OT:RR:CTF:FTM H315665 MD
Ms. Sheri G. Lawson
Willson International, Inc.
160 Wales Avenue, Suite 100
Tonawanda, NY 14150-2508
RE: Tariff Classification and Country of Origin Marking of Frozen Meal Kits; USMCA
Dear Ms. Lawson,
This is in response to your request, dated November 18, 2020, for a binding ruling, on behalf of your client, Premier Marine USA Inc. The submission requested a ruling on the applicability of the United States-Mexico-Canada Agreement (“USMCA”), as well as the tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) and country of origin marking of two variants of Chicken Korma Meal Kits. Your request, submitted as an electronic ruling request, was forwarded to this office from the National Commodity Specialist Division (“NCSD”) for review. Our ruling is set forth below.
FACTS:
The subject merchandise is described as “cooked chicken, basmati rice cauliflower and onions, in a mild creamy coconut curry sauce, served with mini naan bread, prepped and portioned for a simple stovetop finish.” The component ingredients arrive at Canadian facilities in sealed plastic bags and are processed as follows. The frozen chicken and vegetables are removed from their individual bags, weighed, blended, and packaged together in new plastic bags. The mini naan bread is removed from its bags and are re-packaged in new plastic bags, with 10 pieces of mini naan bread per bag. These newly packaged bags are placed alongside the received bags of Korma Sauce and IQF Basmati Rice in a “master bag,” which is sealed and placed into the cartons for shipment to the United States. Each Chicken Korma Meal Kit is sold in a “family-sized” unit of approximately 907 grams, with each component ingredient portioned in individual pouches, frozen, and packed into pre-printed retail bags with tear strips.
According to attached supplemental materials, the specific ingredient breakdowns for the two Chicken Korma Meal Kit variants is as follows:
The Chicken Korma Meal Kit designated “FG 260” contains approximately 40.35% Korma Coconut Curry Sauce, 20.10% Individual Quick Frozen (“IQF”) Chicken Breast Fillet, 19.71% IQF Cooked Basmati Rice, 13.23% Mini Naan Bread, and 6.62% IQF Vegetables. The IQF Chicken Breast Fillet is a product of the United States, while the Korma Coconut Curry Sauce and Mini Naan Bread are products of Canada. The ingredients of “FG 260” are as follows:
Ingredient
Origin
HTSUS Classification
Korma Coconut Curry Sauce
Canada
2103.90.90
IQF Chicken Breast Fillet
United States
1602.32.00
IQF Cooked Basmati Rice
India and/or Pakistan
1904.90.01
Mini Naan Bread
Canada
1905.90.10
IQF Vegetables
China
0710.90.91
The Chicken Korma Meal Kit designated “FG 261” contains approximately 40.35% Korma Coconut Curry Sauce, 19.96% IQF Chicken Breast Fillet, 19.85% IQF Cooked Basmati Rice, 13.23% Mini Naan Bread, and 6.62% IQF Vegetables. As with the “FG 260” kit, the component ingredients for the “FG 261” kit are received at Canadian facilities in sealed plastic bags. The IQF Chicken Breast Fillet is a product of the United States, while the Korma Coconut Curry Sauce and Mini Naan Bread are products of Canada. The ingredients of “FG 261” are as follows:
Ingredient
Origin
HTSUS Classification
Korma Coconut Curry Sauce
Canada
2103.90.90
IQF Chicken Breast Fillet
United States
1602.32.00
IQF Cooked Basmati Rice
India and/or Pakistan
1904.90.01
Mini Naan Bread
Canada
1905.90.10
IQF Vegetables
China
0710.90.91
ISSUES:
What is the tariff classification of the Chicken Korma Meal Kits?
Are the Chicken Korma Meal Kits eligible for preferential tariff treatment under the USMCA?
What is the country of origin marking of the Chicken Korma Meal Kits?
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 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 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 3(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 affected 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 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.
Mixtures, composite goods consisting of different materials or made up of different components, and goods put up 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.
The 2021 HTSUS provisions under consideration are as follows:
1602: Other prepared or preserved meat, meat offal or blood:
Of poultry of heading 0105:
1602.32.00: Of chickens. . .
Prepared meals:
1602.32.0010: In airtight containers. . .
1602.32.0030: Other. . .
* * *
The Explanatory Notes (“ENs”) of the Harmonized Commodity Description and Coding System may be utilized to understand the language of the HTSUS. The ENs, 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 ENs to GRI 3(b) state, in relevant part:
(VI) 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.
(VII) 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.
(VIII) The factor which determines essential character will vary as between different types 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.
[…]
(X) For the purposes of this Rule, the term “goods put up in sets for retail sale” shall be taken to meal 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 would be a “set put up for retail sale”.
