CLA-2-18:OT:RR:E:NC:232
Ms. Sherri Comeau
Barry Callebaut
2950 Nelson Street
St-Hyacinthe, Quebec
J2S1Y7 Canada
RE: The tariff classification, country of origin and status under the North American Free Trade Agreement (NAFTA) of Milk Chocolate Bars from Mexico; Article 509
Dear Ms. Comeau:
In your letter dated July 24, 2009, you requested a ruling on the country of origin and status of Milk Chocolate Bars, 500 gram sized (Item number Bars-123) from Mexico under the NAFTA.
The subject merchandise is stated to contain 42 percent sugar, 24 percent cocoa butter, 22.5 percent whole milk powder, 11.5 percent cocoa paste, and trace amounts of lecithin and vanilla. The percentage of milkfat is 6.0 percent and the product also contains 21.8 percent milk solids. The initial product is milk chocolate “blocks” having a total weight of 5 kilograms, produced in Belgium. The “blocks” are shipped from Belgium to Mexico where they are melted and molded into milk chocolate, 500 gram bars, packaged for retail sale. You state that no additional ingredients are added to the product and that only the form (size) has been changed.
The applicable subheading for the Milk Chocolate Bars, 500 gram (Item number Bars-123) will be 1806.32.0800, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Chocolate and other food preparations containing cocoa: Other, in blocks, slabs or bars: Not filled: Preparations consisting wholly of ground cocoa beans, with or without added cocoa fat, flavoring or emulsifying agents, and containing not more than 32 percent by weight of butterfat or other milk solids and not more than 60 percent by weight of sugar: Containing butterfat or other milk solids (excluding articles for consumption at retail as candy or confection): Other, containing over 5.5 percent by weight of butterfat: Described in additional U.S. note 2 to chapter 18 and entered pursuant to its provisions. The rate of duty will be 5 percent ad valorem. If the quantitative limits of additional U.S. note 2 to chapter 18 have been reached, and the product does not contain less than 21 percent by weight of milk solids, classification is under 1806.32.0800, HTS and dutiable at the rate of 54.4 cents per kilogram plus 4.4 percent ad valorem. In addition, products classified in subheading 1806.32.0800, HTS, will be subject to additional duties based on their value as described in subheadings 9904.18.09 to 9904.18.18, HTS.
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, … Based on the facts provided, Milk Chocolate Bars, 500 gram described above, when classified in subheading 1806.32.0800, HTSUS, will qualify for NAFTA preferential treatment, because it will meet the requirements of HTSUS General Note 12(b)(ii)(A) and 12(t)/18.5. It will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
Your inquiry also requests a ruling on the country of origin for an imported article which is produced in Belgium and shipped to Mexico for processing and retail packaging.
In this case, the milk chocolate, 5 kilogram “blocks” were produced in Belgium and shipped to Mexico. In Mexico, the “blocks” are melted and molded into milk chocolate, 500 gram bars. No ingredients are added to alter the chocolate during the melting and molding stages; only the form has been changed. The chocolate blocks were shipped to Mexico, a participant in the North American Free Trade Agreement (NAFTA) and the NAFTA Marking Rules must be used to determine marking and country of origin.
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. 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." 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 134.1(b), Customs Regulations [19 CFR 134.1(b)], defines the country of origin as the country of manufacture, production, or growth of any article of foreign origin entering the Untied States. 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 this part. However, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. Section 102.11, Customs Regulation (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. Paragraph (a) of this section states that the origin of a good is the country in which:
The good is wholly obtained or produced;
The good is produced exclusively from domestic materials; or
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, and all other applicable requirements of these rules are satisfied.
Section 102.1 (e), Customs Regulations [19 CFR 102.1(e)] defines “foreign material” as “a material whose country of origin as determined under these rules is not the same country or origin as the country in which the good is produced.” Chocolate in “5 kilogram blocks” is exported to Mexico for processing and packing prior to the importation of the finished product, chocolate in “500 gram chocolate bars” into the United States. Because the “500 gram bars” are of Belgium material, the “bars” are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, neither 19 CFR 102.11 (a)(1) or 102.11(a)(2) may be used to determine the origin of the finished articles, and analysis must continue to 19 CFR 102.11(a)(3).
The chocolate 5 kilogram block which is initially classified under 1806.20.2090, HTSUS will be classified under 1806.32.0800 HTSUS subsequent to processing and packaging in Mexico. This constitutes an applicable change in tariff classification within the requirements of Section 102.20 and the country of origin of the goods is determined to be Mexico.
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 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 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 646-733-3031.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division