CLA-2-21:OT:RR:NC:N2:228
Mr. David M. Murphy
GDLSK
599 Lexington Avenue 36th Floor
New York, NY 10022
RE: The tariff classification, country of origin marking and eligibility of the United States-Mexico-Canada Agreement (USMCA) of vegan cheese products from Canada.
Dear Mr. Murphy:
In your letter dated March 24, 2022, you requested a binding ruling on the tariff classification, country of origin marking and eligibility under the United States-Mexico-Canada Agreement (USMCA) of five varieties of vegan cheese products on behalf of your client, Upfield Europe BV and its affiliates.
An ingredients breakdown, narrative description of the manufacturing process and pictures of the product packaging accompanied your inquiry.
The subject merchandise consists of five products: “Just Like Cheddar For Shredding,” “Just Like Mozzarella For Shredding,” “Just Like Cheddar Block,” “Just Like Mature Cheddar Block,” and “Just Like Smoked Provolone Block.” The ingredients common to all are water (Canada), coconut oil (Philippines, Indonesia, Sweden, Netherlands), modified food starch (Denmark, Netherlands, Thailand), sea salt (USA), flavor (Hungary, Switzerland), olive extract (Spain), beta carotene (USA), and vitamin B12 (USA). Just Like Cheddar For Shredding, and Just Like Mozzarella For Shredding both also contain corn starch (Netherlands), while Just Like Cheddar For Shredding also contains paprika extract (India, China). Just Like Cheddar Block, Just Like Mature Cheddar Block, and Just Like Smoked Provolone Block also contain potato starch (Holland), while Just Like Cheddar Block also contains paprika extract (India, China).
All products are said to be prepared in Canada, in the same manner which begins with the various ingredients being mixed in precise proportions subsequent to being processed in special cookers that optimize the texture and quality of the products. Once the vegan cheese products are cooked, they undergo a molding process to create loaves and blocks.
Pictures of the product packaging depict that all products are marked in a similar manner. The labeling information identifies each product by name, describes them as “100% Vegan,” provides ingredient composition, nutritional facts, and the product weight (11 lbs.). Labeling information provided declares that the products are “Distributed by Upfield U.S. Inc. 433 Hackensack Ave, Hackensack, New Jersey 07602, e-mail: [email protected], Product of Canada.” Below this information is the statement “Keep Refrigerated. Perishable. Do not freeze.”
Classification:
The applicable subheading for the products, “Just Like Cheddar For Shredding,” “Just Like Mozzarella For Shredding,” “Just Like Cheddar Block,” “Just Like Mature Cheddar Block,” and “Just Like Smoked Provolone Block” will be 2106.90.9998, Harmonized Tariff Schedule of the United States (HTSUS), which provides for food preparations not elsewhere specified or included . . . other . . . other . . . other. The general rate of duty will be 6.4 percent ad valorem.
Country of Origin Marking:
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.
The "country of origin" is defined in 19 CFR 134.1(b) as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 the meaning of this part; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.”
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. See 19 C.F.R. § 102.11.
Applied in sequential order, 19 CFR Part 102.11(a) provides that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
The subject merchandise is neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, Sections 102.11(a)(1) and (a)(2) do not apply to the facts presented in this case because the vegan cheese products are neither wholly obtained nor produced exclusively from domestic materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). The subject merchandise is classified under subheading 2106.90.9998, HTSUS. The applicable tariff shift requirement in Part 102.20 for the subject merchandise of subheading 2106.90, HTSUS, consists 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; or A change to subheading 2106.90 from Chapter 4 or subheading 1901.90, provided that the good contains no more than 50 percent by weight of milk solids; or A change to subheading 2106.90 from Chapter 17, provided that the good contains less than 65 percent by dry weight of sugar; or A change to subheading 2106.90 from heading 2009 or subheading 2202.90, provided that a single juice ingredient of foreign origin, or juice ingredients from a single foreign country, constitute in single strength form no more than 60 percent by volume of the good; or A change to compound alcoholic preparations of subheading 2106.90 from any other subheading, except from subheading 2208.20 through 2208.50.”
The products, “Just Like Cheddar For Shredding,” “Just Like Mozzarella For Shredding,” “Just Like Cheddar Block,” “Just Like Mature Cheddar Block,” and “Just Like Smoked Provolone Block” contain the following non-originating ingredients that need to undergo the tariff shift: coconut oil (Philippines, Indonesia, Sweden, Netherlands), modified food starch (Denmark, Netherlands, Thailand), flavor (Hungary, Switzerland), olive extract (Spain), corn starch (Netherlands) paprika extract (India, China) and potato starch (Holland). Because the non-originating materials contained in the subject merchandise are classified in subheadings outside of subheading 2106.90, except from Chapter 4, Chapter 17, heading 2009, subheading 1901.90 or subheading 2202.90, the tariff shift rule in Part 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 products is Canada.
You have also requested a ruling on whether the proposed marking is acceptable. In addition to the proposed marking description from the pictures provided as detailed above, you state that the retail containers for the U.S. market of the vegan cheese products will be marked “Distributed by Upfield US Inc,” and “Product of Canada, Packaged In the USA” in close proximity and comparable size. The term, “Product of Canada” is acceptable country of origin marking. Additionally, since the proposed products are marked "Product of Canada" in close proximity to the U.S address on the labels, the proposed marking is acceptable as a result of the origin findings outlined above.
USMCA:
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—
the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries;
the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials;
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));
Since the vegan cheese products contain non-originating ingredients, they are not considered a good wholly obtained or produced entirely in a USMCA country under GN 11(b)(i), nor are the products 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 vegan cheese products are classified under subheading 2106.90.9998, HTSUS. The applicable rule of origin for goods classified under subheading 2106.90.9998, HTSUS, is in GN 11(o)/ 21.15, HTSUS, which provides “A change to heading 2106 from any other chapter.”
The products, “Just Like Cheddar For Shredding,” “Just Like Mozzarella For Shredding,” “Just Like Cheddar Block,” “Just Like Mature Cheddar Block,” and “Just Like Smoked Provolone Block” contain the following non-originating ingredients that need to undergo the tariff shift: coconut oil (Philippines, Indonesia, Sweden, Netherlands), modified food starch (Denmark, Netherlands, Thailand), flavor (Hungary, Switzerland), olive extract (Spain), corn starch (Netherlands) paprika extract (India, China) and potato starch (Holland). Since the non-originating ingredients in the subject merchandise are all classified in a Chapter other than heading 2106, HTSUS, the tariff shift rule is met. Therefore, the products “Just Like Cheddar For Shredding,” “Just Like Mozzarella For Shredding,” “Just Like Cheddar Block,” “Just Like Mature Cheddar Block,” and “Just Like Smoked Provolone Block” are eligible for preferential tariff treatment under the USMCA.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs and Border Protection field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
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 [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division