OT:RR:CTF:FTM H316132 MD
Center Director
Agriculture & Prepared Products Center of Excellence and Expertise
U.S. Customs and Border Protection
5600 Pearl Street
Rosemont, Illinois 60018
Attn: Alan McKnight, Supervisory Import Specialist
RE: Internal Advice Request; Tariff Classification of Processed Onion Products from China
Dear Center Director,
This is in response to the internal advice request, dated December 31, 2020, initiated by BCFoods, Inc. (“BCFoods” or “Importer”), concerning the tariff classification of processed onion products from China.
FACTS:
BCFoods is an industrial food ingredients importer and producer based in the United States. Specifically, BCFoods imports “dehydrated and processed vegetables, herbs, and spiced from a variety of countries,” such as China, Peru, India, Germany, and Mexico. At-issue are shipments of processed onion products which entered the United States at the Port of Chicago between February 13, 2020, and December 31, 2020. After a review of their United States import operations, Importer determined that the tariff classification that they had been using to import the processed onion products was “incorrect.” Whereas Importer had previously imported the processed onion products under either subheading 0712.20.2000, Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”), or subheading 0712.20.4000, HTSUSA, it is now their belief that a more accurate classification would be subheading 2005.99.9700, HTSUSA.
Within their request for internal advice, Importer describes the manufacturing process of the processed onion products as follows. Fresh onions are purchased from contracted farmers and are moved into storage for quality control testing. Once deemed suitable, the onions are pulled from storage, “washed using filtered water, then sorted to remove stones and dirt,” and “peeled to remove the skins and roots before a second washing step.” After the second washing, “[t]he onions are sliced or cut to a desired size,” depending on their intended end use, following which they are “spun [within a centrifuge] to remove surface water” before being “transferred to the oven drying process.”
During this “[i]nitial [p]rocessing” of oven drying, the cut or sliced onions are “initially hot air dried in a multi-layer continuous drying machine. This process “takes 3 to 3.5 hours at a drying temperature between 80 to 90°C (176 to 194°F), after which the onions are cooled. Throughout the aforementioned processing, the “[m]oisture level[s] of the products [are] monitored and tested… with a target of approximately 7% moisture.” Once the cut or sliced onions are cooled, they are transferred into bags for storage and further processing.
This further, or “[s]econdary [p]rocessing,” begins when the “semi-dried onion pieces” are removed from storage and “are sorted using air to separate any remaining skins, off color pieces or, foreign material, and passed through a magnet to remove any ferrous magnetic material” before being “transferred to the toasting oven for final moisture removal.” Within the “single layer oven,” the cut or sliced onions are “baked… at a temperature between 65 to 90°C (149 to 194°F).” As during the initial processing phase, the “[m]oisture level[s] of the products [are] monitored and tested,” this time, “with a target of 3.3% moisture.”
Once cooled, cut or sliced onions are “transferred to final sorting steps including air cleaning and destoning systems to remove dense foreign material.” Additional processing includes the removal of “ferrous metal pieces,” “optical sorting,” “hand sorting,” overall “testing,” and a storage phase. After storage, the products are milled to specific sizes and “screened through sieves to ensure [these] specific sizes.” The products are then tested to “confirm size and microbiological limits as well as moisture levels” (below 5%) before being passed through “final magnets and metal detection” and final packaging for shipping.
ISSUE:
What is the tariff classification of the processed onion products?
LAW AND ANALYSIS:
Classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) is determined 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. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and, mutatis mutandis, to GRIs 1 through 5.
The HTSUS provisions under review are as follows:
0712 Dried vegetables, whole, cut, sliced, broken or in powder, but not further prepared:
0712.20 Onions:
0712.20.2000 Powder or flour.
0712.20.4000 Other.
* * *
2005 Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006:
Other vegetables and mixtures of vegetables:
2005.99 Other:
2005.99.2000 Onions.
2005.99.9700 Other.
* * *
Note 1 to Chapter 20 provides, in relevant part, the following: This chapter does not cover: (a) Vegetables, fruit or nuts, prepared or preserved by the processes specified in chapter 7, 8 or 11
* * *
Note 3 to Chapter 20 provides as follows: Heading 2001, 2004 and 2005 cover, as the case may be, only those products of chapter 7 or of heading 1105 or 1106 (other than flour, meal and powder of the products of chapter 8), which have been prepared or preserved by processes other than those referred to in note 1(a).
* * *
The Harmonized Commodity Description and Coding System Explanatory Notes
(“ENs”) constitute the “official interpretation of the Harmonized System” at the international level. See 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). 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 id.