* * *
Both “FG 260” and “FG 261” Chicken Korma Meal Kits meet the three criteria for classification as a set under the ENs to GRI 3(b). First, the meal kits consist of different articles which are, prima facie, classifiable in different headings. The korma coconut curry sauce is classified in heading 2103, HTSUS, which provides for “Sauces and preparations therefor; mixed condiments and mixed seasonings; mustard flour and meal and prepared mustard.” IQF cooked chicken breast fillets are classified in heading 1602, HTSUS, which provides for “Other prepared or preserved meat, meat offal or blood.” IQF cooked basmati rice is classified in heading 1904, HTSUS, which provides for “Prepared foods obtained by the swelling or roasting of cereals or cereal products (for example, corn flakes); cereals (other than maize (corn)) in grain form or in the form of flakes or other worked grains (except flour, groats and meal), pre-cooked, or otherwise prepared, not elsewhere specified of included.” The mini naan bread is classified in heading 1905, HTSUS, which provides for “Bread, pastry, cakes, biscuits and other bakers’ wares, whether or not containing cocoa; communion wafers, empty cachets of a kind suitable for pharmaceutical use, sealing wafers, rice paper and similar products.” The IQF cooked vegetables are classified in heading 0710, HTSUS, which provides for “Vegetables (uncooked or cooked by steaming or boiling in water), frozen.” Second, the meal kits consist of different foodstuffs intended to be used together to prepare a specific meal/dish – chicken korma. Third, the meal kits are packaged for retail sale in grocery stores (in other words, the meal kits are put up in a manner suitable for sale directly to end users without repacking). For the above reasons, the meal 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, the GRIs, or the ENs. However, EN VIII to GRI 3(b) provides guidance, stating, “[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.”
We find that the IQF Chicken Breast Fillet, re-packaged with the IQF Vegetables, imparts the essential character of both Chicken Korma Meal Kits. Although the curry sauce component of the Chicken Korma Meal Kits constitutes the greatest portion by weight, we note the importance of the chicken component in explicitly distinguishing the products as “Chicken Korma Meal Kits.” CBP has determined that the distinguishing nature of such a protein in a meal kit provides the meal kit with its essential character. See New York Ruling Letter (“NY”) M85884, dated September 8, 2006, concerning the classification of “Asian Shrimp with Vegetables.” In NY M85884, the product consisted of two pouches, boxed together in a retail kit for sale. The first pouch contained raw, peeled, and deveined shrimp which had been coated with a teriyaki sauce, while the second pouch contained a mixture of raw vegetables. The “Asian Shrimp with Vegetables” was ultimately classified under heading 1605, HTSUS, by application of GRI 3(b), with the shrimp imparting the essential character. Similarly, NY N261091, dated February 11, 2015, concerned the classification of “Seafood Casserole with Pasta” and “Green Curry Seafood & Jasmine Rice.” The “Seafood Casserole with Pasta” consisted of water, fish chunks, cream, various vegetables, starch, and seasoning; whereby the “Green Curry Seafood & Jasmine Rice” consisted of fish chunks, water, coconut extract, various vegetables, curry seasoning, and starch. Both products were classified under heading 1604, HTSUS, with the fish imparting the essential character.
Accordingly, in this case, the essential character of the meal kits is the protein which more than any other ingredient in the meal kit is important to the identity of each meal kit. Therefore, the applicable subheading for the Chicken Korma Meal Kits is 1602.32.0030, HTSUSA, which provides for “Other prepared or preserved meat, meat offal or blood: Of poultry of heading 0105: Of chickens: Prepared meals: Other.”
Eligibility 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 United States Congress with the enactment of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. §4511(a)) on January 29, 2020. 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 the purposes of the USMCA. GN 11(b) states, in relevant part:
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 (I) 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 USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o));
* * *
Since the Chicken Korma Meal Kits contain non-originating ingredients, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11 (b)(i), nor are they produced exclusively from originating materials pursuant to GN 11(b)(ii). Thus, we must determine whether these meal kits are eligible for preferential tariff treatment under GN (b)(iii).
The applicable rule for the Chicken Korma Meal Kits is GN 11(o)/16.1, HTSUS, which provides: “[a] change to headings 1601 through 1605 from any other chapter.” Since the non-originating ingredients of the Chicken Korma Meal Kits are all classified in a Chapter other than Chapter 16, the tariff shift rule is met. However, with regard to goods classified as sets pursuant to GRI 3(b), GN 11(i) provides:
Notwithstanding the rules set forth in subdivision (o) of this note, goods classifiable as goods put up for retail sale as provided for in rule 3 of the general rules of interpretation of the tariff schedule shall not be considered originating goods unless:
Each of the goods in the set is an originating good; or
The total value of the non-originating goods in the set does not exceed 10 percent of the value of the set.
