CLA-2-21:OT:RR:NC:N2:228
Ms. Wendy Burns
Northern Customs Services Inc.
225 Old Falls Street
Niagara Falls, NY 14303
RE: The eligibility of preferential duty treatment under the Caribbean Basin Economic Recovery Act (CBERA) and the United States-Caribbean Basin Trade Partnership Act (CBTPA) of Belize-origin sauces from Canada
Dear Ms. Burns:
In your letter dated December 5, 2014, you requested a ruling on the eligibility of Belize-origin sauces from Canada under the CBERA or the CBTPA on behalf of Skjodt Barrett Foods Inc., Canada.
You state that Mild and Hot Habanero Pepper Sauces are wholly made in Belize and packed in 50 gallon drums in Belize. The drums will be shipped to the United States by steamship. Upon arrival in the United States, entry will be filed duty free under the appropriate preferential trade legislation program. The sauces will enter the commerce of the United States, and then in their entirety will be shipped via truck to the Skjodt Barrett Foods in Brampton, Ontario, Canada for repackaging from 50 gallon drums to 70 and 90 gram pouches. The plastic pouches are made in the USA and will be shipped to Canada separately for use in the repackaging. In Canada, the repackaging process includes pasteurizing the sauces, filling them in the pouches, passing pasteurization tunnel, cooling and drying. The sauces are not mixed with water or any other substance in Canada.
Skjodt Barrett Foods Inc. is a packager in Canada, not a purchaser of the Belize-origin Mild and Hot Habanero Pepper Sauces. An unnamed U.S. company is the purchaser of the sauces and contracts with Skjodt Barrett Foods Inc. to do the repackaging. The sauces in bulk will not enter Canada under bond. Skjodt Barrett Foods Inc. is not a Canada Customs bonded facility, nor is it located at a Foreign Trade Zone. The sauces will enter the commerce of Canada at the Skjodt Barrett Foods location. After the sauces are repackaged into pouches, they will be reimported into the United States destined to the original U.S. buyer for retail sale in the United States.
Your questions are whether the goods are still eligible for duty free treatment upon re-entry into the United States from Canada under the CBERA or CBTPA, and whether the operations performed in Canada disqualify the goods for duty free treatment under either of the trade programs.
Products of countries designated as beneficiary countries for purposes of the Caribbean Basin Economic Recovery Act (CBERA) are contained in General Note 7 of the Harmonized Tariff Schedule of the United States (HTSUS).
General Note 7 (a), HTSUS, states, in part:
The following countries and territories or successor political entities are designated beneficiary countries for the purposes of the CBERA, pursuant to section 212 of that Act (19 U.S.C. § 2702):
Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize ....
General Note 7 (b), HTSUS, sets forth the criteria for determining whether a good is eligible for duty-free treatment under the CBERA. General Note 7(b), HTSUS, (19 U.S.C. § 2703) states, in pertinent part, that
(b) (i) Unless otherwise excluded from eligibility by the provisions of subdivisions (d) or (e) of this note, any article which is the growth, product, or manufacture of a beneficiary country shall be eligible for duty-free treatment if that article is provided for in a subheading for which a rate of duty of "Free" appears in the "Special" sub column followed by the symbol "E" or "E*" in parentheses, and if--
(A) that article is imported directly from a beneficiary country into the customs territory of the United States; and
(B) the sum of (I) the cost or value of the materials produced in a beneficiary country or two or more beneficiary countries, plus (II) the direct costs of processing operations performed in a beneficiary country or countries is not less than 35 per centum of the appraised value of such article at the time it is entered. For purposes of determining the percentage referred to in (II) above, the term "beneficiary country" includes the Commonwealth of Puerto Rico, the United States Virgin Islands, and any former beneficiary country. The term “former beneficiary country” means a country that ceases to be designated as a beneficiary country under the Caribbean Basin Economic Recovery Act because the country has become a party to a free trade agreement with the United States. If the cost or value of materials produced in the customs territory of the United States (other than the Commonwealth of Puerto Rico) is included with respect to an article to which this note applies, an amount not to exceed 15 per centum of the appraised value of the article at the time it is entered that is attributed to such United States cost or value may be applied toward determining the percentage referred to in (II) above.
