OT:RR:CTF:VS H312440 EE
Mr. Harold C. Averill
Parker & Company
P.O. Box 271
4694 Jaime Zapata Ave.
Brownsville, TX 78522
RE: Modification of NY N306886; Preferential Tariff Treatment under NAFTA; Instant Chai Teas
Dear Mr. Averill:
This letter is to inform you of the reconsideration of New York Ruling Letter (“NY”) N306886 which was issued to you by U.S. Customs and Border Protection (“CBP”) on November 18, 2019. NY N306886 concerns the tariff classification of certain instant chai teas and their eligibility for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”). We have reviewed NY N306886 and determined that it is partially incorrect with respect to the eligibility of the instant chai teas for preferential tariff treatment under NAFTA. For the reasons set forth below, we are modifying that ruling letter.
FACTS:
The subject merchandise is described as instant chai teas under the brand name “Tea India.” There are four varieties of sweetened teas and one unsweetened tea under the product name “Chai Moments.”
Chai Moments Ginger Chai sweetened tea contains 55 to 60 percent cane sugar, 12 to 14 percent whole milk powder, 11 to 13 percent skim milk powder, 6 to 7 percent black tea extract, 4 to 5 percent chicory root inulin, 1 to 2 percent ginger flavor, and 1 to 2 percent ginger spice powder. The cane sugar, whole milk powder, skim milk powder, and ginger flavor are products of the United States. The total dry weight of sugar is said to be 59.86 percent. The non-originating ingredients of the Chai Moments Ginger Chai are as follows:
Ingredient
Origin
HTSUS Classification
Black Tea Extract
Kenya
2101.20.20
Chicory Root Inulin
Belgium
1108.20.00
Ginger Spice Powder
China, India or Nigeria
2106.90.09
Cane Sugar
United States
1701.99.50
Whole Milk Powder
United States
0402.10.00
Skim Milk Powder
United States
0402.10.00
Ginger Flavor
United States
2106.90.09
Chai Moments Matcha Latte sweetened tea contains 55 to 60 percent cane sugar, 17 to 19 percent non-dairy creamer, 10 to 12 percent malted milk powder, 4 to 6 percent matcha green tea, 4 to 6 percent skim milk powder, 3 to 5 percent whole milk powder, 1 to 2 percent green tea matcha flavor, and less than 1 percent of pectin and tara gum. The cane sugar, non-dairy creamer, malted milk powder, skim milk powder, whole milk powder, and green tea matcha flavor are products of the United States. The total dry weight of sugar is said to be 55.25 percent. The non-originating ingredients of the Chai Moments Matcha Latte are as follows:
Ingredient
Origin
HTSUS Classification
Matcha Green Tea
Japan
0902.10.10
Pectin
Mexico, China or Spain
1302.20.00
Tara Gum
Peru
1302.20.00
Cane Sugar
United States
1701.99.50
Non Dairy Creamer
United States
2106.90.09
Malted Milk Powder
United States
2106.90.09
Skim Milk Powder
United States
0402.10.00
Whole Milk Powder
United States
0402.10.00
Green Tea Matcha Flavor
United States
2106.90.09
Chai Moments Plain Chai sweetened tea contains 55 to 60 percent cane sugar, 14 to 16 percent whole milk powder, 11 to 13 percent skim milk powder, 6 to 8 percent black tea extract, and 9 to 11 percent chicory root inulin. The cane sugar, whole milk powder, and skim milk powder are products of the United States. The total dry weight of sugar is said to be 56.39 percent. The non-originating ingredients of the Chai Moments Plain Chai are as follows:
Ingredient
Origin
HTSUS Classification
Black Tea Extract
Kenya
2101.20.20
Chicory Root Inulin
Belgium
1108.20.00
Cane Sugar
United States
1701.99.50
Whole Milk Powder
United States
0402.10.00
Skim Milk Powder
United States
0402.10.00
