CLA-2 OT:RR:CTF:TCM H237563 TNA
Jennifer R. Diaz, Esq.
Becker & Poliakoff
121 Alhambra Plaza, 10th Floor
Coral Gables, FL 33134
RE: Reconsideration of NY N233747; Classification and DR-CAFTA Preference of Various Pest Lures from Costa Rica
Dear Ms. Diaz:
This letter is in reference to your request, dated January 7, 2013, of reconsideration of NY N233747, issued to you on October 24, 2012, on behalf of Marketing Arm International, Inc., concerning the tariff classification of pheromone lures that incorporate ingredients from the United States, Costa Rica, and the Netherlands and whether they are eligible for preferential treatment under the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA). In that ruling, U.S. Customs and Border Protection (“CBP”) classified the subject pheromone lures under subheading 3808.91.50, Harmonized Tariff Schedule of the United States (“HTSUS”), as “Insecticides, rodenticides, fungicides, herbicides, antisprouting products and plant-growth regulators, disinfectants and similar products, put up in forms or packings for retail sale or as preparations or articles (for example, sulfur-treated bands, wicks and candles, and flypapers): Other: Insecticides: Other: Other.” CBP also found that the merchandise did not qualify for preference under DR-CAFTA. We have reviewed NY N233747 and found it to be partially incorrect. For the reasons set forth below, we hereby modify NY N233747. We note that this modification does not address the classification of the subject pheromone lures and is limited to their eligibility for preference under DR-CAFTA.
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, notice proposing to modify NY N233747 was published on February 4, 2015, in Vol. 49, No. 5, of the Customs Bulletin. CBP received one comment in response to this notice, which is addressed in the ruling.
FACTS:
The subject merchandise consists of four types of pheromone dispensers, used as traps for certain types of insects, specifically beet army worm, cotton pink bollworm, fall army worm, and the insect armyworm. These products are enclosed inside rubber septa and packed in an impermeable aluminum pack. They consist of various chemical compounds that function as attractants for the particular target pest.
The first product, Spodoptera sunia pheromone lure, is a mating disruption pheromone for the armyworm. It consists of two active ingredients: (Z,E)-9,12-tetradecadienyl acetate (CAS-30507-70-1) and (Z)-9-Tetradecenyl acetate (CAS-16725-53-4), as well as a third ingredient, n-hexane. The product is enclosed inside a rubber septum measuring approximately 1.5 cm in length and packed in an impermeable aluminum pack. It is intended for use as an attractant for Spodoptera sunia (armyworm). You state that the supplier of the rubber septa and the active ingredients are all U.S. companies, and that the supplier of the n-hexane is a Costa Rican company.
The second product, Spodoptera exigua pheromone lure, is a mating disruption pheromone for the beet armyworm. It consists of two active ingredients: (Z)- 9, E-12-tetradecadienyl acetate (CAS-31654-77-0) and Z-9-tetradecenol (CAS-35153-15-2). It also contains potassium hydroxide, methanol and n-hexane. The product is enclosed inside a rubber septum measuring approximately 1.5 cm in length and packed in an impermeable aluminum pack. It is intended for use as an attractant for Spodoptera exigua (beet armyworm). You state that the supplier of the rubber septa, the active ingredients, the potassium hydroxide and the methanol are U.S. companies, and the supplier of the n-hexane is a Costa Rican company.
The third product, Spodoptera frugiperda pheromone lure, is a mating disruption pheromone for the fall armyworm. It consists of three active ingredients: Z-7-Dodecenyl acetate (CAS-14959-86-5), (Z)-11-Hexadecenyl acetate (CAS-34010-21-4) and Z-9-Tetradecenyl acetate (CAS-16725-53-4). It also contains n-hexane. The product is blister packed inside a plastic sleeve measuring approximately 4 cm in length and packed in an impermeable aluminum pack. It is intended for use as an attractant for Spodoptera frugiperda (fall armyworm). You state that the suppliers of the active ingredients are U.S. companies, and the supplier of the n-hexane is a Costa Rican company.
