CLA-2 OT:RR:CTF:TCM H254133 HvB
Monica E. Guerrier
Assistant Director, Partnership Branch
Agriculture & Prepared Products
Center of Excellence and Expertise
U.S. Customs and Border Protection
6601 N.W. 25 St.
Miami, FL 33122
Attn: Thomas F. Bechard, Supervisory Import Specialist
RE: Internal Advice; Additional U.S. Note 4 to Chapter 9; Classification of Retail Single-Serve Tea Packaged for Retail Sale
Dear Ms. Guerrier:
This letter is in reply to your memorandum, dated June 4, 2014, forwarding with comments, a Request for Internal Advice from Starbucks Coffee Company (Starbucks), filed by counsel on its behalf. In its Request for Internal Advice, Starbucks seeks clarification from U.S. Customs and Border Protection (CBP) on the applicability of Additional U.S. Note 4 to Chapter 9 under the Harmonized Tariff Schedule of the United States (HTSUS) to importations of single-serve tea packaged for retail sale.
On October 24, 2014, you hosted a teleconference during which members of my staff and I met with Starbucks. This decision takes into consideration Starbucks’ views expressed during that meeting.
FACTS:
Starbucks sells Tazo Tea in retail packaging at grocery stores and at its stores. It also uses Tazo Tea beverages in its beverages for store customers. As sold in the United States, Tazo Tea consists of tea that is flavored with various ingredients, and then packaged in single-serve tea bags for retail sale. Starbucks imports the bulk tea into the United States, blends it with flavoring ingredients, and then exports it to a foreign country where it is packaged. The packaged flavored tea is then re-imported into the United States and is sold in one of three scenarios below based upon the facts as presented by Starbucks:
In a tin for retail sale. The tea is immediately packed in textile filter mesh tea bags. The tea bags are covered in a plastic pouch for freshness, which are then placed in a lidded tin for retail sale.
In a cardboard carton for retail sale. The tea is immediately packed in filter paper tea bags. The tea bags are covered in paper envelopes, placed in plastic pouch, and then a cardboard carton for retail sale.
In a cardboard carton for retail sale-“behind the bar”. The tea is packed in a mesh tea bag and then covered in a plastic pouch for freshness. This scenario covers Starbucks employees who prepare beverages behind the bar for Starbucks’ customers.
The classification of Tazo Tea is not at issue, as Starbucks does not contest that the merchandise is properly classified in heading 0902, HTSUS, which covers “tea, whether or not flavored”. On January 15, 2014, Starbucks contacted an Import Specialist at CBP to request clarification on Chapter 9, Additional U.S. Note 4. The Import Specialist advised Starbucks via email that if the retail packaged tea is less than 2.3 kilogram (kg) net, “each wrapper, outer container, and insider container are separately classified.”
ISSUE:
Whether Additional U.S. Note 4 to Chapter 9 applies to imports of single-serve Tazo tea that are packaged for retail sale.
LAW AND ANALYSIS:
Classification under the 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 GRIs may then be applied.
The 2014 HTSUS provisions under consideration are as follows:
0902 Tea, whether or not flavored:
Additional U.S. Note 4 to Chapter 9 provides:
All immediate containers and wrappings, and all intermediate containers, of tea (heading 0902) in packages of less than 2.3 kg, net, each are dutiable at the rates applicable to such containers and wrappings if imported empty, except that such goods originating in the following territories listed below shall enter free of duty.
Australia, Canada, Chile, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Singapore.
* * *
Starbucks imports tea that is then blended with various ingredients (e.g., cinnamon) in the United States. Next, Starbucks exports the tea to a foreign country where it is packaged into single-serve tea bags made from either textile mesh or paper, and then packaged in plastic pouches which are placed inside retail cardboard or tin cartons. The packaged flavored tea is then reimported into the United States for retail sale. At issue is the meaning of Additional U.S. Note 4 to Chapter 9, i.e., whether the packaging materials should be separately classifiable from the tea.
In its Internal Advice Request, Starbucks asserts that CBP’s current interpretation of Additional U.S. Note 4 to Chapter 9 as it applies to the subject merchandise is erroneous. Starbucks makes two main arguments. First, Starbucks argues that legislative history shows Additional U.S. Note 4 to Chapter 9 (hereinafter “AUS Note 4”) was created to collect revenue to enforce Tea Importation Act of 1897 (21 U.S.C. 41 et seq.). The argument follows that since the Tea Importation Act of 1897 was repealed on April 9, 1996, it is “illogical for CBP to apply an obsolete act.” See Federal Tea Tasters Repeal Act of 1996, 96 P.L. 104-128, 110 Stat. 1198 (April 9, 1996). Second, Starbucks argues that the legislative history to the Tariff Act of 1913 and its 1921 amendments show that Congress never intended that immediate containers should be dutiable, and cites to legislative history and two cases which interpreted the 1913 provision, Paragraph 627. The cited cases are Wright & Graham Co. v. United States, 5 Cust. Ct. Appls. 453 (Nov. 27, 1914) aff’d 6 Ct. Cust. 528 (January 28, 1916), and United States v. McCord Brady Co. et al., 8 Ct. Cust. 208 (November 20, 1917). The provision at issue in those line of cases, paragraph 627 of the Tariff Act of 1913, reads as follows:
“Tea and tea plants. Provided. That cans, boxes, or other containers of tea packed in packages of less than 5 pounds each shall be dutiable at the rate chargeable if imported empty.”
