OT:RR:CTF:FTM H304599 TJS/KF
Port Director
Port of Laredo
U.S. Customs and Border Protection
P.O. Box 3130
Laredo, TX 78044-3130
Attn: Jeffrey Hammel, Supervisory Entry Specialist
RE: Application for Further Review of Protest No. 2304-16-100020; Tariff Classification and NAFTA Eligibility of Peanut-based Snack Products
Dear Port Director:
This is in response to the Application for Further Review (“AFR”) of Protest No. 2304-16-100020, filed on March 3, 2016, by Lawrence W. Hanson, on behalf of importer Internacional de Productos y Semillas, S.A. de C.V. (“IPS” or “Protestant”), concerning certain peanut-based snack products. Specifically, at issue are the products’ liquidation and reliquidation, tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”), and eligibility for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”). Our decision is set forth below.
FACTS:
IPS manufactures snacks and candies for domestic and international sale. In 2013, IPS imported various peanut-based snack products. This AFR concerns 28 entries of certain products, which are identified in the table below:
Table A
Entry No.
Entry Date
Extension Date
Liquidation Date
Reliquidation Date
xxx-xxxxx9114
Jan. 15, 2013
N/A
Nov. 29, 2013
Sept. 11, 2015
xxx-xxxxx2522
Jan. 31, 2013
N/A
Dec. 13, 2013
Sept. 11, 2015
xxx-xxxxx4510
Feb. 11, 2013
N/A
Dec. 27, 2013
Sept. 11, 2015
xxx-xxxxx9436
Mar. 6, 2013
N/A
Jan. 17, 2014
Sept. 11, 2015
xxx-xxxxx4238
Mar. 29, 2013
N/A
Feb. 7, 2014
Sept. 11, 2015
xxx-xxxxx5755
Apr. 5, 2013
N/A
Feb. 14, 2014
Sept. 11, 2015
xxx-xxxxx7306
Apr. 12, 2013
N/A
May 8, 2015
Sept. 11, 2015
xxx-xxxxx9120
Apr. 19, 2013
N/A
Feb. 28, 2014
Sept. 11, 2015
xxx-xxxxx4823
May 13, 2013
Apr. 17, 2014
Apr. 24, 2015
Sept. 11, 2015
xxx-xxxxx8824
June 4, 2013
Apr. 17, 2014
Apr. 24, 2014
Sept. 11, 2015
xxx-xxxxx1398
June 15, 2013
Apr. 17, 2014
Apr. 24, 2015
Sept. 11, 2015
xxx-xxxxx3154
June 25, 2013
Apr. 17, 2014
Apr. 24, 2015
Sept. 11, 2015
xxx-xxxxx6256
July 11, 2013
Apr. 17, 2014
Apr. 24, 2015
Sept. 11, 2015
xxx-xxxxx7643
July 19, 2013
Apr. 17, 2014
Apr. 24, 2015
Sept. 11, 2015
xxx-xxxxx9201
July 30, 2013
Apr. 17, 2014
Apr. 24, 2015
Sept. 11, 2015
xxx-xxxxx1338
Aug. 14, 2013
Apr. 17, 2014
May 22, 2015
Sept. 11, 2015
xxx-xxxxx2328
Aug. 20, 2013
June 3, 2014
May 22, 2015
Sept. 11, 2015
xxx-xxxxx2336
Aug. 20, 2013
June 3, 2014
May 22, 2015
Sept. 11, 2015
xxx-xxxxx3946
Aug. 30, 2013
June 3, 2014
May 22, 2015
Sept. 11, 2015
xxx-xxxxx7236
Sept. 20, 2013
June 3, 2014
June 26, 2015
Sept. 11, 2015
xxx-xxxxx8440
Sept. 27, 2013
June 3, 2014
June 26, 2015
Sept. 11, 2015
xxx-xxxxx4661
Oct. 30, 2013
July 8, 2014
July 24, 2015
Sept. 11, 2015
xxx-xxxxx4679
Oct. 30, 2013
July 8, 2014
July 24, 2015
Sept. 11, 2015
xxx-xxxxx6302
Nov. 8, 2013
Aug. 4, 2014
Sept. 11, 2015
N/A
xxx-xxxxx0726
Dec. 4, 2013
N/A
May 8, 2015
Sept. 11, 2015
xxx-xxxxx2219
Dec. 13, 2013
Sept. 15, 2014
Sept. 11, 2015
N/A
xxx-xxxxx3498
Dec. 20, 2013
Sept. 15, 2014
Sept. 11, 2015
N/A
xxx-xxxxx3993
Dec. 23, 2013
Sept. 15, 2014
Sept. 11, 2015
N/A
IPS filed the above entries with a claim for preferential tariff treatment under the NAFTA. U.S. Customs and Border Protection (“CBP”) sought to verify the NAFTA eligibility of the entries, and requested supporting documentation to substantiate the alleged country of origin for the entered merchandise. In the course of conducting this verification, CBP extended the liquidation deadline for 19 out of the 28 protested entries. Prior to the verification process concluding, 24 entries were automatically liquidated at the preferential tariff rates claimed by IPS. These 24 entries were liquidated before September 11, 2015, as noted above in Table A.
Upon completing its review of the NAFTA Certificates of Origin and samples provided by IPS, CBP determined that IPS could not substantiate the NAFTA eligibility of the entered merchandise. Accordingly, on September 11, 2015, CBP liquidated 4, and reliquidated 24, of the 28 protested entries without preferential tariff treatment. We note that only the entries pertaining to the snack mixes, fried peanuts, roasted peanuts, and Japanese-style peanuts were denied NAFTA preferential tariff treatment.
