CLA-2-24:RR:NC:2:231 J89737
Mr. Munford Page Hall, II
Dorsey and Whitney LLP
1001 Pennsylvania Avenue, NW, Suite 400 South
Washington, DC 20004-2533
RE: The tariff classification of American tobacco that is exported to Canada where it is sliced, reconditioned, blended with various foreign tobaccos, re-dried, and then returned to the United States; 9802.00.80.
Dear Mr. Hall:
In your letter, dated October 7, 2003, you requested a tariff classification ruling on behalf of your client, Universal Leaf Tobacco Company, Richmond, VA.
The merchandise in question will consist of flue-cured and oriental tobaccos that will be processed and blended, after importation into Canada. The foreign tobaccos in this blend will be both flue-cured and oriental types. The American component will be stemmed and stripped flue-cured tobacco only, shipped directly from the United States. It is stated that the U.S. origin tobacco “will usually make up over 50% of the tobacco portion of the final product.”
Upon receipt in Canada, the blending will consist of the following steps:
1. The various types and grades of tobacco from different countries will be placed on lines in various percentages depending on the customer’s specifications.
2. The tobacco will proceed through a slicer that will horizontally cut the tobacco to facilitate ordering.
3. The tobacco will undergo reconditioning (moisture will be added to soften it).
4. During the blending process, the tobacco will be layered in a silo horizontally and distributed vertically. This will maximize the blending of the product.
5. The tobacco will be re-dried.
In your correspondence you inquire as to the applicability of subheading 9802.00.80, HTS, which provides for articles…assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, (b) have not lost their physical identity in such articles by change in form, shape or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating and painting.
In HRL 556479, dated May 12, 1991, Customs ruled on the applicability of subheading 9802.00.80 to processed tobacco of U.S. origin that had been shipped to England to be manufactured into cigarettes, then packaged and returned to the United States. The inquirer sought an allowance in duty under subheading 9802.00.80 for the value of the American tobacco. In denying the claim for a partial duty exemption under that subheading, Headquarters distinguished a simple assembly process, in which prefabricated parts are connected, from a manufacturing process that combined loose materials:
“Section 10.16(a), CR [19 CFR 10.16(a)] provides that the assembly operations may consist of any method used to join together solid components and may be preceded, accompanied, or followed by operations incidental to the assembly process. However, the combining of amorphous solids with each other or with solid components is not regarded as an assembly. Thus, powders, liquids, and analogous substances are considered to be incapable of combining in a genuine assembly within the meaning of the tariff provision. The cigarette tobacco under consideration is merely a fungible material which must be changed from bulk quantities into precise proportions before being combined with papers to form the cigarettes and, therefore, cannot be considered as fabricated components when exported from the United States. Therefore, we are of the opinion that the tobacco portion of the finished cigarettes is not entitled to a duty allowance under subheading 9802.00.80, HTS.”
Following the rationale of this ruling, we believe that mixing or blending is not an assembly operation within the purview of subheading 9802.00.80, HTS. Further, the mixing, as well as the further cutting of the tobacco, is a necessary step in the manufacture of the tobacco and, thus, would constitute an advance in value or improvement in condition of the American tobacco.
Accordingly, the applicable subheading for a blend of unmanufactured flue-cured and oriental tobaccos will be 2401.20, Harmonized Tariff Schedule of the United States (HTS), which provides for Unmanufactured tobacco (whether or not threshed or similarly processed); tobacco refuse, tobacco, partly or wholly stemmed/stripped:...Threshed or similarly processed. If the tobacco blend is to be used in products other than cigarettes, then the applicable subheading will be 2401.20.8390, HTS, with duty at the rate of 37.5 cents/kilogram. If imported as a cigarette blend, then the applicable subheading for this blend, if imported in quantities that fall within the limits described in additional U.S. note 5 to chapter 24, will be 2401.20.8590, HTS, with duty at the rate of 37.5 cents per kilogram. If the
quantitative limits of additional U.S. note 5 have been reached, the applicable subheading for this blend will be 2401.20.8790, HTS, with duty at the rate of 350 percent of the value.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR 177).
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 Thomas Brady at (646) 733-3030.
Sincerely,
Robert B. Swierupski
Director
National Commodity
Specialist Division