OT:RR:CTF:FTM H312091 PJG
Mr. Jeff Kendall
UPS Supply Chain Solutions
2150 Peace Portal Drive
Blaine, Washington 98230
Re: Country of origin marking and tariff classification of coffee beans blended and/or decaffeinated in Canada; Applicability of USMCA
Dear Mr. Kendall:
This is in response to your request, dated June 20, 2020, filed on behalf of Swiss Water Decaffeinated Coffee Company, Inc. (“Swiss Water”), requesting a binding ruling on the country of origin marking and tariff classification of green unroasted coffee beans that are decaffeinated in Canada and the Cascadia FTO and TDL Blends, which are blends of coffee beans from multiple countries that are blended and decaffeinated in Canada. You also inquire about the eligibility of these products for preferential tariff treatment under the United States-Mexico-Canada Agreement (“USMCA”). The National Commodity Specialist Division forwarded your request to this office for a response. Along with your ruling request, you submitted a process flow diagram of the unroasted decaffeinated coffee beans and two documents indicating details of the beans used to formulate the “Cascadia FTO Blend” and the “TDL Blend,” including the origin of each variety of beans.
FACTS:
In your ruling request and accompanying Blend Sheets, you identified four products for our consideration, specifically: 1) green unroasted coffee beans that are grown and harvested in the United States; 2) green unroasted coffee beans that are grown and harvested in Mexico; 3) a blend of coffee identified as “TDL Blend,” which consists of coffee beans that are grown in Brazil and Colombia; and 4) a blend of coffee identified as “Cascadia FTO Blend,” which consists of coffee beans that are grown in five countries, specifically, Indonesia, Ethiopia, Timor-Leste, Honduras, and Guatemala. You note that all of the coffee beans for the “Cascadia FTO Blend” are certified organic.
You have further indicated that the blending and decaffeination of the blend coffees occurs in Canada. You also indicated that the green unroasted coffee beans are decaffeinated in Canada. You have indicated that the decaffeination process involves the use of water and green coffee extract (obtained by soaking coffee beans in water).
ISSUES:
What is the tariff classification of the green unroasted coffee beans that are decaffeinated in Canada and the Cascadia FTO Blend and TDL Blend that are blended and decaffeinated in Canada?
Whether the green unroasted coffee beans, the Cascadia FTO Blend, and/or the TDL Blend are eligible for preferential tariff treatment under the USMCA?
What is the country of origin for marking purposes of the green unroasted coffee beans that are decaffeinated in Canada and the Cascadia FTO Blend and TDL Blend that are blended and decaffeinated in Canada?
LAW AND ANALYSIS:
What is the tariff classification of the green unroasted coffee beans that are decaffeinated in Canada and the Cascadia FTO Blend and TDL Blend that are blended and decaffeinated in Canada?
The classification of merchandise under the Harmonized Tariff Schedule of the United States (“HTSUS”) is governed by 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 GRIs may then be applied.
The 2020 HTSUS provision under consideration is as follows:
0901 Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion:
Coffee, not roasted:
0901.12.00 Decaffeinated:
0901.12.0015 Certified Organic
0901.12.0025 Other
The Harmonized Commodity Description and Coding System Explanatory Notes
(“ENs”) constitute the “official interpretation of the Harmonized System” at the international level. See 54 Fed. Reg. 35127, 35128 (Aug. 23, 1989). While neither legally binding nor dispositive, the ENs “provide a commentary on the scope of each heading” of the HTSUS and are “generally indicative of [the] proper interpretation” of these headings. See id.
The merchandise at the time of importation consists of three coffee bean products, which we will address in turn here. The decaffeinated green unroasted coffee beans and decaffeinated TDL Blend, are classified under heading 0901, HTSUS, and specifically in subheading 0901.12.0025, HTSUS, which provides for “Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion: Coffee, not roasted: Decaffeinated: Other.” The “Cascadia FTO Blend” that are decaffeinated and identified as “Fairtrade Organic,” are classified under heading 0901, HTSUS, and specifically in subheading 0901.12.0015, HTSUS, which provides for “Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion: Coffee, not roasted: Decaffeinated: Certified Organic.”
Whether the green unroasted coffee beans, the Cascadia FTO Blend, and/or the TDL Blend are eligible for preferential tariff treatment under the USMCA?
The 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(a)(i) provides that:
Goods that originate in the territory of Mexico, Canada or the United States (hereinafter referred to as “USMCA country” or “USMCA countries” as further defined in subdivision (l)(xxiv) of this note) under the terms of subdivision (b) of this note and regulations issued by the Secretary of the Treasury (including Uniform Regulations provided for in the USMCA), and goods enumerated in subdivision (p) 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 “S” in parentheses, are eligible for such duty rate, in accordance with section 202 of the United States-Mexico-Canada Agreement Implementation Act.
