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HQ 951741


September 15, 1992

CLA-2 CO:R:C:F 951741 ALS

CATEGORY: CLASSIFICATION

TARIFF NO.: 2001.90.3900, 2005.70.2560, 2005.90.5510, 2005.90.9500

Mr. Dennis Kovler
Import Manager
Mitsui Foods, Inc.
P. O. Box 825
Hackensack, New Jersey 07602

RE: Vegetables - Pepperoncini, Giardinera, and Olives in Preservative Solution

Dear Mr. Kovler:

This is in reference to your letter of April 29, 1992, regarding certain vegetables, the products of Spain, which are processed and repackaged in Canada. Since your original letter which was faxed to us was partially illegible, we requested a clear copy of your inquiry. Your response was received on May 7, 1992.

FACTS:

The products under consideration are pepperoncini, giardinera, and olives which are grown in Spain, shipped to Canada in 55 gallon drums and then processed and repackaged. The products are stated to be inedible at the time of importation into Canada. The pepperoncini, small whole green peppers, arrives in Canada in a liquid solution composed of water, salt (10-12 percent), vinegar (.5 - 1 percent acetic acid), and sulfur dioxide (500 - 1000ppm). In Canada, the peppers are washed in cold water for approximately 12 hours, and repackaged in plastic pouches in a new, hot brine, composed of water, salt (4.4 per- cent), vinegar (4 percent acetic acid), and preservative.

The Giardinera, mixture of vegetables, at the time of importation into Canada, is in a brine composed of water, salt (4- 6 percent), vinegar (.2 - 1 percent acetic acid), and sulfur dioxide (400-1000ppm). In Canada, the mixed vegetables are drained and washed in cold water until completely desalted, and packed in plastic pouches in a hot brine composed of salt (6.1 percent), vinegar (3.4 percent acetic acid), and preservative.

The olives (sliced and/or broken green olives) are imported into Canada in 55-gallon drums in a brine or water and salt (7-9 percent). In Canada, the olives are drained, washed with cold water, and repackaged in plastic pouches in a hot brine consisting of water, salt (8 percent), lactic acid (.8 percent), and preservative.

The repackaged products, which are ready for consumption and are sold to food service customers such as restaurants and pizza shops, have been prepared in such a manner as to assure a relatively long shelf life.

ISSUE:

1. How are the vegetables classified?

2. Are the products eligible for special treatment pursuant to the U.S. - Canada Free Trade Agreement (CFTA)?

LAW AND ANALYSIS:

Classification of merchandise under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) is governed by the General Rules of Interpretation (GRI's) taken in order. GRI 1 provides that the classification is determined first in accordance with the terms of the headings and any relative section and chapter notes. If GRI 1 fails to classify the goods and if the heading and legal notes do not otherwise require, the remaining GRI's are applied, taken in order.

In order to classify the products under consideration we must first determine whether they are prepared or preserved and, if so, the method by which that condition was accomplished. In this regard we noted that the pepperoncini and giardinera, in their condition as imported into the United States are in a solution of water, salt, vinegar and preservative. We also noted that the olives, at the time of importation into the United States, are in a solution of water, salt, lactic acid and - 3 -
preservative. Accordingly, the vegetables are prepared or preserved at the time of such importation.

We next considered the classification of the prepared or preserved vegetables. We noted that classification in either Chapter 7, HTSUSA, which includes edible vegetables, etc., and Chapter 20, which includes preparations of vegetables, depends on the method used to accomplish such preparation or preservation.

Legal Note 1(a) to Chapter 20, HTSUSA, specifies, as hereto pertinent, that vegetables prepared or preserved by the processing specified Chapter 7, HTSUSA, are not covered by the provisions of Chapter 20. We reviewed the various provisions of Chapter 7 as to the preparation or preservation procedures therein. Those provisions generally describe vegetables which are fresh, chilled, steamed or dried, but make no reference to the procedures utilized as to the subject vegetables. Reference is also made therein to vegetables provisionally preserved and unsuitable for immediate consumption.

In considering whether these vegetables would be considered as provisionally preserved we consulted the Explanatory Notes (EN) to the Harmonized System which represent the opinion of the tariff classification experts at the international level. The relative explanatory note (EN 07.11) specifies that vegetables which have been treated solely to ensure their provisional preservation during transport or storage prior to use are includable in heading 0711 of the Harmonized Tariff System provided they remain unsuitable for immediate consumption in that state. The EN excludes items which, in addition to having been provisionally preserved in brine, have also been specially treated (e.g., by soda solution, by lactic fermentation).

