OT:RR:CTF:FTM H313454 MJD
Mr. Anthony Parlatore
Blending Sales Manager
Redpath Sugar Ltd.
95 Queen’s Quay East
Toronto, ON M5E 1A3 Canada
RE: Drink mixes; Tariff classification; Country of origin marking; USMCA
Dear Mr. Parlatore,
This is in response to your correspondence, dated August 17, 2020, in which you request a binding ruling, on behalf of Redpath Sugar Ltd. (“Redpath”), concerning the tariff classification of drink mixes under the Harmonized Tariff Schedule of the United States (“HTSUS”), and the country of origin marking and eligibility of these drink mixes for preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”). Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division for review. Our ruling is set forth below.
You have asked that certain information submitted in connection with this request be treated as confidential, pursuant to 19 C.F.R. § 177.2(b)(7). The request for confidentiality is approved. Information concerning the specific formulations (percentage ratios) of the ingredients in the drink mixes contained in the request will not be released to the public.
FACTS:
The products at issue consist of the following five dry powdered drink mixes: lemonade,
orange, fruit punch, grape, and lemon tea. The drink mixes are composed of several ingredients from various countries that are blended together in Canada. Below is a list of the ingredients for each drink mix and the country from which those ingredients are sourced and their classification under the HTSUS:
Lemonade:
Ingredient
Country of Origin
HS Code
Sugar
Brazil
1701.99.10
Citric Acid
Canada
2918.14.00
Sodium Citrate
Canada
2918.15.20
Beatreme
Mexico
3302.10.90
Lemon Flavor
United States
3302.10.10
Silicon Dioxide
United States
2811.22.00
Ascorbic Acid
China
2936.27.00
FD&C Yellow #5 colour
United States
3203.00.20
Orange:
Country of Origin
HS Code
Ingredient
Sugar
Brazil
1701.99.10
Citric Acid
Canada
2918.14.00
Sodium Citrate
Canada
2918.15.20
Beatreme
Mexico
3302.10.90
Lemon Flavor
United States
3302.10.10
Silicon Dioxide
United Sates
2811.22.00
Ascorbic Acid
China
2936.27.00
FD&C Yellow #5
United States
3203.00.20
FD&C Yellow #6
United States
3203.00.20
FD&C Yellow #6 lake
United States
3203.00.20
Fruit Punch:
Country of Origin
HS Code
Ingredient
Sugar
Brazil
1701.99.10
Citric Acid
Canada
2918.14.00
Sodium Citrate
Canada
2918.15.20
Beatreme
Mexico
3302.10.90
Punch Flavor
United States
3302.10.10
Silicon Dioxide
United States
2811.22.00
Ascorbic Acid
China
2936.27.00
FD&C Red #40 colour
United States
3203.00.20
FD&C Red #40 lake
United States
3203.00.20
Grape:
Country of Origin
HS Code
Ingredient
Sugar
Brazil
1701.99.10
Citric Acid
Canada
2918.14.00
Sodium Citrate
Canada
2918.15.20
Grape Dried Crystals
United States
0806.20.90
Grape Flavor
United States
3302.10.10
Silicon Dioxide
United States
2811.22.00
Ascorbic Acid
China
2936.27.00
FD&C Red #40 colour
United States
3203.00.20
FD&C Blue #1 colour
United States
3203.00.20
Lemon Tea:
Country of Origin
HS Code
Ingredient
Sugar
Brazil
1701.99.10
Caramel Colour
United States
3204.19.90
Citric Acid
United States
2918.14.00
Sodium Citrate
Israel
2918.15.20
Lemon Flavor
United States
3302.10.10
Tea Flavor
United States
3302.10.10
Silicon Dioxide
United States
2811.22.00
Ascorbic Acid
China
2936.27.00
Tricalcium Phosphate
Israel
2835.26.90
The drink mixes are produced in 2,200 lb. batches in a ribbon blender. Each drink mix is composed of raw cane sugar imported into Canada from Brazil where it is further refined. One by one the sugar and other ingredients are added to the blender where they are mixed together for ten minutes until the blend is made into the drink mix. The final product for each drink mix contains more than 65 percent by dry weight of sugar. The drink mix is then tested for color, brix, and taste. Once approved by the laboratory, the drink mix is prepared and shipped to the United States. The following are three shipment scenarios for the drink mixes:
Scenario 1
Blended in Canada and packaged in 2,200 lb supersacks. These supersacks will be shipped to a co-manufacturer in the United States where they will discharge the supersack into their hopper. The product will be filled in fibre canisters or 2 lb pillow pouches, packaged 6 per case, palletized and shipped for sale in the United States to the retail market.
