OT:RR:CTF:VS H312439 EE
Mr. Harold C. Averill
Parker & Company
P.O. Box 271
4694 Jaime Zapata Ave.
Brownsville, TX 78522
RE: Instant Chai Teas; USMCA
Dear Mr. Averill:
This is in response to your correspondence, dated July 16, 2020, in which you request a ruling concerning the eligibility of certain instant chai teas for duty-free treatment under the United States-Mexico-Canada Agreement.
FACTS:
The subject merchandise is described as instant chai teas under the brand name “Tea India.” There are four varieties of sweetened teas and one unsweetened tea under the product name “Chai Moments.”
Chai Moments Ginger Chai sweetened tea contains 55 to 60 percent cane sugar, 12 to 14 percent whole milk powder, 11 to 13 percent skim milk powder, 6 to 7 percent black tea extract, 4 to 5 percent chicory root inulin, 1 to 2 percent ginger flavor, and 1 to 2 percent ginger spice powder. The cane sugar, whole milk powder, skim milk powder, and ginger flavor are products of the United States. The total dry weight of sugar is said to be 59.86 percent. The non-originating ingredients of the Chai Moments Ginger Chai are as follows:
Ingredient
Origin
HTSUS Classification
Black Tea Extract
Kenya
2101.20.20
Chicory Root Inulin
Belgium
1108.20.00
Ginger Spice Powder
China, India or Nigeria
2106.90.09
Cane Sugar
United States
1701.99.50
Whole Milk Powder
United States
0402.10.00
Skim Milk Powder
United States
0402.10.00
Ginger Flavor
United States
2106.90.09
Chai Moments Matcha Latte sweetened tea contains 55 to 60 percent cane sugar, 17 to 19 percent non-dairy creamer, 10 to 12 percent malted milk powder, 4 to 6 percent matcha green tea, 4 to 6 percent skim milk powder, 3 to 5 percent whole milk powder, 1 to 2 percent green tea matcha flavor, and less than 1 percent of pectin and tara gum. The cane sugar, non-dairy creamer, malted milk powder, skim milk powder, whole milk powder, and green tea matcha flavor are products of the United States. The total dry weight of sugar is said to be 55.25 percent. The non-originating ingredients of the Chai Moments Matcha Latte are as follows:
Ingredient
Origin
HTSUS Classification
Matcha Green Tea
Japan
0902.10.10
Pectin
Mexico, China or Spain
1302.20.00
Tara Gum
Peru
1302.20.00
Cane Sugar
United States
1701.99.50
Non Dairy Creamer
United States
2106.90.09
Malted Milk Powder
United States
2106.90.09
Skim Milk Powder
United States
0402.10.00
Whole Milk Powder
United States
0402.10.00
Green Tea Matcha Flavor
United States
2106.90.09
Chai Moments Plain Chai sweetened tea contains 55 to 60 percent cane sugar, 14 to 16 percent whole milk powder, 11 to 13 percent skim milk powder, 6 to 8 percent black tea extract, and 9 to 11 percent chicory root inulin. The cane sugar, whole milk powder, and skim milk powder are products of the United States. The total dry weight of sugar is said to be 56.39 percent. The non-originating ingredients of the Chai Moments Plain Chai are as follows:
Ingredient
Origin
HTSUS Classification
Black Tea Extract
Kenya
2101.20.20
Chicory Root Inulin
Belgium
1108.20.00
Cane Sugar
United States
1701.99.50
Whole Milk Powder
United States
0402.10.00
Skim Milk Powder
United States
0402.10.00
Chai Moments Ginger Turmeric sweetened tea contains 55 to 65 percent cane sugar, 12 to 14 percent whole milk powder, 11 to 13 percent skim milk powder, 5 to 6 percent black tea extract, 5 to 6 percent chicory root inulin, 1 to 2 percent ginger flavor, less than 1 percent of ginger spice powder, turmeric spice powder, cinnamon spice powder, and pepper spice powder. The cane sugar, whole milk powder, skim milk powder, and ginger flavor are products of the United States. The total dry weight of sugar is said to be 59.45 percent. The non-originating ingredients of the Chai Moments Ginger Turmeric are as follows:
Ingredient
Origin
HTSUS Classification
Black Tea Extract
Kenya
2101.20.20
Chicory Root Inulin
Belgium
1108.20.00
Ginger Spice Powder
China, India or Nigeria
2106.90.09
Turmeric Spice Powder
India
2106.90.09
Cinnamon Spice Powder
Vietnam
2106.90.09
Pepper Spice Powder
India, Indonesia, Malaysia or Vietnam
2106.90.09
Cane Sugar
United States
1701.99.50
Whole Milk Powder
United States
0402.10.00
Skim Milk Powder
United States
0402.10.00
Ginger Flavor
United States
2106.90.09
Chai Moments Unsweetened Masala tea contains 45 to 50 percent whole milk powder, 35 to 40 percent chicory root inulin, 8 to 10 percent black tea extract, 1 to 2 percent cinnamon spice powder, and less than 1 percent of clove spice powder, ginger spice powder, cardamom spice powder, and pepper spice powder. The whole milk powder is a product of the United States. The non-originating ingredients of the Chai Moments Unsweetened Masala are as follows:
Ingredient
Origin
HTSUS Classification
Chicory Root Inulin
Belgium
1108.20.00
Black Tea Extract
Kenya
2101.20.20
Cinnamon Spice Powder
Vietnam
2106.90.09
Clove Spice Powder
Brazil, Comoros, Indonesia, Madagascar, Vietnam or Zanzibar
2106.90.09
Ginger Spice Powder
China, India, or Nigeria
2106.90.09
Cardamom Spice Powder
Guatemala, Honduras or India
2106.90.09
Pepper Spice Powder
India, Indonesia, Malaysia or Vietnam
2106.90.09
Whole Milk Powder
United States
0402.10.00
You state that all ingredients will be shipped to Mexico where they will be manufactured into instant chai tea products. They are then packaged into individual units (sticks) varying from 12.5g to 25g. These individual packages are then packaged in boxes of either 10 or 20 units each. Both are then bulk packed in master cartons of 6 each. The boxes that have 10 sticks each will be put up for retail sale. The boxes with 20 sticks will be sold as individual single serve per stick. The product is steeped in a cup of hot water to make a beverage.