IPS asserts that CBP’s actions on September 11, 2015, were improper because IPS did not receive a notice extending the one-year liquidation deadline for any of the 28 protested entries. Consequently, IPS contends that several of entries were deemed liquidated by operation of law upon the expiry of their liquidation deadline. IPS also contends that none of the reliquidations were timely, because they occurred outside of CBP’s 90-day deadline to voluntarily reliquidate an entry. IPS’ contentions thus hinge on whether extension notices were in fact issued, and whether CBP timely acted prior to the statutory (re)liquidation deadline applicable to each entry.
On March 3, 2016, IPS filed the present protest based on its contentions. On July 14, 2016, the Port of Laredo denied the protest, and denied IPS’ request for further review. Although the port did not retain physical copies of the extension notices issued to IPS, the dates of issuance listed in Table A were recorded in CBP’s Automated Commercial System (“ACS”) database. The port also reiterated that IPS failed to substantiate its NAFTA preference claims by the documentation provided. On August 8, 2016, IPS requested that our office set aside the port’s denial of further review. Our office granted this request on October 7, 2016.
We now address the documentation provided by IPS concerning the NAFTA eligibility of the subject merchandise. IPS has a manufacturing facility located in Mexico and a receiving facility in Texas. Protestant alleges that nearly all of the raw peanuts used in its peanut-based products are sourced from a select group of Mexican and U.S. suppliers. The raw peanuts are purchased in various forms including whole peanuts in their shell, shelled whole peanuts in their skin, shelled and skinned whole peanuts, and shelled and skinned halved peanuts. The merchandise under protest consists of two snack mixes, roasted peanuts, fried peanuts, Japanese-style peanuts, and one confection.
The first snack mix is referred to as “Super Cantinero,” although IPS manufactures it for a variety of customers under several brand names. Super Cantinero contains fried peanuts, corn chips, garlic, chilies, oils, seeds, and seasonings, which are all manufactured and blended at IPS’ facility in Mexico. IPS fries the shelled peanuts, cuts and fries corn tortillas to make the corn chips, fries the garlic and chili pieces, and blends the mix with various spices. The second snack mix, generally referred to as “Party Mix,” includes two types of peanuts and fried, flavored corn meal sticks. This mix consists specifically of Virginia-style peanuts, which are shelled peanuts, fried with the paper-like skin on. At its facility in Mexico, IPS fries and salts the peanuts, blends the corn meal mix to create the corn sticks, and then fries and seasons the corn sticks before blending and seasoning all the components to complete the mix. After the Super Cantinero and Party Mix are mixed, they are weighed, packaged, and tested for quality and consistency. Both mixes are packaged in a variety of ingredient combinations, weights, and sizes in sealed plastic bags ready for retail sale. IPS provided a sample of each snack mix to CBP in retail package form, but CBP indicated that the mixes were imported in bulk.
IPS manufactures a variety of roasted or fried seasoned peanut products that consist exclusively of peanuts. Protestant indicated that these products are manufactured from raw peanuts supplied to IPS from a variety of Mexican suppliers. The raw peanuts arrive at the IPS facility either shelled or still in the shell. Depending on the product being prepared, the peanuts are fried in oil or oven roasted, and then blended with salt and seasonings. The finished products are then packaged either in bulk packaging or for individual sale, checked for quality control and contaminants, and prepared for shipping. Protestant indicates that IPS used Mexican-origin runner-style peanuts for the roasted and fried peanuts because they are best suited for the manufacturing process. However, Protestant’s submission includes photos of runner-style peanuts in bulk from both Mexican and U.S. suppliers. To prove that the peanuts in these products originated in Mexico, Protestant provided documentation comparing IPS’ inventory of Mexican-origin raw peanuts to the exports to the United States, asserting that the short turn-around of raw peanuts within IPS’ manufacturing facility demonstrates that the exported products were manufactured from Mexican peanuts on-hand in warehouse inventory. Protestant provided a spreadsheet with information derived from purchase orders, invoices, inventory records, and export documents, showing IPS’ inventory of raw peanuts from Mexican suppliers and exports of roasted and fried seasoned peanuts to the United States.
Japanese-style peanuts are peanuts with a baked-on coating of flour, honey, and seasoning. IPS purchases these Japanese-style peanuts in bulk from multiple suppliers based in Mexico, inspects them for quality, and then exports them to the United States in boxes and/or bags of approximately ten kilos. Protestant provided declarations from several Japanese-style peanut vendors in Mexico, and provided a NAFTA Certificate of Origin for Japanese-style peanuts, which covered a blanket period in 2012. During a meeting with CBP in August 2014, IPS suggested that one Mexican supplier may have sourced some peanuts from Nicaragua.
The sugar-based, peanut-flavored confection is the Palanqueta bar, which consists of a mixture of peanuts, pumpkin seeds, sesame seeds, raisins, various sugars, margarine, lecithin, and citric acid. At IPS’ facility in Mexico, the raw ingredients are cooked, seasoned, and blended with the remaining ingredients. The mixture is then rolled out, cut into candy-bar shaped pieces, wrapped, and packaged for retail sale.
Protestant disputes the tariff classification of the snack mixes and the Palanqueta bar and the denial of NAFTA preferential tariff treatment. The snack mixes, roasted and fried peanuts, and Japanese-style peanuts were liquidated as entered under subheading 2008.11.6000, Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”), 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: Peanuts (ground-nuts): Other: Other.” The Palanqueta bar was liquidated as entered under subheading 1704.90.1000, HTSUSA, which provides for “Sugar confectionery (including white chocolate), not containing cocoa: Other: Confections or sweetmeats ready for consumption: Candied nuts.”
ISSUES:
Whether the protest entries were timely liquidated and reliquidated.
What is the tariff classification of the snack mixes and Palanqueta bar under the HTSUSA?
Whether the peanut-based products qualify for preferential tariff treatment under the NAFTA.
LAW AND ANALYSIS:
Whether the protest entries were timely liquidated and reliquidated.
