OT:RR:CTF:FTM H313148 TJS
Ms. Sheri G. Lawson
Wilson International Inc.
160 Wales Avenue, Ste. 100
Tonawanda, New York 14150
RE: Tariff Classification of Pasta Kits; USMCA; Country of Origin Marking
Dear Ms. Lawson,
This is in response to your correspondence, dated January 8, 2020, in which you requested a binding ruling, on behalf of Mastronardi Produce Ltd. (“Mastronardi”), concerning the tariff classification, country of origin marking, and eligibility of certain pasta and tomato meal kits for preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”). Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division for review. Our ruling is set forth below.
FACTS:
The merchandise is pasta and tomato meal kits in the following four varieties: “You Make Me Chill | Cold Pasta Salad Kit” (hereinafter “Pasta Salad Kit”), “You Make Me Hot | Spicy Arrabbiata Pasta Kit” (hereinafter “Arrabbiata Pasta Kit”), “You Make Me Blush | Creamy Parmesan Pasta Kit” (hereinafter “Creamy Parmesan Pasta Kit”), and “You Make Me Fresh | Classic Italian Pasta Kit” (hereinafter “Classic Italian Pasta Kit”). The pasta kits consist of fresh greenhouse grown tomatoes harvested in Canada, the United States, or Mexico (depending on the time of year), uncooked pasta from the United States, and a spice packet from the United States or Canada. Each kit except the Creamy Parmesan Pasta Kit also includes an herb-infused oil packet from Italy. The ingredients are packaged together in Canada and then imported into the United States and sold to retail grocery stores. The kits are packaged in plastic containers and sold in the produce section of grocery stores.
The Pasta Salad Kit contains approximately 67% tomatoes, 29% pasta, 2% herb-infused oil, and 2% Italian spices. The Spicy Arrabbiata Pasta Kit contains approximately 67% tomatoes, 29% pasta, 2% herb-infused oil, and 1% Arrabbiata spices. The Creamy Parmesan Pasta Kit contains approximately 66% tomatoes, 29% pasta, and 5% creamy parmesan cheese spices. The Classic Italian Pasta Kit contains approximately 67% tomatoes, 29% pasta, 2% herb-infused oil, and 2% Italian spices. The directions for the Spicy Arrabbiata Pasta Kit, Creamy Parmesan Pasta Kit, and Classic Italian Pasta Kit instruct the user to boil the pasta, prepare the tomatoes and spices into a sauce, and combine all the components. The Pasta Salad Kit requires the user to boil the pasta, cut the tomatoes, prepare a dressing, and combine all the components. According to your submission, the tomatoes represent approximately 60-70% of the value of the kits and they take up about 60-70% of the space in the plastic container in which the kits are packaged and sold. The herb-infused oil packet represents approximately 7-9% of the value of the kits, depending on the variety.
ISSUES:
What is the tariff classification of the pasta kits?
Whether the pasta kits imported into the United States from Canada are eligible for preferential tariff treatment under the USMCA.
What is the country of origin of the pasta kits for marking purposes?
LAW AND ANALYSIS:
Tariff Classification
Classification of goods 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. Pursuant to GRI 6, classification at the subheading level uses the same rules, mutatis mutandis, as classification at the heading level.
GRI 3(a) and (b) provide as follows:
When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
The heading which provides the most specific description shall be preferred to headings providing a more general description. However, when two or more headings each refer to part only of the materials or substances contained in mixed or composite goods or to part only of the items in a set put up for retail sale, those headings are to be regarded as equally specific in relation to those goods, even if one of them gives a more complete or precise description of the goods.
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
* * * * *
In understanding the language of the HTSUS, the Explanatory Notes (“EN”) of the Harmonized Commodity Description and Coding System may be utilized. The EN, although not dispositive or legally binding, provide a commentary on the scope of each heading, and are generally indicative of the proper interpretation of the Harmonized System at the international level. See T.D. 89-80, 54 Fed. Reg. 35127 (Aug. 23, 1989).
