OT:RR:CTF:VS H301455 EGJ

Area Port Director
Baltimore Service Port
U.S. Customs and Border Protection
40 S Gay Street
Baltimore, MD 21202

Attn: Jeremy Jackson, Supervisory Import Specialist

RE: Eligibility for preferential tariff treatment under the U.S. - Korea Free Trade Agreement

Dear Port Director:

This is in response to your Request for Internal Advice, dated November 30, 2015, initiated by Rhee Bros., Inc. (“Rhee Bros.”), concerning the proper tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of certain dried seaweed, and Thai jasmine rice and rice cakes. We issued our tariff classification decision to you in Headquarters Ruling Letter (“HQ”) H272093, dated November 7, 2017.

In addition, you requested a ruling on the eligibility for preferential tariff treatment under the US – Korea Free Trade Agreement (“UKFTA”) for 18 food items and two cookware items. We note that the Internal Advice pertains to entries made between March 23, 2012, and August 7, 2013. This letter addresses the UKFTA eligibility of the 20 aforementioned items, and includes additional information submitted to us in a correspondence from counsel for Rhee Bros. dated February 15, 2019.

FACTS:

Rhee Bros. has labeled each of the 18 food items and the two cookware items with a sample number. Below, we have set forth a list of the twenty products at issue, together with any non-originating ingredients, according to the provided sample number.

Sample No. Item Non-originating Ingredients  1. Roasted seaweed Corn oil, sesame oil and perilla oil;  2. Gosomi biscuits Vegetable oil, sesame seeds, whey powder, ammonium bicarbonate, palm oil, sodium bicarbonate, and cheese powder;  3. Yogurt-flavored drink Cultured nonfat milk, sugar, high fructose corn syrup, aspartame, and artificial flavor;  4. Butane fuel cartridges All components are manufactured in South Korea;  5. Noodles in soup

 Noodles made from: wheat flower, buckwheat flour, and sweet potato starch;

Soup base made from: salt, dried green onion, dried garlic, glucose, beef extract, monosodium glutamate, mustard oil, and soybean oil;  6. Aloe vera drink Aloe vera gel powder and aloe vera pulp;  7. Soy sauce Soybeans, salt, and sodium benzoate;  8. Melon ice bar Frozen cream, cellulose gum, and yellow no. 5;  9. Samyang ramen  Noodles made from: wheat flour, palm oil, tapioca starch, potato starch, potassium carbonate, and guar gum;

Soup base made from: dried carrot, dried bok choy, dried chives, dried cabbage, yeast extract, rice powder, mixed powder of chili, garlic and onion powder, black pepper, palm oil, and onion powder;  10. Pears All harvested in South Korea;  

11. Soup stock Monosodium glutamate, corn starch, glucose, onion powder, garlic powder, beef extract, green onion powder, and black pepper powder;  12. Pears All harvested in South Korea;  13. Vegetable dumplings with radish Wheat flour, soybean protein, green onion, radish, sweet potato starch vermicelli, leek, and garlic;  14. Wok pans All components manufactured in South Korea;  15. Vegetable dumplings Wheat flour, green onion, sweet potato starch vermicelli, soy protein, leek, corn oil, and garlic;  16. Pickled radishes Salt, vinegar, monosodium glutamate, saccharin, and citric acid;  17. Citron tea All ingredients are made or harvested in South Korea;  18. Barbecue sauce Monosodium glutamate, xanthan gum, black pepper, sesame oil, and ginger;  19. Red bean ice bar Milk fat; and  20. Rice cake Rice.   As supporting documentation for each item, Rhee Bros. has provided a manufacturer’s declaration which includes a list of all the ingredients or components, as well as the country of origin of each ingredient or component.

ISSUE:

Whether the 18 food products and two cookware items are eligible for preferential tariff treatment under the UKFTA?

LAW AND ANALYSIS:

The requirements for eligibility for preferential tariff treatment under the UKFTA are set forth in Note 33 to the General Notes (“GN”) to the HTSUS (19 U.S.C. § 1202). This note provides in pertinent part:

(b) For the purposes of this note subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if-

The good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both.

