HQ 0952419 - "A la Perruche" sugar chunks in 1701, HTSUSA; Cane or beet sugar and chemically pure sucrose, in solid form; Agricultural import fees in 9904, HTSUSA; Additional U.S. Note 3 to Chapter 17; Import restrictions; Substantial transformation - Country of origin; Texas Instruments; Superior Wire; HRL 082033. - United States International Trade Commision Rulings

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HQ 952419

October 15, 1992

CLA-2 CO:R:C:F 952419 LPF

CATEGORY: CLASSIFICATION

TARIFF NO.: 1701.11.0125, 1701.11.0325, 1701.99.0125, 1701.99.0225, 9904.40.20

Simeon M. Kreisberg, Esq.
Mayer, Brown & Platt
2000 Pennsylvania Avenue, NW
Washington, D.C. 20006-1885

RE: "A la Perruche" sugar chunks in 1701, HTSUSA; Cane or beet sugar and chemically pure sucrose, in solid form; Agricultural import fees in 9904, HTSUSA; Additional U.S. Note 3 to Chapter 17; Import restrictions; Substantial transformation - Country of origin; Texas Instruments; Superior Wire; HRL 082033.

Dear Mr. Kreisberg:

This is in response to your letter of August 14, 1992, submitted on behalf of Bri-Al, Inc. You request, in regard to "A la Perruche" sugar chunks, the proper classification, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) and a determination whether the refining of the sugar constitutes a substantial transformation.

FACTS:

The merchandise consists of brown and white irregular sugar chunks sold under the name "A la Perruche." According to your letter, a company in Paris, France imports raw cane sugar from Swaziland. In France, the raw sugar is refined through filtration, crystallization and maturation until the sugar agglomerates into bars. The brown sugar is produced by adding caramelized syrup made from the cane sugar during refining. The bars are broken into irregular lumps and are packaged into 17 and 35 ounce boxes, which are imported into the United States for sale to food service distributors. You state that the brown sugar has a polarity of 98.9 degrees and the white sugar has a polarity of 99.7 degrees. You also explain that the Department of Agriculture does not consider these products to be "Specialty Sugar" as defined in 15 CFR 2011.202 (j) (1992).

ISSUE:

Whether the sugar chunks are classifiable in heading 1701 as cane or beet sugar and chemically pure sucrose, in solid form, or are classifiable elsewhere in the HTSUSA, and whether the refining, in France, of raw sugar, from Swaziland, substantially transforms the sugar into a French product for duty and quota purposes.

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. Most 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. The EN's to 1701 provide, in pertinent part that, "cane sugar is derived from the juices of the sugar cane stalk." As the sugar chunks fit this description, they are classifiable in heading 1701.

At the six digit subheading level, 1701.11 provides for raw cane or beet sugar, not containing added flavoring or coloring matter, while 1701.99 provides for other cane or beet sugar. In this regard, the EN's to 1701 indicate that:

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 brown sugar chunk's sucrose content by weight, in the dry state, is 98.9 international sugar degrees, which indicates it is raw sugar. See Subheading Note 1 and Additional U.S. Note 1 to Chapter 17, HTSUSA, Sugar and Sugar Confectionery. Also, the addition of a dark or caramelized syrup to the brown sugar is
not considered an added coloring or flavoring since such sugar cane products are provided for in Chapter 17, and they are products commonly added to refined sugar in order to produce brown sugar. The product 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.

The white sugar chunk's sucrose content by weight, in the dry state, is 99.7 international sugar degrees, which indicates it is not raw sugar. Since the product does not contain added coloring or flavoring, it is classifiable, at the six digit level, in subheading 1701.99. 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 1701.99.0125. 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 1701.99.0225.

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

Country of Origin - Substantial Transformation

When addressing the issue of substantial transformation, we must question whether the refining operations performed on the sugar in the country of exportation, that is France, are of such a substantial nature as to justify the conclusion that the resulting product is a manufacture of that country. See Headquarters' Ruling Letter 082033, issued September 5, 1989. In general, a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United States, 69 CCPA 152, 681 F.2d 778 (1982); See also Superior Wire v. U.S., 11 CIT 608 (1987), 669 F. Supp. 472, aff'd. 867 F.2d 1409 (1989).

In HRL 082033, Customs determined that the refining of raw sugar would not substantially transform the product, since the refining process did not change the essential character of the raw sugar and make it into a new article with a new name, character, or use. Customs explained that:

[t]he refining process does not change the product's intended use, which is dictated by the very nature of the product--the raw sugar with its desired sucrose. The raw sugar already possesses the qualities sought after in sugar (its sweetness and nutriousness). These are not the result of the refining process. While the refining of sugar changes its color and increases its purity,...the refining process is not necessary to obtain its essential qualities. Refining cane sugar upgrades and purifies the sugar, but it does not change the essential character of the product.

In this case, since the refining of the raw sugar in France is not a substantial transformation, the sugar remains a product of Swaziland for country of origin and quota purposes.

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 or 1701.99.0125.

Note 3(a) provides, in pertinent part, that the total amount of sugar entered under subheading 1701.11.01 and 1701.99.01, 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 sugar imported from Swaziland, and classifiable in subheading 1701.11.01 or 1701.99.01, is allocated 1.6 percent of the total base quota amount for certain sugars, syrups and molasses to be imported from the various supplying countries and areas listed in Note 3(b)(i). The United States Trade Representative presently requires that certificates of eligibility accompany such imported sugar.

HOLDING:

"A la Perruche" brown sugar chunks, entered pursuant to Notes 3(a) and 3(b), and not to be further refined or improved in quality, are classifiable in subheading 1701.11.0125. The general column one rate of duty is 1.4606 cents per kilogram less O.020668 cents per kilogram for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 0.943854 cents.

If not entered pursuant to Notes 3(a) and 3(b), and not to be further refined or improved in quality, the brown sugar chunks are classifiable in subheading 1701.11.0325. The general column one rate of duty is 37.386 cents per kilogram less 0.529 cents per kilogram for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 24.161 cents per kilogram.

"A la Perruche" white sugar chunks, entered pursuant to Notes 3(a) and 3(b), and not to be further refined or improved in quality, are classifiable in subheading 1701.99.0125. The general column one rate of duty is 1.4606 cents per kilogram less 0.020668 cents per kilogram for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 0.943854 cents.

If not entered pursuant to Notes 3(a) and 3(b), and not to be further refined or improved in quality, the white sugar chunks are classifiable in subheading 1701.99.0225. The general column one rate of duty is 37.386 cents per kilogram less 0.529 cents per kilogram for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 24.161 cents per kilogram.

We note that a product, from Swaziland, classified in either 1701.11.0125 or 1701.99.0125 is eligible for duty free treatment under the Generalized System of Preferences (GSP), provided it meets the requirements of General Note 3(c)(ii), HTSUSA.

In addition, subheading 9904.40.20 provides that, in any event, 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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