The last product is Gossyplure Pheromone Dispenser, a mating disruption pheromone for the pink bollworm. It consists of two active ingredients: Z-7, E-11-Hexadecadienyl Acetate (CAS 50933-33-0); and Z-7, Z-11-Hexadecadienyl Acetate (CAS 50933-33-0). It also contains n-hexane. It is packaged in rubber septa and is intended for use as an attractant for the pink bollworm. It is stated that the supplier of the rubber septa and the active ingredients are U.S. companies; however, one invoice indicated that origin of the n-hexane is a Costa Rican company. According to the supplier, this product’s active ingredients are purchased in the Netherlands.
Pheromones are natural substances that are produced by special glands in the abdomen of insects and it attracts the opposite gender of the same species. Insects produce pheromones for various purposes such as attracting a mate, marking foraging routes, and signaling alarm. Pheromone traps such as the subject merchandise slowly releases synthetic attractants that helps detect a single species of insect.
In NY N233747, CBP determined that the subject pheromone lures were not eligible for preferential treatment under DR-CAFTA. This conclusion was based on the fact that the FTA had not been updated to reflect the most recent technical updates that had been made to the HTSUS. As a result, NY N233747 reasoned that subheading 3808.91, the subheading in which the subject merchandise was classified, was not named in the applicable DR-CAFTA’s tariff shift rule, and the merchandise was therefore ineligible for preference.
ISSUE:
Are the subject pheromone lures eligible for preferential treatment under DR-CAFTA?
LAW AND ANALYSIS:
General Note 29, HTSUS, incorporates Article 401 of the DR-CAFTA into the HTSUS. General Note 29(b) provides, in pertinent part, that:
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (m) and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good under the terms of this note if--
(i) they are goods wholly obtained or produced entirely in the territory of one of the parties to the Agreement; or
(ii) the good was produced entirely in the territory of one or more of the parties to the Agreement, and—
(A) each of the nonoriginating 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.
In addition, 19 C.F.R. §10.616 states, in pertinent part, the following:
(a) Verification. A claim for preferential tariff treatment made under § 10.583(b) or § 10.591 of this subpart, including any statements or other information submitted to CBP in support of the claim, will be subject to such verification as the port director deems necessary. In the event that the port director is provided with insufficient information to verify or substantiate the claim, or the exporter or producer fails to consent to a verification visit, the port director may deny the claim for preferential treatment.
As an initial matter in our analysis, the following is noted on page 2 of the General Notes (GN) of the HTSUS (2012) (Rev. 1):
[COMPILER’S NOTE: Two sets of changes to the Harmonized System have caused rules of origin for some free trade agreements to be inconsistent with the tariff schedule chapters. First, the rules of origin provisions for various United States free trade agreements have NOT been updated since major changes to the HTS were proclaimed effective on February 3, 2007, and will therefore contain tariff numbers that do not exist in the chapters of the HTS; these outdated rules are included in terms of HS 2002. However, the rules for the North American Free Trade Agreement, the United States-Australia Free Trade Agreement, the United States-Singapore Free Trade Agreement, the United States-Chile Free Trade Agreement, the United States-Bahrain Free Trade Agreement, and the United States-Korea Free Trade Agreement have been updated, and the pertinent general notes do reflect proclaimed rectifications. See Presidential Proclamation 8097, which modified the HTS to reflect World Customs Organization changes to the Harmonized Commodity Description and Coding System and was effective as of Feb. 3, 2007; proclaimed modifications appear on the Web site of the United States International Trade Commission, www.usitc.gov.