Scenario 2
Blended and packaged in Canada. The blended product will be discharged into a hopper where it is gravity fed to the filler. The product will be filled in fibre canisters or 2 lb pillow pouches, packaged 6 per case, palletized and shipped for sale in the United States to the retail market.
Scenario 3
Blended and packaged in Canada. The blended product will be discharged into a hopper where it is gravity fed to the filler. The product will be filled in fibre canisters or 2 lb pillow pouches, packaged 6 per case, palletized and shipped for sale in the United States to the foodservice industry (camps, amusement parks & restaurants).
To consume the drink mix beverage, the contents of the mix are emptied in a container, and cold water is added according to the instructions on the drink mix.
ISSUES:
What is the tariff classification of the drink mixes?
What is the country of origin marking of the drink mixes?
Whether the drink mixes imported into the United States from Canada are eligible for preferential tariff treatment under the USMCA?
LAW AND ANALYSIS:
Tariff Classification
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (“GRI”). 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 2 through 6 may then be applied in order.
The 2020 HTSUS provisions under consideration are as follows:
2106: Food preparations not elsewhere specified or included:
2106.90: Other:
Other:
Other:
Other:
Other:
Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to Chapter 17:
2106.90.9200: Described in additional U.S. note 7 to chapter 17 and entered pursuant to its provisions. . .
2106.90.9400: Other. . .
Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17:
2106.90.9500: Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions. . .
2106.90.9700: Other. . .
* * * * *
Additional U.S. Note 2 to Section IV provides, in relevant part, as follows:
2. For the purposes of this section, unless the context otherwise requires—
…
(c) the term “prepared for marketing to the ultimate consumer in the identical form and package in which imported” means that the product is imported in packaging of such sizes and labeling as to be readily identifiable as being intended for retail sale to the ultimate consumer without any alteration in the form of the product or its packaging; and
(d) the term “ultimate consumer” does not include institutions such as hospitals, prisons and military establishments or food service establishments such as restaurants, hotels, bars or bakeries.
Additional U.S. Note 2 to Chapter 17 provides as follows:
For the purposes of this schedule, the term “articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17” means articles containing over 65 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported.
Additional U.S. Note 3 to Chapter 17 provides as follows:
For the purposes of this schedule, the term “articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17” means articles containing over 10 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, except (a) articles not principally of crystalline structure or not in dry amorphous form, the foregoing that are prepared for marketing to the ultimate consumer in the identical form and package in which imported; (b) blended syrups containing sugars derived from sugar cane or sugar beets, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported; (c) articles containing over 65 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported; or (d) cake decorations and similar products to be used in the same condition as imported without any further processing other than the direct application to individual pastries or confections, finely ground or masticated coconut meat or juice thereof mixed with those sugars, and sauces and
preparations therefor.
Additional U.S. Note 7 to Chapter 17 provides as follows:
The aggregate quantity of articles containing over 65 percent by dry weight of sugars described in additional U.S. note 2 to chapter 17, entered under subheadings 1701.91.44, 1702.90.64, 1704.90.64, 1806.10.24, 1806.10.45, 1806.20.71, 1806.90.45, 1901.20.20, 1901.20.55, 1901.90.67, 2101.12.44, 2101.20.44, 2106.90.74 and 2106.90.92 during the 12-month period from October 1 in any year to the following September 30, inclusive, shall be none and no such articles shall be classifiable therein.
