CLA-2 OT:RR:CTF:TCM H258812 GaK
TARIFF NO: 2005.99.8000
Port Director, Area Port of St. Albans
U.S. Customs and Border Protection
50 South Main Street, Suite 100R
St. Albans, VT 05478
RE: Application for Further Review of Protest No. 0201-14-300059; Classification of artichoke antipasto; North American Free Trade Agreement
Attn: Cheryl R. Teague, Senior Import Specialist
Dear Port Director:
This is in response to the Application for Further Review (“AFR”) of Protest No. 0201-14-300059, filed on June 26, 2014, on behalf of Mondiv, Division of Lassonde Specialties Inc. (“Mondiv” or “Protestant”). This AFR concerns U.S. Customs and Border Protection’s (“CBP”) tariff classification of artichoke antipasto under the Harmonized Tariff Schedule of the United States (“HTSUS”) and eligibility of preferential treatment under the North American Free Trade Agreement (“NAFTA”). We also considered the supplemental information and the product sample submitted during our meeting with Protestant and their counsel on August 14, 2015.
FACTS:
The subject merchandise is an artichoke antipasto, commercially known as a supermarket’s brand of “Artichoke Antipasto.” It was imported on July 15, 2013, originally classified under subheading 2005.99.8000, HTSUSA. CBP subsequently conducted a NAFTA verification on the entry of the merchandise and requested more information. In its response, Mondiv attempted to change the classification of the merchandise to subheading 2103.90.9091, HTSUSA. CBP, however, affirmed the original classification and found that the merchandise did not qualify for preferential treatment under the NAFTA. Mondiv subsequently filed this Protest, arguing for classification in subheading 2103.90.9091, HTSUSA.
The raw materials are imported into Canada, where they are manufactured into the final product and exported to the U.S. The artichoke antipasto consists of 85% artichoke quarters (non-NAFTA origin), 3% parsley (non-NAFTA origin), 3% water (NAFTA origin), 3% extra virgin olive oil (non-NAFTA origin), 2% canola oil (NAFTA origin), 2% garlic (non-NAFTA origin), 1% white vinegar (NAFTA origin), 1% fine salt (NAFTA origin), 0.12% oregano rub (non-NAFTA origin), and 0.03% basil rub (non-NAFTA origin). A sample was not provided to this office.
ISSUES:
Whether the imported artichoke antipasto is classified as “[s]auces and preparations therefore” under heading 2103, HTSUS, or as “other vegetables prepared or preserved” under heading 2005, HTSUS.
Whether the imported artichoke antipasto is eligible for preferential treatment under NAFTA.
LAW AND ANALYSIS:
Initially, we note that the matter is protestable under 19 U.S.C. § 1515(a)(2) as a decision on classification. The protest was timely filed, within 180 days of liquidation for entries made on July 15, 2013 and liquidated on December 6, 2013. See Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429 § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3)(2006)).
Further review of Protest No. 0201-14-300059 is properly accorded to the Protestant pursuant to 19 C.F.R. § 174.24(b) because the decision against which the protest was filed is alleged to involve questions of law or fact which have not been ruled upon by the Commissioner of Customs or his designee or by the Customs Courts.
I. Classification
Merchandise imported into the U.S. is classified under the HTSUS. Tariff classification is governed by the principles set forth in the General Rules of Interpretation (“GRIs”) and, in the absence of special language or context which requires otherwise, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes.
GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs taken in their appropriate order.
The HTSUS headings under consideration are the following:
2005 Other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006:
2005.99 Other:
2005.99.80 Artichokes
***
2103 Sauces and preparations therefore; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard:
2103.90 Other:
2103.90.90 Other
The Harmonized Commodity Description and Coding System Explanatory Notes (“ENs”) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTS and are thus useful in ascertaining the proper classification of the merchandise. See T.D. 89-90, 54 Fed. Reg. 35127, 35128 (August 23, 1989).
