CLA-2-18:OT:RR:NC:N2:232
Mr. Joseph F. Walter
Livingston International
670 Young Street
Tonawanda, NY 14150
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of Hot Chocolate Mix from Canada; Article 509
Dear Mr. Walter:
In your letter dated November 6, 2017, on behalf of your client, Redpath Sugar Ltd., you requested a ruling on the status of two Hot Chocolate Mix Formulations from Canada under the NAFTA. You submitted ingredients breakdowns and descriptive literature with your request.
Hot Chocolate Mix Formulation 1 is said to contain 62-64 percent raw cane sugar, 15-16 percent whey powder, 10-11 percent non-dairy creamer, 7-8 percent cocoa powder and trace amounts of the following: salt, silicon dioxide, cellulose gum, natural and artificial flavors. Hot Chocolate Mix Formulation 2 is said to contain 70-72 percent sugar, 14-16 percent non-dairy creamer, 9-10 percent cocoa powder and trace amounts of the following: salt, natural and artificial flavors, cellulose gum and tricalcium phosphate. With regard to Hot Chocolate Mix Formulations 1 and 2, all of the ingredients are of US origin except for the sugar and cocoa powder which are non-originating goods. The raw cane sugar is refined in Canada and blended with the other ingredients in Canada.
According to the information provided, Hot Chocolate Mix Formulations 1 and 2 will be packaged for three lanes of commerce:
1. For retail sale to consumers in 500g, 1 kg, and 2 kg fiber canisters and 28g pouches;
2. For sale to food service customers in 2lb or and 28g pouches;
3. Imported in 1000 kg super sacks that will be repackaged in the United States into either retail or food service format without any further processing.
The applicable tariff provision for Hot Chocolate Mix Formulation 1 and 2 put up for retail sale and imported in 500 gram, 1 kilogram, and 2 kilogram fiber canisters and 28 gram pouches will be 1806.90.5500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Chocolate and other food preparations containing cocoa: Other: 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 general rate of duty will be 3.5 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 1806.90.5900, HTSUS, and dutiable at the rate of 37.2 cents per kilo plus 6 percent ad valorem. In addition, products classified in subheading 1806.90.5900, HTSUS, may be subject to additional duties based on their value, as described in subheadings 9904.17.49 to 9904.17.65, HTSUS.
The applicable tariff provision for Hot Chocolate Mix Formulation 1 and 2 put up for sale to food service customers in 2 pound or 28 gram pouches will be 1806.90.4500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Chocolate and other food preparations containing cocoa: Other: Other: Other: Other: Articles containing over 65 percent by dry weight of sugar described in additional U.S. note 2 to chapter 17: Other. The duty rate will be 3.5 percent ad valorem. If the quantitative limits of additional U.S. note 7 to chapter 17 have been reached, the product will be classified in subheading 1806.90.4900, HTSUS, and dutiable at the rate of 37.2 cents per kilogram plus 6 percent ad valorem. In addition, products classified in subheading 1806.90.4900, HTSUS, may be subject to additional duties based on their value, as described in subheadings 9904.17.17 to 9904.17.48, HTSUS.
The applicable tariff provision for Hot Chocolate Mix Formulation 1 imported in 1000 kg super sacks that will be repackaged in the United States into either retail or food service format without any further processing will be 1806.20.9500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Chocolate and other food preparations containing cocoa: Other preparations in blocks, slabs or bars, weighing more than 2 kg or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg: Other: 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 general 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 1806.20.9800, HTSUS, and dutiable at the rate of 37.2 cents per kilogram plus 8.5 percent ad valorem. In addition, products classified in subheading 1806.20.9800, HTSUS, may be subject to additional duties based on their value, as described in subheadings 9904.17.49 to 9904.17.65, HTSUS.
The applicable tariff provision for Hot Chocolate Mix Formulation 2 imported in 1000 kg super sacks that will be repackaged in the United States into either retail or food service format without any further processing will be 1806.20.7500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Chocolate and other food preparations containing cocoa: Other preparations in blocks, slabs or bars, weighing more than 2 kg or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg: Other: Containing more than 65 percent by dry weight of sugar: 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 general 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 1806.20.7700, HTSUSA, and dutiable at the rate of 35 cents per kilogram plus 9.8 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; or
(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because--
(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or
(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
Based on the facts provided, Hot Chocolate Mix Formulations 1 and 2, when blended together in Canada qualifies for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(ii)(A) and General Note 12(t)/18.4 and 18.5. They will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
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 website www.fda.gov/oc/bioterrorism/bioact.html.
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 frank.l.troise.cbp.dhs.gov.
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division