The good is produced entirely in the territory of Korea or of the United States, or both, and-

A. Each of the non-originating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or

B. The good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and satisfies all other applicable requirements of this note and of applicable regulations; or

The good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above.

(c) (i) For purposes of subdivision (b)(i) of this note, the expression “wholly obtained or produced entirely in the territory of Korea or of the United States, or both” means any of the following–

plants and plant products grown, and harvested or gathered, in the territory of Korea or of the United States, or both;

Applying GN 33(b)(i) and (c)(i)(A), we note that the two sample numbers of pears, sample nos. 10 and 12, are harvested in Korea. As harvesting is included in the meaning of “wholly obtained or produced” in the parties, we find that both samples of pears are eligible for preferential tariff treatment under the UKFTA.

Similarly, applying GN 33(b)(iii), we note that three of the products are produced entirely from originating materials. The butane fuel cartridges, the wok pans, and the citron tea, which are sample nos. 4, 14, and 17 respectively, are made up solely of components or ingredients which originate in either the United States or Korea. Therefore, we find that these three products are also eligible for preferential treatment under the UKFTA.

The remaining 15 food products contain some ingredients which do not originate within the parties. Therefore, we shall turn to GN 33(o) to apply the relevant tariff shift rule for each one.

Sample No. 1 – Roasted Seaweed

Roasted seaweed is classified in subheading 2008.99, HTSUS, which provides, in pertinent part, for “Fruit, nuts and other edible parts of plants, otherwise prepared or preserved …: Other …” See New York Ruling Letter (“NY”) 810717, dated June 5, 1995. The applicable tariff shift rule for subheading 2008.99, HTSUS, provides for “a change to subheadings 2008.19 through 2008.99 from any other chapter, except as provided for in chapter rule 1 for chapter 20.” We note that Chapter Rule 1 to Chapter 20 does not apply to the instant product. The non-originating ingredients of the roasted seaweed are: corn oil, sesame oil, and perilla oil. All of these oils are classifiable as oils of Chapter 15, HTSUS. As all of the non-originating ingredients shift classification from oils of Chapter 15 to roasted seaweed of subheading 2008.99, HTSUS, we find that the roasted seaweed is eligible for preferential tariff treatment under the UKFTA.

Sample No. 2 – Gosomi Biscuits

Gosomi biscuits are flat crackers which are classified under subheading 1905.90, HTSUS, which provides, in pertinent part, for “Bread, pastry, cakes, biscuits and other bakers' wares, whether or not containing cocoa…: Other.” Turning to GN 33(o), the applicable tariff shift rule provides for, “a change to heading 1905 from any other chapter.” The biscuits’ non-originating ingredients and their tariff classifications are as follows: vegetable oil (“other fixed vegetable fats and oils” of heading 1515, HTSUS), sesame seeds (“other oil seeds” of heading 1207, HTSUS), whey powder (“whey” of heading 0404, HTSUS), ammonium bicarbonate (“carbonates” of heading 2836, HTSUS), palm oil (“palm oil” of heading 1511, HTSUS), sodium bicarbonate (“carbonates” of heading 2836, HTSUS), and cheese powder (“cheese” of heading 0406, HTSUS).

None of the non-originating ingredients are classified in Chapter 19 of the HTSUS. Therefore, all of the non-originating ingredients meet the applicable tariff shift rule when they are manufactured into a product of heading 1905, HTSUS. For these reasons, we find that the Gosomi biscuits are eligible for preferential tariff treatment under the UKFTA.

Sample No. 3 – Yogurt Flavored Drink

The yogurt flavored drink is classified in subheading 2202.90, HTSUS, which provides, in pertinent part, for “[o]ther nonalcoholic beverages: other.” Turning to GN 33(o), we note that the relevant tariff shift rule provides as follows, “A change to beverages containing milk of subheading 2202.90 from any other chapter, except from chapter 4 or from dairy preparations containing over 10 percent by weight of milk solids of subheading 1901.90.” We note that one of the non-originating ingredients in the yogurt flavored drink is cultured nonfat milk, which is classified in Chapter 4. As this ingredient is precluded from meeting the applicable tariff shift rule, we find that the yogurt flavored drink is not eligible for preferential tariff treatment under the UKFTA.

