CLA-2-18:OT:RR:NC:232
Ms. Darlene DiBernardo
Deringer Logistics Consulting Group
173 West Service Road
Champlain, NY 12919
RE: The tariff classification, country of origin and status under the North American Free Trade Agreement (NAFTA), of Café Escapes Milk Chocolate Hot Cocoa Mix from Canada
Dear Ms. DiBernardo:
In your previous letters dated January 15, February 20, and March 24, 2015, on behalf of you client, Keurig Green Mountain, you requested a tariff classification ruling. You provided samples and ingredient breakdown for our review. Samples were reviewed and disposed of. The subject merchandise, “K-cup” Café Escapes Milk Chocolate Hot Cocoa is said to contain (in the range of) 44.5 to 48.9 percent sugar, 33.7 to 37.3 percent creamer, 13.3 to 14.8 percent cocoa powder, 2.0 to 2.4 percent Belgian chocolate powder, 2.4 to 2.6 percent salt and less than one percent of the following: acesulfame potassium, vanillin and sucralose.
The product is a bulk packaged, 700 kilogram milk chocolate hot cocoa mix that is manufactured in Sweden and shipped to Canada. In Canada, the mix does not undergo any additional processing. Nothing is added to the bulk mix. The hot cocoa mix, (700 kilogram bulk package) will be repacked into the finished retail package, “K-cup”. The “K-cup” is a small plastic cup holding, enough hot cocoa mix to be used by consumers. They would place the k-cup, in a coffee machine that heats water to make a hot beverage.
The applicable subheading for K-cup, Café Escapes Milk Chocolate Hot Cocoa will be 1806.90.9090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for chocolate and other food preparations containing cocoa…other … other…other. The rate of duty will be 6 percent ad valorem.
Your inquiry also requests a ruling on the country of origin and eligibility for preferential tariff treatment under the NAFTA for the K-cup, Café Escapes Milk Chocolate Hot Cocoa produced in Canada.
Section 134.1(b), CBP regulations, defines "country of origin": "Country of Origin" means the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 the meaning of this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 134.1(j), CBP 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), CBP 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" which are set out at 19 CFR Part 102. Section 102.11 sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11(a) states that the country of origin of a good is the country in which: (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 section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. Since the finished K-cup, Café Escapes Milk Chocolate Hot Cocoa Mix is produced in Canada with Sweden origin chocolate, these goods are neither wholly obtained or produced, nor produced exclusively from domestic materials. Accordingly, paragraph (a)(3) of section 102.11 is the next applicable rule that must be applied to determine the origin of the finished hot cocoa mix. The finished retail milk chocolate hot cocoa mix are stated to be classifiable under subheading 1806.90, HTSUS. The bulk milk chocolate hot cocoa mix exported from Sweden to Canada is classifiable under subheading 1806.20. The applicable change in tariff classification for 1806.90 set out in section 102.20(d), Section IV, Chapters 16 through 24 of the CBP regulations provide: A change to subheadings 1806.31 through 1806.90 from any other subheading, including another subheading within that group.
Since the exported (Swedish) hot cocoa mix is classified under subheading 1806.20 and after the repackaging in Canada, the finished K-cup hot cocoa mix are classified under subheading 1806.90, HTSUS, the requisite tariff shift would be met. The K-cup, Café Escapes Milk Chocolate Hot Cocoa Mix may be considered to be a product of Canada for country of origin purposes and can be marked accordingly.
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; or (iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or …
Based on the facts provided, the “K-cup” Café Escapes Milk Chocolate Hot Cocoa Mix does qualify for preferential treatment under the NAFTA because the hot cocoa mix does meet the requirements of the applicable tariff shift rule of General Note 12(t)/Chapter 18.5).
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/.
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 Frank Troise via email address: [email protected].
Sincerely,
Gwenn Klein Kirschner
Director
National Commodity Specialist Division