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NY J87735




August 19, 2003

CLA-2-18:RR:NC:SP:232 J87735

CATEGORY: CLASSIFICATION

TARIFF NO.: 1806.20.6000

Mr. Scott R. Boyer
Kraft Foods North America, Inc.
910 Mayer Avenue, 6S
Madison WI 53704

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of Semi-Sweet Cocoa Flavored Compounds from Canada; Article 509

Dear Mr. Boyer:

In your letter dated July 28, 2003 you requested a ruling on the status of Semi-Sweet Cocoa Flavored Compounds from Canada under the NAFTA. Your request also asks for the country of origin for duty preference.

Samples were included with your request. The subject merchandise consists of two products: Compound “A” and Compound “B.” Compound “A” is stated to contain 49 percent to 60 percent sugar, 20 percent to 30 percent vegetable fat, 10 percent to 20 percent cocoa powder (approximately 9 percent to 18 percent non-fat solids), 1 percent to 4 percent dextrose, and small quantities of lecithin and vanilla flavor. You indicate that dextrose may be substituted to replace some of the sugar, with the total sugar content not exceeding 60 percent. The cocoa powder is shipped from the United States, the balance of ingredients are from Canada. The product may be imported in the following ways: bulk chips or drops in 10, 20, 50 kilogram boxes, or in 1980 pound super sacks, liquid tanker shipments, chips in a size ranging from 900 to 10,000 ct/pound, and in I inch diameter wafers with 208 to 240 per pound. The merchandise will be used as an ingredient in the production of cookies.

Compound “B” is stated to contain 49 percent to 60 percent sugar, 25 percent to 35 percent vegetable fat, 10 percent to 20 percent cocoa powder (approximately 9 percent to 18 percent non-fat solids), 1 percent to 4 percent dextrose, and small quantities of lecithin and vanilla flavor. You indicate that dextrose may be substituted to replace some of the sugar, with the total sugar content not exceeding 60 percent. The cocoa powder is shipped from the United States, the balance of ingredients are from Canada. The product may be imported in either liquid tanker shipments, or in I inch diameter wafers with 208 to 240 per pound. The merchandise will be used as a coating for cookies and other food products.

The applicable subheading for the Compound “A’”and Compound “B” will be 1806.20.6000, Harmonized Tariff Schedule of the United States (HTS), which provides for Chocolate and other food preparations containing cocoa: Other preparations in blocks, slabs or bars, 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 kgConfectioners’ coatings and other products (except confectionery) containing by weight not less than 6.8 percent non-fat solids of the cocoa bean nib and not less than 15 percent of vegetable fats other than cocoa butter. The general rate of duty will be 2 percent ad valorem.

Compound “A” is not classified in subheading 1806.20.9900, HTS, which is the residual bulk chocolate provision, because it is more specifically described in subheading 1806.20.6000, HTS.

The non-originating material used to make the Compound “A” and Compound “B” has satisfied the changes in tariff classification required under HTSUSA General Note 12(t)/18. The products will be entitled to a free rate of duty under the NAFTA 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 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 Compound “A” and Compound “B” are processed in a NAFTA country "Canada" prior to being imported into the U.S. Since, "Canada" is defined under 19 CFR 134.1(g), as a NAFTA country, we must first apply the NAFTA Marking Rules in order to determine whether the imported Compounds are goods 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 the imported Compound “A” and Compound “B” are goods of “Canada”, for marking purposes, noting the requirements of Section 102.20 (d).

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

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 646-733-3031.

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, Bureau of Customs and Border Protection, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229.

Sincerely,

Robert B. Swierupski
Director,

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