CLA-2-20:OT:RR:NC:N2:231
Mr. Yingchao Xiao
Lee & Xiao
2600 Mission St., Suite 100
San Marino, CA 91108
RE: The tariff classification of peanut butter from China.
Dear Mr. Xiao:
In your letter dated August 2, 2012, you requested a tariff classification ruling on behalf of America Cofco Distributors, Inc. (Los Angeles).
The merchandise is described as peanut butter made from peanuts, sugar, vegetable oil and salt. The manufacturing process in China consists of roasting, de-skinning and grinding the peanuts, adding the other ingredients, then mixing and hot-filling the product into jars.
You state that all of the ingredients of this peanut butter will be imported into China from other countries. The raw peanuts will be obtained from the United States, Argentina and Australia.
In your letter, you assert that “since the tariff duty is based on the country of origin of the raw peanuts, we believe that the quota system does not cover the peanuts from USA, Argentina and Australia.”
We disagree with your assertion. First, we would note that the tariff rate quota (TRQ) on peanut butter is separate from the TRQ on peanuts. Second, we would note that Customs and Border Protection has taken the position that the manufacture of peanut butter from raw peanuts constitutes a “substantial transformation,” meaning that the peanuts lose their identity and become a new product having a new name, character and use. The country of origin of peanut butter is thus the country where it is made. See Headquarters Ruling Letters 555062 (Feb. 23, 1990) and 559965 (Jan. 24, 1997). In the present case, the country of origin of the peanut butter for duty, quota and marking purposes is China.
The applicable subheading for the peanut butter, if entered under quota, will be 2008.11.0500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included: nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together: peanuts (ground-nuts): peanut butter and paste: described in additional U.S. note 5 to chapter 20 and entered pursuant to its provisions. The rate of duty will be free.
The applicable subheading for the peanut butter, if entered outside the quota, will be 2008.11.1500, HTSUS, which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included: nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together: peanuts (ground-nuts): peanut butter and paste: other. The rate of duty will be 131.8 percent ad valorem. Also, products classified in subheading 2008.11.1500 will be subject to additional safeguard duties based on their value, as described in subheadings 9904.20.01—9904.20.09.
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/.
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. In the present case, marking such as “Product of China” or “Made in China” will thus be required.
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 177 of the Customs Regulations (19 C.F.R. 177).
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 Nathan Rosenstein at (646) 733-3030.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division