CLA-2:CO:R:C:G 087426 SER
Mr. Rick Wilson
Bacardi Imports, Inc.
2100 Biscayne Boulevard
Miami, Florida 33137
RE: Rum-based beverage; U.S.-Canada Free-Trade Agreement
Dear Mr. Wilson:
On March 2, 1990, you received a tariff classification of a
rum-based beverage under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA) in Headquarters Ruling Letter
(HRL) 085406. In that ruling the beverage was classified in
subheading 2208.90.80, HTSUSA, which provides for other
spirituous beverages. At the time that the ruling letter was
issued the beverage did not meet the requirements of the U.S.-
Canada Free-Trade Agreement (FTA), and therefore, did not
receive any FTA benefits.
FACTS:
Rum is produced in Puerto Rico by Bacardi Corporation using
molasses stated to be from the Dominican Republic. The rum will
be shipped in bulk from Bacardi Corporation to Castleton,
Florida, where it will be blended with real fruit juices and
natural flavors to create a Bacardi rum concentrate. This
concentrate will then be shipped in bulk at 120 proof in tank
containers to F.B.M. in Canada where it will be further blended
with carbonated waters, sweeteners and other minor food
ingredients before being brought back into the United States.
You state that all the ingredients added in Canada will be of
Canadian origin.
ISSUE:
Does this beverage now qualify for reduced duties under the
United States/Canada Free Trade Agreement, following the issuance
of Presidential Proclamation 6142.
-2-
LAW AND ANALYSIS:
As was noted in HRL 085406, the provisions in the General
Notes to the HTSUSA that set forth the FTA differed from the
provisions approved by Congress. At the time the HRL 085406 was
issued the language of the General Notes in the HTSUSA required
that to be an originating good within the Rules of Origin and
thus receive the benefits of the FTA, the good, "if not a wholly
obtained good, must undergo a transformation in which a tariff
classification change in Canada," must occur (emphasis added).
This language differed from the statutory language of the
implementing legislation enacted by Congress, which allows for
transformation of a product in either the United States or Canada
or both. This product previously did not meet the standards of
the General Note because it did not undergo the required
transformation of tariff classification in Canada.
On May 25, 1990, Presidential Proclamation 6142 modified
General Note 3(c)(vii) of the HTSUSA by deleting from subdivision
(B)(2)(I) the words "in Canada". This change brought the General
Notes of the HTSUSA into conformity with the legislation enacted
by Congress, enabling the product at issue to receive beneficial
duty treatment under the FTA, since it had undergone the required
tariff classification change in the United States.
HOLDING:
The product at issue, a rum-based beverage, is properly
classified in subheading 2208.90.80, HTSUSA, which provides for
"other" spirituous beverages. The rate of duty is 26.4 cents per
proof liter under the FTA category. In addition, imports under
this subheading may be subject to a Federal Excise Tax (26 U.S.C.
5001) of $12.50 per proof gallon and a proportionate tax at the
like rate on all fractional parts of a proof gallon.
Sincerely,
John Durant, Director
Commercial Rulings Division