* * *
The following are the percentages, by percentage of total value, for both of the Chicken Korma Meal Kits (“FG 260” and “FG261”):
Ingredient
Percentage of Total Meal Kit Value (“FG 260”)
Percentage of Total Meal Kit Value (“FG 261”)
Korma Coconut Curry Sauce
35.1%
35.1%
IQF Chicken Breast Fillet
29.3%
29.1%
IQF Cooked Basmati Rice
16.9%
17.1%
Mini Naan Bread
17.7%
17.7%
IQF Vegetables
1.0%
1.0%
Of the five component ingredients which make up both the “FG 260” and “FG 261” Chicken Korma Meal Kits, two component ingredients are non-originating goods. Specifically, the IQF Cooked Basmati Rice is a product of India and/or Pakistan, while the IQF Vegetables are a product of China. However, as demonstrated by the information provided, both Chicken Korma Meal Kits possess a total value of non-originating goods which exceeds the 10% threshold. In the case of “FG 260”, the IQF Cooked Basmati Rice and IQF Vegetables constitute 17.9% of the total value of the kit, whereas with “FG 261”, the IQF Cooked Basmati Rice and IQF Vegetables amount to 18.1% of the meal kit’s total value. Therefore, because the Chicken Korma Meal Kits fail to meet the requirement of GN 11(i)(B), they fail to qualify for preferential tariff treatment under the USMCA.
Country of Origin Marking
Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported 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;
(2) The good is produced exclusively from domestic materials; or
(3) 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.
* * *
Since the component ingredients of the Chicken Korma Meal Kits are from a combination of Canada, China, India and/or Pakistan, and the United States, they are neither wholly obtained or produced, nor are they goods produced exclusively from domestic materials as enumerated in sections 102.11(a)(1) or 102.11(a)(2). Since the country of origin cannot be determined via these sections, we turn to 19 C.F.R. § 102.11(a)(3), which states that 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. Defined in section 102.1(e), a “foreign material” is “a material whose country of origin as determined under these rules is not the same 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;
* * *
19 C.F.R. § 102.1 provides, in relevant part:
(m) Minor Processing. “Minor processing” means the following:
(6) Putting up in measured doses, packing, repacking, packaging, repackaging;
* * *
As previously discussed, the foreign components of the Chicken Korma Meal Kits are simply packaged together and not further processed 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. Therefore, pursuant to 19 C.F.R. § 102.11(a)(3), the Chicken Korma Meal Kits are not considered products of Canada.
As an analysis of section 102.11(a) did not determine the country of origin, we next turn to section 102.11(b). Section 102.11(b) contains an exception for goods classified as a set pursuant to GRI 3. Since the Chicken Korma Meal Kits are classified as sets via GRI 3(b), section 102.11(b) is inapplicable in this case.
19 C.F.R. § 102.11(c) states that 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”). In the case of the Chicken Korma Meal Kits, we find that the Korma Coconut Curry Sauce and the IQF Chicken Breast Fillet merit equal consideration for determining the essential character of the set, based on their percentages of weight, percentages of total value, and role in relation to the use and name of the meal kits. Although we discuss above that the IQF Chicken Breast Fillet is the sole component ingredient which imparts the essential character for classification purposes, the country of origin of the Chicken Korma Meal Kits is the country/countries of the Korma Coconut Curry Sauce and the IQF Chicken Breast Fillet. Since the Korma Coconut Curry Sauce is a product of Canada, and the IQF Chicken Breast Fillet is a product of the United States, the Chicken Korma Meal Kits will be the products of the United States and Canada for the country of origin marking purposes.
In accordance with 19 U.S.C. § 1304, every article of foreign origin, unless excepted, must be marked with the name of the country of origin of the article. Inasmuch as the marking requirements of 19 U.S.C. § 1304 are applicable only to articles of “foreign origin,” the Chicken Korma Meal Kits are not required to be marked with a reference to the United States origin upon importation into the United States. 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 should be directed to the FTC, at the following address: Federal Trade Commission, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580.
HOLDING:
Based on the information provided, the applicable subheading for the Chicken Korma Meal Kits is 1602.32.0030, HTSUSA, which provides for “Other prepared or preserved meat, meat offal or blood: Of poultry of heading 0105: Of chickens: Prepared meals: Other.” The column one, general rate of duty is 6.4% ad valorem.
The Chicken Korma Meal Kits are not eligible for preferential tariff treatment under the USMCA.
The country of origin for marking purposes of the Chicken Korma Meal Kits 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