CLA-2-21:OT:RR:NC:N2:228
Mr. Anthony Parlatore
Redpath Sugar Ltd.
95 Queens Quay East
Toronto, M5E1A3
Canada
RE: The tariff classification, country of origin, and eligibility of the United States-Mexico-Canada Agreement (USMCA) of hydration drink mixes from Canada
Dear Mr. Parlatore:
In your letter dated June 1, 2022, you requested a binding ruling on the tariff classification, country or origin, and United States-Mexico-Canada Agreement (USMCA) eligibility of four varieties of hydration drink mixes.
An ingredients breakdown and a description of the manufacturing process accompanied your inquiry.
The hydration drink mixes will be imported in powdered form and prepared in four different varieties – lemon lime, passion fruit, cherry, and watermelon. Ingredients common to all are said to be sugar (Brazil), dextrose (Mexico), citric acid (Thailand), salt (U.S.A), potassium citrate (Israel), sodium citrate (Israel), natural flavor (U.S.A.), dipotassium phosphate (Germany), ascorbic acid (China), vitamin B blend (U.S.A.), rebaudioside A (China), and silicon dioxide (U.S.A). The natural flavor component will contain the specific flavor for each variety of the hydration drink mix (lemon lime, passion fruit, cherry, and watermelon).
The products are said to be prepared by refining imported cane sugar in Canada subsequent to mixing with with other ingredients, blending and packaging in 2,200-pound supersacks for import to the U.S. Upon importation, the products will be repackaged for retail sale in 16-gram sticks, packed 6 sticks per carton. The ultimate consumer will be directed to empty the contents of the stick into 16 ounces of cold water and mix thoroughly to create a flavored beverage.
Classification:
The applicable subheading for the hydration drink mixes if imported in quantities that fall within the limits described in additional U.S. note 8 to chapter 17, will be 2106.90.9500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for food preparations not elsewhere specified or included … other … other … articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17… described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions. The general rate of duty will be 10 percent ad valorem. If the quantitative limits of additional U.S. note 8 to chapter 17 have been reached, the product will be classified in subheading 2106.90.9700, HTSUS, and dutiable at the general rate of 28.8 cents per kilogram plus 8.5 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 the World Wide Web at https://hts.usitc.gov/current.
Country of Origin: 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. The "country of origin" is defined in 19 CFR 134.1(b) 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 or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.” Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. See 19 C.F.R. § 102.11. Applied in sequential order, 19 CFR Part 102.11(a) provides 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 Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. The subject merchandise is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, Sections 102.11(a)(1) and (a)(2) do not apply to the facts presented in this case because the drink mixes are neither wholly obtained nor produced exclusively from domestic materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). The subject merchandise is classified under 2106.90.9500, HTSUS, if imported in quantities that fall within the limits described in additional U.S. note 8 to chapter 17, or 2106.90.9700, HTSUS, if the quantitative limits of additional U.S. note 8 to chapter 17 have been reached. The applicable tariff shift requirement in Part 102.20 for the subject merchandise of subheading 2106.90, HTSUS, consists of the following: “A change to a good of subheading 2106.90, other than to compound alcoholic preparations, from any other subheading, except from Chapter 4, Chapter 17, heading 2009, subheading 1901.90 or subheading 2202.90; or a change to subheading 2106.90 from Chapter 4 or subheading 1901.90, provided that the good contains no more than 50 percent by weight of milk solids; or a change to subheading 2106.90 from Chapter 17, provided that the good contains less than 65 percent by dry weight of sugar; or a change to subheading 2106.90 from heading 2009 or subheading 2202.90, provided that a single juice ingredient of foreign origin, or juice ingredients from a single foreign country, constitute in single strength form no more than 60 percent by volume of the good; or a change to compound alcoholic preparations of subheading 2106.90 from any other subheading, except from subheading 2208.20 through 2208.50.” The hydration drink mixes contain the following non-originating ingredients that need to undergo the tariff shift: sugar (Brazil), dextrose (Mexico), citric acid (Thailand), potassium citrate (Israel), sodium citrate (Israel), dipotassium phosphate (Germany), ascorbic acid (China), and rebaudioside A (China). Because the non-originating materials contained in the subject merchandise are classified in subheadings outside of subheading 2106.90, except from Chapter 4, Chapter 17, heading 2009, subheading 1901.90 or subheading 2202.90, and the goods contain less than 65 percent by dry weight of sugar derived from sugar cane or sugar beets, the tariff shift rule in Part 102.20 is met. Therefore, in accordance with 19 C.F.R. § 102.11(a)(3), the country of origin of the hydration drink mixes for marking purposes is Canada.