Chai Moments Ginger Turmeric sweetened tea contains 55 to 65 percent cane sugar, 12 to 14 percent whole milk powder, 11 to 13 percent skim milk powder, 5 to 6 percent black tea extract, 5 to 6 percent chicory root inulin, 1 to 2 percent ginger flavor, less than 1 percent of ginger spice powder, turmeric spice powder, cinnamon spice powder, and pepper spice powder. The cane sugar, whole milk powder, skim milk powder, and ginger flavor are products of the United States. The total dry weight of sugar is said to be 59.45 percent. The non-originating ingredients of the Chai Moments Ginger Turmeric are as follows:
Ingredient
Origin
HTSUS Classification
Black Tea Extract
Kenya
2101.20.20
Chicory Root Inulin
Belgium
1108.20.00
Ginger Spice Powder
China, India or Nigeria
2106.90.09
Turmeric Spice Powder
India
2106.90.09
Cinnamon Spice Powder
Vietnam
2106.90.09
Pepper Spice Powder
India, Indonesia, Malaysia or Vietnam
2106.90.09
Cane Sugar
United States
1701.99.50
Whole Milk Powder
United States
0402.10.00
Skim Milk Powder
United States
0402.10.00
Ginger Flavor
United States
2106.90.09
Chai Moments Unsweetened Masala tea contains 45 to 50 percent whole milk powder, 35 to 40 percent chicory root inulin, 8 to 10 percent black tea extract, 1 to 2 percent cinnamon spice powder, and less than 1 percent of clove spice powder, ginger spice powder, cardamom spice powder, and pepper spice powder. The whole milk powder is a product of the United States. The non-originating ingredients of the Chai Moments Unsweetened Masala are as follows:
Ingredient
Origin
HTSUS Classification
Chicory Root Inulin
Belgium
1108.20.00
Black Tea Extract
Kenya
2101.20.20
Cinnamon Spice Powder
Vietnam
2106.90.09
Clove Spice Powder
Brazil, Comoros, Indonesia, Madagascar, Vietnam or Zanzibar
2106.90.09
Ginger Spice Powder
China, India, or Nigeria
2106.90.09
Cardamom Spice Powder
Guatemala, Honduras or India
2106.90.09
Pepper Spice Powder
India, Indonesia, Malaysia or Vietnam
2106.90.09
Whole Milk Powder
United States
0402.10.00
All ingredients will be shipped to Mexico where they will be manufactured into instant chai tea products. They are then packaged into individual units (sticks) varying from 12.5g to 25g. These individual packages are then packaged in boxes of either 10 or 20 units each. Both are then bulk packed in master cartons of 6 each. The boxes that have 10 sticks each will be put up for retail sale. The boxes with 20 sticks will be sold as individual single serve per stick. The product is steeped in a cup of hot water to make a beverage.
In NY N306886, CBP determined the Chai Moments Ginger Chai, Chai Moments Matcha Latte, Chai Moments Plain Chai, and Chai Moments Ginger Turmeric were classified under subheading 2101.20.54, Harmonized Tariff Schedule of the United States (“HTSUS”), or 2101.20.58, HTSUS, if the quantitative limits of Additional U.S. Note 8 to Chapter 17 have been reached. The Chai Moments Unsweetened Masala was classified under subheading, 2101.20.90, HTSUS. Additionally, CBP determined none of the five instant chai teas qualified for preferential tariff treatment under NAFTA because the non-originating materials used in the production of the instant chai teas did not undergo the change in tariff classification required by General Note 12(t)/21.2, HTSUS. CBP also determined that the country of origin of the Chai Moments Ginger Chai, Chai Moments Plain Chai, Chai Moments Ginger Turmeric and Chai Moments Unsweetened Masala for marking purposes was the United States and that the country of origin of the Chai Moments Matcha Latte for marking purposes was Kenya.
