CLA-2 OT:RR:CTF:TCM W968394 IDL
TARIFF NOS.: 1602.32.0030; 2106.90.9995
Port Director
U.S. Customs and Border Protection
9 North Grand Avenue
Nogales, Arizona 85621
Re: Frozen Tortilla Wraps, Chicken Enchilada Meals
Dear Port Director:
This is in response to a request for internal advice by Bryan Cave LLP, on behalf of its client, SANA Internacional, S. de R.L. de C.V. (“SANA”), dated July 20, 2006. The request pertains to the country of origin and the classification under the Harmonized Tariff Schedule of the United States (HTSUS) of “tortilla wraps” and “finished meals” (described as “Party Size Chicken Enchiladas with Cheese Sauce and Rice” meals and “One-Dish Chicken Enchilada Suiza with a Sour Cream Sauce and Mexican-Style Rice” meals). Our ruling on this matter is set forth below.
FACTS:
SANA imports from Mexico frozen tortilla wraps filled with chicken meat, vegetables and seasonings in bulk bags marked “Product of Mexico”. The ingredients, listed in descending order of weight percentage, are corn tortilla, chicken meat (over 20%), water, tomatoes, green chilies, modified corn starch, chicken flavor, onion powder, garlic powder, chili pepper, and cilantro. All of the ingredients originate in the U.S., with the exception of the green chilies, which originate in Mexico.
Prior to importation into the U.S., the raw filling ingredients are mixed together and cooked. The cooked filling is assembled with the corn tortilla to form the tortilla wraps that are then frozen and packed in bulk bags for shipment to the United States. Following importation into the U.S., the tortilla wraps are topped with melted cheese and salsa, and packed in trays, along with rice, and packaged as frozen finished meals. The chicken content by weight of the finished meals falls below 20%.
The finished meals are marketed in two varieties. One variety is sold as a single-serve meal, in a compartmentalized tray that holds a tortilla wrap topped with melted cheese and salsa in one section, and rice in another section. The other variety is sold as a family-size meal on a flat tray. Such trays are layered with rice on the bottom, and tortilla wraps topped with melted cheese and salsa on top of the rice.
ISSUE:
(1) What is the classification of the tortilla wraps imported from Mexico?
What is the classification of the finished meals?
Whether the imported tortilla wraps undergo a “substantial transformation”, thereby excepting the finished meals from marking requirements under the North American Free Trade Agreement (NAFTA) Marking Rules?
LAW AND ANALYSIS:
Merchandise is classifiable under the HTSUS in accordance with the General Rules of Interpretation (GRIs). The systematic detail of the HTSUS is such that most goods are classified by application of GRI 1, that is, 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 3 provides for goods that are prima facie, classifiable under two or more headings. GRI 6 provides that “for legal purposes”, classification of goods in the subheading of a heading shall be determined according to the terms of those subheadings and any related subheading notes, and mutatis mutandis, to the above rules, on the understanding that only subheadings at the same level are comparable. GRI 6 thus incorporates GRIs 1 through 5 in classifying goods at the subheading level.