IPS contends that several of the protested entries were deemed liquidated, because IPS failed to receive notices extending the deadline for liquidation. Consequently, IPS contends the entries were untimely reliquidated after the expiry of CBP’s statutory deadline for voluntary reliquidation. We address the notice, liquidation, and reliquidation of the entries in turn.
The statutory deadline for CBP to liquidate an entry, absent suspension of liquidation or extension, is “within 1 year from the date of entry.” 19 U.S.C. § 1504(a)(1)(A); see also 19 C.F.R. § 159.11(a). Failure to comply with this statutory deadline results in the entries’ deemed liquidation “at the rate of duty, value, quantity, and amount of duties asserted by the importer of record” on the entry documents filed with CBP. Id. As no suspension of liquidation is relevant to the protested entries, CBP could only extend the liquidation deadline for the protested entries through the issuance of an extension. IPS asserts that no notice of extension was ever issued or received for any of the 28 protested entries.
A valid extension of the deadline for liquidation, pursuant to the prior iteration of 19 U.S.C. § 1504(b) in effect at the time of the subject entries, required timely “notice to the importer, his consignee, or agent.” Enron Oil Trading & Transp. Co. v. United States, 15 C.I.T. 511, 512 (1991) (hereinafter Enron). The corresponding customs regulation “in turn provide[d] for notice ‘on Customs Form 4333-A, … [stating] that the time [for liquidation] has been extended and the reasons for doing so.’ 19 C.F.R. § 159.12(b) (1991).” Id. Such notice is timely if given prior to the expiry of the one-year statutory deadline for liquidation under 19 U.S.C. § 1504. Notice serves to extend the liquidation deadline for no more than a year. See Headquarters Ruling Letter (“HQ”) 226631 (Jan. 23, 1997) (quoting 19 C.F.R. § 159.12). Additional extension notices may subsequently be issued, extending the liquidation deadline for a total of four years from the date of entry. Id.
Timely issuance of notice may be established from copies of the actual notices issued, or, in circumstances where neither copies nor the original records still exist, from the date of notice recorded in CBP’s databases. See HQ 225027 (June 14, 1994) (noting that in Enron “Customs did not maintain paper copies of extension notices, but stored information relating to notices in a computerized history file” which evidenced the dates of issuance). CBP is also accorded a rebuttable presumption that it issued timely notices of extension, arising from the presumption of regularity which attaches to official Government acts. Peg Bandage v. United States, 17 C.I.T. 1337, 1340-1341 (1993) (“the government is accorded a presumption of regularity that attaches to Customs' recordkeeping”); Frontier Ins. Co. v. United States, 25 C.I.T. 717, 726 (2001) (“Frontier”); Intra-Mar Shipping Corp. v. United States, 66 Cust. Ct. 3, 6 (1971).
In Frontier, a similar circumstance arose to the present protest - a surety challenged CBP’s liquidation of several entries at a higher duty rate than asserted by the importer, contending the entries were deemed liquidated due to CBP’s failure to properly effect notices extending the deadline for liquidation. Although CBP did “not retain a hard copy of the notices, [it asserted they we]re regularly mailed within a day of printing each week and … retain[ed] a printout indicating when and to what address notices of extension are mailed.” 25 C.I.T. 717 at 727. The Court of International Trade stressed that, as applied to the issuance of notice, the presumption of regularity accorded to the duties discharged by CBP served to substantiate “that notice was given in accordance with statutory and regulatory requirements, and the presumption of delivery.” Id. at 727. Due to the printout CBP provided, indicating the date on which notice was issued, the court concluded that the surety failed to rebut this presumption of regularity by merely asserting without evidence that delivery never occurred. Rebuttal required “proof of non-receipt” from the surety. Id. (citing A.N. Deringer, Inc. v. United States, 20 C.I.T. 978, 993 (1996)). CBP may therefore properly rely on the dates of notice recorded in ACS to establish that it timely extended the deadline to liquidate the protested entries. The evidentiary burden therefore rests on IPS to prove that it failed to receive the notices, but IPS has provided no such evidence. We consequently find that CBP has timely issued notices extending the liquidation deadline for 19 of the 28 protested entries.
The dates on which CBP issued notices of extension for 19 entries are recorded in ACS, and listed in Table A. Upon reviewing these dates, we find that all 19 notices were timely issued within a year from the date of entry. See 19 C.F.R. § 159.12(a)(1)(i) (1991). CBP’s statutory deadline to liquidate these 19 entries was thereby properly extended for an additional year from the date of entry. The resulting liquidation deadlines applicable to the 28 protested entries are listed below in Table B. The nine entries for which notices of extension were not issued are denoted with an asterisk.
Table B
Entry No.
