CLA-2-18:RR:NC:SP:232 R02077
Mr. David Stewart
Commodity Specialists Company
15 Leigh Fisher
El Paso, TX 79906
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a sugar and chocolate liquor blend from Mexico; Article 509
Dear Mr. Stewart:
In your letter dated June 2, 2005 you requested a ruling on the status of a sugar and chocolate liquor blend from Mexico under the NAFTA. Your request also asks for the country of origin for marking purposes.
The subject merchandise consists of a blend containing 98 percent to 99.5 percent sugar and 0.5 percent to 2 percent chocolate liquor. The sugar will be produced from sugar cane or sugar beets. It will be of United States or Mexican origin. The chocolate liquor will be imported from a NAFTA or non-NAFTA country, or it will be produced in the United States from cocoa beans from a NAFTA or non-NAFTA country. The ingredients will be blended in Mexico and shipped to the United States in 2,400 pound to 2,700 pound bulk bags or containerized in bulk form. The blend will be used to manufacture chocolate, compound chocolate and confectionery products.
The applicable subheading for the sugar and chocolate liquor blend will be 1806.20.7300, Harmonized Tariff Schedule of the United States (HTS), 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 described in additional U.S. note 2 to chapter 17: Other. The general rate of duty will be 30.5 cents per kilogram plus 8.5 percent ad valorem.
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, when the sugar and chocolate liquor blend is manufactured using chocolate liquor produced from NAFTA origin cocoa beans, the product will qualify for NAFTA preferential treatment, because it will meet the requirements of HTSUSA General Note 12(b)(i). The goods will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
Based on the facts provided, when the sugar and chocolate liquor blend is manufactured using chocolate liquor produced from non-NAFTA origin cocoa beans, the product will qualify for NAFTA preferential treatment, because it will meet the requirements of HTSUSA General Note 12(b)(ii)(A). The goods 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 marking requirements for imported articles, which is processed in a NAFTA country prior to being imported into the U.S. A marked sample was not submitted with your letter for review.
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 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.
The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b) of the regulations, defines "country of origin" as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).
Section 134.1(j) of the regulations, provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. 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 134.45(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.
You state that the imported sugar and chocolate liquor blend is processed in a NAFTA country "Mexico" prior to being imported into the U.S. Since, "Mexico" is defined under 19 CFR 134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported blends are goods of a NAFTA country, and thus subject to the NAFTA marking requirements.
Part 102 of the regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that, when the sugar is produced in the United States, the sugar and chocolate liquor blend is a good of “The United States”, for marking purposes, and when the sugar is produced in Mexico, the sugar and chocolate liquor blend is a good of “Mexico”, for marking purposes, noting the requirements of Section 102.11 (b)(1).
Products of the United States are exempted from the country of origin marking requirements. Noting Section 102.19(b), if the country of origin for marking purposes is the United States, the country of origin of the blend for Customs duty purposes, in this case, is Mexico.
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 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 John Maria at 646-733-3031.
Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Bureau of Customs and Border Protection, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division