EN 20.01 provides as follows:
The goods covered by this heading [2001] differ from sauces of heading 21.03 in that the latter are mainly liquids, emulsions or suspensions, which are not intended to be eaten by themselves but are used as an accompaniment to food or in the preparation of certain food dishes.
Similarly, EN 21.03 provides as follows:
This heading covers preparations, generally of a highly spiced character, used to flavour certain dishes (meat, fish, salads, etc.), and made from various ingredients (eggs, vegetables, meat, fruit, flours, starches, oil, vinegar, sugar, spices, mustard, flavourings, etc.). Sauces are generally in liquid form and preparations for sauces are usually in the form of powders to which only milk, water, etc. need to be added to obtain a sauce.
Sauces are normally added to a food as it cooks or as it is served. Sauces provide flavour, moisture, and a contrast in texture and colour. They may also serve as a medium in which food is contained, for example, the velouté sauce of creamed chicken. Seasoning liquids (soy sauce, hot pepper sauce, fish sauce) are used both as ingredients in cooking and at table as condiments.
The heading [21.03] also includes certain preparations, based on vegetables or fruit, which are mainly liquids, emulsions or suspensions, and sometimes contain visible pieces of vegetables or fruit. These preparations differ from prepared or preserved vegetables and fruit of Chapter 20 in that they are used as sauces, i.e., as an accompaniment to food or in the preparation of certain food dishes, but are not intended to be eaten by themselves [emphasis added].
As noted above, the subject merchandise was entered under heading 2005, HTSUS, the provision for prepared or preserved vegetables. Protestant now asserts that the subject merchandise is a specialty sauce classifiable under heading 2103, HTSUS.
Based upon the express terms of headings 2005 and 2103, HTSUS, and the scope of each as put forth in the corresponding ENs, CBP has classified as other prepared or preserved vegetables preparations containing much solid matter in the form of pieces of fruit or vegetables, and classified homogenous blended preparations based on fruit or vegetables as sauces. The description of the product which includes the presence of large pieces and quantities of vegetables (85%) in the artichoke antipasto at issue here supports classification under heading 2005, HTSUS. While the product is labeled “antipasto,” Protestant is a private label manufacturer and has provided recipes that refer to the product as an “artichoke tapenade.” The Merriam-Webster dictionary defines “tapenade” as a “seasoned spread made chiefly with mashed black olives, capers, and anchovies.” It is traditionally used for spreading on bread or as an accompaniment to raw vegetables. As such, tapenades are intended to be eaten by themselves. CBP has issued numerous rulings which classified green/black olive tapenades under heading 2005, HTSUS. In New York Ruling Letter (“NY”) E87207, dated December 13, 1999, CBP found that green olive and basil tapenade which consisted of finely chopped green olives, capers, anchovies, basil, pine seeds, garlic, and salt in a liquid medium of oil and vinegar is classifiable under subheading 2005.70.9100, HTSUSA. In NY G84038, dated November 20, 2000, a green olive tapenade which consisted of green olives, olive oil, herbs, concentrated lemon juice, and garlic powder was also classified under subheading 2005.70.9100, HTSUSA. NY K83151, dated May 17, 2004, held that black olive tapenade, which consisted of 42% olives, sunflower oil, capers, sun-dried tomatoes, salt, vinegar, olive oil, and anchovies was classified under subheading 2005.70.9700, HTSUSA. In addition, in NY N195658, dated January 4, 2012, an olive tapenade which consisted of 50% green olives, capers, olive oil, lemon juice, mustard seed, and salt was classified under subheading 2005.70.9100, HTSUSA.
