MAR-2-38:OT:RR:NC:N1:139
Steve Clyde
Axxess International, Inc.
3041 Commerce Drive, Suite A1
Fort Gratiot, MI 48059
RE: The Country of Origin and Status under the North American Free Trade Agreement (NAFTA) for Sodium Propionate and Sodium Benzoate (REFERENCE RULING N288149)
Dear Mr. Clyde:
In your letter dated January 26, 2018, you requested a ruling on the country of origin and status under the North American Free Trade Agreement (NAFTA) for Sodium Propionate and Sodium Benzoate; 19 CFR 102.21(c)(2); tariff shift; Article 509. Note this ruling is intended to compliment ruling N288149 which contains the identical composition of the product addressed in this ruling.
CLASSIFICATION
Classification of the product -67% sodium propionate 33% sodium benzoate - was addressed in previous ruling N288149 The technical description and classification follow:
In a reactor, propionate acid, benzoate acid, and sodium hydroxide are reacted in water to produce a homogenous solution. The solution is then dried by spray drying to obtain a homogenous inseparable solid product composed of 67% sodium propinate and 33% sodium benzoate, as a white agglomerate powder. This mixed product is used as antimicrobial in food applications.
The applicable subheading for the sodium propionate and sodium benzoate will be 3824.99.9295, Harmonized Tariff Schedule of the United States (HTSUS), which provides for: Prepared binders for foundry molds or cores; chemical products and preparations of the chemical or allied industries (including those consisting of mixtures of natural products), not elsewhere specified or included: Other: Other: Other: Other: Other: Other. The rate of duty will be 5 percent ad valorem.
NAFTA - LAW AND ANALYSIS:
General Note 12(b), Harmonized Tariff Schedule of the United States (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
(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the non-originating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because--
(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or
(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
Based on the information provided and subsequent submissions, the final product contains non-originating materials (i.e. those that were produced in countries other than Canada, the United States, or Mexico). As a result, to qualify for NAFTA treatment under the terms of General Note 12(b)(ii)(a), each non-originating material must undergo the change in tariff classification set forth in General Note 12(t).
The relevant change in tariff classification rule for subheading 3824.90 (3824.99 in the 2018 HTSUS Chapter 38), states, in part, the following:
A change to any other good of subheading 3824.90 from any other chapter, except from chapters 28 through 37.
The product, Sodium Benzoate 1/3 + Sodium Propionate 2/3, contains material from the Netherlands which is a country outside the NAFTA territory. Based on initial information provided and subsequent submissions, the materials (classified in Chapter 28 as inorganic compounds) do not undergo the required change in tariff classification and, therefore, this request for NAFTA originating status cannot be granted on the basis of General Note 12(ii)(b), HTSUS.
COUNTRY OF ORIGIN AND MARKING - LAW AND ANALYSIS:
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 as legibly and 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 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.
As stipulated in 19 CFR 134.1(b), "country of origin" is defined as “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 determine the country of origin.
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.
You state that that the product, is processed in a NAFTA country "Canada" prior to being imported into the U.S. Since "Canada” is defined under 19 CFR 134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported products are "good[s] of a NAFTA country," and thus subject to the NAFTA marking requirements.
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.
Based on the information provided with your submission, all of the components of the Sodium Benzoate + Sodium Propionate product meet the requisite tariff shift outlined above. Consequently, the country of origin of the Sodium Benzoate + Sodium Propionate product will be Canada for marking purposes..
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 https://hts.usitc.gov/current.
This merchandise may be subject to the Federal Food, Drug, and Cosmetic Act and/or The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which are administered by the U.S. Food and Drug Administration (FDA). Information on the Federal Food, Drug, and Cosmetic Act, as well as The Bioterrorism Act, can be obtained by calling the FDA at 1-888-463-6332, or by visiting their website at www.fda.gov.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 181). Should it be subsequently determined that the information furnished is not complete and does not comply with 181.100(a) (2), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, if there is any change in the facts submitted to Customs, it is recommended that a new ruling request be submitted.
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 Patrick Day at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division