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NY J84627




June 5, 2003

CLA-2-21:RR:NC:2:228 J84627

CATEGORY: CLASSIFICATION

TARIFF NO.: 2103.90.9091

Mr. David Dunbar
KMZ Rosenman
525 West Monroe Street
Chicago, IL 60661-3693

RE: The tariff classification, status under the North American Free Trade Agreement (NAFTA), and country of origin marking of a cheese sauce from Canada; Article 509

Dear Mr. Dunbar:

In your letter dated May 15, 2003, on behalf of Kerry Inc., Beloit, WI, you requested a ruling on the status of a cheese sauce from Canada under the NAFTA.

The product is described as a finished, ready to use sauce composed of cheddar cheese, water, milk fat, whey, whey protein concentrate, sodium phosphate, nonfat dry milk, salt, flavor, Worcestershire sauce, lactic acid, sorbic acid, sodium alginate, mustard, maltodextrin, and color. The sauce will be imported in 35-gram pouches, 250-gram cans, 22.68 kilogram boxes, 160-kilogram drums, and 1000-kilogram totes, and sold to food industry manufacturers. After importation, the smaller containers (35-gram pouch and 250-gram can) will be inserted into retail packages containing food products such as macaroni, noodles, rice, or dried potatoes. The sauce imported in larger containers will be repackaged into retail containers.

All ingredients may be products of the United States, Canada, or Mexico. Some, however, may also be obtained from non-NAFTA countries. The cheddar cheese, milkfat, and non fat dry milk may be products of New Zealand, Australia, Argentina, Ireland, the United Kingdom, or Germany. The lactic acid may be a product of Belgium, Brazil, the Netherlands, or Spain. The sodium phosphate may be a good of Germany or Israel. The color ingredients may be products of India, Morocco, or Spain. Sorbic acid may be product of Belgium or China, sodium alginate may be a good of the United Kingdom, and the maltodextrin may originate in Germany. In Canada, the ingredients are mixed together in accordance with a particular formula, pasteurized, and packaged.

The applicable tariff provision for the cheese sauce will be 2103.90.9091, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for sauces and preparations thereforotherotherother. The general rate of duty will be 6.4 percent ad valorem.

When produced wholly of ingredients made in the United States, Canada, and Mexico, the cheese sauce, being wholly obtained or produced entirely in the territory of the Untied States, Canada, and Mexico, will meet the requirements of HTSUSA General Note 12(b)(i), and will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

When produced with one or more ingredients from non-NAFTA countries, each non-originating material used to make the cheese sauce will have satisfied the changes in tariff classification required under HTSUSA General Note 12(t)/21.7. The cheese sauce will be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

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.

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 the imported cheese sauce is a good of Canada for marking purposes.

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 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 Stanley Hopard at 646-733-3029.

Sincerely,

Robert B. Swierupski
Director,

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