OT:RR:CTF:VS H282979 CMR
Daniel E. Waltz, Esq.
Squire Patton Boggs (US) LLP
2550 M Street, N.W.
Washington, D.C. 20037
RE: Reconsideration of New York Ruling Letter (NY) N271047; NAFTA eligibility of certain liquid sugar products
Dear Mr. Waltz:
On June 23, 2016, our New York office issued New York Ruling Letter (NY) N271047 to you in response to a ruling request submitted on behalf of your client, Redpath Sugar. The ruling dealt with the classification of two types of liquid sugars, which are also known as sugar syrups, and the eligibility of the sugar syrups for preferential tariff treatment under the North American Free Trade Agreement (NAFTA). We have had occasion to review this decision and have determined there is an error with regard to the eligibility of the products for preferential tariff treatment under the NAFTA. Therefore, we are modifying NY N271047 as set forth herein.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. §1625(c)(1)), as amended by section 623 of Title VI, notice of the proposed modification was published on April 12, 2017, in the Customs Bulletin, Volume 51, No. 15. CBP received no comments in response to the notice.
FACTS:
The products at issue are described in NY N271047 as follows:
“The subject matter consists of two types of liquid sugar produced in Canada. Pure Cane Classic Syrup (Lower Brix Formula) is said to contain 81.481 percent liquid sucrose #1, 18.439 percent filtered water, and 0.04 percent potassium sorbate and 0.04 percent citric acid. The liquid sugar consists of raw cane sugar originating in Mexico, Brazil, Guatemala, Costa Rica, Honduras, El Salvador or Nicaragua and is refined in Canada. The potassium sorbate is a product of China and the citric acid is a product of Brazil. Pure Cane Classic Syrup (Higher Brix Formula) is said to contain 77.185 percent liquid sucrose #1, 20 percent medium invert syrup, 2.81 percent filtered water, 0.004 percent potassium sorbate and 0.002 percent citric acid. The liquid sugar consists of raw cane sugar originating in Mexico, Brazil, Guatemala, Costa Rica, Honduras, El Salvador or Nicaragua and is refined in Canada. The medium invert syrup is a product of the United States. The potassium sorbate is a product of China and the citric acid is a product of Brazil.
The syrups will not be further processed upon arrival in the United States (they will not be incorporated in another product in the United States or further refined). They will be shipped packaged (not in bulk). There will be two bottle sizes (750 ml and 375 ml). The syrups (in both sizes) will be sold to food service industry and the retail market. These syrups will be used for beverage sweetening (e.g. coffee, teas). They will be sold in pump dispensers and the consumer will add the flavored syrups to the beverage of the consumer’s choice.
According to Customs Laboratory Report no. NY20152232, dated May 13, 2016, Pure Cane Classic Syrup (Lower Brix Formula) “contains a clear, low viscosity liquid. The sample has a moisture content of 45.2 percent, and a sugar content on a dry basis of 1.6 percent fructose, 3.1 percent glucose and 87.2 percent sucrose. No flavoring, coloring compound or non-sugar soluble solids were detected.” Pure Cane Classic Syrup (Higher Brix Formula) “contains a viscous yellow colored liquid. The sample has a moisture content of 33.536 percent, and a sugar content on a dry basis of 6.6 percent fructose, 6.6 percent glucose and 85.0 percent sucrose. No flavorings, coloring compound or non-sugar solids were detected.”
The sugar syrups were classified in subheading 1702.90.9000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel: Other, including invert sugar and other sugar and sugar syrup blends containing in the dry state 50 percent by weight of fructose: Other: Other: Other.”
NY N271047 discussed the NAFTA eligibility of the sugar syrups and concluded that they met the requirements of General Note (GN) 12(b)(ii)(A) and GN 12(t)/17.1. The ruling concluded that the sugar syrups qualified for preferential tariff treatment under the NAFTA.
ISSUE:
Whether the sugar syrups described in NY N271047 qualify for preferential tariff treatment under the NAFTA.
LAW AND ANALYSIS:
The NAFTA is implemented in General Note (GN) 12 of the HTSUS. GN 12(a)(i) states that goods are eligible for the NAFTA rate of duty if they originate in the territory of a NAFTA party and qualify to be marked as goods of Canada. GN 12(b) sets forth the various methods for determining whether a good originates in the territory of a NAFTA party. Specifically, these provisions provide, in relevant part, as follows:
(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note—
(i) 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), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the "Special" subcolumn followed by the symbol "CA" in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
* * *
(b) 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 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 subdivision (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivision (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; ….
The sugar syrups are produced in Canada from U.S. or Mexico ingredients and foreign (non-NAFTA party) ingredients. As such, the production in Canada must cause the non-originating ingredients to meet the requisite tariff shift rule set forth in GN 12(t). As the sugar syrups at issue are classified in subheading 1702.90.9000, HTSUS, the applicable tariff shift rule is “A change to headings 1701 through 1703 from any other chapter.”
The raw cane sugar used in producing both syrups includes raw cane sugar originating from non-NAFTA parties, i.e., Brazil, Guatemala, Costa Rica, Honduras, El Salvador or Nicaragua. Raw cane sugar is classified in heading 1701, HTSUS, which provides for “Cane or beet sugar and chemically pure sucrose, in solid form.” As the finished sugar syrups are classified in heading 1702, HTSUS, and the non-originating raw cane sugar is classified in 1701, HTSUS, the non-originating raw cane sugar fails to meet the requisite tariff shift and the finished sugar syrups do not qualify for preferential tariff treatment under the NAFTA.
HOLDING:
The sugar syrups described herein do not qualify for preferential tariff treatment under the NAFTA. NY N271047, dated June 23, 2016, is hereby modified in accordance with this decision. In accordance with 19 U.S.C. § 1625(c), this ruling will become effective 60 days after its publication in the Customs Bulletin.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division