ISSUES:
Whether the instant chai teas classified under subheadings 2101.20.54, 2101.20.58, and 2101.20.90, HTSUS, imported into the United States from Mexico are eligible for preferential tariff treatment under the NAFTA.
What is the country of origin of the instant chai teas for purposes of country of origin marking?
LAW AND ANALYSIS:
General Note (“GN”) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(a)(ii), HTSUS, provides 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 Mexico. GN 12(b), HTSUS, 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 Mexico 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 “MX” 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 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.
Since the instant chai teas contain non-originating materials, they are not considered goods wholly obtained or produced entirely in a NAFTA party under GN 12(b)(i). We must next determine whether the instant chai sticks qualify under GN 12(b)(ii).
There is no dispute that the instant chai teas are classified in heading 2101, HTSUS. The applicable rule is in GN 12(t)/21.2, HTSUS, which provides: “[a] change to heading 2101 from any other chapter.” All of the instant chai teas with the exception of the Chai Moments Matcha Latte contain ingredients classified in Chapter 21. Therefore, we agree with NY N306886 that the four teas, Chai Moments Ginger Chai, Chai Moments Plain Chai, Chai Moments Ginger Turmeric, and Chai Moments Unsweetened Masala, do not meet the tariff shift rule since they contain ingredients classified in Chapter 21. As such, they do not qualify as NAFTA originating goods.
However, the Chai Moments Matcha Latte contains only three ingredients which are non-originating: matcha green tea from Japan classified under subheading 0902.10.10, HTSUS; pectin from China or Spain, classified under subheading 1302.20.00, HTSUS; and tara gum from Peru, classified under subheading 1302.20.00, HTSUS. Since all three non-originating ingredients are classified in a chapter other than chapter 21, the tariff shift rule is met. Accordingly, we disagree with NY N306886 that the Chai Moments Matcha Latte does not qualify as a NAFTA originating good.
We must next determine whether the Chai Moments Matcha Latte qualifies to be marked as a good of Mexico. See GN 12(a)(ii), HTSUS (NAFTA-originating goods must also qualify to be marked as products of Mexico under the NAFTA Marking Rules to be eligible for preferential treatment).
In this regard, 19 C.F.R. § 134.1(j) provides that “[t]he ‘NAFTA Marking Rules’ are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country.” 19 C.F.R. § 134.1(j) 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.”
19 C.F.R. § 102.11 sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. 19 C.F.R. § 102.11(a) provides that the country of origin of a good is the country in which:
The good is wholly obtained or produced;
The good is produced exclusively from domestic materials;
or
Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Because the Chai Moments Matcha Latte is produced in Mexico from non-originating materials, it is neither wholly obtained or produced (19 C.F.R. § 102.11(a)(1)), nor produced exclusively from domestic materials (19 C.F.R. § 102.11(a)(2)). Accordingly, 19 C.F.R. § 102.11(a)(3) is the applicable rule that must next be applied to determine the origin of the Chai Moments Matcha Latte for marking purposes. “Foreign material” is defined in 19 C.F.R. § 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” In order to determine whether Mexico is the country of origin, we must look at those ingredients whose country of origin is other than Mexico. Pursuant to 19 C.F.R. § 102.20(d), the applicable tariff shift rule for the Chai Moments Matcha Latte is “[a] change to heading 2101 from any other heading.” Since the matcha green tea from Japan, the pectin from China or Spain, the tara gum from Peru, the cane sugar, non-dairy creamer, malted milk powder, skim milk powder, whole milk powder, and green tea matcha flavor from the United States are classified in a heading other than heading 2101, the tariff shift rule is met. As such, we find that the Chai Moments Matcha Latte qualifies to be marked as a good of Mexico under the NAFTA Marking Rules.