Liq. Deadline
Liq. Date
Reliq. Deadline
Reliq. Date
xxx-xxxxx9114*
Jan. 15, 2014
Nov. 29, 2013
Feb. 27, 2014
Sept. 11, 2015
xxx-xxxxx2522*
Jan. 31, 2014
Dec. 13, 2013
Ma. 13, 2014
Sept. 11, 2015
xxx-xxxxx4510*
Feb. 11, 2014
Dec. 27, 2013
Mar. 27, 2014
Sept. 11, 2015
xxx-xxxxx9436*
Mar. 6, 2014
Jan. 17, 2014
Apr. 17, 2014
Sept. 11, 2015
xxx-xxxxx4238*
Mar. 29, 2014
Feb. 7, 2014
May 8, 2014
Sept. 11, 2015
xxx-xxxxx5755*
Apr. 5, 2014
Feb. 14, 2014
May 14, 2014
Sept. 11, 2015
xxx-xxxxx7306*
Apr. 12, 2014
May 8, 2015
Not Established
Sept. 11, 2015
xxx-xxxxx9120*
Apr. 19, 2014
Feb. 28, 2014
May 28, 2014
Sept. 11, 2015
xxx-xxxxx4823
May 13, 2015
Ap. 24, 2015
July 23, 2015
Sept. 11, 2015
xxx-xxxxx8824
June 4, 2015
Apr. 24, 2015
July 23, 2015
Sept. 11, 2015
xxx-xxxxx1398
June 15, 2015
Apr. 24, 2015
July 23, 2015
Sept. 11, 2015
xxx-xxxxx3154
June 25, 2015
Apr. 24, 2015
July 23, 2015
Sept. 11, 2015
xxx-xxxxx6256
July 11, 2015
Apr. 24, 2015
July 23, 2015
Sept. 11, 2015
xxx-xxxxx7643
July 19, 2015
Apr. 24, 2015
July 23, 2015
Sept. 11, 2015
xxx-xxxxx9201
July 30, 2015
Apr. 24, 2015
July 23, 2015
Sept. 11, 2015
xxx-xxxxx1338
Aug. 14, 2015
May 22, 2015
Aug. 20, 2015
Sept. 11, 2015
xxx-xxxxx2328
Aug. 20, 2015
May 22, 2015
Aug. 20, 2015
Sept. 11, 2015
xxx-xxxxx2336
Aug. 20, 2015
May 22, 2015
Aug. 20, 2015
Sept. 11, 2015
xxx-xxxxx3946
Aug. 30, 2015
May 22, 2015
Aug. 20, 2015
Sept. 11, 2015
xxx-xxxxx7236
Sept. 20, 2015
June 26, 2015
Sept. 24, 2015
Sept. 11, 2015
xxx-xxxxx8440
Sept. 27, 2015
June 26, 2015
Sept. 24, 2015
Sept. 11, 2015
xxx-xxxxx4661
Oct. 30, 2015
July 24, 2015
Oct. 22, 2015
Sept. 11, 2015
xxx-xxxxx4679
Oct. 30, 2015
July 24, 2015
Oct. 22, 2015
Sept. 11, 2015
xxx-xxxxx6302
Nov. 8, 2015
Sept. 11, 2015
Feb. 27, 2014
N/A
xxx-xxxxx0726*
Dec. 4, 2014
May 8, 2015
Not Established
Sept. 11, 2015
xxx-xxxxx2219
Dec. 13, 2015
Sept. 11, 2015
Mar. 27, 2014
N/A
xxx-xxxxx3498
Dec. 20, 2015
Sept. 11, 2015
Apr. 17, 2014
N/A
xxx-xxxxx3993
Dec. 23, 2015
Sept. 11, 2015
May 8, 2014
N/A
Upon reviewing the dates in Table B, we find that all but two entries were timely liquidated within a year from the date of entry, or the two-year extended liquidation deadline. See 19 U.S.C. § 1504(a)(1)(A); 19 C.F.R. § 159.12(a)(1)(i) (1991). The two entries not timely liquidated are bolded in Table B. These two entries, no.’s xxx-xxxxx7306 and xxx-xxxxx0726, were instead deemed liquidated by operation of law on April 13, 2014, and December 5, 2014, respectively. See 19 U.S.C. § 1504(a)(1)(A). These entries deemed liquidated “at the rate of duty, value, quantity, and amount of duties asserted” by IPS. Id. The sole remaining timeliness question concerns CBP’s subsequent reliquidation of the 24 entries identified in Table B, including the reliquidation of the two entries that initially deemed liquidated.
CBP had the authority to voluntarily reliquidate these 24 entries “within ninety days from the date on which notice of the original liquidation [wa]s given or transmitted to the importer, his consignee or agent.” 19 U.S.C. § 1501 (1993). Notice of reliquidation was required in order to effect a valid reliquidation and a condition precedent to triggering CBP’s reliquidation authority under 19 U.S.C. § 1501, for both entries that had prior either liquidated or deemed liquidated. See HQ H136435 (May 22, 2014). Additionally, such notice had to be published on a customs bulletin in a conspicuous place at the port of entry for the reliquidations of either the prior liquidated or deemed liquidated merchandise. See 19 C.F.R. § 159.9(a)-(c) (2014).
Our office contacted the Port of Laredo, and various CBP Officers involved in the initial protest, to verify if and when bulletin notice of liquidation and deemed liquidation for the subject entries were posted. No copies of the bulletin notices were retained by CBP. One CBP Officer noted that the ACS database was nevertheless programmed to automatically generate a computerized bulletin notice. The Court of International Trade has previously held that an ACS computer-generated offline document lodged at a port satisfies CBP’s requirement to post notice under 19 C.F.R. § 159.9. Samuel Aaron, Inc. v. United States, 30 C.I.T. 1143, 1151-52 (2006) (hereinafter Samuel). The court concluded such automated notice was sufficient to trigger CBP’s reliquidation authority under 19 U.S.C. § 1501 (2004). Id. (“[a]lthough … administratively sloppy, this Court cannot say that … offline bulletin notice of liquidation [is] legally insufficient”). However, a critical difference concerning posting arises between Samuel and this AFR. In Samuel, CBP confirmed that some form of bulletin notice, automatically generated or otherwise, was made “available to the public” at a port such that it substantially complied with the requirements of 19 C.F.R. § 159.9. In the present AFR, the Port of Laredo is unable to confirm that notice of liquidation or deemed liquidation was ever publicly posted for any of the 24 entries it sought to reliquidate. Of these, 22 were liquidated and two were deemed liquidated. We address proof of posting for both types of liquidation in turn.