The EN to GRI 3(b) state, in pertinent part:
This second method relates only to:
Mixtures.
Composite goods consisting of different materials.
Composite goods consisting of different components.
Goods put up in sets for retail sales.
It applies only if Rule 3(a) fails.
In all these cases the goods are to be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable.
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.
[. . .]
For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to mean goods which:
consist of at least two different articles which are, prima facie, classifiable in different headings. Therefore, for example, six fondue forks cannot be regarded as a set within the meaning of this Rule;
consist of products or articles put up together to meet a particular need or carry out a specific activity; and
are put up in a manner suitable for sale directly to end users without repacking (e.g., in boxes or cases or on boards).
“Retail sale” does not include sales of products which are intended to be re-sold after further manufacture, preparation, repacking or incorporation with or into other goods.
The term “goods put up in sets for retail sale” therefore only covers sets consisting of goods which are intended to be sold to the end user where the individual goods are intended to be used together. For example, different foodstuffs intended to be used together in the preparation of a ready-to-eat dish or meal, packaged together and intended for consumption by the purchaser would be a “set put up for retail sale”.
The EN to GRI 3(b) further provide the following example of a set that can be classified by reference to GRI 3(b):
Sets, the components of which are intended to be used together in the preparation of a spaghetti meal, consisting of a packet of uncooked spaghetti (heading 19.02), a sachet of grated cheese (heading 04.06) and a small tin of tomato sauce (heading 21.03), put up in a carton:
Classification in heading 19.02.
* * * * *
The pasta kits meet all three of the criteria for classification as a set per the EN to GRI 3(b). First, the pasta kits consist of different articles which are, prima facie, classifiable in different headings. Tomatoes are classified in heading 0702, HTSUS, which provides for, “Tomatoes, fresh or chilled.” Pasta is classified in heading 1902, HTSUS, which provides for, “Pasta, whether or not cooked or stuffed (with meat or other substances) or otherwise prepared, such as spaghetti, macaroni, noodles, lasagna, gnocchi, ravioli, cannelloni; couscous, whether or not prepared.” The spice packets and oil packets are classified in heading 2103, HTSUS, which provides for, “Sauces and preparations therefore; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard.” Second, the pasta kits consist of different foodstuffs intended to be used together to prepare a pasta and tomato-based meal. Third, the pasta kits are packaged for retail sale in grocery stores. Thus, the pasta kits are classified under a single tariff provision as a set.
GRI 3(b) provides that goods put up in sets for retail sale shall be classified as if they consisted of the material or component which gives them their essential character. The term “essential character” is not defined within the HTSUS, GRI, or EN. However, EN VIII to GRI 3(b) gives guidance, stating that, “[T]he 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 good.”
When classifying meal kits pursuant to GRI 3(b), CBP generally determines that the component that constitutes the greatest portion by weight of the set gives them their essential character. For example, New York Ruling Letter (“NY”) N249203 (Jan. 16, 2014) concerned the classification of a pizza kit that contained 400 grams of chilled pizza dough and 200 grams of red tomato sauce. Determining that the dough imparted the essential character of the pizza kit, CBP classified the set in heading 1901, HTSUS. Similarly, in NY F86663 (May 19, 2000), CBP held that the essential character of an apple crisp dessert kit, which consisted of 235 grams of crumble topping blend and approximately 15 grams of raisins, was imparted by the crumble topping blend. See also NY N258994 (Dec. 3, 2014) (classifying stir-fry meal kits); and NY N236520 (Jan. 10, 2013) (classifying a salsa kit, caprese kit, and guacamole kit).
