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NY R00699




September 17, 2004

CLA-2-20:RR:NC:2:231

CATEGORY: CLASSIFICATION

TARIFF NO.: 2008.11.4500; 2008.11.6000

Ms Tina Mikkelsen
Saharas International Ltd.
P.O. Box 1250l
DK-9100 Aalborg
Denmark

RE: The tariff classification of coated peanuts from the Netherlands.

Dear Ms Mikkelsen:

In your letter dated August 13, 2004, you requested a tariff classification ruling.

In an earlier ruling to your company on July 2004, (NYRL File Number K87520), certain thinly coated, chili flavored peanuts, consisting of 50 percent peanuts by weight in a hard shell made up of flour, sugar, salt and chili, were classified as prepared or preserved peanuts in subheading 2008.11.4500/ 008.11.6000, HTS. In your present request, you ask whether these tariff codes, with their accompanying duty rates would apply to the same product, if the peanuts were of U.S. origin and the processing of the peanuts were to take place in the Netherlands. As indicated to you earlier by phone, we do not believe that the applicable tariff codes and duty rates would be affected under these new conditions.

Briefly, headings 9801 and 9802, Harmonized Tariff Schedule of the United States (HTS), provide preferential duty treatment for American Goods Returned to the United States, after having previously been exported, and for American articles returned to the United States, after having been exported for repair or alteration. Subheading 9801.00.10, HTS, applies to goods of American origin which have returned from abroad in essentially the same condition when exported,--i.e., returned goods that have not been advanced in value or improved in condition while abroad. In a Headquarters ruling letter, dated April 3, 1989, (File Number HQ 554934), American peanuts that were exported to Mexico and there thinly coated with a flour coating were held not to be American Goods Returned under subheading 9801.00.10, HTSUS, as a result of the foreign processing. These same coated peanuts were also held not classifiable in subheading 9802.00.50, HTSUS, which provides for the assessment of duty on the value of repairs or alterations performed on articles returned to the U.S., after having been exported for that purpose. The ruling stated that

“the application of this tariff provision is precluded in circumstances where the operations performed abroad destroy the identity of the articles or create new or commercially different articles. See A.F. Burstrom v. United States, 44 CCPA 27, C.A.D. 631 (1957); Guardian Industries Corporation v. United States, 3 CIT 9 (1982). Treatment under subheading 9802.00.50, HTSUS, is also precluded where the exported articles are incomplete for their intended use and the foreign processing operation is a necessary step in the preparation or manufacture of finished articles. Doliff and Company, Inc. v United States, 66 CCPA 77, C.A.D. 1225, 599 F2d 1015 (1979).”

Quite clearly, the coating of the instant peanuts in the Netherlands would constitute a necessary step in the manufacture of these chili-flavored coated peanuts.

Accordingly, the applicable subheading for these coated, chili flavored peanuts, if entered under quota, will be 2008.11.4500, Harmonized Tariff Schedule of the United States (HTS), which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or to the sweetening matter or spirit, not elsewhere specified or included, nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together, peanuts (ground-nuts), other, described in additional U.S. note 2 to chapter 12 and entered pursuant to its provisions. The rate of duty will be 6.6 cents per kilogram.

The applicable subheading for these coated, chili flavored peanuts, if entered outside the quota, will be 2008.11.6000, Harmonized Tariff Schedule of the United States (HTS), which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or to the sweetening matter or spirit, not elsewhere specified or included, nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together, peanuts (ground-nuts), other, other. The rate of duty will be 131.8 percent ad valorem. In addition, products classified in subheading 2008.11.6000, HTS, will be subject to additional safeguard duties,--currently, based on their value,--as described in subheadings 9904.12.01-9904.12.19.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

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 P. Brady at 646-733-3030.

Sincerely,

Robert B. Swierupski
Director,

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