As provided in EN 21.03, the distinction between prepared or preserved vegetables of chapter 20 of HTSUS and certain preparations classified under heading 2103 is that the latter are used as sauces, but are not intended to be eaten by themselves. Therefore, in determining whether the artichoke antipasto is also described by heading 2103, HTSUS, the issue is whether it is used as a sauce but is not intended to be eaten by itself. The U.S. Supreme Court has opined on the meaning of the word “sauce.” The court stated that “[t]he word "sauce," as commonly used, designates a condiment, generally but not always of liquid form, eaten as an addition to and together with a dish of food, to give it flavor and make it more palatable; and is not applied to anything which is eaten, alone or with a bit of bread, either for its own sake only, or to stimulate the appetite for other food to be eaten afterwards.” Bogle v. Malone, 152 U.S. 623, 625 (1894). See also Nestle Refrigerated Food Co. v. United States, 18 CIT 661, 668 (Ct. Int’l Trade 1994).
In Orlando Food Products v. United States, 140 F.3d 1437, 20 Int'l Trade Rep. (BNA) 1001 (Fed. Cir. 1998), the CAFC found that a canned tomato product consisting of approximately 60 % whole, peeled tomatoes and 40 % tomato puree, by weight, together with salt, citric acid and a basil leaf, used as a preparation for a sauce, was described by the terms of both heading 2002, HTSUS (tomatoes prepared or preserved otherwise than by vinegar or acetic acid), and heading 2103, HTSUS (sauces and preparations therefor). The court further found that heading 2103, HTSUS more specifically described the merchandise than heading 2002, notwithstanding the clearly visible large pieces and quantities of tomato present, so that proper classification was determined to be heading 2103, HTSUS. The court in Nestle, following the seminal Bogle case and its progeny, determined that in ascertaining whether a product fits within the common meaning of sauce, the court will “examine a variety of key features, including its ingredients, flavor, aroma, texture, consistency, actual and intended use, and marketing.” See, e.g., Neuman & Schwiers Co, 18 CCPA at 3. The court further concluded that of these key features, actual and intended use are of paramount importance and that a product is a sauce if it can be used "as is," that is, if it may be eaten as an accompaniment to other foods to make such foods more flavorful and palatable. “Whether a product is fit for use as a sauce depends upon more than the mere possibility of use; rather, substantial actual use as a sauce must be demonstrated. See Wah Shang Co. v. United States, 44 CCPA 155, 159, C.A.D. 654 (1957). Also, according to Nestle, a product's physical features are also considered in light of their effect on the product's ability to be used as a sauce. The Nestle case involved a tomato sauce product, which was specifically intended and actually used as a base for the preparation of other finished sauces. Based on the actual use of the product, the court found that heading 2103 more specifically described the merchandise.
Protestant submitted various recipes that use the artichoke antipasto to demonstrate that it is a sauce. However, the recipes shows that the artichoke antipasto is used as a convenient “shortcut” in lieu of preparing artichoke hearts or combined with olive oil before being added to pasta or meats rather than being used “as is.” Nestle at 671. While Protestant repeatedly refers to the artichoke antipasto as a specialty sauce, it is not a finished sauce for purposes of heading 2103 since it is not suitable in its imported condition as a sauce. Protestant also provided a picture of a grocery aisle, which shows the artichoke antipasto being displayed next to a section of sauces, but omitted the fact that it is also displayed next to jars of whole olives. We conclude that the product is not described by heading 2103, HTSUS.
