CLA-2-17:OT:RR:NC:N2:232
Mr. Brett Harris Roll & Harris LLP 2001 L Street NW
Washington, DC 20036
RE: The Classification, Marking, and Eligibility of the United States-Mexico Canada Trade Agreement (USMCA) for Sugar and Vanillin Blends
Dear Mr. Harris,
This is in response to your letter dated December 3, 2021 on behalf of your client, The Hershey Company, requesting a ruling on classification, country of origin marking and the eligibility of the USMCA on Sugar and Vanillin Blends.
The subject merchandise is described as Sugar and Vanillin Blends, a mixture of sugar and artificial vanillin powder. Product 1 consists of 99.98 percent sugar and 0.02 percent vanillin powder. Product 2 consists of 99.5 percent sugar and 0.5 percent vanillin powder. Product 3 consists of 99 percent sugar and 1 percent vanillin powder.
You state that the raw cane sugar (Products of Brazil, Guatemala and other Central American countries) is refined, blended with the vanillin powder (Product of the United States, France and China) and packed in Canada. The finished products will be shipped to the United States in 2,200 pound supersacks. The Sugar and Vanillin Blends will be further mixed with other ingredients upon importation for the manufacturing of confectionery products.
Classification:
The applicable subheading for all Sugar and Vanillin Blends will be 1701.91.4800.
Harmonized Tariff Schedule of the United States (HTSUS), which provides for cane or
beet sugar and chemically pure sucrose, in solid form...containing added flavoring matter whether or
not containing added coloring... articles containing over 65 percent by dry weight of sugar described
in additional U.S. note 2 to chapter 17...other. The general rate of duty will be 33.9 cents per
kilogram plus 5.1 percent ad valorem.
Country of Origin Marking The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C. § 1304(a)), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. Applied in sequential order, the required hierarchy establishes that: The country of origin of a good is the country in which: (a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(3) 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 requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because all five sugar and vanillin blended products are neither wholly obtained nor produced exclusively from “domestic” (Canada, in this case) materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). The applicable tariff shift requirement in section 102.20 for the Sugar and Vanillin Blends Products of subheading 1701.91, HTSUS, consist of the following:
A change to heading 1701 through 1702 from any other chapter.
Because the foreign material (sugar) contained in all Sugar and Vanillin Blends is
classified in subheadings 1701.13, the tariff shift rule in 19 C.F.R. § 102.20(a)(3) is not met.
Since an analysis of section 102.11(a) has not produced a country of origin determination, we turn to section 102.11(b) of the regulations. Section 102.11(b)(1) provides as follows:
(b) Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:
(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good, or . . .
When determining the essential character of a good under 19 C.F.R. § 102.11, 19 C.F.R. § 102.18(b)(1) provides that only domestic and foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the § 102.20 specific rule or other requirements applicable to the good shall be taken into consideration.
Here, the only material that does not undergo the applicable tariff shift in 19 C.F.R. § 102.20(d) is the raw sugar from Brazil, Guatemala and the Central American countries, and consistent with Sections 102.11(b) and 102.18(b)(1), it is the material that imparts the “essential character” unto the Sugar and Vanillin Blended Products.
Accordingly, for marking purposes the country of origin of the Sugar and Vanillin Blends are Brazil, Guatemala and the Central American countries of the raw cane sugar used in the Sugar and Vanillin Blends.
USMCA:
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11, HTSUS, implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states, in relevant part:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
…
Since all Sugar and Vanillin Blends contain non-originating material, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and (ii). We must next determine whether the Sugar and Vanillin Blends under GN 11(b)(iii). All Sugar and Vanillin Blends are classified in subheading 1701.91, HTSUS. The applicable rule of origin for merchandise under subheading 1701.91, HTSUS, is in GN 11(o), HTSUS, which provides, in relevant part:
Chapter 17 (1) “A change to headings 1701 through 1703 from any other chapter.”
The Sugar and Vanillin Blends contain refined sugar (heading 1701) which is non-originating from Brazil, Guatemala and the Central American countries is already classified in heading 1701, HTSUS. Therefore, the tariff shift rule is not met. Accordingly, the Sugar and Vanillin Blends classified under subheading 1701.91.4800, HTSUS, do not satisfy the tariff shift rule under GN 11(o).
However, we note that the special column for subheading 1701.91.4800, HTSUS, references subheadings 9823.10.01- 9823.10.45, HTSUS, for “S+”. U.S. Note 10 to Subchapter XXII, which concerns sugar containing products pursuant to the USMCA, provides that:
This note and subheadings 9823.10.01 through 9823.10.45 are effective as to originating goods of the USMCA countries eligible for special tariff treatment under the terms of general note 11 to the tariff schedule provided for in subheadings 1701.91.48, […] except as provided in subparagraph (b)(3). From July 1, 2020, through December 31, 2020, in 2021 and in successive years thereafter, the rates of duty provided for in subheadings 9823.10.01 through 9823.10.45 in the “Special” subcolumn of rates of duty column 1 followed by the symbol “(S+)” shall apply to goods of such countries in lieu of the duty rates set forth in the special subcolumn in the permanent subheadings enumerated above.
* * *
(b) Goods of Canada that qualify to be marked as a good of Canada pursuant to U.S. law, without regard to whether the good is marked shall be eligible for USMCA tariff treatment only under subheadings 9823.10.02 through 9823.10.45.