In circumstances where CBP is unable to establish as a matter of fact that bulletin notice of liquidation was posted, it may instead establish posting by matter of law. “Liquidation is legally defined to occur upon the posting of bulletin notice, and Customs is presumed to record liquidation dates in accordance with this definition.” Peg Bandage v. United States, 17 C.I.T. 1337, 1341 (1993). The presumption that CBP’s officially recorded liquidation dates reflect the actual dates on which bulletin notices were posted shifts the evidentiary burden onto the protestant to prove that posting occurred. Penrod Drilling Co. v. United States, 13 C.I.T. 1005, 1009 (1989) (holding that although Customs could not prove it actually posted bulletin notice, and the plaintiff demonstrated receipt of courtesy notice on a date which differed from the liquidation date recorded by Customs, the plaintiff still failed to rebut the presumption that CBP posted notice). CBP elaborated on this presumption in HQ H004403, dated September 21, 2009. In that case, a party untimely protested liquidation of an entry without drawback benefits. The party alleged notice of liquidation was not posted, such that its deadline to file a protest under 19 U.S.C. § 1514(c)(3)(A) did not run from CBP’s officially recorded liquidation date. The party offered no evidence to prove that CBP indeed failed to post notice of liquidation. CBP ruled that “because CBP officials are presumed to perform their lawful duties, unless a claimant provides evidence to the contrary, ‘the presumption that notice was posted is sufficient’” to establish posting as a matter of law. HQ H004403 (quoting Star Sales & Distributing Corp. v. United States, 663 F. Supp. 1127, 1129 (CIT 1986)). Akin to the party in HQ H004403, IPS alleges that CBP failed to post notice of liquidation for the entries reliquidated on September 11, 2015. IPS also offers no evidence to support its allegation, preserving the posting presumption accorded to CBP. We thus find that the liquidation dates recorded in ACS reflect the dates on which bulletin notice was posted by the Port of Laredo. CBP’s 90-day voluntary reliquidation deadline under 19 U.S.C. § 1501 (2004) ran from these dates, as listed in Table B. Upon reviewing the applicable deadlines, we find that only the following four entries, underlined in Table B, were timely reliquidated: no.’s xxx-xxxxx7236, xxx-xxxxx8440, xxx-xxxxx4661, and xxx-xxxxx4679. Our analysis now turns to the two deemed liquidated entries.
In circumstances where CBP is unable to establish as a matter of fact that bulletin notice of deemed liquidation was posted, it may not rely on a legal presumption to establish posting. The voluntary reliquidation deadline for deemed liquidated entries ran from the date on which bulletin notice was posted, but CBP’s officially recorded date of deemed liquidation could substantially differ from the date notice was posted. 19 C.F.R. § 159.9(a)-(c) (2014). Notice of deemed liquidation could be posted within “a reasonable period after each liquidation by operation of law.” 19 C.F.R. § 159.9(c)(2)(ii). The two entries at issue, no.’s xxx-xxxxx7306 and xxx-xxxxx0726, were deemed liquidated on April 13, 2014, and December 5, 2014, respectively. Neither ACS, nor any other recordkeeping database, nor information obtained from various CBP Officers, indicates that bulletin notice of deemed liquidation was ever posted for these entries. We therefore find that CBP cannot substantiate that notice of deemed liquidation was posted within a reasonable period from the date of deemed liquidation. Since posting of bulletin notice was a condition precedent to CBP’s voluntary reliquidation authority under 19 U.S.C. § 1501 (2004), we find that CBP lacked the authority to reliquidate entry no.’s xxx-xxxxx7306 and xxx-xxxxx0726.
For ease of reference, we summarize the extensive liquidation history detailed in this section. Of the 28 protested entries, CBP issued timely notices of extension for the 19 entries identified in Table A. In consequence, all of the protested entries save for entry no.’s xxx-xxxxx7306 and xxx-xxxxx0726 were timely liquidated. Liquidation was timely because it occurred within a year from the date of entry, or within two years if the liquidation deadline was extended. 19 U.S.C. § 1504(a)(1)(A). On September 11, 2015, CBP sought to reliquidate 24 of the protested entries. Reliquidation was untimely, or invalid, for all but the following four entries: no.’s xxx-xxxxx7236, xxx-xxxxx8440, xxx-xxxxx4661, and xxx-xxxxx4679. Reliquidation was untimely because it occurred outside the applicable 90-day statutory deadline, as identified in Table B. 19 U.S.C. § 1501 (2004); 19 C.F.R. § 159.9(a-b) (1994). Reliquidation of the two deemed liquidated entries was invalid because the posting of bulletin notice required to trigger CBP’s voluntary reliquidation authority cannot be established. 19 C.F.R. § 159.9(c) (1994). Consequently, we find that the 28 protested entries were liquidated, deemed liquidated, and reliquidated, at the rate and amount of duties validly assessed by CBP or applicable by operation of law on the dates represented below in Table C.
Table C
Entry No.
Final Disposition
xxx-xxxxx9114
Timely liquidated on Nov. 29, 2013.
xxx-xxxxx2522
Timely liquidated on Dec. 13, 2013.
xxx-xxxxx4510
Timely liquidated on Dec. 27, 2013.
xxx-xxxxx9436
Timely liquidated on Jan. 17, 2014.
xxx-xxxxx4238
Timely liquidated on Feb. 7, 2014.
xxx-xxxxx5755
Timely liquidated on Feb. 14, 2014.
xxx-xxxxx7306
Deemed liquidated on Apr. 13, 2014.
xxx-xxxxx9120
Timely liquidated on Feb. 28, 2014
xxx-xxxxx4823
Timely liquidated on Ap. 24, 2015
xxx-xxxxx8824
Timely liquidated on Apr. 24, 2015
xxx-xxxxx1398
Timely liquidated on April 24, 2015.
xxx-xxxxx3154
Timely liquidated on April 24, 2015.
xxx-xxxxx6256
Timely liquidated on April 24, 2015.
xxx-xxxxx7643
Timely liquidated on April 24, 2015.
xxx-xxxxx9201
Timely liquidated on April 24, 2015.
