Mr. Ralph Natale
American Shipping Company, Inc.
140 Sylvan Avenue
Englewood Cliffs, NJ 07632
RE: The tariff classification of shelled hazelnuts from China.
Dear Mr. Natale:
In your letter dated November 5, 2004, you requested a tariff classification ruling on behalf of your client, the American Pistachio Co, d/b/a Sunrise Commodities of Englewood Cliffs, NJ.
The goods at issue consist of hazelnuts of U.S. origin that will be shipped to China, where they will be shelled and, then, packaged in either bulk or retail containers. The shelled hazelnuts will be re-exported to the United States. You ask whether these nuts will be considered as products of China or of the United States, and whether they will be eligible for entry as U.S. goods, returned after being processed abroad.
Regarding the country of origin of the shelled nuts, we believe that these hazelnuts are similar to certain green pistachio nuts of U.S. origin that were exported to Hong Kong for cracking and then returned to the United States. In addressing the issue of country of origin marking for these pistachios, Headquarters ruling letter of April 12, 1989, (File number 555246), noted that
“Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304) provides, in general, that all articles of foreign origin imported into the U.S. shall be legibly and conspicuously marked to indicate the country of origin to an ultimate purchaser in the U.S. U.S. products exported and returned are specifically excepted from country of origin marking requirements under section 134.32(m), Customs Regulations (19 CFR 134.32(m)). In applying this section, Customs has ruled that products of the U.S. which are exported for further processing and subsequently returned, are generally not subject to country of origin marking upon importation into the U.S., unless the further processing in the foreign country constituted a substantial transformation of the product. See, e.g., C.S.D. 80-15; C.S.D. 79-443.”
The ruling concluded that the cracking of the pistachio shells “is a necessary step to which all pistachio nuts, intended for any commercial use, are subjected, therefore, the nuts remain products of the U.S. and are not subject to the requirements of the marking statute, 19. U.S.C. 1304.” Similarly, we find that the shelling of the instant hazelnuts does not change the fundamental character of the nut or result in a new and different commercial article of commerce. Moreover, it is a necessary step to which all hazelnuts, intended for commercial use, are subjected. Accordingly, these hazelnuts will remain products of the United States for purposes of marking, country of origin.
With regard to the question as to whether the shelling of these hazelnuts qualifies for a partial exemption from duty under subheading 9802.00.50, HTSUS, as U.S. goods being returned after processing abroad, similar products have also been the subjects of prior rulings. For instance, in a ruling dated May 25, 1988, (File Number HQ 554834), Customs held that a foreign shelling process, which consisted of hand picking pecan meat pieces from nut shells of U.S. origin, constituted an operation that exceeded a repair or alteration. In explaining its rationale, the ruling cited the Court’s decision in Doliff and Company, Inc. v. United States, 66 CCPA 77, C.A.D. (1979), noting that “[t]reatment under subheading 9802.00.50, HTSUS, is also precluded there the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles.” The shelling of the pecan pieces was a held to be a necessary step in the preparation of the pecan nuts as finished articles. Similarly, we believe that the shelling of the instant nuts is a necessary step in their preparation as finished articles. Accordingly, the returned, shelled hazelnuts will not qualify for a partial exemption from duty as U.S. goods, returned after processing abroad.
The applicable subheading for the shelled hazelnuts will be 0802.22.0000, Harmonized Tariff Schedule of the United States (HTS), which provides for Hazelnuts or filberts (Corylus spp.):...Shelled. The rate of duty will be 26.5 cents/kg.
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 Thomas P. Brady at 646-733-3030.
Robert B. Swierupski