Additional U.S. Note 8 to Chapter 17 provides as follows:
The aggregate quantity of articles containing over 10 percent by dry weight of sugars described in additional U.S. note 3 to chapter 17, entered under subheadings 1701.91.54, 1704.90.74, 1806.20.75, 1806.20.95, 1806.90.55, 1901.10.74, 1901.90.69, 2101.12.54, 2101.20.54, 2106.90.78 and 2106.90.95 during the 12-month period from October 1 in any year to the following September 30, inclusive, shall not exceed 64,709 metric tons (articles the product of Mexico shall not be permitted or included under this quantitative limitation and no such articles shall be classifiable therein).
* * * * *
In addition, the Explanatory Notes (“EN”) to the Harmonized Commodity Description and Coding System represent the official interpretation of the tariff at the international level. While neither legally binding nor dispositive, the ENs provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The ENs to Chapter 2106, HTSUS, states, in pertinent part, the following:
21.06 – Food preparations not elsewhere specified or included.
. . .
Provided that they are not covered by any other heading of the Nomenclature, this heading covers:
. . .
(B) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption. The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, etc.) with foodstuffs (flour, sugar, milk powder, etc.), for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance, keeping qualities, etc.) (see the General Explanatory Note to Chapter 38).
. . .
The heading includes, inter alia:
. . .
(12) Preparations for the manufacture of lemonades or other beverages, consisting, for example, of:
- flavoured or coloured syrups, being sugar solutions with natural or artificial substances added to give them the flavour of, for example, certain fruits or plants (raspberry, blackcurrant, lemon, mint, etc.), whether or not containing added citric acid and preservatives;
. . .
Such preparations are intended to be consumed as beverages after simple dilution with water or after further treatment. Certain preparations of this kind are intended for adding to other food preparations.
. . .
(17) Preparations in the form of granules or powders consisting of sugar, flavouring or colouring matter (e.g., plant extracts or certain fruits or plants such as orange, blackcurrant, etc.), antioxidants (e.g., ascorbic acid or citric acid or both), preserving agents, etc., of a kind used for making beverages. However, preparations which have the character of sugar fall in heading 17.01 or 17.02, as the case may be.
You suggest that the drink mixes are classified under heading 2106, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included.” Specifically, you provide that the drink mixes destined for retail market are classified in subheading 2106.90.95, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions.” When the drink mixes are sold to the foodservice market, you believe they are classified under subheading 2106.90.94, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17: Other.”
Heading 2106, HTSUS, only covers food preparations, which are not more specifically provided for elsewhere in the tariff. The food preparations of heading 2106, HTSUS, are also generally considered to be mixtures of foods ingredients to be used in or with other foods. This is further illustrated by EN 21.06, which lists several examples of goods composed of a mixture of ingredients. Specifically, the drink mixes at issue here are illustrated in paragraph 12 to EN 21.06, which describes preparations for the manufacture of lemonades or other beverages. These beverages include for example, “flavoured or coloured syrups, being sugar solutions with natural or artificial substances added to give them the flavor of, for example, certain fruits or plants (raspberry, blackcurrant, lemon, mint, etc.), whether or not containing added citric acid and preservatives.” These preparations are “intended to be consumed as beverages after simple dilution with water or after further treatment.” See paragraph 12 to EN 21.06. Similarly, the drink mixes at issue here are beverages that are made from mostly sugar and contain artificial substances to give each drink mix a specific type of flavoring of certain fruits or plants i.e. lemon, orange, grape, etc., and they contain citric acid. Moreover, the drink mixes are prepared for consumption by adding water to the dry powdered mix. In addition, paragraph 17 to EN 21.06 also describes the drink mixes at issue here. Paragraph 17 to EN 21.06 describes food preparations that are in the form of powders (or granules) that are used to make beverages and consist of sugar, flavouring or colouring matter, antioxidants, and preserving agents. The drink mixes at issue here are powdered dry mixes used for making beverages and contain among other ingredients, sugar, flavoring and coloring matter, and an antioxidant and a preserving agent in the form of citric acid.
