CLA-2-16:RR:NC:2:231 R03167
(9801.00.1097); 3923.21.0095; 4821.10.4000
Ms. Sheri G. Lawson
Wilson International, Inc.
250 Cooper Avenue, Suite 102
Tonawanda, NY 14150
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of Griddle StackerTM Pancake, Sausage and Egg Kit and Pancake and Sausage Kit from Canada; Article 509
Dear Ms. Lawson:
In your letter dated January 25, 2006, you requested a tariff classification ruling on behalf of your client, Otter Valley Foods, Inc.
The products in question are described as two food kits to be imported under the brand name, Griddle StackerTM. These kits consist of different food components that are packaged together in a kit format,--viz., fully cooked griddlecakes (pancakes), sausage patties and cooked and seasoned egg patties. Each component in the kit will be wrapped separately, six pieces of each product in its own bag. Each kit will be packed in a corrugated cardboard box and shipped frozen to Wal-Mart stores in the United States. The product is intended to be sold at the Wal-mart deli counter, where the kits will be thawed as needed, assembled into sandwiches and sold out of the cooler in the deli counter to consumers as a ready-made product, available to eat in the store or take out.
The Pancake, Sausage and Egg Kit contains 24 griddlecakes (pancakes), 12 pork sausage patties and 12 egg patties, packed with 12 sandwich bags and 12 deli labels.
The Pancake and Sausage Kit will contain 24 griddlecakes and 12 pork sausage patties, packed with 12 sandwich bags and 12 deli labels.
You state in your letter that each shipping box contains the exact number of
griddlecakes, sausage and/or egg patties to make twelve sandwiches. Further, each box contains 12 sandwich bags and labels for packing and labeling the finished sandwiches. The sandwich bags are made from polyethylene and are a product of China. Their dimensions are 3 by 5 inches (76.2 mm x 127 mm). They are not reclosable and have no handles. The labels are self-adhesive paper labels, printed by a flexography process. They are manufactured in the United States and printed in Canada. You state that, in the industry, these products would be bought, advertised and ultimately resold as sandwiches and, accordingly, that they should be classified as entireties, or “food preparations” under note 2 of Chapter 16.
We would disagree for the following reasons. First, while the griddlecakes,
sausage patties and egg patties may each be categorized, individually, as “food preparations,” the mere fact that these three food products, packaged as separate components, are shipped in a single carton would not automatically render them a single tariff entity. Following the logic of your argument,--e.g., you suggest that these kits are analogous to complete machines imported in a knockdown condition,—these kits should be treated, in effect, as complete sandwiches imported in an unassembled condition and, therefore, subject to classification as finished, or complete, articles (in this case, as complete sandwiches) under General Rule of Interpretation (GRI) 2(a), HTSUS. Arguably, finished sandwiches would be within the scope of the term “food preparations,” as it appears in note 2 of Chapter 16; however, GRI 2(a) was not intended to cover food products.
The Explanatory Notes to the Harmonized System (EN) for GRI 2(a), in discussing the application of this rule to goods imported in an unassembled condition, contemplate a physical assembly of such goods by means of mechanical fasteners, such as nuts and bolts. The EN specifically exclude from the scope of this rule the agricultural and food products of Sections I through VI of the tariff by virtue of the nature of this type of goods,--presumably, since they do not lend themselves to this type of assembly. In relevant part, the EN state that:
“(V)
The second part of Rule 2(a) provides that complete or finished articles
presented unassembled or disassembled are to be classified in the same heading as the assembled article. When goods are so presented, it is
usually for reasons such as requirements or convenience of packing,
handling or transport.
(VII)
For purposes of this Rule, “articles presented unassembled or disassembled” means articles the components of which are to be assembled either by means of fixing devices (screws, nuts, bolts, etc.) or by riveting or welding, for example, provided only assembly operations are involved.
(VIII)
Cases covered by this Rule are cited in the General Explanatory Notes to Sections or Chapters (e.g., Section XVI, and Chapters 44, 86,87 and 89).
(IX)
In view of the scope of the headings of Sections 1 to VI, this part of the Rule does not normally apply to goods of these Sections.”
Alternatively, consideration of these kits under GRI 3, as “sets,” would also be precluded. One example of a set, included in the Explanatory Notes to GRI 3 lists a retail package containing “a sandwich made of beef, with or without cheese, in a bun (heading 16.02), packaged with potato chips (French fires) heading 20.04”, with the essential character provided by the meat sandwich. (See page 5, Rule 3(b), item (X)(1)(a), Explanatory Notes to the Harmonized System.) This example is distinguishable from the instant situation, since the GRI requires that sets consist of goods that “are put up in a manner suitable for sale directly to users without repacking (e.g., in boxes or cases or on boards)”. (See item (X)(c) on page 5, EN.) The instant kits do not consist of sandwiches, nor do they consist of sandwiches put up in retail packaging for direct sale to the consumer. More relevant, perhaps, Item (XI) on page 5 of the Explanatory Notes to GRI 3 addresses the status (vis-à-vis the relevance of GRI 3) of goods consisting of separately packed components, imported for further manufacture:
“(XI)
This Rule does not apply to goods consisting of separately packed constituents put up together, whether or not in a common packaging, in fixed proportions for the industrial manufacture of, for example, beverages
In our opinion, the instant Griddle Stacker TM kits, in which the different components are separately packed in fixed proportions for the ultimate production,--after importation,-- of finished sandwiches that will be offered to consumers, individually packaged and labeled, are akin to the products described in item (XI).
