Ms. Marie-Helene Roy
Concept Gourmet du Village ULC
539 Chemin du Village
Morin-Heights, QC J0R 1H0
RE: The tariff classification, marking, and eligibility of the United States-Mexico-Canada Agreement (USMCA) of a beverage mix from Canada
Dear Ms. Roy:
In your letter dated June 10, 2021, you requested a binding ruling on the tariff classification, marking, and United States-Mexico-Canada Agreement (USMCA) eligibility for the product, "White Hot Chocolate." An ingredients breakdown, manufacturing flowchart, and a sample of the product accompanied your inquiry. The sample was examined and discarded.
The subject merchandise, "White Hot Chocolate" is described as a powder that is said to contain approximately 46 percent sugar derived from sugar cane (Product of Brazil), 25 percent modified milk ingredients which include whey protein concentrate, dairy product solids and sodium caseinate (Product of Canada), 10 percent corn syrup solids (Product of USA), 4 percent mono and di-glycerides (Product of USA), 2 percent coconut oil (Product of USA), 2 percent dipotassium phosphate (Product of USA), 2 percent silicon dioxide (Product of USA), 2 percent turmeric (Product of USA), 2 percent annatto (Product of USA), 2 percent modified cellulose gum/guar gum (Product of USA), 2 percent salt (Product of Canada), and 1 percent flavor (Product of Canada). All ingredients are received, blended and filled into 35-gram pouches in Canada. These individual pouches are then packaged in cardboard boxes of 24 units each and will be sold individually to the end-consumer. Directions on the product label instruct the consumer to add hot water or milk to make the product.
In your letter, you suggested that the product may be classified under subheading 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. Based on the composition of the ingredients and our examination of the sample, the product will be classified elsewhere.
The applicable subheading for the product, "White Hot Chocolate" will be 2106.90.8200, HTSUS, which provides for food preparations not elsewhere specified or included ... other ... other ... containing over 10 percent by weight of milk solids ... other ... other. The general rate of duty will be 6.4 percent ad valorem.
Country of Origin Marking:
The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940).
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. Applied in sequential order, the required hierarchy establishes that:
The country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced;
(a)(2) The good is produced exclusively from domestic materials; or
(a)(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 requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case as the product is neither wholly obtained nor produced exclusively from "domestic" materials. Accordingly, we look to section 102.11(a)(3). The applicable tariff shift requirement in section 102.20 for the product of subheading 2106.90, HTSUS, consist 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; A change to subheading 2106.90 from Chapter 17, provided that the good contains less than 65 percent by dry weight of sugar.
Because the foreign material (sugar) is classified in Chapter 17, HTSUS, the product must contain less than 65 percent by dry weight of sugar to satisfy the tariff shift requirement. Based on the information provided, the dry weight of sugar contained in the product is approximately 46 percent. Accordingly, the tariff shift rule set forth in 19 C.F.R. 102.20 is met. Therefore, in accordance with 19 C.F.R. 102.11(a)(3), the country of origin for marking purposes of the product is Canada.
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-
i) the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
ii) the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
iii) 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 product, "White Hot Chocolate" contains non-originating ingredients, it is 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 2106.90.8200, HTSUS. The applicable rule of origin for goods classified under subheading 2106.90.8200, HTSUS, is in GN 11(o)/21.12, HTSUS, which provides "[a] change to tariff items 2106.90.03, 2106.90.06, 2106.90.09, 2106.90.22, 2106.90.24, 2106.90.26, 2106.90.28, 2106.90.62, 2106.90.64, 2106.90.66, 2106.90.68, 2106.90.72, 2106.90.74, 2106.90.76, 2106.90.78, 2106.90.80 or 2106.90.82 from any other chapter, except from chapter 4 or tariff items 1901.90.32, 1901.90.33, 1901.90.34, 1901.90.36, 1901.90.38, 1901.90.42 or 1901.90.43.
In this case, the product contains the following non-originating ingredients that need to undergo the tariff shift: sugar from Brazil. Since the non-originating ingredient, the sugar, is classified in a chapter other than from chapter 4 or tariff items 1901.90.32, 1901.90.33, 1901.90.34, 1901.90.36, 1901.90.38, 1901.90.42 or 1901.90.43, the tariff shift rule is met. Accordingly, the product, "White Hot Chocolate," classified under subheading 2106.90.8200, HTSUS, is an originating good pursuant to GN 11(o).
Thus, the "White Hot Chocolate" is eligible for preferential tariff treatment under the USMCA.
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.
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 Timothy.Petrulonis@cbp.dhs.gov.
Steven A. Mack
National Commodity Specialist Division