Due to the fact that the drink mixes are not classified more specifically elsewhere in the tariff and that they are mixtures of food ingredients similar to the examples in paragraph 12 and 17 to EN 21.06, we find that the drink mixes are properly classified in heading 2106, HTSUS, and specifically, in subheading 2106.90, HTSUS. Next, we must consider whether the drink mixes are classified more specifically in subheadings 2106.90.92 and 2106.90.94, HTSUS, as articles containing over 65% by dry weight of sugar as described in Additional U.S. Note 2 to Chapter 17 (“Note 2”). Note 2 requires that the product must:
[Contain] over 65 percent by dry weight of sugars derived from sugar cane or sugar beets, whether or not mixed with other ingredients, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported.
All of the drink mixes meet the first two requirements of Note 2 - that they must contain over 65 percent of dry weight of cane sugar and are capable of being further processed with other ingredients i.e. water. However, the fulfillment of the third requirement of Note 2, that the product is “not prepared for marketing to the ultimate consumer in the identical form and package in which imported,” depends on how the drink mixes are imported and who they are imported to. Additional U.S. Note 2(c) to Section IV provides that “the term ‘prepared for marketing to the ultimate consumer in the identical form and package in which imported’ means that the product is imported in packaging of such sizes and labeling as to be readily identifiable as being intended for retail sale to the ultimate consumer without any alteration in the form of the product or its packaging.” Furthermore, Additional U.S. Note 2(d) to Section IV provides that “the term ‘ultimate consumer’ does not include institutions such as hospitals, prisons and military establishments or food service establishments such as restaurants, hotels, bars or bakeries.”
In the first scenario, the drink mixes are blended in Canada and shipped to a co-manufacturer in the United States in 2,200 lb supersacks. Once in the United States, the supersacks are discharged in a hopper and the drink mixes are filled in fibre canisters or 2 lb pillow pouches, and shipped for sale to the retail market in the United States. In this scenario, the drink mixes are not prepared for marketing to the ultimate consumer in the identical form and package in which imported according to Additional U.S. Note 2(c) to Section IV. Here the drink mixes are imported in 2,200 lbs supersacks and repackaged for sale in fibre canisters or 2 lb pillow pouches so the packaging the goods are imported in is altered prior to the sale to the ultimate consumer. Therefore, the drink mixes in the first scenario meet the requirements of Note 2.
In the second scenario, the drink mixes are blended and packaged in fibre canisters or 2 lb pillow pouches in Canada, and shipped for sale in the United States to the retail market. In the instant scenario, the drink mixes are prepared for marketing to the ultimate consumer in the identical form and package in which imported because the packaging has not been altered once imported and the drink mixes are sold to the retail market which is the ultimate consumer of the product. Therefore, the drink mixes in this case do not meet the requirements of Note 2.
Lastly, in the third scenario, the drink mixes are blended and packaged in fibre canisters or 2 lb pillow pouches in Canada, and shipped for sale in the United States to the foodservice industry (camps, amusement parks & restaurants). In the instant case, the drink mixes do meet the requirements of Note 2 because although they are imported in fibre canisters or 2 lb pillow pouches without being repackaged, they are not sold to an ultimate consumer because according to Additional U.S. Note 2(d) to Section IV, the ultimate consumer does not include institutions such as food service establishments as is the case here with the drink mixes being sold to the food service industry i.e. camps, amusement parks, and restaurants.
