HQ 0950434 - Piloncillo brown sugar cane in 1701; Cane or beet sugar and chemically pure sucrose, in solid form; Agricultural import fees in 9904; Additional U.S. Note 3 to Chapter 17; Import Restrictions; GSP Eligibility - United States International Trade Commision Rulings

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HQ 950434

April 27, 1992

CLA-2 CO:R:C:F 950434 LPF

CATEGORY: CLASSIFICATION

TARIFF NO.: 1701.11.0125, 1701.11.0325, 9904.40.20

Mr. Froylan Sanchez
Operations Manager
Ingro, Inc.
1048 E. Burgrove St.
Carson, CA 90746

RE: Piloncillo brown sugar cane in 1701; Cane or beet sugar and chemically pure sucrose, in solid form; Agricultural import fees in 9904; Additional U.S. Note 3 to Chapter 17; Import Restrictions; GSP Eligibility

Dear Mr. Sanchez:

This is in response to your letter of September 24, 1991, submitted on behalf of Ingro, Inc. You request, in regard to Piloncillo brown sugar cane, the proper classification, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA), applicable import restrictions and eligibility for duty-free treatment, under the Generalized System of Preferences (GSP) (19 U.S.C. 2461-2466).

FACTS:

According to your letter of December 18, 1991, the product is produced when brown sugar cane molasses and water are cooked at 300 degrees, poured into molds and cooled for three minutes. The molds are opened and the product is cooled for an additional 45 minutes. The merchandise is packed in 25, 50 and 100 pound bags or boxes.

The Customs laboratory provides that the brown, truncated, cone-shaped piece of solid sugar cane has a sucrose content of 85.52 percent by weight, that is, 85.52 international sugar degrees. The laboratory indicates that the product is an unpurified sugar cane juice that has been boiled down to a solid state.

You explained by telephonic conversation on February 4, 1992, that the ingredients which compose the Piloncillo are from Mexico and the entire production process takes place in Mexico. In addition, you stated that you will import the product in its solid state without any further refining.

ISSUE:

Whether the Piloncillo is classifiable in heading 1701 as cane or beet sugar and chemically pure sucrose, in solid form, or in heading 1703 as molasses resulting from the extraction or refining of sugar, and whether it is subject to restrictions for importation and is eligible for duty-free treatment under the GSP.

LAW AND ANALYSIS:

Classification under the HTSUSA

The General Rules of Interpretation (GRI's) taken in their appropriate order provide a framework for classification of merchandise under the HTSUSA. The majority of imported goods are classified by application of GRI 1, that is, according to the terms of the headings of the tariff schedule and any relative section or chapter notes. The Explanatory Notes (EN's) to the Harmonized Commodity Description and Coding System, which represent the official interpretation of the tariff at the international level, facilitate classification under the HTSUSA by offering guidance in understanding the scope of the headings and GRI's.

Heading 1701 provides for cane or beet sugar and chemically pure sucrose, in solid form, while heading 1703 provides for molasses resulting from the extraction or refining of sugar. The EN's to 1701 provide, in pertinent part:

Cane sugar is derived from the juices of the sugar cane stalk. Beet sugar is derived from the juices obtained by extraction from the root of the sugar beet.

Raw or crude cane or beet sugars occur in the form of brown crystals, the colour being due to the presence of impurities. Their sucrose content by weight, in the dry state, corresponds to a polarimeter reading of less than 99.5 degrees.... They are generally destined for processing into refined sugar products. Raw sugar may, however, be of such a high degree of purity that it is suitable for human consumption without refining.

The EN's to 1703 provide, in pertinent part:

Molasses of this heading is obtained only as a result of the extraction or refining of sugar. It is most commonly obtained as a normal by-product resulting from the extraction or refining of beet or cane sugar or from the production of fructose from maize (corn).

The Customs laboratory analysis, in considering the inquirer's method of production, revealed that the process involves boiling down unpurified sugar cane juice to a solid state. The Piloncillo is not a by-product from the extraction or refining of the cane sugar and, thus, is classifiable in heading 1701.

The product's sucrose content by weight, 85.52 international sugar degrees, qualifies the Piloncillo as raw sugar. See Subheading Note 1 and Additional U.S. Note 1 to Chapter 17, HTSUSA, Sugar and Sugar Confectionery. In addition, since no flavoring or coloring matter is added to the product, it is classifiable, at the six digit level, in subheading 1701.11.