Protestant also cited several CBP rulings, which classified products such as chutneys, relish, sandwich spread, and pesto sauce under heading 2103, HTSUS, and claimed that the artichoke antipasto was similar to these products because it is a combination of minced vegetables combined with a more “spreadable ingredient…that makes it semi-viscos [sic] and spreadable, for easy use as a condiment or sauce.” Protestant cited to NY 806362, dated February 10, 1995, in which CBP considered a pesto sauce described as a “thick, green, creamy food product” consisting of 48% parmesan cheese, butter, garlic, basil, romano cheese, pine nuts, and olive oil. CBP found that the pesto sauce was classified under subheading 2103.90.9060, HTSUSA. The artichoke antipasto at issue is not a creamy food product, but rather chopped up vegetables immersed in a semi-transparent liquid. In addition, dairy was the main ingredient in the pesto sauce, whereas artichokes are the main ingredient in the artichoke antipasto. Protestant also cited to NY K83948, dated March 10, 2004, where CBP considered a sandwich spread, which resembled mayonnaise with small pieces of chopped vegetables. The sandwich spread composed of 35% relish (cucumbers, corn syrup, sugar, vinegar, spices, peppers, turmeric, stabilizers, flavors, and preservatives), 34% soybean oil, water, eggs, salt, corn starch, sugar, and glucose syrup. CBP held that the sandwich spread is classified under subheading 2103.90.9091, HTSUSA. Protestant also cites NY K86929, dated June 22, 2004, which classified a chutney consisting of sliced fruit sweetened and flavored with sugar, lemon, and mustard essence. The chutney is said to be used as condiments for meats and other food dishes and CBP classified it under 2103.90.9091, HTSUSA. Headquarters Ruling Letter (“HQ”) 962419, dated March 3, 1999, held that the chutney, described as a gelatinous mass with pieces of solid fruit composed of 48% sugar, 44% mangoes, salt, acetic acid, ginger, pectin, and spices, is classifiable under subheading 2103.90.9060, HTSUSA. We note that the physical texture is visually distinguishable from the artichoke antipasto, which is comprised of visible chunks of artichokes immersed in semi-transparent liquid. The liquid is not gelatinous or creamy and it is not a spreadable paste as claimed by Protestant. Therefore, we find that the artichoke antipasto is properly classified under subheading 2005.99.8000, HTSUSA.
II. NAFTA Eligibility
General Note (“GN”) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(a)(i), HTSUS, provides, in pertinent part, that:
Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.
Accordingly, the artichoke antipasto will be eligible for the “Special” “CA” rate of duty provided: (1) they are deemed to be NAFTA originating under the provisions of General Note 12(b), HTSUS; and, (2) qualify to be marked as products of Canada under the NAFTA Marking Rules that are set forth in Part 102 of the Code of Federal Regulations (19 CFR § 102). In order to determine whether the artichoke antipasto is NAFTA-originating, we must consult GN 12(b), HTSUS, which provides, in pertinent part, as follows:
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.
Because the artichoke antipasto is comprised, in part, of non-originating materials, GN 12(b)(i), HTSUS, does not apply. Therefore, we must determine whether the non-originating materials undergo the requisite tariff shift (or other applicable requirement) prescribed under GN 12(b)(ii), HTSUS. As discussed above, the imported artichoke antipasto is classified under subheading 2005.99, HTSUS, which provides for other vegetables prepared or preserved…by vinegar or acetic acid, not frozen. The applicable rule set forth in GN 12(t)/20.1 requires:
[a] change to headings 2001 through 2007 from any other chapter.
We must determine whether the non-originating materials undergo the appropriate tariff shift (or other applicable requirement) prescribed under GN 12(t)/20.1, HTSUS. In Protestant’s NAFTA worksheet, Protestant stated that the artichoke quarters are classified under subheading 2005.99, HTSUS. Since these are non-originating materials used in making the artichoke antipasto that do not undergo a requisite chapter change as a result of the processing done in Canada, the tariff classification change requirement of GN 12(t)/20.1 is not satisfied. Therefore, the artichoke antipasto is not eligible for preferential treatment under the NAFTA.
HOLDING:
By application of GRIs 1 and 6, the subject merchandise is classified under heading 2005, HTSUS, and specifically under subheading 2005.99.8000, HTSUSA, which provides “[o]ther vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006: [o]ther vegetables and mixtures of vegetables: [o]ther: [a]rtichokes.” The 2013 column one general rate of duty is 14.9%.
The subject merchandise is not eligible for preferential treatment under the NAFTA, per General Note 12 of the HTSUS.
You are instructed to deny the protest in full, except to the extent reclassification of the merchandise as indicated above results in net duty reduction and partial allowance. In accordance with the 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 reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision.
No later than 60 days from the date of this letter, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel, and to the public on the CBP homepage on the World Wide Web at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division