xxx-xxxxx1338
Timely liquidated on May 22, 2015.
xxx-xxxxx2328
Timely liquidated on May 22, 2015.
xxx-xxxxx2336
Timely liquidated on May 22, 2015.
xxx-xxxxx3946
Timely liquidated on May 22, 2015.
xxx-xxxxx7236
Timely reliquidated on Sept. 11, 2015.
xxx-xxxxx8440
Timely reliquidated on Sept. 11, 2015.
xxx-xxxxx4661
Timely reliquidated on Sept. 11, 2015.
xxx-xxxxx4679
Timely reliquidated on Sept. 11, 2015.
xxx-xxxxx6302
Timely liquidated on Sept. 11, 2015.
xxx-xxxxx0726
Deemed liquidated on Dec. 5, 2014.
xxx-xxxxx2219
Timely liquidated on Sept. 11, 2015.
xxx-xxxxx3498
Timely liquidated on Sept. 11, 2015.
xxx-xxxxx3993
Timely liquidated on Sept. 11, 2015.
What is the tariff classification of the snack mixes and Palanqueta bar under the HTSUSA?
Classification under the 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.
The Harmonized Commodity Description and Coding System Explanatory Notes (“EN”) constitute the official interpretation at the international level. While neither legally binding nor dispositive, the EN provide a commentary on the scope of each heading of the HTSUSA and are generally indicative of the proper interpretation of the headings. It is CBP’s practice to follow, whenever possible, the terms of the ENs when interpreting the HTSUSA. See T.D. 89-80, 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989).
The 2013 HTSUSA provisions at issue are:
1704.90: Sugar confectionery (including white chocolate), not containing cocoa: Other: Confections or sweetmeats ready for consumption:
1704.90.1000: Candied nuts…
1704.90.3520: Other: Other: Put up for retail sale: Containing peanuts, peanut butter or peanut paste…
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2008: 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:
2008.11.6000: Nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together: Peanuts (ground-nuts): Other: Other…
2008.97.1040: Other, including mixtures other than those of subheading 2008.19: Mixtures: In airtight containers and not containing apricots, citrus fruits, peaches or pears: Other…
* * * * *
Super Cantinero and Party Mix
Protestant initially classified Super Cantinero and Party Mix under subheading 2008.11.6000, HTSUSA, 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: Peanuts (ground-nuts): Other: Other.” Protestant now asserts that these products are properly classified under subheading 2008.97.1040, HTSUSA, 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.”
In support of its argument, Protestant cites to New York Ruling Letter (“NY”) N237245, dated February 1, 2013, which classified Banana Burst Trail Mix under subheading 2008.97.1040, HTSUSA, when packed in airtight containers, and under subheading 2008.97.9094, HTSUSA, when not in airtight containers. Banana Burst Trail Mix was composed of 20% whole banana chips, 18% raisins, 14% dark chocolate bananas, 12% raw cashew nuts, 12% raw walnuts, 10% dried cranberries, 8% raw pumpkin seeds, and 6% yogurt covered cranberries. The ingredients were mixed together in Canada and then packaged for retail sale in a 200-gram, sealed plastic bag. We find that the Banana Burst Trail Mix differs from Super Cantinero and Party Mix with respect to ingredients and composition. Notably, the Banana Burst Trail Mix contains no peanuts whereas peanuts are a significant component of IPS’ products.
Super Cantinero and Party Mix are made 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, Super Cantinero and Party 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. GRI 2(b) states that if a product is a mixture or combination of materials or substances that are, prima facie, classifiable in two or more headings, then GRI 3 applies. The snack mixes in this case are mixtures of various ingredients. GRI 3(b) provides that mixtures or composite goods consisting of different materials or made up of different components, shall be classified as if they consisted of the material or component which gives them their essential character.
EN VIII to GRI 3(b) provides, “The factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the goods.”
HQ 967691, dated July 13, 2006, concerned the classification of “Mediterranean Mix” that consisted of 25% peanuts, 16.5% sunflower seeds, and 7% raisins. The remaining 48.5% of the mixture was unaccounted for. Due to the lack of information regarding the complete percentage of the mixture, CBP could not determine the essential character of the product and could not give a precise classification. See also HQ 967692 (July 13, 2006) (revoking a tariff classification ruling due to the lack of information relative to the ingredients breakdown and method of preparation for each component of two snack mixes).
In order to determine which material or component gives Super Cantinero and Party Mix their essential character, we must consider the ingredient composition. On September 19, 2019, we requested the additional information from Protestant’s counsel in order to classify the products and consider Protestant’s claim that the Super Cantinero and Party Mix are properly classified under subheading 2008.97.1040, HTSUSA. No response was received. None of the documentation provided with the protest or with the entry (such as IPS’ invoices, its submission, nor any other supporting documentation) describe the breakdown of components for either snack mix. Without this additional information, we are unable to make a classification determination and substantiate Protestant’s claim that the products are classified under 2008.97.1040, HTSUSA. Therefore, Super Cantinero and Party Mix will remain classified under subheading 2008.11.6000, HTSUSA, as entered.
Palanqueta Bar
The Palanqueta bar was liquidated as entered under subheading 1704.90.1000, HTSUSA, as candied nuts. Protestant argues that the Palanqueta is properly classified under subheading 1704.90.3520, HTSUSA, which provides for “Sugar confectionery (including white chocolate), not containing cocoa: Other: Confections or sweetmeats ready for consumption: Other: Other: Put up for retail sale: Containing peanuts, peanut butter or peanut paste.”