The EN to GRI 3(b) includes an example of a spaghetti meal that is classified in heading 1902, HTSUS, because the spaghetti imparts the essential character to the set. We find that the spaghetti meal example is distinguishable to the pasta kits at issue because the pasta kits contain fresh tomatoes rather than a small tin of tomato sauce. The pasta kits’ directions instruct the consumer to prepare their own sauce using the fresh tomatoes and seasonings. Although the pasta is the base of the meal once it is prepared, the pasta kits as imported consist primarily of fresh tomatoes. We find that the tomatoes impart the essential character to each pasta kit because they comprise the largest portion by weight of each kit. Furthermore, according to your submission, the tomatoes constitute the greatest value and bulk of each kit. The pasta kits are packaged in plastic containers and sold in produce sections, which is consistent with how fresh tomatoes are packaged and sold.
The applicable heading for the four pasta kits is 0702, HTSUS, which provides for, “Tomatoes, fresh or chilled.” The 10-digit subheading under the Harmonized Tariff Schedule of the United States Annotated (“HTSUSA”) depends on when the subject pasta kits are entered into the United States. When entered during the period from March 1 to July 14, inclusive, or the period from September 1 to November 14, inclusive, in any year, will be 0702.00.2010, HTSUSA, which provides for fresh greenhouse tomatoes entered during the above-mentioned periods. If entered during the period from July 15 to August 31, inclusive, in any year, the applicable subheading will be 0702.00.4010, HTSUSA. When entered during the period from November 15, in any year, to the last day of the following February, inclusive, the applicable subheading will be 0702.00.6010, HTSUSA.
USMCA
The United States-Mexico-Canada Agreement (“USMCA”) was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
…
The Creamy Parmesan Pasta Kit consists of components from the United States, Mexico, and/or Canada. Therefore, the Creamy Parmesan Pasta Kit is a good wholly obtained or produced entirely in the territory of one or more USMCA countries under GN 11(b)(i). As the Pasta Salad Kit, Spicy Arrabbiata Pasta Kit, and Classic Italian Pasta Kit each contain non-originating herb-infused oil from Italy, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i). These kits are also not produced entirely in Mexico or Canada exclusively from originating materials under GN 11(b)(ii). We must next determine whether the pasta kits qualify under GN 11(b)(iii). As previously noted, the pasta kits are classified in heading 0702, HTSUS. The applicable rule of origin for goods classified under heading 0702, HTSUS, is “[a] change to headings 0701 through 0711 from any other chapter.” Since the non-originating component, the herb-infused oil, is classified in Chapter 21, HTSUS, the tariff shift rule is met. However, with regard to goods classified as sets pursuant to GRI 3(b), GN 11(i) provides as follows:
Notwithstanding the rules set forth in subdivision (o) of this note, goods classifiable as goods put up in sets for retail sale as provided for in rule 3 of the general rules of interpretation of the tariff schedule shall not be considered to be originating goods unless—
each of the goods in the set is an originating good; or
the total value of the nonoriginating goods in the set does not exceed 10 percent of the value of the set.
As the herb-infused oil from Italy is not an originating good, the pasta kits are not considered to be originating under GN 11(i)(A). However, the total value of the non-originating oil does not exceed 10% of the value of any pasta kit variety. Therefore, the pasta kits containing the herb-infused oil meet the requirement of GN 11(i)(B) and qualify for preferential tariff treatment under the USMCA.
Country of Origin Marking
To allow for a more seamless transition period, at this time, CBP continues to utilize the marking rules set forth in 19 C.F.R. Part 102, with the exception of 19 C.F.R. § 102.19, for purposes of country of origin marking with respect to goods from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) 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.
When the tomatoes, pasta, and spice packet in the Creamy Parmesan Pasta Kit originate from the United States, then the country of origin of the kit will be the United States. When the countries of origin of the items in the pasta kits is a combination of Canada, the United States, Mexico, and/or Italy, as described above, then the kits will be neither wholly obtained or produced or produced exclusively from domestic materials in a single country. In those circumstances, the country of origin cannot be determined under section 102.11(a)(1) or (2). Pursuant to 19 C.F.R. § 102.11(a)(3), the country of origin of a good is the country in which “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.” “Foreign material” is defined in section 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.”