The ENs to heading 0712 state, in relevant part:
07.12 – Dried vegetables, whole, cut, sliced, broken or in powder, but not further prepared
0712.20 – Onions
[…]
This heading covers vegetables of headings 07.01 to 07.11 which have been dried (including dehydrated, evaporated or freeze-dried) i.e., with their natural water content removed by various processes. The principal kinds of vegetables treated in this way are potatoes, onions, mushrooms, wood ears (Auricularia spp.), jelly fungi (Tremella spp.), truffles, carrots, cabbage and spinach. They are usually prepared in strips or slices, either of one variety or mixed (julienne).
The heading also covers dried vegetables, broken or powdered, such as asparagus, cauliflower, parsley, chervil, onion, garlic, celery, generally used either as flavouring materials or in the preparation of soups.
* * *
The ENs for heading 2005 state, in pertinent part:
20.05 – Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 20.06
The term “vegetables” in this heading is limited to the products referred to in Note 3 to this Chapter. These products (other than vegetables prepared or preserved by vinegar or acetic acid of heading 20.01, frozen vegetables of heading 20.04 and vegetables preserved by sugar of heading 20.06) are classified in the heading when they are prepared or preserved by processes not provided for in Chapter 7 or 11.
* * *
Importer posits that their processed onion products are properly classified under subheading 2005.99.9700, HTSUSA, which provides for “Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006: Other vegetables and mixtures of vegetables: Other: Other,” as opposed to either subheading 0712.20.2000, HTSUSA, which provides for “Dried vegetables, whole, cut, sliced, broken into powder, but not further prepared: Onions: Powder or flour,” or subheading 0712.20.4000, HTSUSA, which provides for “Dried vegetables, whole, cut, sliced, broken into powder, but not further prepared: Onions: Other.” Specifically, Importer contends that the processed onion products are “not classifiable under Heading 0712 because [their] ‘essential character’ is provided by the secondary processing of onion pieces or powder of Heading 2005.” Simply put, Importer states that the processed onion products undergo some form of processing which exceeds the scope of heading 0712, HTSUS. In support, Importer provides several Headquarters Ruling Letters (“HQ”) and New York Ruling Letters (“NY”) which discuss processing operations which exceed the scope of heading 0712, HTSUS.
According to Importer, the processed onion products undergo four stages of manufacture – pre-processing, initial processing, secondary processing, and final processing. During pre-processing, purchased onions are tested for quality, washed, sorted, peeled, sliced or cut, and spun before being transferred to an oven for the initial drying process. This initial processing takes place in “a multi-layer continuous drying system,” where the sliced or cut onions are hot air-dried for anywhere between “3 to 3.5 hours as a drying temperature between 80 to 90°C (176 to 194°F),” after which the onions are cooled. During this drying, the moisture levels are monitored and tested with a target of 7% moisture. After a brief storage period, the secondary processing phase begins with preliminary sorting of the processed onions before their transfer to a toasting oven. The processed onions are “baked in a single layer oven at a temperature between 65 to 90°C (149 to 194°F)” for between “2.5 to 4.5 hours.” As before, the onions are monitored for moisture, this time with a target of 3.3% moisture. The final processing phase consists of hand sorting, testing, and storage; after which the processed onion products are milled, sieved, tested for moisture levels below 5%, passed through metal detection, and packed for shipping.
Heading 0712, HTSUS, provides for “[d]ried vegetables, whole, cut, sliced, broken or in powder, but not otherwise prepared. The ENs for heading 0712, HTSUS, elaborate on the allowed preparations for classification therein; specifically providing for “vegetables of headings 07.01 to 07.11 which have been dried (including dehydrated, evaporated or freeze-dried) i.e., with their natural water content removed by various processes.” As such, onions (which are provided for eo nomine within heading 0703, HTSUS) are provided for within heading 0712, HTSUS – whether or not they are whole, cut, sliced, broken, or in powder – so long as they are also dried in a manner where their natural water content has been removed by various processes, such as dehydration, evaporation, or freeze-drying.
Note 1(a) to Chapter 20 specifically excludes vegetables prepared and preserved by the processes specified within Chapter 7 from classification therein. Such preparations and preservations include “chilled, frozen[,] provisionally preserved or dried” vegetables. Note 3 to Chapter 20 provides that “products of chapter 7” (vegetables) which “have been prepared or preserved by processes other than those referred to in note 1(a),” are classified within heading 2001, 2004, or 2005.
