CLA-2-22:OT:RR:NC:232
Mr. David J. Doyle
Hiram Walker & Son’s Ltd.
2072 Riverside Dr. East
Windsor Ontario
N8Y 4S5 Canada
RE: The tariff classification, marking and country of origin of Flavored Vodka from Denmark
Dear Mr. Doyle:
In your letter dated June 9, 2009, you requested a ruling on tariff classification and country of origin of Flavored Vodka from Denmark. Your request also asks for the marking requirements for these products.
The subject merchandise consists of flavored vodka bottled in the United States. You suggest two scenarios for potential production of these products asking for advice on each one.
Scenario 1: Vodka is produced in Denmark and then imported into the United States. You state that the strength of the vodka at the time of importation will be equal to or greater than 80 percent by volume. The vodka will be diluted with water, sugar and flavor to produce a Flavored Vodka product in the United States. The final product will be a Flavored Vodka with 35 percent alcohol by volume.
Scenario 2: Vodka is produced in Denmark and then imported into the United States. You state that the strength of the vodka at the time of importation will be less than 80 percent by volume. The vodka will be diluted with water, sugar and flavor to produce a Flavored Vodka product in the United States. The final product will be a Flavored Vodka with 35 percent alcohol by volume.
The applicable subheading for the Flavored Vodka presented in Scenario 1 will be 2207.10.3000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher: for beverage purposes. The duty rate will be 18.9 cents per proof liter. In addition, the ethyl alcohol may be subject to a Federal Excise Tax of 13.50 per proof gallon and a proportionate tax rate on all fractional parts of a proof gallon.
The applicable subheading for the Flavored Vodka presented in Scenario 2 will be 2208.60.5000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for vodka ... in containers each holding over 4 liters ... valued over $2.05 per liter. The rate of duty will be free. In addition, the vodka is subject to a Federal Excise Tax of $13.50 per proof gallon and a proportionate tax at the like rate on all fractional parts of a proof gallon.
Your inquiry also requests a ruling on the country of origin determination for an alcoholic beverage for the purpose of label marking.
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.
The country of origin for marking purposes is defined at section 19 CFR 134.1(b), to mean 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 the meaning of Part 134. A substantial transformation is effected when a manufacturer or processor converts or combines an article into a new and different article resulting in a change in name, character, or use.
In this case, we must first determine if the product undergoes a substantial transformation. We must consider what effect, if any, the dilution with water in the United States and the addition of sugar and flavor from the United States, Canada and other various countries has on the vodka. HQ ruling 562642, dated April 14. 2003, in which we held that dilution and bottling of vodka, do not render a substantial transformation. We believe that the Court of International Trade’s (CIT) analysis in National Juice Products Ass’n v. United States, 10 CIT 48, 628 F. Supp. 978 (1986), is also applicable to this case. In National Juice, the CIT upheld Customs ruling in HRL 728557, dated September 4, 1985, in which we held that imported orange juice concentrate was not substantially transformed when it was mixed with water, essential oils, flavoring ingredients and domestic fresh juice in order to produce frozen concentrated orange juice and reconstituted orange juice. Customs found that the manufacturing process did not create an article with a new name, character or use. Customs held, and the CIT agreed, that the manufacturing process did not change the "fundamental character of the product" as "it was still essentially the juice of oranges."
In both scenarios, the imported vodka has not been substantially transformed as a result of the dilution and addition of sugar from the United States, Canada or other various countries and flavor added in the United States to produce flavored vodka. The imported vodka remains a product of "Denmark" for country of origin marking.
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 http://www.usitc.gov/tata/hts/.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 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 Frank Troise at (646) 733-3031.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division