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HQ 562610




March 19, 2003

CLA-2 RR:CR:SM 562610 ALH

CATEGORY: CLASSIFICATION

TARIFF NO.: 2106.90.5400

Mr. James Jagger

Dip. Eng., Certified Customs Specialist
Affiliated Customs Broker Ltd.
500 Carlingview Drive
Etobicoke, ON., Canada, M9W 5R3

RE: Advance Ruling Request for Tariff Classification and Applicability of NAFTA Preferential Tariff Treatment for a Concentrated and Fortified Mixture of Juices, Orange Blend

Dear Mr. Jagger:

This is in response to your undated letter received on December 18, 2002, on behalf of Vitality Foodservice Canada Co. (“Vitality”). In your letter, you requested an advance ruling regarding the tariff classification and applicability of the North American Free Trade Agreement (“NAFTA”) preferential tariff treatment for a product of concentrated and fortified mixture of juices referred to as Orange Blend.

FACTS:

Vitality is headquartered in Surrey, British Columbia, Canada. The product at issue is a blend (by volume) of 52 percent orange juice concentrate (65 Brix), 31 percent apple juice concentrate (70 Brix), 16 percent water, and less than one percent each of orange oil, orange aroma, ascorbic acid, sodium benzoate, and potassium sorbate. The orange juice concentrate, orange oil, and orange aroma are products of the United States. The apple juice concentrate is a product of Germany, the water is of Canadian origin, and the ascorbic acid, sodium benzoate, and potassium sorbate are products of China. In Canada, all ingredients are combined according to a prescribed formula, pasteurized, and packaged. The imported blend has a Brix of 58.1.

ISSUES:

What is the correct tariff classification for the imported orange blend?

Whether the orange blend is an “originating good” under the NAFTA and therefore eligible for the preferential rate of duty.

LAW AND ANALYSIS:

Tariff Classification

The General Rules of Interpretation (GRI) set forth the manner in which merchandise is to be classified under the Harmonized Tariff Schedule of the United States (“HTSUS”). GRI 1 requires that classification be determined first according to the terms of the headings of the tariff and any relative section or chapter notes and, unless otherwise required, according to the remaining GRIs, taken in order.

The Harmonized Commodity Description and Coding System Explanatory Notes (ENs) constitute the official interpretation of the Harmonized System at the international level. While not legally binding, the ENs provide a commentary on the scope of each heading of the HTSUS and thus are useful in ascertaining the classification of merchandise under the System. Customs believes the ENs should always be consulted.

The product at issue in this case contains the following ingredients displayed with their respective tariff classifications, which you provided in your submission.

Water (2201.90, HTSUS)
Sodium Benzoate (2916.31, HTSUS)
Potassium Sorbate (2916.19, HTSUS)
Orange Concentrate (2009.11, HTSUS)
Apple concentrate (2009.79, HTSUS)
Orange aroma (3301.12, HTSUS)
Orange oil (3302.10, HTSUS)
Ascorbic acid (2936.27, HTSUS)

Orange Blend is a concentrated mixture of orange and apple juices. However, to compensate for the low vitamin C content of the apple juice, the manufacturer has added a measure of vitamin C (“ascorbic acid”) to the blended juices. Fruit juices and vegetable juices not fortified with vitamins or minerals, unfermented and not containing added spirit, whether or not containing added sugar or other sweetening matter are classified under heading 2009, HTSUS. The ENs for heading 2009, HTSUS, state, in pertinent part:

...the heading excludes fruit juices in which one of the constituents (citric acid, essential oil extracted from the fruit, etc.) has been added in such quantity that the balance of the different constituents as found in the natural juice is clearly upset; in such case the product has lost its original character.

With the addition of the ascorbic acid, sodium benzoate, and potassium sorbate, the Orange Blend is excluded from heading 2009, HTSUS. The proper classification for Orange Blend would be under subheading 2106.90.5400, HTSUS, food preparations not elsewhere specified or included, other, fruit or vegetable juices, fortified with vitamins or minerals, mixtures of juices.

NAFTA Preferential Tariff Treatment

In order to qualify for the NAFTA preferential tariff treatment, the good must “originate” as defined in Article 401 of the NAFTA. General Note 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. General Note 12(a)(i) provides, in pertinent part:

Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note –

(i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Agreement Implementation Act.

Accordingly, the Orange Blend product will be eligible for the “Special” “CA” rate of duty provided it is a NAFTA “originating” good under General Note 12(b), HTSUS, and qualifies to be marked as a product of Canada under the marking rules.

With respect to the “originating” requirement, General Note 12(b), HTSUS, provides, in pertinent part:

(b) For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if --

(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that --
except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or

(iii) they are goods produced entirely in the territory of Canada, Mexico, and/or the United States exclusively from originating materials; or...