Here, the processed onion products are undoubtedly dried during the initial processing phase. As described by Importer within their Request for Advice, “cut onion is initially hot air dried in a multi-layer continuous drying system,” a process which “takes 3 to 3.5 hours at a drying temperature between 80 to 90°C (176 to 194°F).” Technical literature supplied by Importer identifies the drying system utilized during the initial processing phase as a Dodia Dryotech Imperial Automatic Dryer, Model DX-4. At the top of the specifications sheet for the Imperial Automatic Dryer, Model DX-4, Dodia Dryotech describe themselves as “[manufacturers] of dehydration plants for onion[s].” Moreover, the specifications sheet lists the “[h]eat source type” of the Model DX-4 as “[o]il, water[,] or steam,” which is utilized to dehydrate the processed onion products therein. Importer’s contention; however, is that the processed onion products are removed from heading 0712, HTSUS, because the secondary processing phase exceeds the scope for classification therein. Specifically, Importer asserts that the processed onion products are provided for within heading 2005, HTSUS, which provides for “Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006.” Upon review and analysis of the information furnished by Importer, we agree.
The secondary processing phase of the processed onion products begins when semi-dried onion pieces are removed from storage, after which they are sorted and passed through metal detection before being transferred to a “toasting oven for final moisture removal.” According to Importer’s request for internal advice, the processed onion products are “baked in a single layer oven at a temperature between 65 to 90°C (149 to 194°F),” for anywhere between “2.5 to 4.5 hours,” depending on the moisture levels of the processed onion products at the beginning of the secondary processing phase. Throughout this process, the moisture level of the products is “monitored and tested” with a target of 3.3% moisture. Supplemental information provided by Importer specifies that the machinery used within the secondary processing phase is a “Continuous dryer for Re-hydration (Toasting),” which consists of four chambers within which the onion products undergo processing. Each of the four chambers are set to identical processing parameters; notably, a dryer air inlet temperature of approximately 125°C (257°F) and a dehydration chamber temperature between 65 to 120°C (149 to 248°F). As a result of re-dehydration processing, the processed onion products will go from a moisture content of approximately 6-7% to a moisture content of approximately 3.5%. After toasting, the moisture content of the processed onion products will be approximately 2.7%. Moreover, Importer provided images of the secondary processing machinery in-use, including of the machinery’s raw material inlet feeding port and its outlet and unloading port. In distinct visual contrast from the onion product displayed in the inlet port photo, the visible onion product in the outlet port photo is significantly browned.
The ENs for heading 0712, HTSUS, state that classification therein is limited to products which have been “dried (including dehydrated, evaporated or freeze-dried) i.e., with their natural water content removed by various processes.” In contrast, Importer refers to the “toasting” or “bak[ing]” or the processed onion products during the secondary processing phase. Moreover, Importer provides that the machinery utilized in this secondary processing phase was custom “designed to [their] specifications” for use by their overseas partners “to toast/bake the [o]nion” from its moisture levels in the initial processing phase “down to targeted levels less than 4% moisture for final processing (final sorting/cleaning and milling to size).” Since the processed onion products are “prepared or preserved by processes not provided for in Chapter 7,” as the toasting/baking of the secondary processing phase goes beyond mere drying, we find that the processed onion products are accurately classified outside of heading 0712, HTSUS, specifically within subheading 2005.99.2000, HTSUSA, which provides for “Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006: Other vegetables and mixtures of vegetables: Other: Onions.”
When onion or garlic products, which have been harvested, dried, and stored by a manufacturer, undergo an additional processing phase beyond simple drying, this additional processing has been considered “further preparation” beyond the scope of heading 0712, HTSUS. Support for the removal of the processed onion products from heading 0702, HTSUS, and their eventual classification within heading 2005, HTSUS, comes in the form of a line of CBP rulings discussing the tariff classification of similar processed onion products. In NY N304106, dated May 3, 2019, toasted onion products from China were classified under subheading 2005.99.2000, HTSUSA, which provides for “Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006: Other vegetables and mixtures of vegetables: Other: Onions.” The toasted onion products were produced by “remov[ing] the roots and stems [from the onion before], peel[ing], wash[ing,] and slic[ing] them.” The onions are then “heated at 55 to 60 degrees Celsius for 3 ½ hours to remove water content to approximately 9 percent or less” before being “stored in a temperature-controlled environment in moisture-controlled packaging until orders for toasted onion products are received.” Secondary processing of these onions consisted of “heat[ing the onions] to between 80 and 90 degrees Celsius for 5 hours,” which lowers the moisture content to “approximately less than 6 percent.”