Second, for the second set of HS changes, the rules of origin for the United States-Chile Free Trade Agreement have been updated, as shown in the change record for this edition, to reflect the modifications to the HTS made by Presidential Proclamation 8771 of December 29, 2011 and effective as of February 3, 2012. This proclamation modified the HTS to reflect the WCO changes to the Harmonized System recommended to be effective in 2012. In addition, the rules of origin for the United States-Korea Free Trade Agreement were updated effective on and after January 1, 2014, pursuant to Presidential Proclamation xxxx. No other rules of origin provisions have been updated since the 2012 Harmonized System update, and these provisions may reflect HTS numbers as in effect in 2002 or 2007.
Contact officials of U.S. Customs and Border Protection in order to ascertain whether affected goods qualify for FTA treatment. A ruling on an individual shipment may be necessary.]
Accordingly, because the DR-CAFTA rules of origin have not been updated to reflect the 2007 or the 2012 changes to the Harmonized System, the pre-2007 classifications for the goods at issue must be used in order to ascertain the eligibility under the DR-CAFTA.
Therefore, under the terms of the Compiler’s Note, while the DR-CAFTA rules have not yet been updated to reflect the technical updates to the HTSUS, and the updated subheading is not listed in the appropriate tariff shift rule, this alone is not a reason to deny preferential tariff treatment under the FTA, as determined in NY N233747. The change in subheading in which the subject merchandise is classified is not the result of a substantive change, but merely a change in the tariff number of the subheading because of the technical updates to the HTSUS. We now find that a denial of preference on this basis was unwarranted, and we re-examine whether the subject merchandise is entitled to duty-free treatment under the DR-CAFTA.
The relevant DR-CAFTA tariff shift rule states:
A change to subheadings 3808.10 through 3808.90 from any other subheading, provided that 50 percent by weight of the active ingredient or ingredients is originating.
It is not in dispute that the subject merchandise was classified in subheading 3808.10.50 under the pre-2007 HTSUS. Thus, contrary to the reasoning of NY N233747, the subject merchandise will meet this tariff shift rule if sufficient documentation is provided to show that 50 percent by weight of the active ingredient or ingredients is originating. If the merchandise was eligible prior to the 2007 technical updates, the technical updates themselves are not a bar to preference.
Your claim for DR-CAFTA preference is based on these goods being wholly obtained or produced in the U.S. and Costa Rica. When this request for reconsideration was first filed, no certificates of origin for the materials were submitted. However, CBP has allowed DR-CAFTA preference claims if the information needed to base a claim for preference is verified in documentation submitted by the importer, such as purchase orders, commercial invoices, proof of payment, shipping documents, etc., in addition to certificates of origin. See, e.g., HQ H196456, dated May 16, 2012; HQ H192596, dated February 14, 2012; and HQ H198036, dated February 27, 2012.
In the present case, the first product, Spodoptera sunia, contains three ingredients: (Z,E)-9,12-tetradecadienyl acetate, (Z)-9-Tetradecenyl acetate, and n-hexane, enclosed inside a rubber septum. The first two ingredients are the active ingredients. The submitted invoices include an invoice from the U.S. supplier for the Z-9-Tetradecenyl acetate. They also include invoices from both the Costa Rican supplier and the U.S. supplier for the (Z,E)-9,12-tetradecadienyl acetate. These invoices show sales of the materials between Costa Rican and U.S. companies, but these materials could have been produced anywhere and there is no indication on the invoices that the materials were produced in the U.S. and/or Costa Rica. Thus, these invoices do not definitively establish that any of the ingredients were manufactured or produced in Costa Rica or the U.S. As counsel for the importer, you submitted a comment after the proposed ruling was published in the Customs Bulletin. You submit the importer’s certification that the Spodoptera sunia was made in the United States, and a certificate of origin showing that the Z-9-Tetradecenyl acetate was made in the United States.
