Coffee Extract processed in West Germany

HQ 084408 August 8,1989 CLA-2 CO:R:C:G 084408 JGH CATEGORY: Classification TARIFF NO.: 2101.10.2040; 9903.23.20 Leonard M. Zuckerman L.M. Zuckerman & Co., Inc. 50 Broadway New York, N.Y. RE: Coffee Extract processed in West Germany Dear Mr. Zuckerman: Your letter of April 7,1989, concerns the processing of coffee extract in West Germany. FACTS: Coffee extract from Brazil, Mexico, Paraguay, "or from various other non-European sources" is sent to West Germany, where it is dissolved in water and redried by freeze drying. The freeze-dried coffee is then exported to the United States. ISSUE: Whether coffee extract processed in West Germany becomes a product of West Germany, and therefore subject to the increased duties pursuant to Presidential Proclamation No. 5759. LAW AND ANALYSIS: Presidential Proclamation No. 5759 assessed a duty of 100 percent ad valorem on certain products of countries of the European Community (EC). Subheading 9903.23.20, Harmonized Tariff Schedule of the United States (HTSUS), imposes such a duty on soluble or instant coffee which is a product of the EC. Coffee extract from Brazil, Mexico, or Paraguay is sent to West Germany, where it is dissolved in water and then freeze dried. -2- For a product such as this to be considered a product of West Germany, it must be substantially transformed by sufficient processing into a new and different article of commerce. While changing coffee extract into a freeze dried coffee changes the form of the coffee, it is a change from an intermediate product of a finished one; the coffee extract being a material in process, advancing toward the finished product. Thus, the processing undergone in West Germany is not, in and of itself, considered sufficient to transform the extract into a new and different article of commerce. HOLDING: Coffee extract, a product of Brazil, Mexico, or Paraguay, which is sent to West Germany to be processed into freeze-dried coffee, is not transformed into a product of the EC, and, as a result, is not subject to the 100 percent rate of duty assessed under subheading 9903.23.20, HTSUS. Sincerely, John Durant, Director Commercial Rulings Division 6 cc: N.Y., Seaport Hurley library 084408