Sample No. 5 – Noodles in Soup

The noodles in a soup base are classified in subheading 1902.30, HTSUS, which provides for “Pasta …: other pasta.” Under GN 33(o), the relevant tariff shift rule states as follows: “a change to headings 1902 through subheading 1904.30 from any other chapter.” The non-originating ingredients which form the noodles and their corresponding tariff classifications are as follows: wheat flower (“wheat … flour” of heading 1101, HTSUS), buckwheat flour (“cereal flours other than wheat or meslin flour” of heading 1102, HTSUS), and sweet potato starch (“dextrins and other modified starches” of heading 3505, HTSUS). The non-originating ingredients which form the soup base and their corresponding tariff classifications are as follows: salt (“salt” of heading 2501, HTSUS), dried green onion (“dried vegetables” of heading 0712, HTSUS), dried garlic (“dried vegetables” of heading 0712, HTSUS), glucose (“other sugars, including … glucose … in sold form” of heading 1702, HTSUS), beef extract (“food preparations not elsewhere specified or included” of heading 2106, HTSUS), monosodium glutamate (“monosodium glutamate” of subheading 2922.42.10, HTSUS), mustard oil (“other fixed vegetable fats and oils” of heading 1515, HTSUS), and soybean oil (“soybean oil” of heading 1507, HTSUS).

As none of the non-originating ingredients are classified in Chapter 19, we find that the noodles in a soup base meet the applicable tariff shift rule. Therefore, the noodles in a soup base qualify for preferential tariff treatment under the UKFTA.

Sample No. 6 – Aloe Vera Drink

The aloe vera drink is classified in subheading 2202.90.90, HTSUS, which provides, in pertinent part, for “[o]ther nonalcoholic beverages: other: other.” Turning to GN 33(o), we note that the relevant tariff shift rule provides as follows, “a change to any other good of subheading 2202.90 from any other chapter.” The non-originating ingredients and their corresponding tariff classifications are as follows: aloe vera gel powder (“food preparations not elsewhere specified or included” of heading 2106, HTSUS) and aloe vera pulp (“other edible parts of plants, otherwise prepared or preserved” of heading 2008, HTSUS). As both non-originating ingredients are classified outside of Chapter 22, we find that the aloe vera drink satisfies the relevant tariff shift rule and qualifies for preferential tariff treatment under the UKFTA.

Sample No. 7 – Soy Sauce

The soy sauce is classified in heading subheading 2103.10, HTSUS, which provides, in pertinent part, for “sauces …: soy sauce.” Under GN 33(o), the relevant tariff shift rule states as follows: “a change to subheading 2103.10 from any other chapter.” The non-originating ingredients and their corresponding tariff classifications are as follows: soybeans (“soybeans” of heading 1201, HTSUS), salt (“salt” of heading 2501, HTSUS), and sodium benzoate (“benzoic acid, its salts and esters” of subheading 2916.31, HTSUS). As all of the non-originating ingredients are classified outside of Chapter 21, we find that the soy sauce satisfies the relevant tariff shift rule and qualifies for preferential tariff treatment under the UKFTA.

Sample No. 8 – Melon Ice Bar

The melon ice bar is classified in heading 2105, HTSUS, which provides, in pertinent part, for “ice cream and other edible ice.” Under GN 33(o), the relevant tariff shift rule states as follows: “a change to heading 2105 from any other heading, except from headings 0401 through 0405 and from dairy preparations containing over 10 percent by weight of milk solids of subheading 1901.90.” We note that one of the non-originating ingredients is frozen cream, which is classified as “cream” of heading 0402, HTSUS. As the frozen cream does not meet the applicable tariff shift rule, we find that the melon ice bar does not qualify for preferential tariff treatment under the UKFTA.