CBP classifies candied nuts in individual pieces in 1704.90.1000, HTSUSA. See NY L86488 (Sept. 14, 2005) (classifying “Toffee Peanuts”); NY I89637 (Jan. 17, 2003) (classifying peanuts that were repeatedly dipped into a sugar mixture until they were thickly coated); NY D89565 (Apr. 5, 1999); and NY 809514 (May 8, 1995) (concerning small peanut pieces coated with hard candy shells of varying colors). NY D89565 concerned the classification of three peanut-based products. The “French Burnt” peanuts were candy coated peanuts with a bumpy surface texture and contained 58.18% liquid sugar, 29.58% roasted peanuts, and other minor ingredients. The “Boston Baked Beans” were candy coated peanuts with a smooth surface, resembling baked beans, and contained 52.85% sugar, 31.12% roasted peanuts, and other minor ingredients. The peanut brittle was a sugar candy mixed with peanuts that contained 26.73% roasted peanuts, 26.28% glucose, 25.89% liquid sugar, 20.71% granulated sugar, salt, and coloring. All three products were packaged for retail sale as a confectionery. CBP classified the “French Burnt” peanuts and “Boston Baked Beans” under subheading 1704.90.1000, HTSUSA, as candied nuts. CBP classified the peanut brittle under subheading 1704.90.3520, HTSUSA.
In contrast, NY E82376, dated June 1, 1999, CBP classified coated individual peanuts consisting of peanuts, flour, sugar, salt, and Kanbaiko (flavoring) under subheading 2008.11.6000, HTSUS. The product also included either white sesame, black sesame, seaweed, or lavender. In explaining why the peanuts were not considered candied nuts, CBP noted that candied nuts contain a thick, hard, candy coating that usually comprises more than 50% of the product by weight.
CBP has consistently classified confectionary bars that contain peanuts, similar to the Palanqueta bar, under subheading 1704.90.3520, HTSUSA. See NY N116969 (Aug. 23, 2010) (“Fruit & Nut” fudge bar); NY L80966 (Dec. 15, 2004) (“Peanut Candy”, “Peanut/Sesame Toffee”, “Peanut Cake”, “Peanut Flaked Cookie”, “Peanut/Coconut Toffee”, and “Peanut CrIPS”); and NY H82654 (June 28, 2001) (Fruit and Nut Bar and Mixed Nut Feast Bar).
To determine whether the Palanqueta bar is classified under subheading 1704.90.1000, HTSUSA, or 1704.90.3520, HTSUSA, we must determine whether the peanuts in the Palanqueta bar are considered “candied.” In addition to CBP’s description of candied nuts in NY E82376, Merriam-Webster dictionary defines “candied” as “encrusted or coated with sugar.” The Palanqueta bar will be considered “candied nuts” under subheading 1704.90.1000, HTSUSA, if it is comprised entirely of nuts that contain a thick sugar-coating. While the Palanqueta bar contains peanuts and various sugars, it also includes pumpkin seeds, sesame seeds, and raisins. Subheading 1704.90.1000, HTSUSA, does not cover these additional ingredients as they are not nuts. Additionally, the manufacturing process for the Palanqueta bar does not involve encrusting or coating the individual peanuts with sugar. Rather, the raw peanuts and seeds are first cooked and seasoned and then mixed with the remaining ingredients before being rolled out and cut into candy-bar shaped pieces. We find that mixing with sugar and other ingredients is not equivalent to encrusting or coating with sugar. The peanuts do not retain their individual shape once they are manufactured into the bar with the other ingredients. Moreover, the Palanqueta is put up for retail sale by being cut into individual portions, wrapped, and packaged. Therefore, the Palanqueta bar is not classified as “candied nuts” of subheading 1704.90.1000, HTSUSA, because it is not comprised of individual peanuts with a thick, hard sugar coating. Because the Palanqueta bar is manufactured in candy-bar shaped pieces ready for consumption, and contains peanuts, it is properly classified under subheading 1704.90.3520, HTSUSA.
Whether the peanut-based products qualify for preferential tariff treatment under the NAFTA?
Protestant argues that the subject merchandise is eligible for NAFTA preferential tariff treatment. Pursuant to General Note (“GN”) 12(a), HTSUS, for an article to be eligible for NAFTA preference, two requirements must be satisfied. First, the article in question must be “originating” within the rules of origin set forth in the GN 12(b), HTSUS. Second, the article must qualify to be marked as a good of a NAFTA party under the NAFTA marking regulations contained in 19 C.F.R. § 102.20.
Per GN 12(b), goods imported into the United States may be considered “goods originating in the territory of a NAFTA party” only if:
they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
they have been transformed in the territory of Canada, Mexico and/or the United States so that—
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
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
they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials. . .
As discussed, the Super Cantinero, Party Mix, roasted peanuts, fried peanuts, and Japanese-style peanuts are classified under subheading 2008.11, HTSUS. The applicable rule in subdivision (t) provides for “a change to subheading 2008.11 from any other chapter.” The raw ingredients used to manufacture Super Cantinero and Party Mix include garlic (heading 0703), dried chili peppers (heading 0904), raw peanuts (heading 1202), tortilla chips (heading 1905), palm oil (heading 1511), and salt (heading 2501). Likewise, the ingredients for the roasted peanuts, fried peanuts, and Japanese-style peanuts do not include any classified in Chapter 20, HTSUS. Though the ingredients appear to undergo the requisite tariff shift, it remains to be determined whether they meet the additional test imposed by GN 12(s), HTSUS, which provides exceptions to the change in tariff classification rules.
GN 12(s)(i)(B), HTSUS, provides:
Agricultural and horticultural goods grown in the territory of a NAFTA party shall be treated as originating in the territory of that party even if grown from seed, bulbs, rootstock, cuttings, slips or other live parts of plants imported from a non-party to the NAFTA, except that goods which are exported from the territory of Mexico and are provided for in-- subheading 2008.11, if any material provided for in heading 1202 used in the production of such goods was not harvested in the territory of Mexico, shall be treated as nonoriginating goods.