As a result, the drink mixes in scenarios one and three could be classified in subheading 2106.90.92, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17: Described in additional U.S. note 7 to chapter 17 and entered pursuant to its provisions.” Nonetheless, since Additional U.S. Note 7 to Chapter 17, HTSUS, states that “the aggregate quantity of articles containing over 65 percent by dry weight of sugars described in additional U.S. note 2 to chapter 17 … shall be none and no such articles shall be classifiable therein,” the subject drink mixes are classified in subheading 2106.90.94, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included:: Other: Other: Other: Other: Other: Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17: Other.”
The drink mixes in shipping scenario two are classified in subheading 2106.90.95, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions.” If the quota described in Additional U.S. note 8 to chapter 17, HTSUS, is already filled, the subject drink mixes are classified in subheading 2106.90.97, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Other.”
(2) Country of Origin Marking
You have also inquired about the country of origin of the drink mixes. To allow for a more seamless transition period, at this time, CBP continues to utilize the marking rules set forth in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
. . .
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the drink mixes are neither wholly obtained nor produced exclusively from “domestic” (Canada, in this case) materials. Accordingly, because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in section 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” The applicable tariff shift requirement in section 102.20 for the drink mixes of subheading 2106.90, HTSUS, consist of the following:
A change to a good of subheading 2106.90, other than to compound alcoholic preparations, from any other subheading, except from Chapter 4, Chapter 17, heading 2009, subheading 1901.90 or subheading 2202.90; or
A change to subheading 2106.90 from Chapter 4 or subheading 1901.90, provided that the good contains no more than 50 percent by weight of milk solids; or
A change to subheading 2106.90 from Chapter 17, provided that the good contains less than 65 percent by dry weight of sugar; or
A change to subheading 2106.90 from heading 2009 or subheading 2202.90, provided that a single juice ingredient of foreign origin, or juice ingredients from a single foreign country, constitute in single strength form no more than 60 percent by volume of the good; or
A change to compound alcoholic preparations of subheading 2106.90 from any other subheading, except from subheading 2208.20 through 2208.50.
Based on the tariff shift requirements in section 102.20 for subheading 2106.90, HTSUS, all of the foreign ingredients contained in dry powdered drink mixes (lemonade, orange, fruit punch, grape, and lemon tea) undergo a tariff shift, except for the sugar from Brazil contained in each drink mix, which is classified in subheading 1701.99.10, HTSUS. Since the drink mixes in this case contain more than 65 percent by dry weight of sugar, they are the material classified in a tariff provision from which a change in tariff classification is not allowed. Therefore, the tariff shift requirement of section 102.11(a)(3) is not met. Since an analysis of section 102.11(a) has not produced a country of origin determination, we turn to section 102.11(b) of the regulations. Section 102.11(b)(1) provides as follows:
(b) Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:
(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good, or . . .
The rule of interpretation set forth in 19 C.F.R. § 102.18(b) state, in pertinent part, the following:
(b) (1) For purposes of identifying the material that imparts the essential character to a good under §102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the §102.20 specific rule or other requirements applicable to the good. For purposes of this paragraph (b)(1):
(i) The materials to be considered must be classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good under consideration.
In this case, the material in the drink mixes which is classified in a tariff provision from which a change in tariff classification is not allowed under section 102.20 for subheading 2106.90, HTSUS, is the sugar from Brazil classified in subheading 1701.99.10, HTSUS. Therefore, it is the sugar from Brazil that imparts the essential character of the drink mixes and the country of origin for marking purposes for all of the drink mixes is Brazil.
