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HQ 959946

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March 25, 1997

CLA-2 RR:TC:FC 959946K

CATEGORY: CLASSIFICATION

TARIFF NO.: 2008.11.60

Mr. Roberto Castro Genera
Nuttis Closa , S.A. De C.V.
Campeche 674
Col. Independencia
Monterrey, N.L., Mexico

RE: Request For Tariff Classification Ruling for Peanuts Of U.S. Origin Further Processed In
Mexico and Returned; Peanut Snacks; Tariff Rate Quota

Dear Sir:

Your undated letter received on October 11, 1996, at the Office of the Director, National Commodity Specialist Division, New York, New York, requesting a tariff classification ruling concerning certain peanut products, has been referred to our office for a direct response. Our decision follows.

FACTS:

Raw peanuts of U.S. origin will be exported to a Mexican bonded warehouse. In the Mexican bonded warehouse, the peanuts will be deposited into a rotating coating machine where wheat flour and a sugar syrup are added. Once coated and dried, the peanuts are roasted and then coated with a flavoring such as lemon, chili, etc., and returned to the United States as various peanut snack products. Samples were submitted.

You requested exemptions from any tariff rate quotas under the Harmonized Tariff Schedule of the United States (HTSUS).

ISSUE:

The issue is what is the classification of the peanuts in there condition as imported into the United States and are there any exemptions from tariff rate quotas for this merchandise.

LAW AND ANALYSIS:

General Note, 2, HTSUS, defines the "term 'Customs Territory of the United States', as used in the tariff schedule, includes only the States, the District of Columbia and Puerto Rico". Section 101.1 of the Customs Regulations, defines, in part, the term "exportation" as meaning "a severance of goods from the mass of things belonging to this country with the intention of uniting them to the mass of things belonging to some foreign country." General Note 1, HTSUS, provides in part, with certain exceptions not applicable here, that "all goods provided for in this schedule and imported into the customs territory of the United States from outside thereof...are subject to duty or exempt therefrom..."

A Mexican bonded warehouse is not part of the customs territory of the United States. The peanuts exported from the United States to a Mexican bonded warehouse and there processed into roasted and flavored peanuts have merged with the mass of things belonging to a foreign country and the peanuts are subject to the tariff schedule upon importation into the customs territory of the United States. We have no authority to waive the provisions of the tariff schedule.

Heading 9801.00.10, HTSUS, provides for a general free rate of duty for products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. Raw U.S. peanuts as described above that are exported to a foreign country where they are roasted, flavored , and processed into finished peanut snacks are not eligible as products of the United States that are returned after being exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad.

Heading 2008, HTSUS (1997), provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included. Subheading 2008.11, HTSUS, at the six digit level, specifically provides for prepared or preserved peanuts (ground-nuts), whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included. Subheading 2008.11, has further breakouts at the eight digit levels, subheadings 2008.11.02 through subheadings 2008.11.60, containing tariff rate quotas for peanut butter and paste,
blanched peanuts, other prepared or preserved peanut products as follows:

RATES OF DUTY (1997)

General Special
Column 2
2008.11 Peanuts (ground-nuts):
Peanut butter and paste:
2008.11.02 Described in general note 15 of the tariff schedule and entered pursuant to its provisions....
0.6›/kg Free (E,IL,J,MX) 15›/kg
2008.11.05 Described in additional
U.S. note 5 to this chapter and entered pursuant to its provisions.....
0.6›/kg Free (E,IL,J) 15›/kg
1/ 2008.11.15 Other
2/....................... 143.4% 3.9›/kg (MX) 155%
Blanched peanuts:
2008.11.22 Described in general note 15 of the tariff schedule and entered pursuant to its provisions..... 6.6›/kg Free (E,IL,J,MX) 15›/kg 2008.11.25 Described in additional
U.S. note 2 to chapter 12 and entered pursuant to its provisions................. 6.6›/kg Free (E,IL,J) 15›/kg 2008.11.35 Other 3/....................... 143.4% See 9906.20.03- 155%

9906.20.05 (MX)
Other:
2008.11.42 Described in general note 15 of the tariff schedule and entered pursuant to its provisions.... 6.6›/kg Free (E,IL,J,MX) 15›/kg

2008.11.45 Described in additional
U.S. note 2 to chapter 12 and entered pursuant to its provisions................. 6.6›/kg Free (E,IL,J)

2008.11.60 Other 3/....................... 143.4% See 9906.20.03- 155%

9906.20.05 (MX)
1/ Rate suspended. See General Note 3(c)(iv). 2/ See subheadings 9904.20.01-9904.20.10. 3/ See subheadings 9904.12.01-9904.12.19.

The roasted and flavored peanuts, as imported, are classified as other peanut products prepared or preserved in subheadings 2008.11.45, HTSUS, a tariff rate quota provision as described in U.S. note 2, to Chapter 12 and entered pursuant to its provisions, or, 2008.11.60,

HTSUS, an over the tariff rate quota rate provision. See above. Additional U.S. Note 2(b) to Chapter 12, HTSUS, provides as follows.

The aggregate quantity of peanuts entered under subheadings 1202.10.40, 1202.20.40, 2008.11.25 and 2008.11.45 during the 12-month period from April 1 in any year through the following March 31, inclusive shall not exceed the quantities specified herein (articles the product of Mexico shall not be permitted or included under this quantitative limitation and no such articles shall be classifiable therein).

Quantity

Entered in the 12-month period from
April 1 in any year to the following March 31, inclusive

Argentina 29,853
Other countries or areas 5,043

The note specifically states that articles from Mexico shall not be permitted or included under the quantitative limitation and no such article shall be classified in subheading 2008.11.45, HTSUS. Accordingly, the prepared peanut products are classified in subheading 2008.11.60, HTSUS.

