CLA-2-20:OT:RR:NC:N2:228
Ms. BJ Shannon
Alston & Bird
950 F Street NW
Washington, DC 20004
RE: The tariff classification and eligibility of the United States-Mexico-Canada Agreement (USMCA) of a Snack Mix product from Canada
Dear Ms. Shannon:
In your letter dated April 14, 2022, on behalf of your client Trophy Foods, Inc., you requested a binding ruling on the classification, and United States-Mexico-Canada Agreement (USMCA) eligibility of a snack mix.
An ingredients breakdown, narrative description of the manufacturing process and a picture of the product accompanied your inquiry.
The subject merchandise is described as a snack mix that is said to contain approximately 25 to 35 percent peanuts (Canada), 15 to 25 percent almonds (Canada), 10 to 20 percent banana chips (Vietnam), milk chocolate peanut butter cups (United States) and peanut butter gems (United States). You state that the peanuts and almonds are imported in raw condition from the United States and are oil roasted, pasteurized and salted in Canada prior to blending with the other ingredients. The peanut butter cups and peanut butter gems will be imported from the United States and are blended with the other ingredients in that form. The banana chips have been fully processed in Vietnam (i.e., roasted, fried, dried, sweetened) and are merely mixed with the other ingredients in Canada. The finished snack mix will be packaged for retail sale and exported to the United States.
Classification:
Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRI). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRI may then be applied in order. GRI 6 provides the mechanism for determining the classification of goods under the subheadings of a heading.
When goods are classifiable under two or more subheadings the provisions of GRI 3 must be followed. GRI 3 provides, in pertinent part, the following: When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows: (a) The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods. (b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3 (a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable. (c) When goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs last in numerical order among those which equally merit consideration.
The snack mix is composed of ingredients that, although mixed together, maintain their original identity. Each ingredient remains complete and recognizable and is not subordinated into a new product merely by the act of mixing with the other ingredients. As such, the snack mix cannot be classified in accordance with GRI 1. Because classification in a single heading cannot be determined by applying GRI 1, we must apply the other GRI’s. In order to determine which material or component gives the snack mix its essential character, we must consider the ingredient composition. In this case, the prepared and preserved peanuts, almonds, and banana chips, all classified in heading 2008, HTSUS, comprising 65 to 75 percent of the snack mix would provide the essential character.
Since the four-digit heading (2008, HTSUS) has been determined, at issue is the applicable eight-digit subheading. Therefore, GRI 6 is implicated. GRI 6 requires that the classification of goods at the subheading level “shall be determined according to the terms of those subheadings, any related subheading notes, and mutatis mutandis, to the above rules [GRIs 1-5], on the understanding that only subheadings at the same level are comparable.”
In your letter, you proposed classification for the snack mix under subheading 2008.19.8500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included . . . nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together . . . other, including mixtures . . . other, including mixtures . . . mixtures. Based on the composition of the ingredients and the analysis above, the snack mix will be classified elsewhere.
Subheading 2008.19, HTSUS, does not describe the snack mix as a whole. However, the snack mix is fully described by the terms of subheadings 2008.97.1040, HTSUS, and 2008.97.9094, HTSUS. Therefore, by application of GRI 3(b), the snack mix is classified under heading 2008, HTSUS. Specifically, by application of GRI 6 and GRI 1, the snack mix, when imported in airtight containers, is classified in subheading 2008.97.1040, HTSUS, which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included . . . other, including mixtures other than those of subheading 2008.19 . . . mixtures . . . in airtight containers and not containing apricots, citrus fruits, peaches or pears . . . other. The general rate of duty will be 5.6 percent ad valorem. When imported in containers that are not airtight, the applicable subheading will be 2008.97.9094, HTSUS, which provides for fruit … otherwise prepared or preserved … other, including mixtures … mixtures … other … other … other. The general rate of duty will be 14.9 percent ad valorem.
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 of the 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:
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 non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));
Since the snack mix contains non-originating ingredients, it is not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor is the product produced exclusively from originating materials per GN 11(b)(ii). Thus, we must determine whether the product qualifies under GN 11(b)(iii).
As previously noted, the snack mx is classified under subheading 2008.97.1040, HTSUS, when imported in airtight containers, and 2008.97.9094, HTSUS, when imported in containers that are not airtight. The applicable rule of origin for goods classified under subheading 2008.97, HTSUS, is in GN 11(o), HTSUS, which provides in relevant part:
A change to subheading 2008.19 through 2008.99 from any other chapter
The snack mix contains a non-originating ingredient, classified in subheading 2008.99, specifically, Vietnamese banana chips, which do not meet the tariff shift rule.
Furthermore, Chapter Rule 1 of GN 11(o)/20 states, “Fruit, nut and vegetable preparations of chapter 20 that have been prepared or preserved merely by freezing, by packing (including canning) in water, brine or natural juices, or by roasting, either dry or in oil (including processing incidental to freezing, packing, or roasting), shall be treated as an originating good only if the fresh good were wholly produced or obtained entirely in the territory of one or more of the USMCA countries.” The banana chips have been fully processed in Vietnam and are merely mixed with the other ingredients in Canada. Based on the information provided, they were not wholly produced or obtained entirely in one or more of the USMCA countries as outlined in the Chapter Rule above for consideration to be treated as an originating good.
However, the banana chips represent less than 10 percent of the total cost of the snack mix. The de minimis rules provided for in GN 11(e)(i), and GN 11(e)(iii) HTSUS, states as follows:
In general.—Except as provided in subparagraphs (e)(ii) through (iv) below, a good that does not undergo a change in tariff classification or satisfy a regional value content requirement set forth in subdivision (o) of this note is an originating good if—
(A) the value of all nonoriginating materials that are used in the production of this good, and do not undergo the applicable change in tariff classification set forth in subdivision (o) of this note –
(1) does not exceed 10 percent of the transaction value of the good, adjusted to exclude any costs incurred in the international shipment of the good; or
(2) does not exceed 10 percent of the total cost of the good
(B) the good meets all other applicable requirements of this note; and
(C) the value of such nonoriginating materials is included in the value of the nonoriginating materials for any applicable regional value content requirement for the good
(iii) Goods provided for under chapters 1 through 27.—Subparagraph (i) of this subdivision does not apply to a nonoriginating material used or consumed in the production of a good provided for in chapters 1 through 27 unless the nonoriginating material is provided for in a different subheading than the subheading of the good for which origin is being determined.
Based on the information provided, the banana chips do not exceed 10 percent of the total cost of the snack mix. Since the banana chips do not exceed 10 percent of the total cost of the good, the de minimis requirement is satisfied and the snack mix is eligible for preferential tariff treatment under the USMCA.
This merchandise may be subject to the Federal Food, Drug, and Cosmetic Act and/or The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which are administered by the U.S. Food and Drug Administration (FDA). Information on the Federal Food, Drug, and Cosmetic Act, as well as The Bioterrorism Act, can be obtained by calling the FDA at 1-888-463-6332, or by visiting their website at www.fda.gov.
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 Timothy Petrulonis at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division