(3) USMCA
The 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)). General Note (“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 drink mixes contain non-originating ingredients, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). The drink mixes are also not produced exclusively from originating materials under GN 11(b)(ii). Thus, we must next determine whether the drink mixes qualify under GN 11(b)(iii). As previously noted, the drink mixes in scenario two are classified under subheading 2106.90.95, HTSUS. The applicable rule of origin for drink mixes classified under subheading 2106.90.95, HTSUS, is in GN 11(o)/21.15, HTSUS, which provides “[a] change to heading 2106 from any other chapter.” Since the non-originating ingredients in the drink mixes are all classified in a chapter of the tariff other than chapter 21, the tariff shift rule is met. Accordingly, the drink mixes classified under subheading 2106.90.95, HTSUS, qualify as a USMCA originating good. However, the drink mixes in scenarios one and three are classified in subheading 2106.90.94, HTSUS, and if the quota described in Additional U.S. Note 8 to chapter 17 of subheading 2106.90.95, HTSUS, is already filled, the drink mixes in scenario two are classified in subheading 2106.90.97, HTSUS. The special column for subheadings 2106.90.94 and 2106.90.97, HTSUS, references subheadings 9823.10.01- 9823.10.45, HTSUS for “S+.”
Examining 9823.10.01-9823.10.45, HTSUS, we note that subheading 9823.10.01 refers to U.S. Note 10(a) to Subchapter XXIII, which pertains to goods of Mexico and is not applicable here. Subheading 9823.10.02, HTSUS, and the subheadings that follow in that group refers to U.S. Note 10(b) to Subchapter XXIII, which pertains to goods of Canada and, therefore, is not applicable here as goods of Brazil. Specifically, U.S. Note 10 to Subchapter XXIII, which concerns 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 1701.91.48, 1701.91.58, 1702.20.28, 1702.30.28, 1701.40.28, 1702.60.28, 1702.90.58, 1702.90.68,1704.90.68, 1704.90.78, 1806.10.15, 1806.10.28, 1806.10.38, 1806.10.55, 1806.10.75, 1806.20.73, 1806.20.77, 1806.20.94,1806.20.98, 1806.90.39, 1806.90.49, 1806.90.59, 1901.10.76, 1901.20.25, 1901.20.35, 1901.20.60, 1901.20.70, 1901.90.68,1901.90.71, 2101.12.38, 2101.12.48, 2101.12.58, 2101.20.38, 2101.20.48, 2101.20.58, 2103.90.78, 2106.90.46, 2106.90.72, 2106.90.76, 2106.90.80, 2106.90.91, 2106.90.94 or 2106.90.97, except as provided in subparagraph (b)(3). 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(b) states that “[g]oods of Canada that qualify to be marked as a good of Canada pursuant to U.S. law, without regard to whether the good is marked shall be eligible for USMCA tariff treatment only under subheadings 9823.10.02 through 9823.10.45.” Since the country of origin for marking purposes of the drink mixes at issue here is Brazil and not Canada, the “S+” rates are not applicable. Accordingly, the drink mixes, if classified in subheadings 2106.90.94, HTSUS, and 2106.90.97, HTSUS, do not qualify as USMCA originating goods, and are subject to the column 1 general duty rate.
HOLDING:
By application of GRI 1 and 6, the drink mixes in scenarios one and three are classified in subheading 2106.90.94, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17: Other.” The column one, general rate of duty is 28.8¢/kg + 8.5% ad valorem.
The drink mixes in scenario two are classified in subheading 2106.90.95, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions.” The column one, general rate of duty is 10 percent ad valorem. If the quota described in Additional U.S. note 8 to Chapter 17, HTSUS, is already filled, the subject drink mixes are classified in subheading 2106.90.97, HTSUS, which provides for “[f]ood preparations not elsewhere specified or included: Other: Other: Other: Other: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Other.” The column one, general rate of duty is 28.8¢/kg + 8.5% ad valorem.
Based on the information provided, the drink mixes classified under subheading 2106.90.95, HTSUS, are eligible for preferential tariff treatment under the USMCA. The duty rate is free. However, the drink mixes classified in subheadings 2106.90.94, HTSUS, and 2106.90.97, HTSUS, do not qualify for preferential tariff treatment under the USMCA since the country of origin of the drink mixes for marking purposes is Brazil. The column one, general rate of duty is 28.8¢/kg + 8.5% ad valorem.
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,
Yuliya A. Gulis, Chief Food, Textiles and Marking Branch