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NY F88652




July 7, 2000

CLA-2-18:RR:NC:SP:232 F88652

CATEGORY: CLASSIFICATION

TARIFF NO.: 1806.20.8100; 1806.20.8300

Mr. Nan Gold
Rafi Industries, Inc.
1700 Higgins Road, Suite 610
Des Plains, Illinois 60018

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a chocolate dairy product from Canada or Mexico; Article 509

Dear Mr. Gold:

In your letter dated June 13, 2000 you requested a ruling on the status of a chocolate dairy product from Canada or Mexico under the NAFTA. Your request also asks for the country of origin for marking purposes.

The subject merchandise will consist of 90 percent anhydrous milk fat and 10 percent chocolate liquor. The anhydrous milk fat will be of non-NAFTA origin. The cocoa liquor will be produced in the United States from non-NAFTA cocoa beans. The ingredients will be imported into Canada or Mexico where they will be blended, and then packaged in a frozen or liquid form in 50 pound boxes or in one ton tote boxes. The merchandise will be used as an ingredient in the confectionery industry.

The applicable subheading for the 90 percent anhydrous milk fat and 10 percent chocolate liquor product from Canada, if imported in quantities that fall within the limits described in additional U.S. note 10 to chapter 4, will be 1806.20.8100, Harmonized Tariff Schedule of the United States (HTS), which provides for Chocolate and other food preparations containing cocoa: Other preparations in blocks or slabs weighing more than 2 kg or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg: other...other...other: Dairy products described in additional U.S. note 1 to chapter 4...described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions. The rate of duty will be 10 percent ad valorem. If the quantitative limits of additional U.S. note 10 to chapter 4 have been reached, the product will be classified in subheading 1806.20.8300, HTS, and dutiable at the rate of 52.8 cents per kilogram plus 8.5 percent ad valorem. .

Each of the non-originating materials used to make the 90 percent anhydrous milk fat and chocolate liquor product have satisfied the changes in tariff classification required under HTSUSA General Note 12(t)/18. If classified under subheading 1806.20.8100, HTS, the merchandise will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

The applicable subheading for the 90 percent anhydrous milk fat and 10 percent chocolate liquor product from Mexico will be 1806.20.8300, Harmonized Tariff Schedule of the United States (HTS), which provides for Chocolate and other food preparations containing cocoa: Other preparations in blocks or slabs weighing more than 2 kg or in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg: other...other...other: Dairy products described in additional U.S. note 1 to chapter 4...otherother. The rate of duty will be 52.8 cents per kilogram plus 8.5 percent ad valorem. .

Each of the non-originating materials used to make the 90 percent anhydrous milk fat and chocolate liquor product have satisfied the changes in tariff classification required under HTSUSA General Note 12(t)/18, and will therefore be entitled to a free rate of duty if entered under the terms of general note 12 of the Harmonized Tariff Schedule of the United States, and imported in quantities that fall within the quantitative limits described in U.S. note 7 to subchapter 6 of chapter 99 HTS pursuant to subheading 9906.18.24. If the quantitative limits of U.S. note 7 to subchapter 6 of chapter 99 have been reached, and if the product is valued not over 59 cents per kilogram, it will be dutiable at the rate of 16.9 cents per kilogram in subheading 9906.18.25, HTS. If valued over 59 cents per kilogram, the rate of duty will be 28.4 percent ad valorem, pursuant to subheading 9906.18.26, HTS, upon compliance with all applicable laws, regulations, and agreements.

Your inquiry also requests a ruling on the country of origin marking requirements for an imported article which is processed in a NAFTA country prior to being imported into the U.S. A marked sample was not submitted with your letter for review.

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The marking requirements of these goods are set forth in Part 134, Customs Regulations.

Section 134.1(b) of the regulations, defines "country of origin" as
the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).

Section 134.1(j) of the regulations, provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.

You state that the imported 90 percent anhydrous milk fat and 10 percent chocolate liquor product is processed in a NAFTA country "Canada" or “Mexico” prior to being imported into the U.S. Since "Canada" and “Mexico” are defined under 19 CFR 134.1(g), as NAFTA countries, we must first apply the NAFTA Marking Rules in order to determine whether the imported product is a "good of a NAFTA country", and thus subject to the NAFTA marking requirements.

Part 102 of the regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes.

Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that, when produced in Canada, the imported 90 percent anhydrous milk fat and chocolate liquor product is a good of “Canada” for marking purposes, since the requirements of Section 102.11 (a) (3) have been satisfied.

Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that, when produced in Mexico, the imported 90 percent anhydrous milk fat and chocolate liquor product is a good of “Mexico” for marking purposes, since the requirements of Section 102.11 (a) (3) have been satisfied.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR Part 181).

This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party.

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist John Maria at 212-637-7059.

Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, U.S. Customs Service, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229.

Sincerely,

Robert B. Swierupski
Director,

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