Accordingly, if all other requirements are satisfied, merchandise imported into the United States will qualify for preferential tariff treatment under the USMCA if it meets one of the origin criteria enumerated in GN 11(b). GN 11(b) provides as follows:
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 non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
* * *
GN11(l)(iv)(2) defines the term “Good wholly obtained or produced entirely in the territory of one or more USMCA countries,” in relevant part, as follows:
The term ‘good wholly obtained or produced entirely in the territory of one or more USMCA countries’ means any of the following:
* * *
(2) a plant, plant good, vegetable or fungus grown, cultivated, harvested, picked or gathered in the territory of one or more USMCA countries;
* * *
(11) a good produced in the territory of one or more USMCA countries exclusively from goods referred to in any of subparagraphs (1) through (10), inclusive, of this subdivision, or from their derivatives, at any stage of production.
You have indicated that under certain scenarios, the green unroasted coffee beans are grown and harvested either in the United States or Mexico, and they are decaffeinated in Canada. In accordance with GN 11(b)(i), HTSUS, the raw coffee beans are considered as a “good originating in the territory of a USMCA country” if they are “wholly obtained or produced” entirely in the territory of one or more USMCA countries. GN 11(l)(iv)(2), HTSUS, defines the term “[g]ood wholly obtained or produced entirely in the territory of one or more USMCA countries” to mean, in relevant part, “a plant, plant good, vegetable or fungus grown, cultivated, harvested, picked or gathered in the territory of one or more USMCA countries.” The green unroasted coffee beans at issue are classified in subheading 0901.12, HTSUS, and as such, fall within the scope of Section II, Vegetable Products, HTSUS. The term “[g]ood wholly obtained or produced entirely in the territory of one or more USMCA countries” also includes “a good produced in the territory of one or more USMCA countries exclusively from goods referred to in any of subparagraphs (1) through (10), inclusive, of this subdivision, or from their derivatives, at any stage of production. See GN 11(1)(iv)(11), HTSUS. Therefore, in consideration of the aforementioned provisions, it is apparent that the green unroasted coffee beans are “wholly obtained or produced” entirely in the territory of the United States or Mexico and even though the green unroasted coffee beans are decaffeinated in Canada, they retain their USMCA originating status when imported into the United States from Canada, and they are eligible for preferential tariff treatment under the USMCA.
You have also indicated that the Cascadia FTO Blend and the TDL Blend consist of unroasted coffee beans grown in a variety of countries, which are not parties to the USMCA, and that the products are blended and decaffeinated in Canada. Accordingly, as neither of these products are “wholly obtained or produced” or produced exclusively from originating materials entirely in the territory of one or more USMCA countries, we consider GN 11(b)(iii), which provides, in relevant part, that a good imported into the United States from the territory of a USMCA country, is eligible for preferential tariff treatment if “the good is a good produced entirely in the territory of one or more USMCA countries using non originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)).” GN 11(o)/9.1, states in relevant part, that for goods of heading 0901, HTSUS, there must be a change to heading 0901, HTSUS from any other chapter. In this instance, the coffee beans and the coffee bean blends are all classified in heading 0901, HTSUS, therefore, the requirements of GN 11(o) are not met. Accordingly, the Cascadia FTO Blend and the TDL Blend are not eligible for preferential tariff treatment under the USMCA when imported into the United States.
What is the country of origin for marking purposes of the green unroasted coffee beans that are decaffeinated in Canada and the Cascadia FTO Blend and TDL Blend that are blended and decaffeinated in Canada?
The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C.
§ 1304(a)), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).
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:
(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.
. . .
See 19 C.F.R. §§ 102.11(a)(1)-(3).
Section 102.1(g) provides, in relevant part, that the term “wholly obtained or produced”
in a country means:
* * *
(2) A vegetable or plant good harvested in that country;
* * *
(10) A good produced in that country exclusively from goods referred to in paragraphs (g)(1) through (10) of this section or from their derivatives, at any stage of production.
The green unroasted coffee beans that are grown and harvested in the United States or Mexico are “wholly obtained or produced” in the United States or Mexico consistent with the meaning of the term provided for in 19 C.F.R. § 102.1(g) because they are classified in subheading 0901.12, HTSUS, and as such, fall within the scope of Section II, Vegetable Products, HTSUS, and retain their status as a product of those countries for country of origin marking purposes even though the decaffeination process occurs in Canada. See 19 C.F.R. § 102.11(a)(1); see also New York Ruling Letter (“NY”) N151855 (April 1, 2011) (finding that Nicaragua was the country of origin for marking purposes of green coffee beans from Nicaragua that were decaffeinated in Mexico). The green unroasted coffee beans that are grown and harvested in the Mexico may be marked “Product of Mexico,” or other words of similar meaning. The Federal Trade Commission (“FTC”) has jurisdiction concerning the use of the phrase “Made in the U.S.A.,” or similar words denoting U.S. origin. Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin green unroasted coffee beans that are grown and harvested in the United States should be directed to the FTC, at the following address: Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580.
