CLA-2-18:OT:RR:NC:N4:232
Michael E. Roll
Pisani & Roll LLP
Attorneys at Law
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 chocolate preparation product from Canada and Mexico; Article 509.
Dear Mr. Roll:
In your letter dated April, 27, 2017 on behalf of your client Rafi Industries, Inc., d/b/a/ Chicago Sweeteners, you requested a ruling on the status of a chocolate preparation product from Mexico and Canada under the NAFTA. The samples submitted will be returned to you as requested.
The subject merchandise is a chocolate preparation which consists of 94 percent skim milk powder of NAFTA (United States) or non NAFTA origin (New Zealand) (Heading 0402) and 6 percent chocolate liquor (Heading 1803) or chocolate powder (Heading 1805) both non NAFTA origin (Ivory Coast). In the alternative, the chocolate preparation will consist of either of the following:
Alternative Option 1: 94 percent skim milk powder (non-NAFTA) (HTSUS heading 0402)
6 percent chocolate liquor (non-NAFTA) (HTSUS heading 1803)
Alternative Option 2: 94 percent skim milk powder (non-NAFTA) (HTSUS heading 0402)
6 percent cocoa powder (non-NAFTA) (HTSUS heading 1805)
Alternative Option 3: 94 percent skim milk powder (NAFTA) (HTSUS heading 0402)
6 percent chocolate liquor (non-NAFTA) (HTSUS heading 1803)
Alternative Option 4: 94 percent skim milk powder (NAFTA) (HTSUS heading 0405)
6 percent cocoa powder (non-NAFTA) (HTSUS heading 1805)
The chocolate 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 50 lbs. bags or 2000 kgs. and will be used in the manufacturing of confectionery products as well as chocolate-based food items such as puddings and frozen desserts.
The applicable tariff provision for the 94 percent skim milk powder/6 percent chocolate liquor preparation, Alternative Options 1 and 3, and the 94 percent skim milk powder and 6 percent chocolate powder preparation, Alternative Options 2 and 4, if imported in quantities that fall within the limits described in additional U.S. note 10 to chapter 4, will be 1806.20.8100, Harmonized Tariff Schedule of the United States, Annotated, (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: Described in additional U.S. note 10 to chapter 4 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 10 to chapter 4 have been reached, the product will be classified in subheading 1806.20.8300, HTSUS, and dutiable at the rate of 52.8 cents per kilogram plus 8.5 percent ad valorem. In addition, products classified in subheading 1806.20.8300, HTSUS, will be subject to additional duties based on their value, as described in subheadings 9904.04.59 to 9904.04.66, HTSUS.
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.
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 preparation, when made in Mexico using 94 percent skim milk powder from the United States or New Zealand and 6 percent chocolate liquor or chocolate powder from the Ivory Coast, 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 preparations referred to as Alternative Option 1 to 4 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 chocolate preparations, Alternative Options 1 to 4, 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