General Note 12(s)(I)(A) and (B), North American Free Trade Agreement, HTSUS, states as follows;
(s) Exceptions to Change in Tariff Classification Rules.

(I) Agricultural and horticultural goods grown in the territory of a NAFTA party shall be treated as originating in the territory of that party even if grown from seed, bulbs, rootstock, cuttings, slips or other live parts of plants imported from a non-party to the NAFTA, except that goods which are exported from the territory of Mexico and are provided for in--

(A) heading 1202, if the goods were not harvested in the territory of Mexico,

(B) subheading 2008.11, if any material provided for in heading 1202 used in the production of such goods was not harvested in the territory of Mexico, or

(C) tariff items 1806.10.43, 1806.10.45,
1806.10.55, 1806.10.65, 1806.10.75, 2106.90.42, 2106.90.44 or 2106.90.46, if any material provided for in subheading 1701.99 used in the production of such goods is not a qualifying good,
shall be treated as nonoriginating goods. The term "qualifying good" means an originating good that is an agricultural good, except that in determining whether such good is an originating good, operations performed in or materials obtained from Canada shall be
considered as if they were performed in or obtained from a non-party to the NAFTA. (Emphasis added.)

Accordingly, the peanut products do not qualify as originating goods for purposes of the special rate of duty for subheading 2008.11.60, HTSUS.

HOLDING:

Prepared roasted and flavored peanut products produced in Mexico with peanuts not harvested in Mexico, are classified as other prepared or preserved peanut products in subheading 2008.11.60, HTSUS, and subject to the 1997 general rate of duty of 143.4 percent ad valorem.

Sincerely,

John Durant, Director

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See also:

• Tariff No.: 1202.10.40 - Peanuts (ground-nuts), not roasted or cooked, in shell, subject to add. US note 2 to Ch.12
• Tariff No.: 1202.20.40 - Peanuts (ground-nuts), not roasted or cooked, shelled, subject to add. US note 2 to Ch.12
• Tariff No.: 1806.10.43 - Cocoa powder, o/90% by dry wt of sugar, subject to gen. note 15 of the HTS
• Tariff No.: 1806.10.45 - Cocoa powder, o/90% by dry wt of sugar, described in add US note 2 to Ch. 17: subject to add US note 7 to Ch. 17
• Tariff No.: 1806.10.55 - Cocoa powder, o/90% by dry wt of sugar, described in add US note 2 to Ch. 17: not subject to add US note 7 to Ch. 17
• Tariff No.: 1806.10.65 - Cocoa powder, o/90% by dry wt of sugar, neosi, subject to add. US note 1 to Ch. 18
• Tariff No.: 1806.10.75 - Cocoa powder, o/90% by dry wt of sugar, neosi
• Tariff No.: 2008.11.02 - Peanut butter and paste, subject to gen. note 15 of the HTS
• Tariff No.: 2008.11.05 - Peanut butter and paste, subject to add. US note 5 to Ch. 20, not GN15
• Tariff No.: 2008.11.15 - Peanut butter and paste, nesoi, not subject to gen note 15 or add US note 5 to Ch. 20
• Tariff No.: 2008.11.22 - Blanched peanuts, subject to gen. note 15 of the HTS
• Tariff No.: 2008.11.25 - Blanched peanuts, subject to add. US note 2 to Ch. 12, not GN15
• Tariff No.: 2008.11.35 - Blanched peanuts, nesoi, not subject to gen note 15 or add US note 2 to Ch. 12
• Tariff No.: 2008.11.42 - Peanuts, otherwise prepared or preserved, nesoi, subject to gen. note 15 of the HTS
• Tariff No.: 2008.11.45 - Peanuts, otherwise prepared or preserved, nesoi, subject to add. US note 2 to chap. 12, not GN15
• Tariff No.: 2008.11.60 - Peanuts, otherwise prepared or preserved, nesoi, not subject to gen note 15 or add US note 2 to Ch. 12
• Tariff No.: 2106.90.42 - Syrups from cane/beet sugar, neosi, w/added coloring but not added flavoring, subject to gen. note 15 of the HTS
• Tariff No.: 2106.90.44 - Syrups from cane/beet sugar, neosi, w/added coloring but not added flavoring, subject to add US note 5 to Ch. 17, not GN15
• Tariff No.: 2106.90.46 - Syrups from cane/beet sugar, neosi, w/added coloring but not added flavoring, not subject to gen note 15 or add US note 5 to Ch. 17
• Tariff No.: 9801.00.10 - U.S. goods returned without having been advanced in value or improved in condition while abroad
• Tariff No.: 9904.12.01 - Peanuts, in shell, in 1202.10.80, entered in value safeguard period, under $0.05/kg
• Tariff No.: 9904.12.19 - Peanuts, other, in 1202.20.80, 2008.11.35 & 2008.11.60, entered in quantity safeguard period
• Tariff No.: 9904.20.01 - Peanut butter and paste, in 2008.11.15, entered in value safeguard period, under $0.05/kg
• Tariff No.: 9904.20.10 - Peanut butter and paste, in 2008.11.15, entered in quantity safeguard period
• Tariff No.: 9906.20.03 - Mexico goods: Fruits, nuts and other edible parts of plants, prepared/preserved, in 2008.11.35 & .60, within quota, in nt.16
• Tariff No.: 9906.20.05 - Mexico goods: Fruits, nuts and other edible parts of plants, prepared/preserved, in 2008.11.35 & .60, other, other