Since the Orange Blend product is not “wholly obtained or produced entirely in” a NAFTA country, or “produced entirely in...[a NAFTA country]...exclusively from originating materials,” it will qualify as an originating good only if the finished product has been transformed in Canada such that the non-originating ingredients undergo the applicable change in tariff classification pursuant to GN 12(b)(ii)(A). If the ingredients from China and Germany undergo the applicable change in tariff classification, then the finished product may qualify as an originating good and be eligible for NAFTA preferential tariff treatment.

You advise that the non-originating ingredients are classified under the HTSUS as follows: sodium benzoate (2916.31, HTSUS); potassium sorbate (2916.19, HTSUS); apple concentrate (2009.79, HTSUS); and, ascorbic acid (2936.27, HTSUS). The Orange Blend is classified under subheading 2106.90.5400, HTSUS. For purposes of this ruling, we are assuming the correctness of these classifications. The tariff shift rule set forth in GN 12(t)/21.11 states:

A change to tariff item 2106.90.54 from any other chapter, except from heading 2009 or tariff item 2202.90.37; or

A change to tariff item 2106.90.54 from any other subheading within chapter 21, heading 2009 or tariff item 2202.90.37, whether or not there is also a change from any other chapter, provided that a single juice ingredient, or juice ingredients from one non-party to the NAFTA, constitute in single strength form no more than 60 percent by volume of the good.

The Orange Blend could not achieve originating status under note (A) since the non-originating apple juice concentrate is a good of heading 2009, HTSUS. However, originating status may be achieved under note (B), provided that the non-originating apple concentrate, in single strength form, constitutes no more than 60 percent by volume of the good. Based on the information you provided, the apple concentrate equals 31 percent of the volume of the good. Provided this information is accurate, all of the non-originating ingredients meet the rule. The Orange Blend satisfies the requirements under General Note 12(b), HTSUS, to qualify as an “originating” good.

With regard to the country of origin marking requirements for goods of a NAFTA country, the determination is made in accordance with Annex 311 of the NAFTA, as implemented under the NAFTA Implementation Act (Pub.L. 103-182, 107 Stat. 437 (December 8, 1993)). The "NAFTA Marking Rules” are set forth at 19 CFR Part 102. Section 102.11(a), Customs Regulations (19 CFR 102.11(a)), provides:

[t]he country of origin of a good is the country in which:

The good is wholly obtained or produced;
The good is produced exclusively from domestic materials; or Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Subparagraphs (a)(1) and (a)(2) of section 102.11 do not apply to the facts presented in this case since the Orange Blend is neither wholly obtained or produced, nor produced exclusively from domestic materials. Pursuant to 19 CFR 102.11(a)(3), the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20, and satisfies any other applicable requirements of that section. “Foreign material” is defined at 19 CFR 102.1(e) as “a material whose country of origin as determined under these rules is not the same country of origin as the country in which the good is produced.”

The applicable rule for the Orange Blend is found in 19 CFR 102.20(d), and states, in pertinent part:

2106.90....... A change to a good of subheading 2106.90, other than to compound alcoholic preparations, from any other subheading, except from Chapter 4, Chapter 17, heading 2009, subheading 1901.90 or subheading 2202.90; or

A change to subheading 2106.90 from heading 2009 or subheading 2202.90, provided that a single juice ingredient of foreign origin, or juice ingredients from a single foreign country, constitutes in single strength form no more than 60 percent by volume of the good; or...

The foreign (non-Canadian) materials which must undergo the above tariff change, include the following: sodium benzoate (2916.31, HTSUS); potassium sorbate (2916.19, HTSUS); orange concentrate 65 Brix (2009.11, HTSUS); apple concentrate (2009.79, HTSUS); orange aroma (3301.12, HTSUS); orange oil (3302.10, HTSUS); and, ascorbic acid (2936.27, HTSUS). Pursuant to 19 CFR 102.20(d), in order for the orange concentrate and apple concentrate under heading 2009, HTSUS, to meet the tariff shift requirement they each must not constitute more than 60 percent of the volume of the good. Based on the facts submitted with this request, the orange concentrate constitutes 52 percent of the volume of the good and the apple concentrate constitutes 31 percent of the volume of the good. Provided this information is accurate, all of the foreign materials meet the tariff shift requirements as set forth in 19 CFR 102.20(d). The country of origin for marking purposes is Canada. 7
HOLDING:

Tariff Classification

The proper tariff classification for the imported Orange Blend is subheading 2106.90.5400, HTSUS, food preparations not elsewhere specified or included, other, fruit or vegetable juices, fortified with vitamins or minerals, mixtures of juices.

NAFTA Preferential Tariff Treatment

Pursuant to General Note 12(b), HTSUS, Orange Blend is an originating good for purposes of the NAFTA preferential tariff treatment and is entitled to the “CA” free rate of duty when imported into the U.S. assuming compliance with all applicable regulations (see 19 CFR Part 181).

Pursuant to 19 CFR 102.11(a)(3) of the Customs Regulations, the country of origin of the Orange Blend is Canada for purposes of country of origin marking and it must be so marked.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If you have any questions regarding the foregoing, please let us know.

Sincerely,

Myles B. Harmon
Director

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