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HQ 959492




August 13, 1996

CLA-2 RR:TC:FC 959492K

CATEGORY: CLASSIFICATION

TARIFF NO.: 2401.10.63; 2401.10.65

Peter Buck Feller, Esq.
Mc Kenna & Cuneo
1900 K. Street, N.W.
Washington, D.C. 20006

RE: Tobaccos and Tariff Rate Quota

Dear Mr. Feller:

This is in response to your request of July 19, 1996, on behalf of the Pipe Tobacco Council, for a ruling concerning the Tariff Rate Quota (TRQ) for tobaccos.

FACTS:

Leaf tobaccos from India will be imported to be used to manufacture cigarette tobaccos which will be packaged in pouches or cans for retail sale to permit the consumer to hand-roll cigarettes. The manufactured cigarette tobaccos may be in a kit which includes a roll or sheaf of cigarette paper. It is your position that the tobaccos as briefly described are not subject to TRQ. A meeting was requested and one was held at Customs Headquarters on July 30, 1996.

ISSUE:

The issue is whether the tobaccos described above are subject to the TRQ as outlined in Additional U.S. Note 5, Chapter 24, Harmonized Tariff Schedule of the United States (HTSUS).

LAW AND ANALYSIS:

Presidential Proclamation 6821, dated September 12, 1995, effective September 13, 1995, established a TRQ for certain tobaccos under actual use provisions. The Proclamation is incorporated by reference as part of this decision. For purposes of this decision, we will discuss subheadings 2401.10.61, 2401.10.63, and 2401.10.65, HTSUS. However, our response is equally applicable for other subheadings in Chapter 24 covered by the TRQ. The subheadings cover other unmanufactured flue-cured, burley and other light air-cured leaf tobaccos as follows:

Subheading 2401.10.61, to be used in products other than cigarettes (and excluded from the TRQ), dutiable at the general rate of 26.7›/kg

Subheading 2401.10.63, other (to be used in cigarettes and covered by TRQ) as described in Additional U.S.Note 5 to Chapter 24 and entered pursuant to its provisions, dutiable at the general rate of 26.7›/kg

Subheading 2401.10.65, other ( to be used in cigarettes but quantities exceed the TRQ), dutiable at the general rate of 350% ad valorem

Additional U.S. Rule of Interpretation 1.(b), HTSUS, provides that "a tariff classification controlled by the actual use to which the imported goods are put in the United States is satisfied only if such use is intended at the time of importation, the goods are so used and proof thereof is furnished within 3 years after the date the goods are entered". The declaration of the intended use at the time of importation and the certification of the actual use of the goods within 3 years after the date of entry, are the responsibilities of the importer. See sections 10.131-10.139, of the Customs Regulations.

It is argued that the ultimate consumer uses the cigarette tobaccos to make cigarettes, not the importer or the domestic manufacturer and therefor, the cigarette tobaccos and/or kits are not cigarette products. If we were to agree with this argument, we would have to conclude that the manufactured cigarette tobaccos are not used in cigarettes. It is conceded that the imported tobaccos will be processed into manufactured cigarette tobaccos and are dedicated for use and are used in cigarettes. The manufacturer has done all that is necessary for the consumer to finish the production of the cigarettes. It is similar to a producer who uses oranges to make concentrated orange juice and may then use it to make reconstituted orange juice for retail sale, or the producer may sell the concentrated orange juice in retail containers with instructions for the consumer to add prescribed amounts of water to finished the production of reconstituted single strength orange juice. We cannot say that oranges were not used to make the reconstituted orange juice. In the case before us, we cannot conclude that the imported tobaccos were not used in cigarettes.

We believe that the tariff is clear that tobaccos to be used in cigarettes are excluded from coverage in subheading 2401.10.61, HTSUS, and therefore are subject to Additional U.S. Note 5. There is nothing in Additional U.S. Note 5 or the Proclamation to indicate an intent to exclude cigarette kits from the TRQ.

HOLDING:

Imported flue-cured, burley and other light air-cured leaf tobaccos imported with the intent to manufacture cigarette tobaccos for retail sale to be used by the consumer to hand-roll cigarettes, are classified in subheading 2401.10.63, HTSUS, subject to quota pursuant to Additional U.S. Note 5, Chapter 24, and dutiable at the general rate of 26.7 cents per kg.

If the quota is filled, the tobaccos are classified in subheading 2401.10.65, HTSUS, dutiable at 350 percent ad valorem.

If the quota is filled at the time of importation, the tobaccos may be entered for warehouse (or a foreign trade zone) and held for withdrawal for consumption at the opening of the next quota period in accordance with section 132.5, of the Customs Regulations.

Sincerely,

John Durant, Director

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