Based on the foregoing, the several components of the Griddle StackersTM sandwich kits are separately classifiable.
The applicable subheading for the frozen griddlecakes (pancakes) will be 1905.90.9090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for bread, pastry, cakes, biscuits and other bakers’ wares, whether or not containing cocoa; communion wafers, empty capsules of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products: Other, other, other. The rate of duty will be 4.5 percent ad valorem.
The applicable subheading for the frozen Sausage Patties will be 1601.00.2090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for sausages and similar products, of meat, meat offal or blood; food preparations based on these products. The rate of duty will be 0.8 cents per kilogram.
The applicable subheading for the frozen Egg Patties will be 2106.90.9995, Harmonized Tariff Schedule of the United States (HTSUS), which provides for food preparations not elsewhere specified or included, other, other, … frozen. The rate of duty will be 6.4 percent ad valorem.
The applicable subheading for the 3 by 5 inch (76.2 mm x 127 mm), non-reclosable, polyethylene sandwich bags, without handles, will be 3923.21.0095, Harmonized Tariff Schedule of the United States (HTSUS), which provides for sacks and bags (including cones), of polymers of ethylene, other, other. The rate of duty will be 3 percent ad valorem.
The applicable subheading for the printed, self-adhesive paper labels will be 4821.10.4000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for paper and paperboard labels of all kinds, whether or not printed, printed, other. The rate of duty will be Free.
NAFTA status.
As previously stated, the components in these kits are not classifiable as a unit, but each component is separately classifiable. In your letter, you requested a determination of NAFTA eligibility and country of origin marking for these kits, noting that the origin of the components will be Canada (for the griddlecakes) and the United States (for the sausage patties and egg patties). You advised that the sausage patties and egg patties will be imported into Canada in bulk as finished products. In Canada, the patties will be repackaged into bags holding either six sausage patties or six egg patties.
General Note (GN) 12, HTSUS, provides the requirements that must be met in order to qualify for preferential duty treatment under the NAFTA. GN 12(a)(i), HTSUS, states, in relevant part, that such treatment shall be afforded to goods exported to the United States from Canada that are “goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported in to the customs territory of the United States.”
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.
(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
As the griddlecakes, sausage patties, egg patties and paper labels are said to be goods produced in Canada and the U.S. from originating ingredients of Canadian and U.S. origin, they would be “goods that originate in the territory of a NAFTA party,” as required by GN 12(a)(i). However, the sandwich bags, which were imported into Canada as products of China and not further processed, fail to meet the requirement for a tariff shift in GN 12(t) and are not originating goods under the NAFTA.
Country of origin marking.
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 to 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).
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the imported griddlecakes are goods of Canada for marking purposes, since they were made in Canada with originating ingredients.
However, the sausage patties and egg patties will not be further processed in Canada but only repacked for export. Although originating in a NAFTA territory within the meaning of § 181.1(q), (19 CFR 181.1(q)), the repackaging of these goods in Canada does not constitute an advance in value or improvement in their condition. (See United States v. John V. Carr & Sons, Inc., 69 Cust. Ct. 78, C.D. 4377 (1972), aff’d 61 CCPA 52, C.A.D. 1118 (1974).) Accordingly, the NAFTA preference override (19 CFDR 102.19) would not apply. For marking purposes, these would remain products of the United States. They would not be entitled to preferential treatment under GN 12(a)(i), HTSUS.
Since they remain goods of U.S. origin, upon reimportation into the United States, the sausage patties and egg patties would be eligible for preferential duty treatment in subheading 9801, HTSUS, as American Goods Returned, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. The applicable subheading for the sausage patties will be 9801.00.1015, HTSUS, which includes meat and poultry provided for in chapter 2 or 16. The applicable subheading for the egg patties will be 9801.00.1097, HTSUS, which provides for other goods of this heading.
Similarly, applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the printed, self-adhesive labels are goods of the United States for marking purposes, since they failed to undergo the tariff shift required in section 102.20(j), Code of Federal Regulations, (19 C.F.R. §102.20(j)).
The language of 19 U.S.C. 1304 applies only to articles of foreign origin. The Federal Trade Commission has jurisdiction over goods marked “Made in the U.S.A.” Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin should be directed to the FTC, at the following address:
Federal Trade Commission,
6th & Pennsylvania Avenue, N.W.,
Washington, D.C. 20508.
Finally, applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the imported sandwich bags are goods of China for marking purposes, since they were made in China and have undergone no further processing in Canada.
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/.
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 Thomas P. Brady at 646-733-3030.
Sincerely,
Robert B. Swierupski
Director,
National Commodity
Specialist Division