Although the information provided with the ruling request does not specify whether the products have been specially treated as previously discussed, we believe that the products have been so treated. Virtually all green Spanish olives are de-bittered by treatment with soda solution (lye) immediately after harvest, and subsequently immersed in salt brine, where lactic fermentation proceeds. This occurs prior to pitting and slicing.

The other products under consideration are the type of vegetables one might find on a vegetable condiment tray. This suggests that these products have undergone a fermentation process prior to placement in barrels of brine.

Accordingly, since all the vegetables have been specially treated in addition to being preserved in brine, the subject vegetables would not be classifiable in Chapter 7. They are classifiable in Chapter 20.

The vegetables, if considered to be prepared or preserved by vinegar or acetic acid, would be classifiable in heading 2001 and, if prepared or preserved by other than vinegar or acetic acid, would be classifiable in heading 2005.

It has been Customs practice to regard a product as prepared or preserved by vinegar or acetic acid when the acetic acid content in the equilibrated product is equal to or exceeds .5 percent, as determined by laboratory analysis. (See Headquarters Ruling Letter (HRL) 085838, dated December 21, 1989, and HRL 069121, dated May 20, 1983.)

If the samples of pepperoncini and giardinera are found to contain a vinegar or acetic acid of .5 percent or more, they would be classified in subheading 2001.90.3900, HTSUSA, as other vegetables prepared or preserved by vinegar or acetic acid. Since giardinera, a mixture of vegetables, is not specifically described by one of the named vegetables and since none of the vegetables in the relative subheading form the essential character of the mixture, giardinera is classifiable under the provision for "other vegetables, other".

If laboratory analysis indicates that the acetic acid content is less than .5 percent, the pepperoncini would be classified in subheading 2005.90.5510, HTSUSA, which provides for other vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen...other vegetables...fruits of the genus Capsicum (peppers)...other...sweet bell-type peppers. The giardinera, with less than .5 percent acetic acid, would be classified in subheading 2005.90.9500, HTSUSA, which provides for other vegetables prepared or preserved otherwise than by vinegar or acetic acid...mixtures of vegetables...other. (See New York Ruling Letter (NYRL) 862378).

We next considered whether the subject vegetables would qualify for special treatment under the provisions of the U. S. - Canada Free Trade Agreement (CFTA). In accordance with General Note 3(c)(vii)(B), HTSUSA, articles which are not wholly obtained or produced in the territory of Canada and/or the United States must be transformed in Canada and/or the United States in accordance with the provisions of General Note 3(c)(vii)(R). - 5 -

Section IV thereof, which covers Chapters 16 through 24 of the HTSUSA, as hereto pertinent, specifies in rule (aa) that there must have been a tariff classification change from one chapter to another, except for goods of chapter 20 subject to rule (ee), for merchandise to be eligible for special CFTA treatment. The referenced rule (ee) specifies that fruit, nut, and vegetable preparations of chapter 20 preserved in various ways, including packing in water, brine, etc., "shall be treated as a good of the country in which the fresh good was produced." In view of the foregoing, we do not believe that the vegetables under consideration meet the requirements for special treatment under the CFTA.

HOLDING:

Pepperoncini and Giardinera (vegetables) grown in Spain and repackaged in Canada in plastic pouches in hot brine composed of various percentages of water, salt, vinegar and preservative are classifiable in subheading 2001.90.3900, HTSUSA, if the acetic acid level of the products equals or exceeds .5 percent based on laboratory analysis. They would be subject to a general rate of duty of 12 percent ad valorem.

Pepperoncini, as noted above, is classifiable in subheading 2005.90.5510, HTSUSA, if the acetic acid content, as determined by laboratory analysis, is less that .5 percent. The general rate of duty for pepperoncini so classified is 17.5 percent ad valorem.

Giardinera, as noted above, is classifiable in subheading 2005.90.9500, HTSUSA, if the acetic acid content, as determined by laboratory analysis, is less than .5 percent. The general rate of duty for giardinera so classified is 17.5 percent ad valorem.

Olives grown in Spain and repackaged in Canada in plastic pouches in a hot brine composed of water, salt, lactic acid and preservative is classifiable in subheading 2005.70.2560, HTSUSA, if green in color and broken and/or sliced, and if in containers holding 8 kg. or less, drained weight. The general rate of duty for olives so classified is 10.8 cents/kg. on the drained weight.

Vegetables grown in Spain, packaged in a preservative solution in large containers which are repackaged in Canada in a - 6 -
new preservative solution and smaller containers, do not meet the requirements of General Note 3(c)(vii)(R)(4)(aa) or (ee) and are not eligible for special treatment under the U.S. - Canada Free Trade Agreement.

Sincerely,

John Durant, Director
Commercial Rulings Division

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