CLA-2-20:OT:RR:NC:2:228
Mr. Ryan Albright
President
Covered Bridge Potato Chip Company
35 Alwright Ct.
Waterville, Carleton Co.
New Brunswick, E7P 0A5
Canada
RE: The tariff classification, country of origin marking, and status under the North American Free Trade Agreement (NAFTA), of potato chips from Canada; Article 509
Dear Mr. Albright:
In your letter dated September 27, 2011, you requested a ruling on the status of potato chips from Canada under the NAFTA.
Ingredients breakdowns and images of the packaging labels for five products, and a sample of a burlap bag were submitted with your letter. Additional information was provided via e-mail on October 31, 2011. Covered Bridge brand Old Fashioned Kettle Cooked Potato Chips are fried potato chips, prepared in five flavors – sea salt, sea salt & cracked pepper, smokin’ sweet BBQ, sea salt & vinegar, and creamy dill. The common ingredients to all products are russet potatoes and canola oil. Sea Salt potato chips also contain sea salt. Sea Salt & Cracked Pepper potato chips also contain sea salt and spice (black pepper). Smokin’ Sweet BBQ potato chips also contain barbecue seasoning (dextrose, sea salt, sugar, corn flour, yeast, onion powder, garlic powder, tomato powder, horseradish powder, oleoresin paprika, smoke flavor and flavor). Sea Salt & Vinegar potato chips also contain sea salt & vinegar seasoning (vinegar powder – maltodextrin and vinegar, sea salt, sugar, yeast and citric acid). Creamy Dill potato chips also contain creamy dill seasoning (vinegar powder – maltodextrin and vinegar, dried whey, cane sugar, sea salt, citric acid, spice, onion powder, garlic powder and flavor). The russet potatoes, spice and barbecue seasoning are products of Canada. The oil, sea salt, sea salt & vinegar seasoning, and creamy dill seasoning are products of the United States. The potato chips are produced in Canada, and packed in a sealed, polypropylene bag containing seven ounces (198 grams), net weight, placed in an open burlap bag said to have a tag on it to indicate the flavor, ingredients, and bar code. The burlap bag is left open so consumers can easily slide out the polypropylene bag to view the nutritional facts and other information on the sealed bag.
One side of the burlap bag is printed with the name of the product “Covered Bridge Old Fashioned Kettle Style POTATO CHIPS”, but not the flavor, followed by the name of the product written in French, a line drawing of a covered bridge, a statement of “Made with Russet Potatoes” in English and French and the net weight. The back of the burlap bag is printed with a brief story about the company in English and French, a product freshness guarantee in English and French, and the contact information for Covered Bridge Potato Chip Company Inc.. A statement of “Nutrition Facts inside Bag” in English and French is indicated on the bottom of the burlap bag. The sealed bag containing the chips, inside the open burlap bag, is printed on the front with the name of the product, including the flavor, no trans fat and gluten-free declarations, a “Made with Russet Potatoes” statement, and the net weight. The back panel is divided into two columns. One column displays a brief story about the company, the freshness guarantee, a telephone and fax number for consumer questions or comments, and the declaration of the absence of preservatives, artificial colors, artificial flavors, trans fat and gluten. The other column contains the UPC code, the nutrition facts box, a list of ingredients, “Manufactured by” statement followed by the company name, address and website, the country of origin – “Product of Canada”, and a line drawing of a covered bridge with a “Made with Russet Potatoes” statement on the bottom of the section.
The applicable subheading for the potato chips will be 2005.20.0020, Harmonized Tariff Schedule of the United States (HTSUS), which provides other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen...potatoes…potato chips. The rate of duty will be 6.4 percent ad valorem.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that
For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--
(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or
(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--
(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or
(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; . . . .
Based on the facts provided, the goods described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(i). The goods will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the North American Free Trade Agreement (“NAFTA”), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b) of the regulations, defines “country of origin” as
the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).
Section 134.1(j) of the regulations, provides that the “NAFTA Marking Rules” are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the regulations, defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the regulations, provides that a “good of a NAFTA country” may be marked with the name of the country of origin in English, French or Spanish.
Part 102 of the regulations, sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the imported potato chips are goods of Canada for marking purposes. The proposed retail packaging, as described above, are conspicuously, legibly and permanently marked in satisfaction of the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.
This merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling FDA at 301-575-0156, or at the Web site www.fda.gov/oc/bioterrorism/bioact.html.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Bruce N. Hadley, Jr. at (646) 733-3029.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division