Heading 1202, HTSUS, provides for “Peanuts (ground-nuts), not roasted or otherwise cooked, whether or not shelled or broken.” Thus, a good exported from Mexico under subheading 2008.11, HTSUS, is not treated as an originating good under the NAFTA if it was produced using any raw peanuts that were not harvested in the territory of Mexico. Here, the Super Cantinero, Party Mix, roasted peanuts, fried peanuts, and Japanese-style peanuts will not be eligible for NAFTA preferential tariff treatment if the raw peanuts used in the products were harvested somewhere other than Mexico.
Protestant states that IPS used U.S. and Mexican-origin raw peanuts to manufacture Super Cantinero and Party Mix, but does not distinguish whether any entries were produced exclusively from Mexican-origin raw peanuts. Furthermore, Protestant did not provide any documentation suggesting that certain shipments of Super Cantinero and Party Mix to the United States only used Mexican-origin raw peanuts. Since Super Cantinero and Party Mix are classified in subheading 2008.11, HTSUS, and they are manufactured with raw peanuts from the United States, the snack mixes are non-originating under the NAFTA and are not eligible for duty preference.
Protestant claims that the roasted and fried peanuts are made with only Mexican-origin peanuts because IPS maintained a sufficient supply of raw peanuts from Mexican suppliers to produce the roasted and fried peanuts. However, nothing in the Protestant’s submission definitively connects the inventory of Mexican-origin raw peanuts to the products at issue. The provided spreadsheet merely demonstrates that IPS had enough Mexican-origin raw peanuts in inventory prior to certain exports of the products to the United States. We further note that Protestant did not provide any information regarding the inventory of U.S.-origin raw peanuts. As stated above, Protestant provided photos showing bulk quantities of runner-style peanuts from both Mexican and U.S. suppliers, suggesting that IPS had an inventory of U.S.-origin peanuts. Thus, we cannot determine with certainty whether the products at issue were manufactured exclusively with the Mexican-origin raw peanuts listed on the inventory documentation. We find that Protestant’s argument and documentation do not substantiate the country of origin of the peanut-based products at issue. Accordingly, the roasted and fried peanuts are non-originating under the NAFTA.
Protestant presents the same argument for its Japanese-style peanuts, claiming that the raw peanuts used to make the Japanese-style peanuts are of Mexican origin. Although the Japanese-style peanut suppliers are based in Mexico, the provided documentation does not sufficiently indicate the origin of the Japanese-style peanuts. The declarations provided by the Japanese-style peanut vendors in Mexico were not substantiated by CBP and the NAFTA Certificate of Origin does not cover the 2013 entries. Additionally, during the August 2014 meeting with CBP, IPS indicated that one Mexican supplier may have sourced some peanuts from Nicaragua. Therefore, we cannot verify that the raw peanuts used in the manufacture of IPS’ Japanese-style peanuts were harvested in Mexico. Accordingly, the Japanese-style peanuts are non-originating under the NAFTA and do not qualify for preferential tariff treatment under the NAFTA.
HOLDING:
In accordance with the above, we find that:
The following entries are deemed liquidated: xxx-xxxxx7306 and xxx-xxxxx0726. The following entries are timely liquidated: xxx-xxxxx9114; xxx-xxxxx2522; xxx-xxxxx4510; xxx-xxxxx9436; xxx-xxxxx4238; xxx-xxxxx5755; xxx-xxxxx9120; xxx-xxxxx4823; xxx-xxxxx8824; xxx-xxxxx1398; xxx-xxxxx3154; xxx-xxxxx6256; xxx-xxxxx7643; xxx-xxxxx9201; xxx-xxxxx1338; xxx-xxxxx2328; xxx-xxxxx2336; xxx-xxxxx3946; xxx-xxxxx6302; xxx-xxxxx2219; xxx-xxxxx3498; and xxx-xxxxx3993. The following entries are timely reliquidated: xxx-xxxxx7236; xxx-xxxxx8440; xxx-xxxxx4661; and xxx-xxxxx4679.
The Super Cantinero and Party Mix are classified under subheading 2008.11.6000, HTSUSA, 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: Peanuts (ground-nuts): Other: Other.” The 2013 column one duty rate is 131.8% ad valorem.
The Palanqueta bar is classified under subheading 1704.90.3520, HTSUSA, which provides for “Sugar confectionery (including white chocolate), not containing cocoa: Other: Confections or sweetmeats ready for consumption: Other: Other: Put up for retail sale: Containing peanuts, peanut butter or peanut paste.” The 2013 column one duty rate is 5.6% ad valorem.
The Super Cantinero, Party Mix, roasted peanuts, fried peanuts, and Japanese-style peanuts are not eligible for the preferential tariff treatment under the NAFTA. The Palanqueta bar was already liquidated at the preferential duty rate under the NAFTA.
You are instructed to GRANT the protest with respect to the deemed liquidation of entry numbers xxx-xxxxx7306 and xxx-xxxxx0726. With respect to the remaining entries that were timely liquidated and reliquidated subject to this protest, you are instructed to DENY the protest since reclassification of the merchandise as indicated would result in no net duty reduction.
In accordance with Sections IV and VI of the CBP Protest/Petition Processing Handbook (HB 3500-08A, December 2007, pp. 24 and 26), you are to mail this decision, together with the CBP Form 19, to the Protestant no later than 60 days from the date of this letter. Any re-liquidation of the entry or entries in accordance with the decision must be accomplished prior to mailing the decision.
Sixty days from the date of the decision, the Office of Trade, Regulations and Rulings will make the decision available to CBP personnel, and to the public on the Customs Rulings Online Search System (“CROSS”) at https://rulings.cbp.gov/ which can be found on the U.S. Customs and Border Protection website at http://www.cbp.gov and other methods of public distribution.
Sincerely,
For Craig T. Clark, Director
Commercial and Trade Facilitation Division