Sample No. 9 – Samyang Ramen

The Samyang ramen consists of noodles in a soup base, and is classified under 1902.30, HTSUS, which provides for “Pasta …: other pasta.” Under GN 33(o), the relevant tariff shift rule states as follows: “a change to headings 1902 through subheading 1904.30 from any other chapter.” The non-originating ingredients which form the noodles and their corresponding tariff classifications are as follows: wheat flour (“wheat … flour” of heading 1101, HTSUS), palm oil (“palm oil” of heading 1511, HTSUS), tapioca starch and potato starch (“dextrins and other modified starches” of heading 3505, HTSUS), potassium carbonate (“potassium carbonates” of subheading 2836.40, HTSUS), and guar gum (“other mucilages and thickeners” of heading 1302, HTSUS). The non-originating ingredients which form the soup base and their corresponding tariff classifications are as follows: dried carrot, dried bok choy, dried chives, dried cabbage, mixed powder of chili, garlic and onion powder, onion powder (all the preceding “dried vegetables … in powder” of heading 0712, HTSUS), yeast extract (“other food preparations” of heading 2106, HTSUS), rice powder (“food preparations of flour, groats, meal, starch or malt extract, of heading 1901, HTSUS), black pepper (“pepper” of heading 0904, HTSUS), and palm oil (“palm oil” of heading 1511, HTSUS).

We note that all of the non-originating ingredients meet the relevant tariff shift rule except for one – the rice powder, which is classified in heading 1901, HTSUS. However, the importer has provided information which supports that the value of the rice powder does not exceed 10 percent of the value of the finished Samyang ramen. Under GN 33(e)(1), the de minimis rule of the UKFTA states as follows:

(i) Except as provided in subdivisions (d)(i), (e)(ii) and (m) below, a good that does not undergo a change in tariff classification pursuant to subdivision (n) of this note is an originating good if--

the value of all non-originating materials that—

are used in the production of the good, and

do not undergo the applicable change in tariff classification set out in subdivision (n) of this note, does not exceed 10 percent of the adjusted value of the good.

As the rice powder is the only non-originating ingredient and it does not exceed 10 percent of the finished good’s value, we find that it qualifies for the de minimis rule. Therefore, although it does not meet the tariff shift rule, the Samyang ramen still qualifies for preferential tariff treatment under the UKFTA.

Sample No. 11 – Soup Stock

The soup stock is classified under heading 2104, HTSUS, which provides, in pertinent part, for “soups and broths.” Under GN 33(o), the relevant tariff shift rule states as follows: “a change to heading 2104 from any other chapter.” We note that one of the non-originating ingredients is beef extract, which is classified as “other food preparations” of heading 2106, HTSUS. Additionally, Rhee Bros. has provided information which states that the beef extract exceeds 10 percent of the value of the finished soup stock. Therefore, it does not meet the de minimis exception for non-originating ingredients. As the beef extract does not meet the applicable tariff shift rule, we find that the soup stock does not qualify for preferential tariff treatment under the UKFTA.

Sample Nos. 13 and 15 – Vegetable Dumplings with Radish and Vegetable Dumplings

We note that the tariff classification of dumplings is subject to a proposed modification under 19 U.S.C. § 1625, which is still open at this time. See proposed HQ H199095, 48 Cust. B. & Dec. 48 (July 23, 2014). Pursuant to 19 C.F.R. § 177.7(a), we cannot issue a ruling letter “with regard to transactions or questions … in any instance in which it appears contrary to the sound administration of the Customs and related laws to do so.” As the tariff classification of dumplings is subject to an open modification, we cannot issue a decision on the instant dumplings. As such, the Port should perform a tariff shift analysis under the UKFTA once the final modification is published.

Sample No. 16 – Pickled Radishes

The pickled radishes are classified as “vegetables … prepared or preserved by vinegar,” under heading 2001, HTSUS. Under GN 33(o), the relevant tariff shift rule states as follows: “a change to headings 2001 through 2007 from any other chapter, except as provided for in chapter rule 1 for chapter 20 and except from heading 0701.” We note that Chapter Rule 1 to Chapter 20 provides, in pertinent part, as follows: “Fruit, nut and vegetable preparations of headings 2001 through 2008 that have been prepared or preserved by freezing, by packing (including canning) in water, brine or natural juices or by roasting, either dry or in oil (including processing incidental to freezing, packing or roasting) shall be treated as originating only if the fresh good were wholly obtained or produced entirely in the territory of Korea or of the United States, or both.” As the radishes are harvested in Korea before they are pickled, we note that Chapter Rule 1 will not exclude the instant pickled radishes from eligibility under the UKFTA.