As to the aforementioned 1913 provision, we note that in Toy Biz, Inc. v. United States, 27 C.I.T. 11, 248 F. Supp. 2d. 1234 (Ct. Int'l Trade 2003), the Court of International Trade observed: “It is a well-established maxim in statutory construction that, if there is a change in the statutory language, the court is to assume that ‘the change was not made by accident, but that it was intentional, and that by making such a change in expression Congress used the term in a different sense from that in which the former expression was used [internal citation omitted].’” Toy Biz, Inc., supra, citing to Stroheim & Romann v. United States, 13 Ct. Cust. App. 489, 493, Treas. Dec. 41370 (1926).
Furthermore, when a statute is clear on its face, an agency need not delve into the legislative history as the congressional intent can be gleaned from the face of the statutory text. See National Customs Brokers and Forwarders Association of America v. United States, 731 F. Supp. 1076 at 1080, 24 Cust. B. & Dec. No. 12, p. 37 at 41 (March 21, 1990). See H222280, dated September 10, 1991. In 1876, the U.S. Supreme Court also opined: “It is well established that where the language of a statute is transparent and its meaning is clear, there is no room for the office of construction.” See Lewis, Trustee v. United States, 92 U.S. 618, L. Ed. 513 (1876). See also Headquarters Ruling Letter (HQ) 950983, dated June 15, 1992.
The current language has been in effect since 1963. See 28 Fed. Reg. 8673 (August 17, 1963), Pub. Law 87-456 (May 21, 1962). Here, the change in language from the 1962 Tariff Act, as adopted under the 1971 TSUS and under the HTSUS via the current AUS Note 4 demonstrates that Congress intended that all immediate and intermediate containers should be dutiable. Furthermore, in regard to the Congressional intent at the time the HTSUS was adopted, we see no indication of an expressed Congressional intent to alter Custom’s previous classification of containers of tea under the TSUS. (Pub. L. 100-418 (Aug. 23, 1988)). See also HQ 086887, dated June 12, 1990.
Accordingly, we are of the opinion that Congress clearly intended that all immediate containers, wrappings, and all intermediate containers should be classified separately as if they had been entered apart from the tea being entered. See HQ 950983, dated June 15, 1992. The U.S. Court of Customs also expressed this view in Ralph A. Leavitt v. United States, 67 Cust. Ct. 30 (1971) on the provision at issue, then enacted as section 402 of Tariff Act of 1913, under Headnote 2, Supbart A, Part 11, Schedule 1. That provision’s language does not differ from the current AUS Note 4. In Leavitt v. United States, the court wrote: “However, by virtue of the Congressional mandate in headnote 2…the tea bags as immediate containers of tea, and the cardboard boxes as intermediate containers of tea, are separately dutiable as ‘if imported empty.’ The specific provision of headnote 2… by its specific language covers ‘all’ containers or wrappings of tea, regardless of their physical composition.” Ibid at 36. Hence, the meaning of the AUS Note 4 is clear and transparent and thus, there is no room for statutory construction by this office.
Moreover, CBP has consistently issued rulings concerning the separate classification of wrappers, outer containers, and inside containers for retail packaged tea that is less than 2.3 kg net. In HQ 957210, dated March 6, 1995, we issued a ruling on flavored tea that was packaged in foil packages inside cardboard boxes, wherein we directed the importer to classify the packaging components separately. On November 22, 1993, in New York Ruling Letter (NY) 892095, CBP issued a ruling on black tea that was imported in paper tea bags, with each tea bag enclosed in a paper sack. The tea bags were packaged in a cellophane-wrapped paper box in sizes of 10 or 24 tea bags per box. The importer was advised that “all immediate containers and wrappings, and all intermediate containers, of tea in packages less than 2.3 kilograms, net, each are dutiable at the rates applicable to such containers and wrappings if imported empty.” On November 28, 2006, we issued NY N004087 to Starbucks on merchandise substantially similar to the instant merchandise. See also NY 851505, dated April 27, 1990, NY E81943, dated June 4, 1999, and N258048, dated March 27, 2014.