In understanding the language of the HTSUS, the Harmonized Commodity Description and Coding System Explanatory Notes (ENs) may be utilized. The ENs, although not dispositive or legally binding, provide a commentary on the scope of each heading of the HTSUS, and are the official interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
The HTSUS provisions under consideration are as follows:
1602 Other prepared or preserved meat, meat offal or blood:
* * *
Of poultry of heading 0105:
* * *
1602.32.00 Of chickens
Prepared meals:
* * *
1602.32.0030 Other
1602.32.0040 Other
…
1901 …[F]ood preparations of flour, groats, meal, starch or malt
extract, not containing cocoa…, not elsewhere specified or included…
…
1904 Prepared foods obtained by the swelling or roasting of cereals or
cereal products…; cereals (other than corn (maize)) in grain from or in the form of flakes or other worked grains (except flour, groats and meal), pre-cooked or otherwise prepared, not elsewhere specified or included:
…
1905 Bread, pastry, cakes, biscuits and other bakers’ wares…
…
2106 Food preparations not elsewhere specified or included:
* * *
Other:
* * *
Other:
* * *
Other:
* * *
Other:
2106.90.9995 Frozen
…
Counsel has asserted that the tortilla wraps, which contain more than 20 percent by weight of chicken, should be classified under heading 1602, HTSUS. Note 2 of Chapter 16, HTSUS, supports counsel’s assertion, providing that food preparations containing more than 20 percent by weight of meat are covered in that chapter.1 We have also examined headings 1901 and 1905, HTSUS, and the ENs corresponding to those headings. ENs 19.01 and 19.05 each exclude preparations or products “containing more than 20% by weight of…meat…” and assign such products to Chapter 16. Accordingly, the tortilla wraps are classified under heading 1602. The subheading provisions under consideration are 1602.32.0030, HTSUS, and 1602.32.0040, HTSUS. In previous rulings, we have held that Shaomai, a wrapped dish similar to tortilla wraps, is a “prepared” food. See HQ 951472 (February 8, 1993) and HQ 086283 (May 14, 1990). Accordingly, the tortilla wraps are classified as a prepared food falling under subheading 1602.32.0030, HTSUSA.
After importation into the United States, the tortilla wraps, are topped with
melted cheese and salsa. The toppings envelop and penetrate the tortilla wraps, transforming the tortilla wraps into enchiladas. The enchiladas are packed in trays, along with rice, and packaged as frozen finished meals. It is necessary to determine the classification of both the “enchiladas” and the “rice”.
The chicken content for the enchiladas falls below 20% by weight, precluding classification under Chapter 16. We have examined headings 1901, 1905, and 2106, HTSUS. Classification of the enchiladas under heading 1901 is precluded by the provisions of EN 19.01, which suggest that the enchiladas would have had to be uncooked to warrant consideration for classification under heading 1901, HTSUS (fully or partially cooked bakers’ wares and precooked or cooked pizza are excluded from heading 1901, HTSUS). See EN 19.01.
With regard to heading 1905, HTSUS, the enchiladas are comprised of various components, including a tomato-based sauce seasoned with chilies and melted cheese topping. EN 19.05 addresses “bread, pastry, cakes, biscuits and other bakers’ wares”. The enchiladas are neither baked prior to importation, nor are they the type of good generally recognized as bakers’ wares. As such, we find that the enchiladas do not fall under the category of “bakers’ wares”, as described in heading 1905, HTSUS, and EN 19.05.
Accordingly, we hold that the enchiladas are a “food preparation not elsewhere specified or included” in the HTSUS, and are classified in heading 2106, HTSUS. The rice preparation, however, is classified in heading 1904, HTSUS. Therefore, since the enchiladas and the rice are classified in different headings of the HTSUS, we must examine the provisions of GRI 3.
GRI 3 provides that classification of goods classifiable under two or more headings shall be effected as follows:
The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to [Rule] 3(a), shall be classified as if they consisted of the material or component which gives them their essential character….
The Explanatory Notes for GRI 3(b) provide examples of sets which can be classified by reference to Rule 3(b), including
…[s]ets consisting of a sandwich made of beef, with or without cheese, in a bun (heading 16.02), packaged with potato chips (French fries) (heading 20.04)….
The ENs provide for classification of that set in heading 16.02. The example cited is analogous to the finished meals being discussed here (i.e., enchiladas and rice). The finished meals are to be classified according to the component which imparts their essential character, which is the enchiladas.
General Note 12(b)(i), HTSUS, provides that “goods wholly obtained or produced entirely in the territory of Canada, Mexico, and/or the United States” are eligible for treatment as NAFTA originating goods. Since the tortilla wraps are made in Mexico of U.S. and Mexican ingredients, they qualify as NAFTA originating goods.
With regard to the country of origin of the tortilla wraps and finished meals, the country of origin marking requirements for a "good of a NAFTA country" are determined in accordance with Annex 311 of the NAFTA, as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993), and the appropriate CBP Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, CBP Regulations. The marking requirements of these goods are set forth in Part 134, CBP Regulations.
