar syrup blends containing in the dry state 50 percent by weight of fructose:
Derived from sugar cane or sugar beets:
Containing soluble non-sugar solids (excluding any foreign substances, including but not limited to molasses, that may have been added to or developed in the product) equal to 6 percent or less by weight of the total soluble solids: any foreign substances, including but not limited to molasses, that may have been added to or developed in the product) equal to 6 percent or less by weight of the total soluble solids:
1702.90.10 Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions .
1702.90.20 Other . . . .
Other:
1702.90.40 Other . . . .
2918 Carboxylic acids with additional oxygen function and their anhydrides, halides, peroxides and peroxyacids; their halogenated, sulfonated, nitrated or nitrosated derivatives:
2938 Glycosides, natural or reproduced by synthesis, and their salts, ethers, esters and other derivatives:
3507 Enzymes; prepared enzymes not elsewhere specified or included:
The ENs to heading 1702 (EN 17.02), HTSUS, state, in pertinent part, the following:
(A) OTHER SUGARS
This part covers sugars, other than sugars of heading 17.01 or chemically pure sugars of heading 29.40, in solid form (including powders), whether or not containing added flavouring or colouring matter. The principal sugars of this heading are:
(2) Invert sugar, the main constituent of natural honey. It is usually prepared commercially by the hydrolysis of refined sucrose solutions and consists of equal proportions by weight of glucose and fructose. It may be presented in solid form or as a viscous syrup (see Part (B)). It is used in pharmacy, in bread making, in the manufacture of fruit preserves and artificial honey and in the brewing industry.
The ENs to Heading 3507 (EN 35.07) state, in pertinent part, the following:
The following are the most important among the enzymes found in trade:
…
(9) Invertase (ß-fructofuranosidase).
Invertase is usually derived from low fermentation brewer’s yeast.
This enzyme splits sucrose into glucose and fructose. It is used in the manufacture of golden syrup, chocolate and marzipan.
There is no dispute that the tartaric acid is classified in heading 2918, HTSUS, as carboxylic acids. (See Headquarters Ruling Letters (HQ) 964378, dated December 14, 2000, 964585, dated December 15, 2000, and 960536, dated May 11, 1998). Rebaudioside A is classified in heading 2938, HTSUS, as glycosides. (See New York Ruling Letters (NY) R00975, dated October 26, 2004, and N115801, dated August 4, 2010). Furthermore, the Invertase is classified in heading 3507, HTSUS, the provision for “Enzymes; prepared enzymes not elsewhere specified or included”. (See EN 35.07). There is also no dispute that the correct classification of the refined cane sugar as exported from Guatemala to the Dominican Republic is heading 1701, HTSUS. The page submitted entitled “Commercial and Institutional Product Line” lists the ingredients of both Nesugar and Nesugar Light as “granulated sugar” from Guatemala. The “Certificate of Origin” refers to the product as “Guatemala white refined sugar.” Cane sugar of heading 1701, HTSUS, can be raw or refined and appear in a granulated form. Hence, the refined cane sugar from Guatemala used in the manufacture of the liquid sugar product is classified in heading 1701, HTSUS (see also New York Ruling Letter (NY) H88164, dated March 1, 2002 and NY E89666, dated December 1, 1999). However, we note that you state that the classification of the liquid sugar products imported into the United States is subheading 1702.90.40, HTSUS.
Here, the manufactured sugar syrups do not contain added color or flavoring. The sugar syrups are composed of invert sugar and are therefore classified in heading 1702, as sugar syrups not contining flavoring or coloring matter at GRI 1. At GRI 6, the sugar syrups contain less than 50 percent fructose. Hence, at the six-digit level, they are classified in subheading of 1702.90, HTSUS.
At the eight-digit level, the Nesugar does not contain any soluble non-sugar solids and hence, is classified in subheading 1702.90.40, HTSUS, as you suggest. However, the Nesugar Light products contain 3.12% soluble non-sugar solids and must be classified as such in subheading 1702.90.10/20, the in quota and out of quota provisions for sugar, described in Additional U.S. Note 5 to Chapter 17 of the HTSUS, “containing soluble non-sugar solids . . . equal to 6 percent or less by weight of the total soluble solids.” Hence, the Nesugar Light products cannot be classified as “other” sugar of subheading 1702.90.40 HTSUS, as they meet the description above that subheading at the eight-digit level.