We note that subheading 2101.20.54, HTSUS, is not a NAFTA eligible provision for goods of Mexico. Examining the special column for subheading 2101.20.54, HTSUS, the article may only be duty-free under NAFTA if it qualifies to be marked as a good of Canada, as the special column only has an indicator for “CA” and not for “MX.” Indeed, additional U.S. note 8 to chapter 17 referenced in subheading 2101.20.54, HTSUS, indicates that “articles the product of Mexico shall not be permitted or included under this quantitative limitation and no such articles shall be classifiable therein.” Accordingly, we disagree with NY N306886 that the Chai Moments Matcha Latte is classified under subheading 2101.20.54, HTSUS, which is not a NAFTA eligible provision for goods of Mexico. Rather, we find that the Chai Moments Matcha Latte is classified under subheading 2101.20.58, HTSUS, and qualifies as a NAFTA originating good.
Regarding making a NAFTA claim for the Chai Moments Matcha Latte, if an importer fails to make a claim for NAFTA at the time of entry, the NAFTA claim may be made by filing a request under 19 U.S.C. § 1520(d). Specifically, that provision states in pertinent part that:
Notwithstanding the fact that a valid protest was not filed, the Customs Service may . . . reliquidate an entry to refund any excess duties (including any merchandise processing fees) paid on a good qualifying under the rules of origin set out in section 202 of the North American Free Trade Agreement Implementation Act [19 USCS § 3332], . . . for which no claim for preferential tariff treatment was made at the time of importation if the importer, within 1 year after the date of importation, files, in accordance with those regulations, a claim that includes—
(1) a written declaration that the good qualified under the applicable rules at the time of importation;
(2) copies of all applicable certificates or certifications of origin; and
(3) such other documentation and information relating to the importation of the goods as the Customs Service may require.
Although the remaining four teas do not qualify for NAFTA preference, the NAFTA Marking Rules will still apply for purposes of this marking decision modification. As the black tea extract from Kenya in the Chai Moments Ginger Chai, Chai Moments Plain Chai, Chai Moments Ginger Turmeric, and Chai Moments Unsweetened Masala is classified under heading 2101, HTSUS, the tariff shift rule is not satisfied for these four instant chai teas. Because 19 C.F.R. § 102.11(a)(1)-(3) is not determinative of origin, the analysis continues to 19 C.F.R. § 102.11(b) which provides in pertinent part:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:
(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good, or…
When determining the essential character of a good under 19 C.F.R. § 102.11, 19 C.F.R. § 102.18(b) provides that only domestic and foreign materials that are classified in a tariff provision from which a change is not allowed shall be taken into consideration. Therefore, only the black tea extract from Kenya may be considered for purposes of determining the essential character of the instant chai teas. Accordingly, we disagree with N306886 and find that the country of origin of the Chai Moments Ginger Chai, Chai Moments Plain Chai, Chai Moments Ginger Turmeric, and Chai Moments Unsweetened Masala teas is Kenya for country of origin marking purposes.
HOLDING:
The Chai Moments Matcha Latte, classified under subheading 2101.20.58, HTSUS, is eligible for preferential tariff treatment under NAFTA. The country of origin of the Chai Moments Matcha Latte is Mexico for purposes of the marking requirements. The Chai Moments Ginger Chai, Chai Moments Plain Chai, Chai Moments Ginger Turmeric, classified under subheading 2101.20.58, HTSUS, and Chai Moments Unsweetened Masala teas, classified under subheading 2101.20.90, HTSUS, are not eligible for preferential tariff treatment under NAFTA, and their country of origin is Kenya for marking purposes.
EFFECT ON OTHER RULINGS:
To the extent that a post-importation 19 U.S.C. 1520(d) will be made, HQ N306886, dated November 18, 2019, is hereby MODIFIED with respect to the eligibility of Chai Moments Matcha Latte, classified under subheading 2101.20.58, HTSUS, for preferential tariff treatment under NAFTA and the country of origin of all five instant chai teas for marking purposes.
Sincerely,
for Craig T. Clark, Director
Commercial and Trade Facilitation Division