Accordingly, based on the limited facts you presented, we advise that the merchandise should be classified under the HTSUS as follows:
Tea in tin for retail sale:
The tea is classified in 0902, which provides for “Tea, whether or not flavored.”
The tin base is classified in 7310.29.00, which provides for “Tanks, casks, drums, cans, boxes and similar containers, for any material (other than compressed or liquefied gas), of iron or steel, of a capacity not exceeding 300 liters, whether or not lined or heat insulated, but not fitted with mechanical or thermal: Containers, of circular cross section, of a volume capacity between 11.4 liters and 26.6 liters, of a kind used for the conveyance of goods.”
The tin lid is classified in 7326.90.85, which provides for “Other articles of steel: Other.”
The filter mesh teabag is classified in 6307.90.98, which provides for “Other made up articles, including dress patterns: Other: Other.”
The plastic pouch is classified in 3923.29.00, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Of other plastics.”
The teabag’s label is classified in 4821.10, which provides for “Paper and paperboard labels of all kinds, whether or not printed: Printed.”
Tea in a retail cardboard carton:
The tea is classified in 0902, which provides for “Tea, whether or not flavored.”
The cardboard carton is classified in 4819.20.00, which provides for “Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibers; box files, letter trays and similar articles, of paper or paperboard of a kind used in offices, shops or the like: Folding cartons, boxes and cases, of non-corrugated paper or paperboard.”
The paper envelope filterbag is classified in 4811.59.40, which provides for: “Paper, paperboard, cellulose wadding and webs of cellulose fibers, coated, impregnated, covered, surface-colored, surface-decorated or printed, in rolls or rectangular (including square) sheets, of any size, other than goods of the kind described in heading 4803, 4809, or 4810: In strips or rolls of a width exceeding 15 cm or in rectangular (including square) sheets with one side exceeding 36 cm and the other side exceeding15 cm in the unfolded state: Other.”
The plastic pouch is classified in 3923.29.00, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Of other plastics.”
The tab paper label is classified in 4821.10.40, which provides for “Paper and paperboard labels of all kinds, whether or not printed: Printed: Other.”
In a cardboard carton for retail sale-“behind the bar”.
The tea is classified in 0902, which provides for “Tea, whether or not flavored.”
The filter mesh teabag is classified in 6307.90.98, which provides for “Other made up articles, including dress patterns: Other: Other.”
The plastic pouch is classified in 3923.29.00, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Of other plastics.”
The teabag’s label is classified in 4821.10.40, which provides for “Paper and paperboard labels of all kinds, whether or not printed: Printed: Other.”
HOLDING:
In accordance with Additional U.S. Note 4 to Chapter 9, the flavored tea is classified in heading 0902, HTSUS. The column one, general rate of duty is free. The filter mesh tea bags are class is classified in 6307.90.98, HTSUS, which provides for “Other made up articles, including dress patterns: Other.” The column one, general rate of duty is 7% ad valorem. The plastic pouch is classified in 3923.29.00, HTSUS, which provides for “Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics: Of other plastics.” column one, general rate of duty is 3% ad valorem. The paper label is classified in 4821.10.40, HTSUS, which provides for “Paper and paperboard labels of all kinds, whether or not printed: Printed: Other.” The column one, general rate of duty is free. The paper filter bag is classified in heading 4823.20.90, HTSUS, which provides for “Other paper, paperboard, cellulose wadding and webs of cellulose fibers, cut to size or shape; other articles of paper pulp, paper, paperboard, cellulose wadding or webs of cellulose fibers: Filter paper and paperboard: Other.” The column one, general rate of duty is free. The cardboard carton is classified in 4819.20.00, which provides for “Cartons, boxes, cases, bags and other packing containers, of paper, paperboard, cellulose wadding or webs of cellulose fibers; box files, letter trays and similar articles, of paper or paperboard of a kind used in offices, shops or the like: Folding cartons, boxes and cases, of non-corrugated paper or paperboard.” The column one, general rate of duty is free. The tin base is classified in 7310.29.00, which provides for “Tanks, casks, drums, cans, boxes and similar containers, for any material (other than compressed or liquefied gas), of iron or steel, of a capacity not exceeding 300 liters, whether or not lined or heat insulated, but not fitted with mechanical or thermal: Containers, of circular cross section, of a volume capacity between 11.4 liters and 26.6 liters, of a kind used for the conveyance of goods.” The column one, general rate of duty is free. The tin lid is classified in 7326.90.85, which provides for “Other articles of steel: Other.” The column one, general rate of duty is 2.9% ad valorem.
Duty rates are provided for convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
You are to mail this decision to the importer of record no later than 60 days from the date of the decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP Home Page 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