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NY N016719




September 21, 2007

CLA-2-04:RR:E:NC:SP:231

CATEGORY: CLASSIFICATION

TARIFF NO.: 0402.29.1000; 0402.29.5000

Ms. Julie L. Dreke
Cargill Incorporated
15407 McGinty Road West
Wayzata, MN 55391

RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of “white crumb” from Canada; Article 509

Dear Ms. Dreke:

In your letter dated September 6, 2007, you requested a ruling on the status of “white crumb” from Canada under the NAFTA.

The “white crumb” is described as a dry mixture of sugar (65-70%) and milk (25-30%) intended for use as an ingredient in the production of milk chocolate products. The milk fat content will be 5-10%. The product will be imported in bulk form (780-kg super-sack totes).

Your letter contains the following discussion of the manufacturing process:

The raw cane or beet sugar is imported by a third-party Canadian company from various foreign origins, processed into granular white sugar, and converted to liquid sugar and then blended with the milk product [Canadian origin] at another third-party Canadian company to form a liquid sweetened condensed milk compound. This liquid mix is then sent to our Cargill, Ltd. plant in Canada. The moisture is then removed from the sugar/milk blend to create the white crumb dry mix. This entire process is completed in Canada.

The applicable tariff provision for the “white crumb,” if entered under quota, will be 0402.29.1000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for milk and cream, concentrated or containing added sugar or other sweetening matter: in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 percent: other: described in additional U.S. note 10 to chapter 4 and entered pursuant to its provisions. The general rate of duty will be 17.5% ad valorem.

The applicable tariff provision for the “white crumb,” if entered outside the quota, will be 0402.29.5000, HTSUS, which provides for milk and cream, concentrated or containing added sugar or other sweetening matter: in powder, granules or other solid forms, of a fat content, by weight, exceeding 1.5 percent: other: other. The general rate of duty will be $1.104 per kilogram + 14.9% ad valorem.

Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.

General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that

For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that--

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or

(B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or

(iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for "parts" and used in the production of such goods does not undergo a change in tariff classification because--

(A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or

(B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts,
provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note.

Based on the facts provided, the goods described above qualify for NAFTA preferential treatment, because they will meet the requirements of HTSUS General Note 12(b)(ii)(A). The goods, when properly entered under HTSUS subheading 0402.29.1000, will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements. However, since subheading 0402.29.5000, HTSUS, does not carry a reduced or free NAFTA rate for Canada, the general rate of duty will apply to the goods when they are entered under that tariff number.

This merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling FDA at 301-575-0156, or at the Web site www.fda.gov/oc/bioterrorism/bioact.html.

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 Nathan Rosenstein at 646-733-3030.

Sincerely,

Robert B. Swierupski
Director,

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