The ingredients and their corresponding tariff classifications are as follows: salt (“non-originating salt” of heading 2501, HTSUS), vinegar (“vinegar” of heading 2209, HTSUS), monosodium glutamate (“monosodium glutamate” of subheading 2922.42.10, HTSUS), saccharin (“saccharin” of subheading 2925.11, HTSUS), and citric acid (“citric acid” of subheading 2918.14, HTSUS). As all of the non-originating ingredients are classified outside of Chapter 21, we find that the pickled radishes satisfy the relevant tariff shift rule and qualify for preferential tariff treatment under the UKFTA.

Sample No. 18 – Barbecue Sauce

The barbecue sauce is classified under subheading 2103.90, HTSUS, which provides, in pertinent part, for “mixed condiments…: other: other: mixed condiments.” Under GN 33(o), the relevant tariff shift rule states as follows: “a change to subheading 2103.90 from any other heading.” The non-originating ingredients and their corresponding tariff classifications are as follows: monosodium glutamate (“monosodium glutamate” of subheading 2922.42.10, HTSUS), xanthan gum (“natural polymers” of heading 3913, HTSUS), black pepper (“pepper” of heading 0904, HTSUS), sesame oil (“sesame oil” of subheading 1515.50, HTSUS), and ginger (“ginger” of heading 0910, HTSUS). As none of the non-originating ingredients are classified in under heading 2103, HTSUS, we find that the barbecue sauce satisfies the relevant tariff shift rule and qualifies for preferential tariff treatment under the UKFTA.

Sample No. 19 – Red Bean Ice Bar

The red bean ice bar is classified in heading 2105, HTSUS, which provides, in pertinent part, for “ice cream and other edible ice.” Under GN 33(o), the relevant tariff shift rule states as follows: “a change to heading 2105 from any other heading, except from headings 0401 through 0405 and from dairy preparations containing over 10 percent by weight of milk solids of subheading 1901.90.” We note that one of the non-originating ingredients is milk fat, which is classified as “other fats and oils derived from milk” of heading 0405, HTSUS. As the milk fat does not meet the applicable tariff shift rule, we find that the red bean ice bar does not qualify for preferential tariff treatment under the UKFTA.

Sample No. 20 – Rice Cake

The rice cakes are classified under subheading 1904.10, HTSUS, which provides, in pertinent part, for “Prepared foods obtained by the swelling or roasting of cereals or cereal products.” Applying GN 33(o), the applicable tariff shift rule states as follows: “a change to headings 1902 through subheading 1904.30 from any other chapter.” The only non-originating ingredient is the rice, which is classified under heading 1006, HTSUS, as “rice.” As the only non-originating ingredient is classified outside of Chapter 19, we find that the rice cakes meet the applicable tariff shift rule and qualify for preferential tariff treatment under the UKFTA.

HOLDING:

The following items qualify for preferential tariff treatment under the UKFTA: the roasted seaweed (sample no. 1), the Gosomi biscuits (sample no. 2), the butane fuel cartridges (sample no. 4), the noodles in soup (sample no. 5), the aloe vera drink (sample no. 6), the soy sauce (sample no. 7), the Samyang ramen (sample no. 9), the pears (sample no. 10), the pears (sample no. 12), the wok pan (sample no. 14), the pickled radishes (sample no. 16), the citron tea (sample no. 17), the barbecue sauce (sample no. 18), and the rice cake (sample no. 20).

The following items do not qualify for preferential tariff treatment under the UKFTA: the yogurt flavored drink (sample no. 3), the melon ice bar (sample no. 8), the soup stock (sample no. 11), and the red bean ice bar (sample no. 19).

The UKFTA eligibility of the vegetable dumplings with radish (sample no. 13) and the vegetable dumplings (sample no. 15) cannot be determined until the tariff classification of dumplings is resolved by publication in the Customs Bulletin of the final modification set forth in HQ H199095.

You are to mail this decision to the Internal Advice requester no later than 60 days from the date of the decision. At that time, the Office of International Trade, Regulations and Rulings, will make the decision available to CBP personnel and the public on the CBP website located at www.cbp.gov, by means of the Freedom of Information Act, and other methods of public distribution.

Sincerely,

Monika R. Brenner, Chief
Valuation and Special Programs Branch