The second product, Spodoptera exigua, consists of five ingredients: (Z)- 9, E-12-tetradecadienyl acetate, Z-9-tetradecenol, potassium hydroxide, methanol and n-hexane, all enclosed inside a rubber septum. The first two are the active ingredients. Among the submitted invoices are invoices from both the Costa Rican supplier and the U.S. supplier for the (Z)-9, E-12- tetradecadienyl acetate and potassium hydroxide. An invoice was also submitted from the Costa Rican supplier for the methanol. These invoices show sales of the materials between Costa Rican and U.S. companies, but these materials could have been produced anywhere and there is no indication on the invoices that the materials were produced in the U.S. and/or Costa Rica. Thus, these invoices do not definitively establish that any of the ingredients were manufactured or produced in Costa Rica or the U.S. As counsel for the importer, you submitted a comment after the proposed ruling was published in the Customs Bulletin. You submit the importer’s certification that the Spodoptera exigua was made in the United States, and a certificate of origin showing that Z-9-Tetradecenyl acetate was made in the United States. We note that Z-9-Tetradecenyl acetate is not among the Spodoptera exigua’s ingredients.
The third product, Spodoptera frugiperda, consists of four ingredients: Z-7-Dodecenyl acetate, (Z)-11-Hexadecenyl acetate, Z-9-Tetradecenyl acetate, and n-hexane. The first three are the active ingredients. The submitted invoices show that the Z-7-Dodecenyl acetate, Z-9-Tetradecenyl acetate and (Z)-11-Hexadecenyl acetate were supplied by U.S. suppliers, and that the rubber septum was supplied by the Costa Rican supplier. However, one invoice, from a U.S. supplier for the (Z)-11-Hexadecenyl acetate and sold to the Costa Rican supplier, indicates that the country of origin of this ingredient is Japan. As counsel for the importer, you submitted a comment after the proposed ruling was published in the Customs Bulletin. You submit the importer’s certification that the Spodoptera frugiperda was made in the United States, and a certificate of origin showing that the Z-9-Tetradecenyl acetate was made in the United States.
The last product at issue, Gossyplure Pheromone Dispenser contains three ingredients: Z-7, E-11-Hexadecadienyl Acetate, Z-7, Z-11-Hexadecadienyl Acetate, and n-hexane. The first two are the active ingredients. The submitted invoices show that the country of origin of the Z-7, E-11-Hexadecadienyl Acetate and Z-7, Z-11-Hexadecadienyl Acetate is the Netherlands, and you acknowledge this origin. As a result, the Gossyplure Pheromone Dispenser cannot receive preferential treatment under DR-CAFTA.
We also note that the tariff shift rule for heading 3808, HTSUS, where the subject goods are classified, requires that at least 50 percent by weight of the active ingredient or ingredients is originating. Once more, we note that the active ingredient in the Gossyplure Pheromone Dispenser is wholly obtained from the Netherlands and is therefore non-originating. The invoices submitted for the other three products at issue show only the sale of ingredients used to make the pheromones lures. Most of these invoices do not substantiate the origin of the ingredients; the only exception is the invoice for the subject Spodoptera frugiperda pheromone lure that states that its country of origin is Japan. These invoices also do not specify the percentage by weight of any originating ingredients. Accordingly, should the port choose to verify the DR-CAFTA claims for the lures for which Certificates of Origin were submitted, and provided that the importer can substantiate information regarding the weight, the goods may receive preferential tariff treatment under DR-CAFTA, if the Port Director is satisfied with the validity of these documents.
HOLDING:
The fact that the rules of origin for DR-CAFTA have not been updated is not a bar to the eligibility of the subject merchandise for preference.
Based on the information presented, however, the Gossyplure Pheromone Dispenser is not eligible for preferential treatment under DR-CAFTA. The eligibility of the remaining products, their eligibility depends on the determination of the Port Director based on certificates of origin presented at the time of entry as specified in 19 C.F.R. §10.616.
EFFECT ON OTHER RULINGS:
NY N233747, dated October 24, 2012, is MODIFIED with respect to the reason for denial of DR-CAFTA preference for the subject merchandise.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division