Similarly, in NY N301964, dated February 13, 2019, CBP found that toasted onion products from China were classified under subheading 2005.99.2000, HTSUSA. The initial production process included “remov[ing] the roots and stems [of the onion], peel[ing,] wash[ing,] and slic[ing]” before being heated at a temperature range of “75-85 degrees Celsius for 6 to 6 ½ hours” to produce a moisture content of approximately “7 percent or less.” After being stored in temperature-controlled environments in moisture-controlled packaging, the onions were heated to “between 60 and 80 degrees Celsius for 2 hours.” In NY N300416, dated October 3, 2018, CBP found that toasted onion products from India were classified under subheading 2005.99.2000, HTSUSA. The initial production process consisted of the “removal of the onion skins [and] slicing” before being dried at temperatures between 55°C and 110°C. Secondary processing consisted of toasting/dehydrating at temperatures between 110°C and 120°C for 80 to 100 minutes. CBP also found initial processing of onions, followed by secondary processing, sufficient to classify toasted onion products at-issue in NY N288283, dated August 16, 2017, and NY N276036, dated December 2, 2016, under subheading 2005.99.2000, HTSUSA.
Within their request for advice, Importer cited CBP rulings discussing the tariff classification of garlic products under heading 2005, HTSUSA, in support of their assertion that their processed onion products should also be classified under heading 2005, HTSUSA. In HQ H289781, dated March 5, 2018, the garlic products were subject to an initial production process where the garlic was “inspected, sorted, peeled, washed and sliced [before being] dried at a temperature of 50-60 degrees Celsius for 5-6 hours.” Secondary processing of the garlic products consisted of “toast[ing] at a temperature of 40-50 degrees Celsius for 3-4 hours.” Likewise, in HQ H281051, dated September 11, 2017, the garlic products were initially processed via “inspect[ion], sort[ing], peel[ing], wash[ing] and slic[ing]” before being “dried at a temperature of 50-60 degrees Celsius for 5-6 hours.” The garlic products were subsequently processed via “toast[ing] at a temperature of 40-50 degrees Celsius for 3-4 hours.” Although the above rulings deal with garlic products, as opposed to onion products, we find their analysis of what CBP considers “further processing” to be informative. As with the CBP rulings classifying processed onion products, those dealing with processed garlic products require the subject merchandise to be otherwise prepared via some form of processing which exceeds the scope either Chapter 7 or Chapter 11. Similar to the onion products at-issue here, each of the aforementioned garlic products were otherwise prepared by means of the secondary process of “toasting” at specific temperature ranges for specific time ranges to result in the desired moisture content. As each of the garlic products were classified within heading 2005, HTSUS, we find these rulings supportive of our ultimate classification of the processed onion products within heading 2005, HTSUS.
Moreover, in HQ H289310, dated March 5, 2018, CBP analyzed the specific machinery utilized in the processing of garlic products and its effect on the product itself. CBP found that the specific machinery utilized in the instant case was “known as a common method of hot air drying,” as opposed to being a machine capable of “toasting” the product. Citing a lexical definition, CBP noted that “toasting requires browning of the surface by being heated in a toaster, over or near a fire, or in an oven.” As there was no indication in the record “that the garlic products at issue were heated in such a manner,” CBP concluded that they had not been toasted. Here, there is sufficient evidence that the secondary processing results in the “toasting” or “bak[ing]” of the subject onion products. Crucially, the machinery utilized in the secondary processing phase is described by Importer as “an oven” which was custom designed “to toast/bake the [o]nion.” Supplemental information provided by Importer included photos of this piece of machinery in use during the secondary processing phase. Specifically, these photos showed both the inlet port and outlet port of the machinery during operation, allowing for a compared analysis of the onion product. Notably, the onion product in the outlet port photo was visibly browned – particularly in comparison to the onion product in the inlet port photo. As such, we also find HQ H289310 informative and supportive of our ultimate classification of the processed onion products within heading 2005, HTSUS.
HOLDING:
By application of GRIs 1 and 6, the subject onion products are classified in subheading 2005.99.2000, HTSUSA, which provides for “Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006: Other: Onions.” The column one, general rate of duty is 4.5% ad valorem.
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 https://hts.usitc.gov/current.
You are to mail this decision to the requestor no later than 60 days from the date of the decision. At that time, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel and to the public on the Customs Rulings Online Search System (“CROSS”), at https://rulings.cbp.gov/, and other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division