With regard to the Cascadia FTO and TDL Blends, which are blends of coffee beans from multiple countries that are blended and decaffeinated in Canada, the requirements of 19 C.F.R. §§ 102.11(a)(1)-(2) are not met because the blends are not wholly obtained or produced in one country or produced exclusively from domestic materials. Section 102.11(a)(3) states that the country of origin of a good is the country in which “[e]ach 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.” Section 102.20 provides that for goods of subheading 0901.12, HTSUS, there must be “[a] change to subheading 0901.11 through 0901.12 from any other chapter.” In this instance, the coffee beans from the various countries that are incorporated into the blend are each classified in subheading 0901.12, HTSUS, before and after they are blended, therefore, the tariff shift requirement of 19 C.F.R. § 102.11(a)(3) is not satisfied. In turn, we consider 19 C.F.R. § 102.11(b), which applies when a determination cannot be made under section 102.11(a) and the good is not a set or classified as a set pursuant to GRI 3. Section 102.18(b)(1) describes the requirements for purposes of identifying the material that imparts the essential character to a good under § 102.11, specifically, it provides as follows:
(b)(1) For purposes of identifying the material that imparts the essential character to a good under §102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the §102.20 specific rule or other requirements applicable to the good. For purposes of this paragraph (b)(1):
(i) The materials to be considered must be classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good under consideration. For example, in the case of a good classified in HTSUS subheading 8607.11 (the rule for which specifies a change to subheading 8607.11 from any other subheading, except from subheading 8607.12, and except from subheading 8607.19 when that change is pursuant to GRI 2(a)), the only materials that may be considered for purposes of identifying the materials that impart the essential character to the good are those that are classified in subheadings 8607.11, 8607.12 and, if the tariff shift is pursuant to GRI 2(a), 8607.19;
(ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good; and
(iii) If there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the §102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under §102.11.
The requirement of 19 C.F.R. § 102.11(b)(1)(i) is met because the tariff shift rule is not satisfied. The materials that would be considered under 19 C.F.R. § 102.11(b)(1)(ii) are the coffee beans from various countries that are blended together. Finally, since there is only one material, the coffee beans, that is not allowed under §102.20 specific rule and there are no other requirements applicable to the coffee blends, then the essential character is imparted by the beans from various countries. Accordingly, pursuant to 19 C.F.R. § 102.11(b)(1), the Cascadia FTO and TDL Blends must be marked to show all of the countries of origin of the beans used in the blend. A marking, such as “Produced from a blend of coffees from the following countries...,” followed by the list of countries, would be an acceptable country of origin marking. See New York Ruling Letter (“NY”) 817048 (Dec. 6, 1995).
HOLDING:
Under the authority of GRIs 1 and 6 the decaffeinated green unroasted coffee beans and decaffeinated TDL Blend, are classified under heading 0901, HTSUS, and specifically in subheading 0901.12.0025, HTSUSA, which provides for “Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion: Coffee, not roasted: Decaffeinated: Other.” The “Cascadia FTO Blend,” which is decaffeinated and identified as “Fairtrade Organic,” are classified under heading 0901, HTSUS, and specifically in subheading 0901.12.0015, HTSUSA, which provides for “Coffee, whether or not roasted or decaffeinated; coffee husks and skins; coffee substitutes containing coffee in any proportion: Coffee, not roasted: Decaffeinated: Certified Organic.” The 2020 column one, general rate of duty for these subheadings is Free.
The country of origin for marking purposes of the decaffeinated green unroasted coffee beans that are wholly obtained or produced in the United States or Mexico, is the United States and Mexico, respectively. The green unroasted coffee beans that are grown and harvested in the Mexico may be marked “Product of Mexico,” or other words of similar meaning. The Federal Trade Commission (“FTC”) has jurisdiction concerning the use of the phrase “Made in the U.S.A.,” or similar words denoting U.S. origin. Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin green unroasted coffee beans that are grown and harvested in the United States should be directed to the FTC, at the following address: Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580.
Based on the Blend Sheets provided, the country of origin for marking purposes of the decaffeinated TDL Blend is Brazil and Colombia and the country of origin for marking purposes of the Cascadia FTO Blend is Indonesia, Ethiopia, Timor-Leste, Honduras, and Guatemala pursuant to 19 C.F.R. § 102.11(b)(1). A marking, such as “Produced from a blend of coffees from the following countries...,” followed by the list of countries, would be an acceptable country of origin marking for each of these products.
The decaffeinated green unroasted coffee beans grown and harvested in either in the United States or Mexico are originating pursuant to GN 11(b)(i) and they are eligible for preferential tariff treatment under the USMCA when imported into the United States.
The decaffeinated Cascadia FTO Blend and the decaffeinated TDL Blend consist of unroasted coffee beans grown in a variety of countries, which are not parties to the USMCA. These products are not USMCA originating under GN 11(b)(iii) and, are not eligible for preferential tariff treatment under the USMCA when imported into the United States.
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 Customs officer handling the transaction.
Sincerely,
Yuliya A. Gulis, Chief
Food, Textiles and Marking Branch