CLA-2-21:OT:RR:NC:N2:232
Harold C. Averill
Parker & Company
P.O. Box 271
4694 Jaime Zapata Ave.
Brownsville, TX 78522
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of Instant Chai tea sticks from Mexico; Article 509
Dear Mr. Averill:
In your letter dated August 14, 2019, on behalf of your client, Rafi Industries, Inc., you requested a ruling on the classification and status of Instant Chai tea sticks from Mexico under the NAFTA.
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 is said to contain 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 Black Tea Extract is a product of Kenya. The Chicory Root Inulin is a product of Belgium. The Ginger Spice Powder may be sourced from China, India or Nigeria. The total dry weight of sugar is said to be 59.86 percent.
“Chai Moments Matcha Latte” sweetened tea is said to contain 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 Matcha Green Tea is a product of Japan. The Pectin may be sourced from Mexico, China or Spain. The Tara Gum is a product of Peru. The total dry weight of sugar is said to be 55.25 percent.
“Chai Moments Plain Chai” sweetened tea is said to contain 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 Black Tea Extract is a product of Kenya. The Chicory Root Inulin is a product of Belgium. The total dry weight of sugar is said to be 56.39 percent.
“Chai Moments Ginger Turmeric” sweetened tea is said to contain 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, and 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 Black Tea Extract is a product of Kenya. The Chicory Root Inulin is a product of Belgium. The Ginger Spice Powder may be sourced from China, India or Nigeria. The Turmeric Spice Powder is a product of India. The Cinnamon Spice Powder is a product of Vietnam. The Pepper Spice Powder may be sourced from India, Indonesia, Malaysia or Vietnam. The total dry weight of sugar is said to be 59.45 percent.
“Chai Moments Unsweetened Masala” tea is said to contain 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 Chicory Root Inulin is a product of Belgium. The Black Tea Extract is a product of Kenya. The Cinnamon Spice Powder is a product of Vietnam. The Clove Spice Powder may be sourced from Brazil, Comoros, Indonesia, Madagascar, Vietnam or Zanzibar. The Ginger Spice Powder may be sourced from China, India, or Nigeria. The Cardamom Spice Powder may be sourced from Guatemala, Honduras or India. The Pepper Spice Powder may be sourced from India, Indonesia, Malaysia or Vietnam.
All ingredients will be shipped to Mexico where they will be manufactured into Chai Tea products. They are then packaged in 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 applicable tariff provision for the “Chai Moments Plain Chai”, “Chai Moments Matcha Latte”, “Chai Moments Plain Chai”, and “Chai Moments Ginger Turmeric” Instant Chai tea sticks will be 2101.20.5400, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Extracts, essences and concentrates of coffee, tea or maté and preparations with a basis of these products or with a basis of coffee, tea or maté; roasted chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof: Extracts, essences and concentrates of tea or maté, and preparations with a basis of these extracts, essences or concentrates or with a basis of tea or maté: 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 rate of duty will be 10 percent ad valorem. If the quantitative limits of additional U.S. note 8 to chapter 17 have been reached, the product will be classified in subheading 2101.20.5800, HTSUS, and dutiable at the rate of 30.5 cents per kilogram plus 8.5 percent ad valorem. In addition, products classified in subheading 2101.20.5800, HTSUS, will be subject to additional duties based on their value, as described in subheadings 9904.17.49 to 9904.17.56, HTSUS.
The applicable tariff provision for the “Chai Moments Unsweetened Masala” Instant Chai tea sticks will be 2101.20.9000, HTSUS, which provides for Extracts, essences and concentrates of coffee, tea or mate and preparations with a basis of these products or with a basis of coffee, tea or mate; roasted chicory and other roasted coffee substitutes, and extracts, essences and concentrates thereof: Extracts, essences and concentrates, of tea or mate, and preparations with a basis of these extracts, essences or concentrates or with a basis of tea or mate: Other: Other: Other. The rate of duty will be 8.5 percent 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 World Wide Web at https://hts.usitc.gov/current.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if--
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or
(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials.
The “Chai Moments Ginger Chai”, “Chai Moments Matcha Latte”, “Chai Moments Plain Chai”, “Chai Moments Ginger Turmeric” and “Chai Moments Unsweetened Masala” Instant Chai tea sticks do not qualify for preferential treatment under the NAFTA because one or more of the non-originating materials used in the production of the goods will not undergo the change in tariff classification required by General Note 12(t)/21.2, HTSUS. The goods will therefore not be entitled to a free rate of duty under NAFTA.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the North American Free Trade Agreement (“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 Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs 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. (Emphasis added).
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. Part 102 of the regulations, sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.
Part 102 of the regulations, sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the “Chai Moments” Instant Chai tea sticks are produced from materials originating in Canada, United States and various other countries and therefore are neither wholly obtained or produced, nor produced exclusively from domestic materials. Since an analysis of sections 102.11(a) (1) and 102.11(a) (2) will not yield a country of origin determination, we look to section 102.11(a) (3).
Section 102.11(a)(3) provides that the country of origin is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20. Since we have determined that “Chai Moments” Plain Chai”, “Chai Moments Matcha Latte”, “Chai Moments Plain Chai”, and “Chai Moments Ginger Turmeric” Instant Chai tea sticks will be 2101.20.5400 or 2101.20.5800 and the “Chai Moments” Unsweetened Masala Instant Chai tea sticks are classified in subheading 2101.20.9000, HTSUS, the applicable tariff shift rule found in section 102.20(d) requires a change to heading 2101 from any other heading. We find that the products fail to achieve the required tariff shift specified in section 102.20(d) hence we progress to section 102.11(b)(1). 102.11(b)(1) provides that 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. Pursuant to 19 CFR 102.18(b)(1), for purposes of identifying the material that imparts the essential character to a good under section 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.
Therefore, since the Black Tea Extract is the only material that does not undergo the requisite tariff shift, the country of origin of the “Chai Moments” Ginger Chai, “Chai Moments” Plain Chai, “Chai Moments” Ginger Turmeric and “Chai Moments” Unsweetened Masala Instant Chai tea sticks for marking purposes is the United States, on the basis of 19 CFR 102.11(b)(1). Since the Green Tea Matcha Flavor is the only material that does not undergo the requisite tariff shift, the country of origin of the “Chai Moments” Matcha Latte Instant Tea sticks for marking purposes is Kenya, on the basis of 19 CFR 102.11(b)(1).
Section 134.11 of the Customs Regulations (19 C.F.R. 134.11) provides in part: Unless excepted by law...every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to an ultimate purchaser in the U.S. the English name of the country of origin of the article, at the time of importation into the Customs territory of the U.S.
Pursuant to 19 U.S.C. § 1304(f), the marking requirements of subsections (a) and (b) shall not apply to articles described in subheadings 0901.21, 0901.22, 0902.10, 0902.20, 0902.30, 0902.40, 2101.10, and 2101.20 of the Harmonized Tariff Schedule of the United States, as in effect on January 1, 1995. As a result, due to the fact that “Chai Moments Ginger Chai”, “Chai Moments Matcha Latte”, “Chai Moments Plain Chai”, and “Chai Moments Ginger Turmeric” and “Chai Moments Unsweetened Masala” Instant Chai tea sticks are all classified in subheading 2101.20, neither the imported products nor their containers are required to be marked with the foreign country of origin. This statutory exemption is effective for goods entered, or withdrawn from warehouse, for consumption on or after October 11, 1996.
This merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling FDA at telephone number (301) 575-0156, or at the Web site www.fda.gov/oc/bioterrorism/bioact.html.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Frank Troise at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division