The aggregate quantity of originating goods of Canada entered under subheading 9823.10.02 from July 1, 2020 through December 31, 2020 shall not exceed the quantity of 4,800 metric tons. Beginning in 2021 and each year following, the quantitative limitations to originating goods of Canada set forth in this note shall be 9,600 metric tons. In any year for which the U.S. Trade Representative has published in the Federal Register a determination that export certificates shall be required, entry under subheading 9823.10.02 shall be eligible if the U.S. importer makes a declaration to U.S. Customs and Border Protection (Customs), in the form and manner determined by Customs, that a valid export certificate issued by the Government of Canada is in effect for such goods.
If the aggregate quantity of originating goods of Canada entered under subheading 9823.10.02 has exceeded the quantity specified in note 10(B)(1) for such year or if other limitations set forth in note 10(B)(1) are not met, such originating goods of Canada shall be entered under subheadings 9823.10.03 through 9823.10.45.
For purposes of entry under subheading 9823.10.02, subject to the quantitative limitations set forth in subparagraph (1), this paragraph, goods that are provided for in 1701.91.48, […] may be made from sugar refined in Canada. For purposes of this subparagraph, sugar refined in Canada means a change to a good of subheading 1701.91 or 1701.99 from any other subheading.
Originating goods that last underwent production in Canada shall be eligible for entry under subheading 9823.10.02 regardless of whether they qualify to be marked as a good of Canada pursuant to U.S. law.
U.S. Note 10(b)(3) specifically provides that for the purposes of subheading 9823.10.02, HTSUS, goods classified under subheading 1701.91.48, HTSUS, may be made from sugar refined in Canada (i.e. from non-originating raw cane sugar). For purposes of U.S. Note 10(b)(3), sugar refined in Canada means “a change to a good of subheading 1701.91 or 1701.99 from any other subheading.”
Thus, goods made from sugar refined in Canada are eligible for the in-quota rate of U.S. Note 10(b)(1) under subheading 9823.10.02, HTSUS.
As determined above, all Sugar and Vanillin Blends at issue are not originating pursuant to GN 11.
However, the Sugar and Vanillin Blends at issue contain sugar refined in Canada from non-originating raw sugar produced in Brazil, and other Central American Countries. While raw cane sugar not containing flavoring or coloring matter is classified in subheading 1701.14, HTSUS, cane sugar other than raw, and containing flavoring or coloring matter, is provided for in heading 1701.91, HTSUS. Accordingly, when the sugar contained in the products was refined in Canada from non-originating raw cane sugar classified in subheading 1701.14, HTSUS, a change to a good of subheading 1701.91, HTSUS, has occurred for purposes of U.S. Note 10(b)(3). Therefore, the products are eligible for the in-quota rate under subheading 9823.10.02, HTSUS, provided they meet the quantitative limits set forth in U.S. Note 10(b)(1).
U.S. Note 10(b)(4) states that “originating goods (the Sugar and Vanillin Blends classified under subheading 1701.91.48, HTSUS, in which non-originating sugar is refined in Canada, entered under subheading 9823.10.02, HTSUS, pursuant to U.S. Note 10(b)(3)) that last underwent production in Canada shall be eligible for entry under subheading 9823.10.02 regardless of whether they qualify to be marked as a good of Canada pursuant to U.S. law.” Thus, goods that last underwent production in Canada do not need to be marked as products of Canada to obtain the in-quota rate per U.S. Note 10(b)(1) under subheading 9823.10.02, HTSUS.
The Sugar and Vanillin Blends at issue last underwent production in Canada where the raw sugar was refined and mixed with vanillin powder to form the finished products. Accordingly, although they do not qualify to be marked as goods of Canada, the Sugar and Vanillin Blends, classified under subheading 1701.91.48, HTSUS, are eligible for the in-quota rate under subheading 9823.10.02, HTSUS, provided they meet the quantitative limits set forth in U.S. Note 10(b)(1).
Based on the foregoing, we conclude that pursuant to U.S. Note 10(b)(3) and (b)(4) to Subchapter XXIII, HTSUS, the Sugar and Vanillin Blends, classified in subheading 1701.91.48, HTSUS, are eligible for preferential tariff treatment under the USMCA under subheading 9823.10.02, HTSUS, which provides for Goods entered under the provisions of the US-Mexico-Canada Agreement under general note 11 to the tariff schedule: (con.) Goods provided for in subheading …1701.91.4800 …: Goods provided for in note 10(b) to this subchapter: Subject to the quantitative limits specified in note 10(b)(1) to this subchapter. The special rate of duty will be free (S+).
If the quantitative limitations set forth in U.S. Note 10(b)(1) have been reached, pursuant to U.S. Note 10(b)(2) products of subheading 1701.91.48, HTSUS, are to be entered under subheading 9823.10.03, HTSUS, only if they qualify to be marked as goods of Canada. Since the countries of origin for marking purposes of the Sugar and Vanillin Blends are Brazil, Guatemala, and the Central American countries, and not Canada, the “S+” rates are not applicable.
Therefore, the Sugar and Vanillin Blends that exceed the quantitative limitations of U.S. Note 10(b)(1) will not be eligible under subheading 9823.10.03, HTSUS, and are subject to the column one general duty rate. The general rate of duty will be 33.9 cents per kilogram plus 5.1 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 the World Wide Web at https://hts.usitc.gov/current.
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 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