Section 134.1(b) of the regulations, defines "country of origin" as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 134.1(j) of the regulations, provides that the "NAFTA Marking Rules " are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.
The imported tortilla wraps are processed in Mexico prior to being imported into the U.S. Since Mexico is defined under 19 CFR § 134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported tortilla wraps are a good of Mexico, and thus, subject to the NAFTA marking requirements.
The marking rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, CBP Regulations (19 CFR § 102). Section 102.11(a), CBP Regulations (19 CFR § 102.11(a)), sets forth the procedures for determining the country of origin of goods for NAFTA purposes and provides, in relevant part, as follows: (a) The country of origin of a good is the country in which:
(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.
Since the tortilla wraps and finished meals contain ingredients originating in the U.S. and Mexico, the tortilla wraps and finished meals do not qualify as “good[s] wholly obtained or produced" in the U.S. or Mexico. Therefore, the country of origin of the tortilla wraps and finished meals cannot be determined under section 102.11(a)(1).
Section 102.11(a)(2) provides that the country of origin may be determined if a good is produced exclusively from domestic materials. "Domestic materials" is defined in section 102.1(d), CBP Regulations, as meaning "a material whose country of origin as determined under these rules is the same country as the country in which the good is produced." Since the tortilla wraps and finished meals are not produced exclusively from materials of any one country, the country of origin cannot be determined under section 102.11(a)(2).
Proceeding to section 102.11(a)(3), that section provides that the country of origin of a good is the country in which "each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section." Section 102.1(e), CBP Regulations, defines "foreign material" 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." As discussed above, the tortilla wraps are classified in subheading 1602.32.0030, HTSUS. The tortilla wraps consist of U.S. and Mexican ingredients, none of which are classified in Chapter 16, HTSUS. The applicable tariff change specified in section 102.20(d), CBP Regulations, states:
1601-1605…A change to heading 1601 through 1605 from any other
chapter.
As the U.S. ingredients, i.e., foreign material, meet the applicable tariff change required by section 102.20(d), the tortilla wraps are goods of Mexico under the NAFTA Marking Rules. Accordingly, the provisions of section 102.20(d) have been met, and the tortilla wraps must be marked as products of Mexico upon importation into the U.S., subject to the NAFTA Marking Rules.
Continuing our “country of origin” analysis, the Mexican tortilla wraps are imported into the U.S., then combined with other ingredients and packed in the U.S., yielding a finished meal consisting of enchiladas and rice that is classified in subheading 2106.90.9995, HTSUS. The applicable tariff change specified in section 102.20(d), CBP Regulations, states, in pertinent part:
2106.90…A change to a good of subheading 2106.90…from any other
subheading” [with exceptions not applicable here].
As such, the Mexican tortilla wraps undergo “an applicable change in tariff classification” [i.e., from heading 1602 to subheading 2106.90]. Accordingly, the provisions of section 102.20(d) have been met, and the finished meals are goods of the United States for marking purposes. As goods of the United States, the finished meals are excepted from country of origin marking requirements.
HOLDING:
By application of GRI 1, the tortilla wraps are classified in heading 1602, HTSUS, specifically, subheading 1602.32.0030, HTSUSA, as: “Other prepared or preserved meat, meat offal or blood: Of poultry of heading 0105: Of chickens: Prepared meals: Other”. As products of Mexico that qualify as “originating goods” under NAFTA, the tortilla wraps are dutiable at the column one, special rate of duty, which is “Free”.
By application of GRI 3, the finished meals are classified in heading 2106, HTSUS, specifically, subheading 2106.90.9995, HTSUSA, as: “Food preparations not elsewhere specified or included: … Other: … Other: … Other: Frozen”. The tortilla wraps undergo “an applicable change in tariff classification” (a change to heading 2106 from 1602) when packed as finished meals in the United States with U.S. ingredients. Therefore, the finished meals are goods of the United States and excepted from country of origin marking requirements.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates provided on the Internet at www.usits.gov/tata/hts/.
You are to mail this decision to counsel for the internal advice applicant no later than 60 days from the date of this letter. On that date, Regulations and Rulings of the Office of International Trade will take steps to 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