The Chai Moments Ginger Chai, Chai Moments Matcha Latte, Chai Moments Plain Chai, and Chai Moments Ginger Turmeric are classified under subheading 2101.20.58, Harmonized Tariff Schedule of the United States (“HTSUS”), if the quantitative limits of Additional U.S. Note 8 to Chapter 17 have been reached. The Chai Moments Unsweetened Masala is classified under subheading, 2101.20.90, HTSUS.
ISSUE:
Whether the instant chai teas classified under subheadings 2101.20.58 or 2101.20.90, HTSUS, imported into the United States from Mexico are eligible for duty-free treatment under the United States-Mexico-Canada Agreement.
LAW AND ANALYSIS:
The United States-Mexico-Canada Agreement (“USMCA”) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). GN 11 of the HTSUS implements the USMCA. GN 11(a) provides:
Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as “USMCA country” or “USMCA countries” as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn, followed by the symbol “S” in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act; and
Goods that originate in the territory of a USMCA country under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn, followed by the symbol “S+” in parentheses, or under a subheading whose article description provides for originating goods of one or more USMCA countries, as the case may be, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act.
GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a "good originating in the territory of a USMCA country" only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
…
Since the instant chai teas contain non-originating materials, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and they do not qualify under GN 11(b)(ii).
We must next determine whether the instant chai sticks qualify under GN 11(b)(iii). The instant chai teas are classified in subheadings 2101.20.58 or 2101.20.90, HTSUS. The applicable rule of origin for the instant chai teas classified under subheadings 2101.20.58 and 2101.20.90, HTSUS, is in GN 11(o)/21.2, HTSUS, which provides: “[a] change to heading 2101 from any other chapter.” All of the instant chai teas with the exception of the Chai Moments Matcha Latte contain non-originating ingredients classified in Chapter 21. Therefore, the four teas, Chai Moments Ginger Chai, Chai Moments Plain Chai, Chai Moments Ginger Turmeric, and Chai Moments Unsweetened Masala, do not meet the tariff shift rule since they contain ingredients classified in Chapter 21. As such, they do not qualify as USMCA originating goods.
However, the Chai Moments Matcha Latte contains only three ingredients which are non-originating: matcha green tea from Japan classified under subheading 0902.10.10, HTSUS; pectin from China or Spain, classified under subheading 1302.20.00, HTSUS; and tara gum from Peru, classified under subheading 1302.20.00, HTSUS. Since all three non-originating ingredients are classified in a chapter other than chapter 21, the tariff shift rule is met. Accordingly, the Chai Moments Matcha Latte classified under subheading 2101.20.58, HTSUS, qualifies as a USMCA originating good. However, we note that the special column for subheading 2101.20.58, HTSUS, references subheadings 9823.10.01-9823.10.45, HTSUS. U.S. Note 10 to Subchapter XXII, which concern sugar containing products pursuant to the USMCA, provides that:
This note and subheadings 9823.10.01 through 9823.10.45 are effective as to originating goods of the USMCA countries eligible for special tariff treatment under the terms of general note 11 to the tariff schedule provided for in subheadings … 2101.20.58 … From July 1, 2020, through December 31, 2020, in 2021 and in successive years thereafter, the rates of duty provided for in subheadings 9823.10.01 through 9823.10.45 in the "Special" subcolumn of rates of duty column 1 followed by the symbol “(S+)” shall apply to goods of such countries in lieu of the duty rates set forth in the special subcolumn in the permanent subheadings enumerated above.
U.S. Note 10(a) states that “[g]oods of Mexico that qualify to be marked as a good of Mexico pursuant to U.S. law, without regard to whether the good is marked, and goods of the United States shall be eligible for USMCA tariff treatment only under subheading 9823.10.01.” Goods provided for in subheading 9823.10.01, HTSUS, are duty free under the USMCA. In HQ H312440, we determined the country of origin of the instant chai teas which is applicable here. In accordance with that decision, the country of origin of the Chai Moments Matcha Latte is Mexico for purposes of the marking requirements. Accordingly, the Chai Moments Matcha Latte is duty free.
HOLDING:
Based on the information provided, The Chai Moments Matcha Latte, classified under subheading 2101.20.58, HTSUS, is eligible for preferential tariff treatment under USMCA. The Chai Moments Ginger Chai, Chai Moments Plain Chai, Chai Moments Ginger Turmeric, classified under subheading 2101.20.58, HTSUS, and Chai Moments Unsweetened Masala teas, classified under subheading 2101.20.90, HTSUS, are not eligible for preferential tariff treatment under USMCA.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
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,
Monika R. Brenner, Chief
Valuation and Special Programs Branch