CLA-2-04:OT:RR:NC:N2:231

Deissy Rincon
Gay Lea Foods Co-Operative Ltd.
5200 Orbitor Drive
Mississauga, ON L4W 5B4
Canada

RE: The tariff classification, country of origin, marking and status under the North American Free Trade Agreement (NAFTA) of Monterey Jack Cheese Snack from Canada, Article 509

Dear Ms. Rincon:

In your letter dated August 10, 2018 you requested a tariff classification ruling. The samples provided have been examined and disposed of.

The merchandise is “Nothing but Cheese Monterey Jack™ with Red Bell and Jalapeño Peppers” composed of Monterey Jack cheese (milk, bacterial culture, salt, calcium chloride and microbial enzymes), red bell pepper, jalapeño peppers, and cellulose powder. Upon examination, the product was found to be crispy, shelf stable, bite-sized pieces of Monterey Jack cheese which have been dehydrated and slightly puffed by a microwave process. “Nothing but Cheese Monterey Jack with Red Bell and Jalapeño Peppers™” will be imported in 18-gram, 57-gram and 7 kilogram (bulk) packaging, respectively. The targeted market for this product are supermarkets and other food service industries.

The applicable subheading for the “Nothing but Cheese Monterey Jack with Red Bell and Jalapeño Peppers™”, if entered under quota, will be 0406.90.9500, HTSUS, which provides for cheese and curd: Other cheese: Other cheeses, and substitutes for cheese, including mixtures of the above: Other, including mixtures of the above (excluding goods containing mixtures of subheadings 0406.90.61 or 0406.90.63): Other: Other: containing cow’s milk (except soft-ripened cow’s milk cheese): described in additional U.S. note 16 to chapter 4 and entered pursuant to its provisions. The rate of duty will be 10% ad valorem.

The applicable subheading for the “Nothing but Cheese Monterey Jack™ with Red Bell and Jalapeño Peppers”, if entered outside the quota (i.e., without a valid import license), will be 0406.90.9700, HTSUS, which provides for cheese and curd: Other cheese: Other cheeses, and substitutes for cheese, including mixtures of the above: Other, including mixtures of the above (excluding goods containing mixtures of subheadings 0406.90.61 or 0406.90.63): Other: Other: containing cow’s milk (except soft-ripened cow’s milk cheese): Other. The rate of duty will be $1.509 per kilogram. Also, products classified in subheading 0406.90.9700, HTSUS, will be subject to additional safeguard duties based on their value, as described in subheadings 9904.06.38—9904.06.49.

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 the World Wide Web at https://hts.usitc.gov/current.

For goods classified in subheading 0406.90.9500, an import license is required in accordance with terms and conditions provided in regulations issued by the Secretary of Agriculture, subject to the approval of the United States Trade Representative (USTR). The regulations may provide for the reallocation among supplying countries or areas of unfilled quantities, subject to USTR approval.

Questions regarding licensing procedures and applications for licenses to import cheese subject to quota should be addressed to:

Import Quota Manager for Dairy Products U.S. Department of Agriculture (USDA) Stop 1029 1400 Independence Avenue, SW Washington, DC 20250-1029 Tel: (202) 720-1344 Importations of this merchandise are subject to regulations administered by various U.S. agencies. Requests for information regarding applicable regulations administered by the U.S. Department of Agriculture (USDA) may be addressed to that agency at the following location:

USDA APHIS, VS, NCIE Products Program 4700 River Road, Unit 40 Riverdale, MD 20737-1231 Tel: (301) 851-3300 Email: [email protected]

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 “Nothing but Cheese Monterey Jack™ with Red Bell and Jalapeño Pepper”, described above qualifies for NAFTA preferential treatment because it will meet the requirements of HTSUS General Note 12(b)(iii). The goods will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

COUNTRY OF ORIGIN - LAW AND ANALYSIS:

Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2. Paragraph (a) of this section provides that the country of origin of a good is the country in which (1) the good is wholly obtained or produced, or (2) the good is produced exclusively from domestic materials, or (3) each foreign material incorporated into that good undergoes an applicable change in tariff classification set out in section 102.20 of the regulations.

"Foreign material" is defined in 19 CFR 102.1(e) as a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the “Nothing but Cheese Monterey Jack™ with Red Bell and Jalapeño Pepper” is manufactured from materials originating in Mexico and the United States and therefore is neither wholly obtained or produced, nor produced exclusively from domestic materials. Since an analysis of sections 102.11(a) (1) and 102.11(a) (2) will not yield a country of origin determination, we look to section 102.11(a) (3).

Section 102.11(a)(3) provides that the country of origin is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20. Since we have determined that “Nothing but Cheese Monterey Jack™ with Red Bell and Jalapeño Pepper” is classified in heading 0406, HTS, the applicable tariff shift rule found in section 102.20(a) requires:

A change to heading 0406 from any other heading…

Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the non-originating materials does undergo the applicable shift in tariff classification. Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that “Nothing but Cheese Monterey Jack™ with Red Bell and Jalapeño Peppers” is a good of Canada for marking purposes.

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 134.45(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.” 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.

As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.

With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable.

The samples you forwarded for our review which is printed with the phrase “TM/MC Dairy Farmers of Canada/Les Producteurs Laitiers du Canada,” is not acceptable. The item must be marked as “Product of Canada” or “Made in Canada.”

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 Ekeng Manczuk at ekeng.b.manczuk.cbp.dhs.gov.

Sincerely,

Steven A. Mack
Director
National Commodity Specialist Division