DR-CAFTA
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, of the 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.
Pursuant to GN 29(b), goods are eligible for treatment as an originating good if—
(i) the good is a good wholly obtained or produced entirely in the territory of one or more of the parties to the agreement;
(ii) the good was produced entirely in the territory of one or more of the parties to the agreement and—
(A) each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note; or (B) the good otherwise satisfies any applicable regional value content or other requirements specified in subdivision (n) of this note; and the good satisfies all other applicable requirements of this note; or
(iii) the good was produced entirely in the territory of one or more of the parties to the agreement exclusively from originating materials.
Pursuant to GN 29(j), an indirect material shall be treated as an originating material for purposes of this note without regard to where it is produced. The term “indirect material” means a good used in the production, testing or inspection of a good but not physically incorporated into the good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of a good, including–
(i) fuel and energy;
(ii) tools, dies and molds;
(iii) spare parts and materials used in the maintenance of equipment or buildings;
(iv) lubricants, greases, compounding materials and other materials used in production or used to operate equipment or
buildings;
(v) gloves, glasses, footwear, clothing, safety equipment and supplies;
(vi) equipment, devices and supplies used for testing or inspecting the good;
(vii) catalysts and solvents; and
(viii) any other goods that are not incorporated into the good but the use of which in the production of the good can reasonably be demonstrated to be a part of that production.
The imported liquid sugar products are not wholly obtained or produced entirely in the territory of the DR-CAFTA countries. See GN 29(b)(i). Thus, we must consider GN 29(b)(ii). The imported merchandise is manufactured in a DR-CAFTA country from both originating and non-originating materials. Pursuant to GN29(b)(ii)(A), a determination must be made whether the non-originating materials undergo the applicable change in tariff classification.
As explained above, the Nesugar products are classified in heading 1702, HTSUS. The applicable tariff shift rule for that heading of the HTSUS, set forth in GN 29(n), states: “A change to headings 1701 through 1703 from any other chapter.”
Under this rule, the tartaric acid and rebaudioside A make the required tariff shift. The granulated sugar from Guatemala and the water from the Dominican Republic is originating and need not make a tariff shift. Invertase is an enzyme. Enzymes are “Macromolecules, mostly of protein nature, that function as (bio)catalysts by increasing the reaction rates. In general, an enzyme catalyses only one reaction type (reaction specificity) and operates on only one type of substrate (substrate specificity).” As such, the Invertase is a catalyst specifically listed in the GN as an “indirect material” and is treated as originating under GN 29(j). Hence, the liquid sugar products meet the requirements of GN 29 and are thus eligible for treatment as originating goods.
HOLDING:
The Nesugar sugar syrup is classified in heading 1702, HTSUS, specifically in subheading 1702.90.40, the provision for : “Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel: Other, including invert sugar and other sugar and sugar syrup blends containing in the dry state 50 percent by weight of fructose: Derived from sugar cane or sugar beets: Other: Other . . .” The special, column one rate of duty is free.
The Nesugar Light sugar syrups are classified in heading 1702, HTSUS, specifically in subheading 1702.90.10/20, the provision for: “Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel: Other, including invert sugar and other sugar and sugar syrup blends containing in the dry state 50 percent by weight of fructose: Derived from sugar cane or sugar beets: Containing soluble non-sugar solids (excluding any foreign substances, including but not limited to molasses, that may have been added to or developed in the product) equal to 6 percent or less by weight of the total soluble solids: any foreign substances, including but not limited to molasses, that may have been added to or developed in the product) equal to 6 percent or less by weight of the total soluble solids: Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions/Other . . . .” The special, column one rate of duty is free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at www.usitc.gov. The instant liquid sugar products manufactured in the Dominican Republic are eligible for preferential treatment under the DR-CAFTA, insofar as they meet the requirements of GN 29.
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 CBP officer handling the transaction.
Sincerely,
Ieva O’Rourke, Chief
Tariff Classification and Marking Branch