(C) For the purposes of this note, the former beneficiary countries are as follows:
El Salvador, Guatemala, Honduras, Nicaragua, Dominican Republic, Costa Rica, Panama
(ii) Pursuant to subsection 213(a)(2) of the CBERA, the Secretary of the Treasury shall prescribe such regulation as may be necessary to carry out this note including, but not limited to, regulations providing that, in order to be eligible for duty-free treatment under CBERA, an article must be wholly the growth, product, or manufacture of a beneficiary country, or must be a new or different article of commerce which has been grown, produced, or manufactured in the beneficiary country, and must be stated as such in a declaration by the appropriate party; but no article or material of a beneficiary country shall be eligible for such treatment by virtue of having merely undergone--
(A) simple combining or packaging operations, or
(B) mere dilution with water or mere dilution
For purposes of the CBERA, the words “imported directly” is defined in 19 C.F.R. § 10.193 as:
(a) Direct shipment from any beneficiary country to the U.S. without passing through the territory of any non-beneficiary country; or
(b) If the shipment is from any beneficiary country to the U.S. through the territory of any non-beneficiary country, the articles in the shipment do not enter into the commerce of any non-beneficiary country while en route to the U.S. and the invoices, bills of lading, and other shipping documents show the U.S. as the final destination; or
(c) If the shipment is from any beneficiary country to the U.S. through the territory of any non-beneficiary country, and the invoices and other documents do not show the U.S. as the final destination, the articles in the shipment upon arrival in the U.S. are imported directly only if they:
(1) Remained under the control of the customs authority of the intermediate country;
(2) Did not enter into the commerce of the intermediate country except for the purpose of sale other than at retail, and the port director is satisfied that the importation results from the original commercial transaction between the importer and the producer or the latter's sales agent; and
(3) Were not subjected to operations other than loading and unloading, and other activities necessary to preserve the articles in good condition.
As stated in General Note 7(a), HTSUS, Belize is a designated beneficiary country under the CBERA.
To determine whether an article will be eligible to receive preferential duty treatment under the CBERA, it must first be classified under a tariff provision for which a rate of duty of "Free" appears in the "Special" sub column followed by the symbol "E" or "E*." For the purposes of this ruling, we assume that the Mild and Hot Habanero Pepper Sauces are classified under subheading 2103.90.9091, HTSUS, which is a CBERA-eligible provision. Therefore, the sauces will receive preferential duty treatment if they are considered to be a "product of" Belize, the 35 percent value-content requirement is met, and they are "imported directly" into the U.S.
As you state that the pepper sauces are wholly made in Belize. When the sauces in drums are imported directly from Belize into the United States, they will be considered a “product of ” Belize, clearly satisfy the CBERA 35% value-content requirement, and meet the imported-directly requirement. They will receive duty-free treatment under the CBERA.
In the case of the sauces in their entirety (in drums) leave the commerce of the United States, enter the commerce of Canada for packaging into retail pouches, and then are re-imported into the United States, the repackaged sauces are not eligible for duty-free treatment under the CBERA because they are not imported directly from a beneficiary country into the United States without needing to further examine whether other requirements are met. Canada is not a designated CBERA beneficiary country and the reimported shipment fails to meet the imported-directly requirement as defined in 19 C.F.R. § 10.193.
In your letter, you also asked whether the repackaged sauces are also eligible for duty free treatment under the CBTPA.
The United States-Caribbean Basin Trade Partnership Act (CBTPA) provides certain specified trade benefits for countries of the Caribbean region. General Note 17 of the HTSUS implements the CBTPA. General Note 17 (a) states, in part,
The following countries have been determined by the USTR to have satisfied the customs requirements of the CBTPA and, therefore, to be afforded the tariff treatment provided for in this note:
Barbados, Belize, Guyana, Haiti, Jamaica, Saint Lucia, Trinidad and Tobago.
General Note 17 (b), HTSUS, sets forth the criteria for determining whether a good is eligible for duty-free treatment under the CBTPA. General Note 17(b), HTSUS, states, in pertinent part, that
(b) Except as provided in subdivision (d) of this note, articles provided for in a provision for which a rate of duty appears in the “Special” sub column followed by the symbol “R” in chapters 1 through 97 of the tariff schedule are those designated by the President to be eligible articles for purposes of the CBTPA pursuant to section 211 of that Act.
Belize is a designated beneficiary country under the CBTPA according to General Note 17 (a). However, the products are classified under subheading 2103.90.9091, HTSUS. There is not “R” shown for the provision. Thus, the sauces are not eligible under the CBTPA regardless of whether they are imported directly from Belize or reimported into the United States from Canada after repackaging.
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 ww.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 Bruce N. Hadley, Jr. at [email protected].
Sincerely,
Gwenn Klein Kirschner
Director
National Commodity Specialist Division