19 C.F.R. § 102.17 provides, in relevant part:
A foreign material shall not be considered to have undergone an applicable change in tariff classification specified in § 102.20 or § 102.21 or to have met any other applicable requirements of those sections merely by reason of one or more of the following:
(c) Simple packing, repacking or retail packaging without more than minor processing;
The foreign components of the instant kits are simply packaged together in Canada. Even if the goods were to undergo the applicable change in tariff classification in 19 C.F.R. § 102.20, the simple packing or repacking is not a qualifying operation in Canada under 19 C.F.R. § 102.17. Hence, the pasta kits are not considered to be products of Canada pursuant to 19 C.F.R. § 102.11(a)(3).
Since an analysis of section 102.11(a) has not produced a country of origin determination, we turn to section 102.11(b) of the regulations. Section 102.11(b) contains an exception for goods classified as a set pursuant to GRI 3. Because the pasta kits are classified as sets pursuant to GRI 3(b), section 102.11(b) does not apply in this case.
Under 19 C.F.R. § 102.11(c), the country of origin of a GRI 3 set or composite good is the country or countries of origin of all materials that merit equal consideration for determining the essential character of the set. All of the materials of the set, foreign and domestic, which merit equal consideration, must be considered. See Headquarters Ruling Letter (“HQ”) 559032 (Oct. 25, 1995) (discussing the interpretation and application of “merit equal consideration”). With regard to the pasta kits, the uncooked pasta and the fresh tomatoes merit equal consideration for determining essential character as they are the two main components of the kits based on their weights and role in relation to the use of the kits. Therefore, although our determination, as discussed above, is that the tomatoes impart the essential character of the pasta kits for classification purposes, the country of origin of the pasta kits is the country or countries of the pasta and the tomatoes. See, e.g., NY 806892 (Mar. 15, 1995) (determining that each material in frozen vegetable blends merited equal consideration for determining the essential character under 19 C.F.R. § 102.11(c)). As the pasta in each kit originates from the United States and the tomatoes originate from either the United States, Mexico, or Canada, the country of origin of the pasta kits will be the United States and possibly Mexico or Canada, depending on where the tomatoes are from.
The marking statute requires articles of foreign origin to be marked with their country of origin (19 U.S.C. § 1304). As the pasta in each kit is from the United States, the kits are products of the United States. We note, however, that inasmuch as the marking requirements of 19 U.S.C. § 1304 are applicable only to articles of “foreign origin,” the pasta kits are not required to be marked with a reference to the United States origin upon importation into the United States. Please note that if you wish to mark the pasta kits to indicate that they are “Made in the United States,” the marking must comply with the requirements of the Federal Trade Commission (“FTC”). We suggest that you direct any questions on this issue to the FTC.
HOLDING:
Based on the information provided, the pasta kits are classified under heading 0702, HTSUS. The applicable subheading for the four pasta kits, when entered during the period from March 1 to July 14, inclusive, or the period from September 1 to November 14, inclusive, in any year, will be 0702.00.2010, HTSUSA, which provides for fresh greenhouse tomatoes entered during the above-mentioned periods. The general rate of duty will be 3.9 cents per kilogram. If entered during the period from July 15 to August 31, inclusive, in any year, the applicable subheading will be 0702.00.4010, HTSUSA, and the general rate of duty will be 2.8 cents per kilogram. When entered during the period from November 15, in any year, to the last day of the following February, inclusive, the applicable subheading will be 0702.00.6010, HTSUSA, and the general rate of duty will be 2.8 cents per kilogram.
The pasta kits are eligible for preferential tariff treatment under the USMCA.
As the pasta in each kit originates from the United States, the country of origin for marking purposes of the pasta kits where the tomatoes originate in the United States is the United States. The country of origin for marking purposes of the pasta kits where the tomatoes originate in Mexico will be the United States and Mexico. The country of origin for marking purposes of the pasta kits where the tomatoes originate in Canada will be the United States and Canada.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Yuliya A. Gulis, Chief
Food, Textiles and Marking Branch