CLA-2-24:OT:RR:NC:N2:231
Mr. George M. Keller
Customs Advisory Services, Inc.
1003 Virginia Ave. (Suite 200)
Atlanta, GA 30354
RE: The tariff classification of three grades of tobacco from Canada.
Dear Mr. Keller:
In your letter dated April 25, 2012, you requested a tariff classification ruling on behalf of your client, Norfolk Leaf Company Ltd. (Simcoe, Ontario, Canada). In response to our request for additional information, you submitted a supplemental letter dated May 21, 2012.
Samples representing three grades of tobacco accompanied your initial letter. You have advised that none are from cigar leaf tobacco or from Oriental or Turkish type tobacco.
The first sample, identified as PMT FCV Grade 1 (Partially Manufactured Tobacco, Flue Cured Virginia, Grade 1), consists of numerous loose, irregularly shaped/sized pieces of tobacco leaf. The pieces are generally small, ranging from those less than a square inch in area to others roughly 1” x 5”. You state that the product meets the USDA Official Standard Grade for Flue-Cured Tobacco Type 92, partly or wholly stemmed/stripped flue cured tobacco which is a byproduct of the leaf-threshing process and is known as strip tobacco. You have provided the following explanation of how this grade will be processed in the United States after importation:
Containers of strip tobacco (PMT FCV Grade 1) and other grades of strip tobacco will be received in different configurations. All receipts will be entered into an inventory control system at the receiving dock prior to factory storage. The blending phase consists of continuous conditioning lines. At the beginning of each blending line, the control system captures use of each tobacco grade component. Each component is conditioned and cased/flavored and transported to strip blending bulkers. Cased stripped tobacco blends are next sent to the cutting line. After cutting, cut and cased strip tobacco blends are conveyed to drying. After drying, tobacco is packed for shipment in boxes. The tobacco will be sent to roll-your-own manufacturers, pipe tobacco manufacturers or exported out of the U.S. The tobacco will not be used in the manufacture of cigarettes in the U.S.
The second sample, identified as PMT FCV Grade S (Partially Manufactured Tobacco, Flue Cured Virginia, Grade Scrap), consists of numerous loose, fine particles of tobacco. Although they are not uniform in size/shape, most of the particles appear to be in the neighborhood of 1/16” square. You state that the product meets the USDA Official Standard Grade for Flue-Cured Tobacco Type 92, partly or wholly stemmed/stripped flue cured tobacco scrap which is a byproduct of the leaf threshing process. You have provided the following explanation of how this grade will be processed into “reconstituted tobacco” in the United States after importation:
Tobacco byproducts (including the instant PMT FCV Grade S, plus tobacco stems, dust, etc.) are ground to the same particle size. During the grinding step, all tobacco byproducts are mixed together according to the pre-defined proportion/blend. The ground tobacco byproducts, binder, water and, if necessary, humectants and cellulose fibers are then added to the mix. The above-described mix passes through a set of 2 rollers, forming a continuous Reconstituted Tobacco film. The film is dried (removal of water) to a final moisture content of approximately 10-14%, cut into small pieces and packed into cardboard boxes for export shipment.
The third sample, identified as PMT FCV Grade ST (Partially Manufactured Tobacco, Flue Cured Virginia, Grade Stem), consists of numerous loose tobacco stems (leaf midribs) in non-uniform lengths, generally ranging from about one-half inch to several inches. You state that the product meets the USDA Official Standard Grade for Flue-Cured Tobacco Type 92, partly or wholly stemmed/stripped flue cured tobacco stems which are a byproduct of the leaf threshing process. After importation into the United States, these stems will be processed into “reconstituted tobacco” by the same method indicated in the preceding paragraph.
You have provided the following explanation of why the words “partially manufactured” appear in the names of all the above tobacco grades:
Under the Canadian Excise Tax Act of 2001 (which is not a Customs statute) “manufactured tobacco” is defined as every article, other than a cigar or packaged raw leaf tobacco, that is manufactured in whole or in part from raw leaf tobacco by any process.
Similarly, partially manufactured tobacco (“PMT”) means manufactured tobacco that is cut filler or cut rag or that is manufactured less fully than cut filler or cut rag. The above samples are not cut filler nor cut rag. However, Canadian Customs and Border Security Agency (“CBSA”) is requiring that the Canadian commercial invoices label these products as PMT.
However, despite the Canadian naming/labeling requirement, you have stressed that all three grades at issue are in reality nothing more than threshed unmanufactured tobacco. That is, after being conditioned with heat and moisture, the leaves have been subjected to the action of mechanical threshers. The threshers help separate the midrib from the lamina by a tearing action which is created by rotors with both fixed and rotary knives placed above a basket of different patterns and sizes. Various air separation devices, known as classifiers, are then used to separate the “lights” (lamina free of stem) from the “heavies” (lamina still attached to the stem). Since all lamina are not removed during a single pass, the threshing/separation process is repeated as many times as required to ensure maximum removal of lamina in as large as possible particle sizes with as little damage and stress to the lamina as possible.
You note that the above-described threshing process produces strip, scrap and stem tobaccos. You assert that these threshed tobaccos are not ready for smoking, have had no additives or flavoring added to them, and therefore cannot be considered “manufactured tobaccos” for purposes of importation into the United States. Based on the information you have submitted, and in light of prior rulings, we agree.
The applicable subheading for the PMT FCV Grade 1 and PMT FCV Grade S tobaccos, imported for use in the United States in the manner described above, will be 2401.20.8310, Harmonized Tariff Schedule of the United States (HTSUS), which provides for unmanufactured tobacco…tobacco, partly or wholly stemmed/stripped: threshed or similarly processed: other: other: to be used in products other than cigarettes: flue-cured. The general rate of duty will be 37.5 cents per kilogram.
The applicable subheading for the PMT FCV Grade ST tobacco, imported for use in the United States in the manner described above, will be 2401.30.2310, HTSUS, which provides for tobacco refuse: other: to be used in products other than cigarettes: tobacco stems: not cut, not ground and not pulverized: flue-cured. The rate of duty will be free.
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/.
Tobacco entered under subheadings 2401.20.8310 and 2401.30.2310, HTSUS, is subject to the actual-use requirements set forth in sections 10.131 through 10.139 of Title 19, Code of Federal Regulations (19 CFR 10.131-139). In particular, sections 10.137 and 10.138 describe, respectively, the records of use that are required to be maintained and the proof of use that must be furnished to Customs and Border Protection within 3 years of the date of entry or withdrawal from warehouse for consumption.
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 Nathan Rosenstein at (646) 733-3030.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division