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NY N015703




September 14, 2007

CLA-2:RR:NC:232

CATEGORY: CLASSIFICATION

Masterpiece International, Ltd.
3751 Island Avenue, Suite 1
Philadelphia, PA 19153

RE: The status under the North American Free Trade Agreement (NAFTA), of candy from Mexico, retail packed in a Foreign Trade Zone (FTZ) in China; Article 509

Dear Mr. Mckeever:

In your letter dated August 14, 2007, on behalf of your client Sherwood Brands, Inc., you requested a ruling on the status of candy from Mexico, packed in a foreign trade zone in China, under the NAFTA.

You state that your client, Sherwood Brands, Inc. plans to ship candy of Mexican origin, classifiable under 1704.90.3550, Harmonized Tariff Schedule of the United States, (HTSUS) from their Carson, California warehouse to a foreign trade zone in China where it, along with other items, (toys, dolls, books, etc.) is put into gift baskets, Easter baskets, backpacks and wastebaskets after which the baskets/backpacks are returned to the United States. You also state that the candy does not enter the commerce of China, nor does it undergo any manner of processing while in China.

Under NAFTA, there are certain prohibitions in the law against the transshipment of originating goods outside the territories of the NAFTA countries. In particular, Section 16 of Part 181, Appendix (19 C.F.R. Part 181, Appendix), states:

A good is not an originating good by reason of having undergone production that occurs entirely in the territory of one or more of the NAFTA countries that would enable the good to qualify as an originating good if subsequent to that production
the good is withdrawn from customs control outside the territories of the NAFTA countries; or
the good undergoes further production or any other operation outside the territories of the NAFTA countries, other than unloading, reloading, or any other operations necessary to preserve the good in good condition, such as inspection, removal of dust that accumulates during shipment, ventilation, spreading out or drying, chilling, replacing salt, sulphur dioxide, or other aqueous solutions, replacing damaged packing materials and containers and removal of units of the good that are spoiled or damaged and present a danger to the remaining units of the good, or to transport the good to the territory of a NAFTA country.

According to your submission the Mexican candy will be shipped from the United States to a foreign trade zone (FTZ) in China. Within the FTZ the candy will be packed in gift baskets, Easter baskets, backpacks and wastebaskets along with other items such as toys, dolls, books, etc. You indicated in a telephone conversation with this office that the packing of all these goods in the FTZ in China is to prepare them for retail sale in the United States.

The retail sale packaging that the Mexican candy undergoes in the Chinese FTZ is more extensive than operations necessary to preserve the product in good condition. These activities serve to enhance presentation for final sale beyond the condition at the time of export, and therefore beyond the processes necessary to preserve the articles in good condition that are permitted under General Note 12(t)/17, HTSUS.

Pursuant to Section 16 of Part 181, Appendix, the Mexican candy will not be eligible for NAFTA preferential tariff treatment.

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 Frank Troise 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, Headquarters, U.S. Customs and Border Protection, 1300 Pennsylvania Ave. N.W., (Mint Annex), Washington, D.C. 20229.

Sincerely,

Robert B. Swierupski
Director,

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