USMCA:
The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11 of the HTSUS implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states:
For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
the good is a good produced entirely in the territory of one or more USMCA countries using non-originating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or
Since the hydration drink mixes contain non-originating ingredients, they are not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor is the product produced exclusively from originating materials per GN 11(b)(ii). Thus, we must determine whether the product qualifies under GN 11(b)(iii).
As previously noted, the product is classified under subheading 2106.90.9500, HTSUS, if imported in quantities that fall within the limits described in additional U.S. note 8 to chapter 17 or 2106.90.9700, HTSUS, if the quantitative limits of additional U.S. note 8 to chapter 17 have been reached. The applicable rule of origin for goods classified under subheading 2106.90.9500, and 2106.90.9700 HTSUS, is in GN 11(o)/21.15, HTSUS, which provides
“[a] change to heading 2106 from any other chapter.
In this case, the drink mixes contain the following non-originating ingredients that need to undergo the tariff shift: sugar (Brazil), dextrose (Mexico), citric acid (Thailand), potassium citrate (Israel), sodium citrate (Israel), dipotassium phosphate (Germany), ascorbic acid (China), and rebaudioside A (China). Since the non-originating ingredients in the products are all classified in a Chapter other than Chapter 21, HTSUS, the tariff shift rule is met. Therefore, the hydration drink mixes are an eligible good for preferential tariff treatment under the USMCA.
Accordingly, the hydration drink mixes, classified under subheading 2106.90.9500, HTSUS, if imported in quantities that fall within the limits described in additional U.S. note 8 to chapter 17 or 2106.90.9700, HTSUS, if the quantitative limits of additional U.S. note 8 to chapter 17 have been reached, are an originating good pursuant to GN 11(o).
However, we note that the special column for subheading 2106.90.97, HTSUS, references subheadings 9823.10.01-9823.10.45, HTSUS, for “S+.” U.S. Note 10 to Subchapter XXIII, HTSUS, which concerns sugar containing products pursuant to the USMCA, provides that:
This note and subheadings 9823.10.01 through 9823.10.45 are effective as to originating goods of the USMCA countries eligible for special tariff treatment under the terms of general note 11 to the tariff schedule provided for in subheadings … 2106.90.97 … except as provided in subparagraph (b)(3). From July 1, 2020, through December 31, 2020, in 2021 and in successive years thereafter, the rates of duty provided for in subheadings 9823.10.01 through 9823.10.45 in the “Special” subcolumn of rates of duty column 1 followed by the symbol “(S+)” shall apply to goods of such countries in lieu of the duty rates set forth in the special subcolumn in the permanent subheadings enumerated above.
U.S. Note 10(b) states that “[g]oods of Canada that qualify to be marked as a good of Canada pursuant to U.S. law, without regard to whether the good is marked shall be eligible for USMCA tariff treatment only under subheadings 9823.10.02 through 9823.10.45.” U.S. Note 10(b)(1) provides the quantitative limitations for goods entered under subheading 9823.10.02, HTSUS, which is a duty-free provision under the USMCA. Per U.S. Note 10(b)(2), if the quantitative limitations of paragraph 10(b)(1) are full, then such originating goods of Canada shall be entered under subheadings 9823.10.03 through 9823.10.45, HTSUS. Thus, as products of Canada, the subject drink mixes of subheading 2106.90.97, HTSUS, are eligible for preferential tariff treatment under the USMCA under subheading 9823.10.02, HTSUS, provided they meet the quantitative limits set forth in U.S. Note 10(b)(1). If the quantitative limitations set forth in U.S. Note 10(b)(1) have been reached, the drink mixes are to be entered under subheading 9823.10.45, HTSUS.
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 Timothy Petrulonis at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division