Insofar as the product is described in, and entered pursuant to, Additional U.S. Note 3(a) and 3(b) to Chapter 17 (Notes 3(a) and 3(b)) and is not further refined or improved in quality, it is classifiable in subheading 1701.11.0125. If the product is not entered pursuant to Notes 3(a) and 3(b), and is not further refined or improved in quality, it is classifiable in subheading 1701.11.0325.

Since neither title II of the Sugar Act of 1948, nor substantially equivalent legislation is presently in effect, the product remains subject to the currently applicable HTSUSA duty rates. See Additional U.S. Note 2 to Chapter 17.

Importation Restrictions

Certain requirements must be met in order for the product to be entered pursuant to Notes 3(a) and 3(b) and thus be classified in subheading 1701.11.0125.

Note 3(a) provides, in pertinent part, that the total amount of sugar entered under subheading 1701.11.01, shall not exceed, in the aggregate, an amount established by the Secretary of Agriculture (Secretary). This total amount consists of (1) a base quota amount, (2) a quota adjustment amount and (3) an amount reserved for the importation of specialty sugars. Modifications of such quantitative limitations and authorization to charge sugar entering the U.S. to a previous or subsequent quota period are subject to the Secretary's approval.

Note 3(b) explains, in pertinent part, that the base quota amount of sugar, imported from Mexico, and classifiable in subheading 1701.11.01, is allocated to the "Other specified countries and areas" category. This category designation permits 0.3 percent of the total base quota amount for certain sugars, syrups and molasses to be imported from the countries, including Mexico, falling under this category. However, the United States Trade Representative (USTR) may modify or suspend such amounts and may provide for minimum quota amounts to provide reasonable access to the U.S. for imports from the "Other specified countries and area" category. The USTR presently requires that certificates of eligibility accompany such imported sugar.

Eligibility for Duty-Free Treatment under the GSP

Under the GSP, eligible articles which are the growth, product or manufacture of a designated beneficiary developing country (BDC) and which are imported directly into the customs territory of the U.S. from a BDC may receive duty-free treatment if the sum of 1) the cost or value of materials produced in the BDC, plus 2) the direct costs of the processing operation in the BDC, is equivalent to at least 35% of the appraised value of the article at the time of entry. See 19 U.S.C. 2463(b).

Mexico is a BDC. See General Note 3(c)(ii)(A), HTSUSA. Since it appears the Piloncillo is completely the growth, product and manufacture of Mexico and will be imported directly into the U.S., if it is classifiable in 1701.11.0125 as discussed above, it will be eligible for duty-free treatment. However, if the product is classifiable in 1701.11.0325 it will not be GSP eligible.

HOLDING:

Piloncillo, entered pursuant to Notes 3(a) and 3(b), is classifiable in subheading 1701.11.0125 as "Cane or beet sugar and chemically pure sucrose, in solid form: Raw sugar not containing added flavoring or coloring matter: Cane sugar: Described in paragraphs (a) and (b) of additional U.S. note 3 to chapter 17 and entered pursuant to its provisions, Not to be further refined or improved in quality." Although the special column one rate of duty provides that the product is duty free if it qualifies for tariff preferences under the GSP, subheading 9904.40.20 provides that the product carries a supplemental agricultural import fee of 2.2 cents per kilogram, but not in excess of 50 percent.

Piloncillo, not entered pursuant to Notes 3(a) and 3(b), is classifiable in subheading 1701.11.0325 as "Cane or beet sugar and chemically pure sucrose, in solid form: Raw sugar not containing added flavoring or coloring matter: Cane sugar: Not to be further refined or improved in quality." The general column one rate of duty is 37.386 cents per kilogram less 0.529 cent per kilogram for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 24.161 cents. In addition, subheading 9904.40.20 provides that the product carries a supplemental agricultural import fee of 2.2 cents per kilogram, but not in excess of 50 percent.

In order to determine which, if any, quantitative limitations or regulations apply when importing your product, we suggest you contact:

Foreign Agricultural Service
U.S. Dept. of Agriculture-Room 5531
Import Policies & Trade Analysis Division Washington, D.C. 20250-1000
(202) 720-5676

Sincerely,

John Durant, Director
Commercial Rulings Division

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