CLA-2 OT:RR:CTF:TCM H099760 JPJ
Paul Hegland, Esq.
Adduci, Mastriani, & Schaumberg LLP
Attorneys at Law
1200 Seventeenth Street, N.W.
Washington, DC 20036
RE: Classification and Country of Origin of Vodka
Dear Mr. Hegland:
This is in response to your request on behalf of your client concerning the classification under the Harmonized Tariff Schedule of the United States (HTSUS) and country of origin of vodka.
FACTS:
The merchandise at issue is vodka produced in Sweden from ethyl alcohol followed by fermentation with yeast of cereals. The vodka will be imported in bulk and contains 96% alcohol/volume.
In the United States, the vodka will be diluted to 40% alcohol/volume for standard vodka and it will be diluted similarly for flavored vodkas, and in the case of the latter, flavorings and/or sweeteners will be added. The diluted and/or flavored product will be bottled in accordance with the rules and regulations of the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of the Treasury, and the bottles will be labeled in accordance with those same requirements. The labels will state, in addition to other TTB labeling requirements, the country of origin of the vodka, i.e., “Product of Sweden”.
ISSUE:
I. Whether the vodka is classified in heading 2207, HTSUS, as undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher, or heading 2208, HTSUS, as undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.
II. Whether the dilution and/or addition of flavorings and/or sweeteners subsequent to importation constitutes a substantial transformation for country of origin purposes.
LAW AND ANALYSIS:
I. Classification
Classification under the HTSUS is made in accordance with the General Rules of Interpretation (GRI’s). 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 GRIs may then be applied.
The HTSUS provisions under consideration are as follows:
2207 Undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher; ethyl alcohol and other spirits, denatured, of any strength:
2208 Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.; spirits, liquers and other spirituous beverages:
The Harmonized Commodity Description and Coding System Explanatory Notes ("EN’s") constitute the official interpretation of the Harmonized System at the international level. While neither legally binding nor dispositive, the EN’s provide a commentary on the scope of each heading of the HTSUS and are generally indicative of the proper interpretation of these headings. See T.D. 89-80, 54 Fed. Reg. 35127-28 (Aug. 23, 1989).
The Explanatory Notes to heading 2208, HTSUS, state, in relevant part, that the heading "covers, whatever their alcoholic strength...spirits produced by distilling...fermented beverages or fermented grain or other vegetable products...without adding flavouring" and, "[p]rovided that their alcoholic strength by volume is less than 80...[percent by volume]...undenatured spirits (ethyl alcohol...) which...are characterised by the absence of secondary constituents giving a flavour or aroma." The EN also states that the heading does not include, in relevant part, (b) . . . undenatured ethyl alcohol of an alcoholic strength by volume of 80% vol or higher (heading 22.07).
"Spirits," as discussed in the above-mentioned Explanatory Notes, is "the liquid containing ethyl alcohol and water that is distilled from an alcoholic liquid or mash." See Webster's Ninth New Collegiate Dictionary (1989).
The Explanatory Notes to heading 2207, HTSUS, state, in part, that "[e]thyl alcohol is the alcohol which occurs in...alcoholic beverages...[and]...is obtained either by fermentation of certain kinds of sugar by means of yeast or other ferments and subsequent distillation...[whereas]...ethyl alcohol and other spirits, denatured, are spirits mixed with substances to render them unfit for drinking but not to prevent their use for industrial purposes."
The merchandise, as imported, contains 96% alcohol/volume. It is only after importation that it will be diluted to 40% alcohol/volume for standard vodka. Therefore, the merchandise is described by heading 2207, HTSUS, because it is ethyl alcohol of a strength of 96% alcohol/vol from the fermentation with yeast of cereals as described by the EN to heading 2207, HTSUS.
II. Country of Origin
Regarding country of origin, 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 imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article 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. 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 the 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. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).
Part 134, CBP Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. §1304. Section 134.1(b), CBP Regulations (19 C.F.R. §134.1(b)), defines “country of origin” as the country of manufacture, production or growth of any article of foreign origin entering the United States. 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 the meaning of the marking laws and regulations. An article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed. United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98)(1940).
In the case under consideration, we must consider what effect, if any, the dilution and/or the addition of flavorings and/or sweeteners that occur after importation have on the country of origin determination.
We believe that the Court of International Trade’s (CIT) analysis in National Juice Products Ass’n v. United States, 10 CIT 48, 628 F. Supp. 978 (1986), is applicable to this case. In National Juice, the CIT upheld CBP’s decision in HQ 728557, dated September 4, 1985, in which we held that imported orange juice concentrate was not substantially transformed when it was mixed with water, essential oils, flavoring ingredients and domestic fresh juice in order to produce frozen concentrated orange juice and reconstituted orange juice. CBP found that the manufacturing process did not create an article with a new name, character or use. CBP held, and the CIT agreed, that the manufacturing process did not change the “fundamental character of the product” as “it was still essentially the juice of oranges.” See also HQ 562468, dated October 4, 2002.
In the instant case, as the processes that occur after importation constitutes mere dilution and/or the addition of flavorings and/or sweeteners, the fundamental character of the product is not altered, and the vodka has not been substantially transformed. The vodka has not been converted into a different article of commerce with a new name, character or use. Therefore, the imported vodka remains a product of Sweden for country of origin marking purposes. See NY N064255, dated July 8, 2009.
HOLDING:
In accordance with GRI I, the vodka containing 96% alcohol/volume is classified in heading 2207, HTSUS. It is specifically provided for in subheading 2207.10.3000, HTSUS as: “Undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher; ethyl alcohol and other spirits, denatured, of any strength: Undenatured ethyl alcohol of an alcoholic strength by volume of 80 percent vol. or higher: For beverage purposes”. The 2010 general, column one rate of duty is 18.9¢/pf.liter. In addition, imports under this heading may be subject to Federal Excise Tax (26 U.S.C. 5001, 26 U.S.C. 5041 or 26 U.S.C. 5051).
Duty rates are provided for 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/.
The imported vodka is not substantially transformed as a result of the dilution and/or the addition of flavorings and/or sweeteners that occur after importation. Therefore, the imported vodka remains a product of “Sweden” for purposes of compliance with 19 U.S.C. §1304.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch