CLA-2 CO:R:C:F 952419 LPF
1701.99.0225, 9904.40.20
Simeon M. Kreisberg, Esq.
Mayer, Brown & Platt
2000 Pennsylvania Avenue, NW
Washington, D.C. 20006-1885
RE: "A la Perruche" sugar chunks in 1701, HTSUSA; Cane or beet
sugar and chemically pure sucrose, in solid form;
Agricultural import fees in 9904, HTSUSA; Additional U.S.
Note 3 to Chapter 17; Import restrictions; Substantial
transformation - Country of origin; Texas Instruments;
Superior Wire; HRL 082033.
Dear Mr. Kreisberg:
This is in response to your letter of August 14, 1992,
submitted on behalf of Bri-Al, Inc. You request, in regard to "A
la Perruche" sugar chunks, the proper classification, under the
Harmonized Tariff Schedule of the United States Annotated
(HTSUSA) and a determination whether the refining of the sugar
constitutes a substantial transformation.
FACTS:
The merchandise consists of brown and white irregular sugar
chunks sold under the name "A la Perruche." According to your
letter, a company in Paris, France imports raw cane sugar from
Swaziland. In France, the raw sugar is refined through
filtration, crystallization and maturation until the sugar
agglomerates into bars. The brown sugar is produced by adding
caramelized syrup made from the cane sugar during refining. The
bars are broken into irregular lumps and are packaged into 17 and
35 ounce boxes, which are imported into the United States for
sale to food service distributors. You state that the brown
sugar has a polarity of 98.9 degrees and the white sugar has a
polarity of 99.7 degrees. You also explain that the Department
of Agriculture does not consider these products to be "Specialty
Sugar" as defined in 15 CFR 2011.202 (j) (1992).
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ISSUE:
Whether the sugar chunks are classifiable in heading 1701 as
cane or beet sugar and chemically pure sucrose, in solid form, or
are classifiable elsewhere in the HTSUSA, and whether the
refining, in France, of raw sugar, from Swaziland, substantially
transforms the sugar into a French product for duty and quota
purposes.
LAW AND ANALYSIS:
Classification under the HTSUSA
The General Rules of Interpretation (GRI's) taken in their
appropriate order provide a framework for classification of
merchandise under the HTSUSA. Most imported goods are classified
by application of GRI 1, that is, according to the terms of the
headings of the tariff schedule and any relative section or
chapter notes. The Explanatory Notes (EN's) to the Harmonized
Commodity Description and Coding System, which represent the
official interpretation of the tariff at the international level,
facilitate classification under the HTSUSA by offering guidance
in understanding the scope of the headings and GRI's.
Heading 1701 provides for cane or beet sugar and chemically
pure sucrose, in solid form. The EN's to 1701 provide, in
pertinent part that, "cane sugar is derived from the juices of
the sugar cane stalk." As the sugar chunks fit this description,
they are classifiable in heading 1701.
At the six digit subheading level, 1701.11 provides for raw
cane or beet sugar, not containing added flavoring or coloring
matter, while 1701.99 provides for other cane or beet sugar. In
this regard, the EN's to 1701 indicate that:
Raw or crude cane or beet sugars occur in the form of
brown crystals, the colour being due to the presence of
impurities. Their sucrose content by weight, in the
dry state, corresponds to a polarimeter reading of less
than 99.5 degrees.... They are generally destined for
processing into refined sugar products. Raw sugar may,
however, be of such a high degree of purity that it is
suitable for human consumption without refining.
The brown sugar chunk's sucrose content by weight, in the
dry state, is 98.9 international sugar degrees, which indicates
it is raw sugar. See Subheading Note 1 and Additional U.S. Note
1 to Chapter 17, HTSUSA, Sugar and Sugar Confectionery. Also,
the addition of a dark or caramelized syrup to the brown sugar is
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not considered an added coloring or flavoring since such sugar
cane products are provided for in Chapter 17, and they are
products commonly added to refined sugar in order to produce
brown sugar. The product is classifiable, at the six digit
level, in subheading 1701.11.
Insofar as the product is described in, and entered pursuant
to, Additional U.S. Note 3(a) and 3(b) to Chapter 17 (Notes 3(a)
and 3(b)), and is not further refined or improved in quality, it
is classifiable in subheading 1701.11.0125. If the product is
not entered pursuant to Notes 3(a) and 3(b), and is not further
refined or improved in quality, it is classifiable in subheading
1701.11.0325.
The white sugar chunk's sucrose content by weight, in the
dry state, is 99.7 international sugar degrees, which indicates
it is not raw sugar. Since the product does not contain added
coloring or flavoring, it is classifiable, at the six digit
level, in subheading 1701.99. Insofar as the product is
described in, and entered pursuant to, Additional U.S. Note 3(a)
and 3(b) to Chapter 17 (Notes 3(a) and 3(b)), and is not further
refined or improved in quality, it is classifiable in subheading
1701.99.0125. If the product is not entered pursuant to Notes
3(a) and 3(b), and is not further refined or improved in quality,
it is classifiable in subheading 1701.99.0225.
Since neither Title II of the Sugar Act of 1948, nor
substantially equivalent legislation is presently in effect, the
products remain subject to the currently applicable HTSUSA duty
rates. See Additional U.S. Note 2 to Chapter 17.
Country of Origin - Substantial Transformation
When addressing the issue of substantial transformation, we
must question whether the refining operations performed on the
sugar in the country of exportation, that is France, are of such
a substantial nature as to justify the conclusion that the
resulting product is a manufacture of that country. See
Headquarters' Ruling Letter 082033, issued September 5, 1989.
In general, a substantial transformation occurs when an article
emerges from a process with a new name, character or use
different from that possessed by the article prior to processing.
See Texas Instruments, Inc. v. United States, 69 CCPA 152, 681
F.2d 778 (1982); See also Superior Wire v. U.S., 11 CIT 608
(1987), 669 F. Supp. 472, aff'd. 867 F.2d 1409 (1989).
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In HRL 082033, Customs determined that the refining of raw
sugar would not substantially transform the product, since the
refining process did not change the essential character of the
raw sugar and make it into a new article with a new name,
character, or use. Customs explained that:
[t]he refining process does not change the product's
intended use, which is dictated by the very nature
of the product--the raw sugar with its desired sucrose.
The raw sugar already possesses the qualities sought
after in sugar (its sweetness and nutriousness).
These are not the result of the refining process.
While the refining of sugar changes its color and
increases its purity,...the refining process is not
necessary to obtain its essential qualities. Refining
cane sugar upgrades and purifies the sugar, but it does
not change the essential character of the product.
In this case, since the refining of the raw sugar in France is
not a substantial transformation, the sugar remains a product of
Swaziland for country of origin and quota purposes.
Importation Restrictions
Certain requirements must be met in order for the product to
be entered pursuant to Notes 3(a) and 3(b) and thus be classified
in subheading 1701.11.0125 or 1701.99.0125.
Note 3(a) provides, in pertinent part, that the total amount
of sugar entered under subheading 1701.11.01 and 1701.99.01,
shall not exceed, in the aggregate, an amount established by the
Secretary of Agriculture (Secretary). This total amount consists
of (1) a base quota amount, (2) a quota adjustment amount and (3)
an amount reserved for the importation of specialty sugars.
Modifications of such quantitative limitations and authorization
to charge sugar entering the U.S. to a previous or subsequent
quota period are subject to the Secretary's approval.
Note 3(b) explains, in pertinent part, that sugar imported
from Swaziland, and classifiable in subheading 1701.11.01 or
1701.99.01, is allocated 1.6 percent of the total base quota
amount for certain sugars, syrups and molasses to be imported
from the various supplying countries and areas listed in Note
3(b)(i). The United States Trade Representative presently
requires that certificates of eligibility accompany such imported
sugar.
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HOLDING:
"A la Perruche" brown sugar chunks, entered pursuant to
Notes 3(a) and 3(b), and not to be further refined or improved in
quality, are classifiable in subheading 1701.11.0125. The
general column one rate of duty is 1.4606 cents per kilogram less
O.020668 cents per kilogram for each degree under 100 degrees
(and fractions of a degree in proportion) but not less than
0.943854 cents.
If not entered pursuant to Notes 3(a) and 3(b), and not to
be further refined or improved in quality, the brown sugar chunks
are classifiable in subheading 1701.11.0325. The general column
one rate of duty is 37.386 cents per kilogram less 0.529 cents
per kilogram for each degree under 100 degrees (and fractions of
a degree in proportion) but not less than 24.161 cents per
kilogram.
"A la Perruche" white sugar chunks, entered pursuant to
Notes 3(a) and 3(b), and not to be further refined or improved in
quality, are classifiable in subheading 1701.99.0125. The
general column one rate of duty is 1.4606 cents per kilogram less
0.020668 cents per kilogram for each degree under 100 degrees
(and fractions of a degree in proportion) but not less than
0.943854 cents.
If not entered pursuant to Notes 3(a) and 3(b), and not to
be further refined or improved in quality, the white sugar chunks
are classifiable in subheading 1701.99.0225. The general column
one rate of duty is 37.386 cents per kilogram less 0.529 cents
per kilogram for each degree under 100 degrees (and fractions of
a degree in proportion) but not less than 24.161 cents per
kilogram.
We note that a product, from Swaziland, classified in either
1701.11.0125 or 1701.99.0125 is eligible for duty free treatment
under the Generalized System of Preferences (GSP), provided it
meets the requirements of General Note 3(c)(ii), HTSUSA.
In addition, subheading 9904.40.20 provides that, in any
event, the product carries a supplemental agricultural import fee
of 2.2 cents per kilogram, but not in excess of 50 percent.
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In order to determine which, if any, quantitative
limitations or regulations apply when importing your product, we
suggest you contact:
Foreign Agricultural Service
U.S. Dept. of Agriculture-Room 5531
Import Policies & Trade Analysis Division
Washington, D.C. 20250-1000
(202) 720-5676
Sincerely,
John Durant, Director
Commercial Rulings Division