CLA-2 OT:RR:CTF:VS H029957KSG
Port Director
U.S. Customs & Border Protection
990 Pacific Highway
Blaine, Washington 98230
RE: Request for Internal Advice; fruit juice; NAFTA; single strength; subheading 2106.90
Dear Port Director:
This is in reply to your correspondence dated May 23, 2008, asking for an interpretation of certain language contained in the product-specific rule in the North American Free Trade Agreement (“NAFTA”), both in General Note 12, of the Harmonized Tariff Schedule of the United States (“HTSUS”) and in the NAFTA Marking Rules set forth in 19 CFR part 102 related to the single strength of imported concentrated juices and juice products.
FACTS:
This relates to an importation of an imported juice product known as “Nutrifruit Ambient Concentrated Orange” exported from Canada by Vitality Foodservice Canada. This product is composed of the following: water, U.S.-origin (Florida) orange juice concentrate with a BRIX 65, Chinese origin apple juice concentrate, BRIX 70, Brazilian origin orange juice concentrate BRIX 65, Valencia oil, orange aroma, beta-carotene, and preservatives. Seven hundred ninety-six (796) liters of this juice product were entered into the U.S. The imported product is classified in subheading 2106.90.54, HTSUS.
ISSUE:
Whether the described juice product is a NAFTA originating good.
LAW AND ANALYSIS:
General Note 12, HTSUS, incorporates Article 401 of NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part:
(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), 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 NAFTA Implementation Act.
Accordingly, the juice product will be eligible for the “Special” “CA” rate of duty provided it is a NAFTA “originating” good under General Note 12(b), HTSUS, and qualifies to be marked as a product of Canada under the marking rules. General Note 12(b), HTSUS, provides, in pertinent part:
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.
Pursuant to the tariff shift rule for 2106.90.54 set forth in GN 12(t), HTSUS, there are alternative rules.
A change to tariff item 2106.90.54 from any other chapter, except from heading 2009 or tariff item 2202.90.37; or
A change to tariff item 2106.90.54 from any other subheading within chapter 21, heading 2009 or tariff item 2202.90.37, whether or not there is also a change from any other chapter, provided that a single juice ingredient, or juice ingredients from one non-party to the NAFTA, constitute in single strength form no more than 60 percent by volume of the good (“Single strength rule”).
As you pointed out in your memorandum, the imported juice product is not
wholly obtained or produced in NAFTA parties and the first tariff shift rule set out in GN 12(t) is not satisfied in this case. Further, this good is exempt from the de minimis rule. The question of whether the imported good satisfies the product-specific rule turns on the meaning of the phrase “by volume of the good.”
You ask if the proper interpretation is to interpret the phrase “by volume of the good” to reflect the adjusted volume of the good when bringing the concentrated juices to single strength. In the alternative, the phrase “by volume of the good” could be interpreted to mean the volume of the good as imported.
You point out that if the alternative analysis were applied, the volume of the Chinese-origin apple juice would be 137% and the volume of the Brazilian-origin orange juice would be 145%. If the volume of the good reflects the adjusted volume of the good when bringing the concentrated juices to single strength, the volume of the Chinese-origin apple juice would be 27.4% and volume of the Brazilian-origin orange juice would be 29%. Both materials would then satisfy the single strength rule and the imported good would be considered an originating good under the NAFTA.
The U.S. Department of Agriculture (“USDA”), Senior Trade Policy Advisor, Office of Negotiations and Agreements, Farm and Foreign Agricultural Services, submitted a letter dated June 2, 2008, setting forth its interpretation of the relevant language. The USDA believes that the rule that uses the adjusted volume of the good when bringing the concentrated juices to single strength is the correct interpretation. The USDA opines that the purpose of this unusual rule is to provide flexibility to manufacturers of proprietary juice blends who would otherwise be subject to the alternative rule which requires a chapter change. Further, the USDA points out that the alternative analysis would often result in
the ingredients adding up to well over 100% as in the instant case, which is an illogical result. We concur with USDA and conclude that the rule that uses the adjusted volume of the good when bringing the concentrated juices to single strength is the correct interpretation. Accordingly, in this case, the imported good would be considered a NAFTA originating good.
HOLDING:
The imported juice product described above would be a NAFTA originating good.
This decision should be mailed by your office to the party requesting Internal Advice no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to CPB personnel, and to the public on the CPB Home Page on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Monika R. Brenner
Chief, Valuation & Special Programs Branch