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NY I84449




July 29, 2002

CLA-2-04:RR:NC:2:231 I84449

CATEGORY: CLASSIFICATION

TARIFF NO.: 0402.29.1000; 0402.29.5000

Mr. Clark Bien
Streamline Foods, Inc.
6018 West Maple Road, Suite 888
West Bloomfield, MI 48322-4404

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of a powdered skim milk blend manufactured in Canada from milk powder of Australian, Canadian, or Danish origin; Article 509

Dear Mr. Bien:

In your letter, dated June 24, 2002, you requested a ruling on the status of a powdered skim milk blend manufactured in Canada from milk powder of Australian, Canadian, or Danish origin under the NAFTA.

The merchandise is a mixture of skim milk powder and sugar (sucrose). The ingredients are 95 percent skim milk powder and 5 percent granulated sugar. The skim milk powder contains 1.8 - 3.0 percent butterfat.

During the manufacturing process the ingredients will be blended in mechanical ribbon blenders. The products will be imported in one ton super sacks and/or 50 pound or 25 kilogram paper bags.

In your correspondence you indicate that the product will be manufactured in Canada from milk powder of Australian, Canadian, or Danish origin. The sugar will be sourced from Australia or the Dominican Republic.

This mix will be sold in the United States either in its condition as imported or it will be mixed with other ingredients and/or processed, packaged, and resold. The product is an ingredient in the further manufacture of a variety of food products, including breakfast cereal, baked goods, drink mixes, and other dairy products.

The applicable subheading for the powdered skim milk blend, if entered under quota, will be 0402.29.1000, Harmonized Tariff Schedule of the United States (HTS), which provides for milk and cream, concentrated or containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 percent, other, described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions. The general rate of duty will be 17.5 percent ad valorem.

The applicable subheading for the powdered skim milk blend, if entered outside the quota, will be 0402.29.5000, HTS, which provides for milk and cream, concentrated or containing added sugar or other sweetening matter, in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 percent, other, other. The rate of duty will be $1.104 per kilogram, plus 14.9 percent ad valorem. In addition, the powdered skim milk blend, when classified in subheading 0402.29.5000, HTS, and made in Canada using skim milk powder of non-Canadian origin, will be subject to additional safeguard duties based on their value, as described in subheadings 9904.04.50 to 9904.05.01, HTS. U.S. Note 1, subchapter IV in chapter 99 states, “Goods of Canada or Mexico imported into the United States shall not be subject to any of the provisions, duties or limitations of this subchapter.” Accordingly, if the powdered skim milk blend is made in Canada using skim milk powder of Canadian origin, the safeguard duties will not apply.

Products manufactured from Canadian milk powder and sugar from Australia or the Dominican Republic qualify for preferential treatment under the NAFTA because each of the non-originating materials used to make the skim milk blend has satisfied the changes in tariff classification required under HTSUSA General Note 12(t)/4. Upon compliance with all applicable laws, regulations, and agreements under the NAFTA, products manufactured from Canadian milk powder, if imported in quantities that fall within the limits described in additional U.S. note 10 to chapter 4, will be subject to a free rate of duty. If the quantitative limits of additional U.S. note 10 to chapter 4 have been reached, the products will be classified in subheading 0402.29.5000, HTS, and will be dutiable at $1.104 per kilogram, plus 14.9 percent ad valorem.

Products manufactured from Australian or Danish milk powder do not qualify for preferential treatment under the NAFTA because one or more of the non-originating materials (the milk powder) used in the production of the goods will not undergo the change in tariff classification required by General Note 12(t)/4. Accordingly, the mixes are not considered to be Canadian products, but rather, of the same origin as their principal ingredient, the milk powder.

Importations of milk and milk products are subject to import regulations administered by various U.S. agencies. Requests for information regarding applicable regulations administered by the U.S. Food and Drug Administration may be addressed to that agency at the following location:

Food and Drug Administration
Division of Import Operations and Policy
5600 Fishers Lane
Rockville, MD 20857

Requests for information regarding applicable regulations administered by the U.S. Department of Agriculture may be addressed to that agency at the following location:

A.P.H.I.S., Veterinary Services
Federal Building, Room 756
6505 Belcrest Road
Hyattsville, MD 20782

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR 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 Thomas Brady at (646) 733-3030.

Sincerely,

Robert B. Swierupski
Director

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