CLA-2-18:OT:RR:NC:N4:232
Mr. Michael E. Roll
Pisani & Roll LLP
1875 Century Park East, Suite 600
Los Angeles, CA 90067
RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a chocolate butter preparation from Mexico; Article 509
Dear Mr. Roll:
In your letter dated August 1, 2016, on behalf of your client Rafi Industries, Inc., d/b/a/ Chicago Sweeteners, you requested a ruling on the status of a chocolate butter preparation from Mexico under the NAFTA.
The subject merchandise is a chocolate butter preparation which consists of 99 percent salted dairy butter of non-NAFTA origin (e.g. Australia, Chile, New Zealand or of European Union origin) (HTSUS heading 0405) and 1 percent chocolate liquor, also not of NAFTA origin (e.g. Indonesia or the Ivory Coast) (HTSUS heading 1803). In the alternative, the chocolate butter preparation will consist of either of the following:
Alternative Option 1: 99 percent salted dairy butter (non-NAFTA) (HTSUS heading 0405)
0.5 percent chocolate liquor (non-NAFTA) (HTSUS heading 1803)
0.5 percent lecithin (non-NAFTA) (HTSUS heading 2923)
Alternative Option 2: 99 percent salted butter (non-NAFTA) (HTSUS heading 0405)
0.5 percent cocoa powder (non-NAFTA) (HTSUS heading 1805)
0.5 percent lecithin (non-NAFTA) (HTSUS heading 2923)
The chocolate butter preparation will be manufactured in Mexico by blending the ingredients to the final required composition as indicated above. The product will be imported into the United States in bulk packaging weighing over 2 kilograms and will be used in the manufacturing of chocolate confectionery products as well as chocolate-based food items such as chocolate filling, chocolate creams, caramels and desserts.
The applicable tariff provision for the 99 percent salted dairy butter/1 percent chocolate preparation, Alternative Option 1 preparation (99 percent salted dairy butter/0.5 percent chocolate liquor/0.5 percent lecithin) and Alternative Option 2 preparation (99 percent salted dairy butter/0.5 percent cocoa powder/0.5 percent lecithin) will be 1806.20.8300, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Chocolate and other food preparations containing cocoa: Other preparations in blocks or slabs weighing more than 2 kg or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg: other...other...other: Dairy products described in additional U.S. note 1 to chapter 4...other…other. The general rate of duty will be 52.8 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 World Wide Web at https://hts.usitc.gov/current.
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
(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because--
(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or
(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.
Based on the facts provided, the chocolate butter preparation, when made in Mexico using 99 percent salted dairy butter from Australia, Chile, New Zealand or the European Union and 1 percent chocolate liquor from the Ivory Coast or Indonesia, the goods described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(ii)(A) and General Note 12 (t) 18.4. It will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
The chocolate butter preparations referred to as Alternative Option 1 and 2 will qualify for NAFTA preferential treatment, because all of the non-originating ingredients will meet the requirements of HTSUS General Note 12(b)(ii)(A) and General Note 12(t)/18.4. They will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.
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 134.1(b) of the regulations, defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added). Section 134.1(j) of the regulations, provides that the “NAFTA Marking Rules” are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. 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. 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. Part 102 of the regulations, sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.
Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the three imported chocolate butter preparations are goods of Mexico for marking purposes. 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 181 of the Customs Regulations (19 C.F.R. 181).
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 Frank Troise at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division