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HQ W968185




March 28, 2007

CLA-2 RR:CTF:TCM W968185ptl

CATEGORY: COUNTRY OF ORIGIN

Mr. John Martin Sanders
16270 80A Avenue
Surrey, British Columbia
Canada, V3S8Y1

RE: Modification of NY R03084

Dear Mr. Sanders:

On January 24, 2006, the Customs and Border Protection (CBP) National Commodity Specialist Division in New York issued ruling NY R03084 to you providing the classification, under the Harmonized Tariff Schedule of the United States (HTSUS), of raw or green coffee that was imported into Canada in bulk where it was then roasted before being shipped to the United States. That ruling also provided a determination of the country of origin for the roasted coffee. We have reviewed the country of origin decision of that ruling and determined that it is incorrect. This ruling corrects that decision.

Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by Title VI, a notice was published in the February 14, 2007, Customs Bulletin, Volume 41, Number 8, proposing to modify NY R03084, and to revoke any treatment accorded to substantially identical transactions. No comments were received in response to the notice.

FACTS:

According to information you provided, you will be importing raw or green coffee beans into Canada in burlap bags holding 60 to 70 kilograms. The coffee will then be roasted in Canada. The roasted coffee will then be imported into the United States for consumption. In ruling NY R03084, which was issued to you on January 24, 2006, the roasted coffee was classified in either subheading 0901.21.0030, HTSUS, or 0901.21.0060, HTSUS, (depending on the size of the container) as “Coffee, roasted: not decaffeinated.” That ruling also stated that “ we find that the imported roasted coffee is a good of the country which produced the raw or green coffee, for marking purposes, noting the requirements of Section 102.20 (b)” of the CBP Regulations.

ISSUE:

Is the country of origin of coffee beans roasted in a North American Free Trade Agreement (NAFTA) country, the country which produced the raw or green coffee beans, or the country in which the roasting occurred?

LAW AND ANALYSIS:

The country of origin marking requirements for a “good of a NAFTA country” are determined in accordance with Annex 311 of the 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 CBP Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, CBP Regulations. The marking requirements of these goods are set forth in Part 134, CBP 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 roasted coffee is 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 roasted coffee is a good of a NAFTA country, and thus subject to the NAFTA marking requirements.

The Marking rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, CBP Regulations (19 CFR 102).

Section 102.11(a), CBP Regulations (19 CFR 102.11(a)), sets forth the procedures for determining the country of origin of goods for NAFTA purposes and provides, in relevant part, as follows:

(a) The country of origin of a good is the country in which:

(1) The good is wholly obtained or produced:

(2) The good is produced exclusively from domestic materials; or

(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Section 102.1, CBP Regulations, provides definitions used in applying the NAFTA rules of origin. Section 102.1(g) defines “a good wholly obtained or produced” as being, in relevant part:

(2) A vegetable or plant good harvested in that country;

(10) A good produced in that country exclusively from goods referred to in paragraphs (g)(1) through (10) of this section or from their derivatives, at any stage of production.

Because the raw or green coffee beans have been imported into Canada before roasting, the roasted coffee does not qualify as “a good wholly obtained or produced” in Canada, or any other country. Therefore, the country of origin of the roasted coffee cannot be determined under section 102.11(a)(1).

Since we cannot use section 102.11(a)(1) to determine the country of origin, we must move to section 102.11(a)(2). That subsection provides that the country of origin may be settled if a good is produced exclusively from domestic materials. “Domestic materials” is defined in section 102.1(d), CBP Regulations, as meaning “a material whose country of origin as determined under these rules is the same country as the country in which the good is produced.” Because the roasted coffee is not produced exclusively from domestic (Canadian) materials, the country of origin cannot be determined under section 102.11(a)(2).

We must proceed to section 102.11(a)(3) which provides that 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 set out in section 102.20 and satisfies any other applicable requirements of that section.” Section 102.1(e), CBP Regulations, defines “foreign material” as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” The applicable tariff change specified in section 102.20(b), CBP Regulations, states:

0901.21 – 0901.22 A change to subheading 0901.21 through 0901.22 from any subheading outside that group.

The raw, or green, coffee which was imported into Canada would be classified in subheading 0901.11, HTSUS, which provides for coffee, not roasted. However, the roasted coffee is classified in subheading 0901.21, HTSUS, which provides for coffee, roasted. Thus, the applicable tariff shift provided for in section 102.20(b), CBP Regulations, has been met, and the country of origin of the roasted coffee is Canada.

However, as stated in NY R03084, Section 14 of the Miscellaneous Trade and Technical Corrections Act of 1996, Pub. L. 104-295, 110 Stat. 3514 (October 11, 1996) amended the country of origin marking statute (19 U.S.C. 1304) to exempt imports of certain specified coffee, tea and spices from the marking requirements of 19 U.S.C. 1304 subsections (a) and (b). The roasted coffee is among the products included in this statutory marking exemption. Therefore, neither the roasted coffee nor its container is required to be marked with the foreign country of origin.

HOLDING:

New York Ruling Letter R03084, dated January 24, 2006, is modified to provide that the country of origin of the roasted coffee is Canada.

In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.

Sincerely,

Myles B. Harmon, Director

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