Special Classification; Caribbean Basin Initiative; 9802.00.5010, HTSUS; U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS; Dominican Republic; U.S. ingredients; fruit juices; 19 USC 1304.

HQ 562347 April 1, 2002 CLA-02 RR:CR:SM 562347 TJM CATEGORY: Classification Cheryl Ellsworth Harris Ellsworth & Levin The Watergate 2600 Virginia Ave, NW, Suite 1113 Washington DC 20037-1905 RE: Special Classification; Caribbean Basin Initiative; 9802.00.5010, HTSUS; U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS; Dominican Republic; U.S. ingredients; fruit juices; 19 USC 1304. Dear Ms. Ellsworth: This is in reply to your letter, dated February 1, 2002, requesting a ruling on behalf of your client on the qualification of various fruit juices produced in the Dominican Republic with U.S. ingredients for duty-free treatment provided under U.S. Note 2(b) to Subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS). Please find our response below. FACTS: Your client, Empresas La Famosa, Inc. (“ELF”), a U.S. corporation, is the parent entity of Productos del Tropico, and Caribex Dominicana, the manufacturers of the products at issue, located in the Dominican Republic. You note that the manufacturing process for each product is substantially the same. Fruit concentrates and purees are defrosted, if frozen, weighed and combined in mixing tanks. Water and ascorbic acid are added and the batch is mixed. The batch is pumped into a balance tank, and a plate heat exchanger. The mix is preheated and homogenized, then pumped to a second heat exchanger where it attains its final temperature. After pasteurization, the product is pumped into a reception tank and then to filling equipment. Empty cans are sterilized, then filled at an established temperature. The filled cans are sent to a spin-cooler, coded, labeled, cased and palletized. The products are then exported to the U.S. directly. Product Ingredients Country of Origin  Grapefruit Juice Grapefruit Concentrate U.S.A.   Ascorbic Acid U.S.A.   Water Dominican Republic   Packaging Dominican Republic  Orange Juice Orange Juice Concentrate U.S.A.   Ascorbic Acid U.S.A.   Water Dominican Republic   Packaging Dominican Republic  Pineapple Juice Pineapple Concentrate U.S.A.   Ascorbic Acid U.S.A.   Water Dominican Republic   Packaging Dominican Republic  Orange-Pineapple Juice Pineapple Concentrate U.S.A.   Orange Juice Concentrate U.S.A.   Ascorbic Acid U.S.A.   Water Dominican Republic   Packaging Dominican Republic   You believe that the products qualify for duty-free treatment provided under U.S. Note 2(b) to Subchapter II, Chapter 98, Harmonized Tariff Schedule of the United States (HTSUS). ISSUE: Whether fruit juices produced in the Dominican Republic as described above qualify for duty-free treatment under U.S Note 2(b) to Subchapter II, Chapter 98, HTSUS. LAW AND ANALYSIS: I. U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS Section 222 of the Customs and Trade Act of 1990 (P.L. 101-382) amended U.S. Note 2, Subchapter II, Chapter 98, HTSUS (“Note 2(b)”), to provide for the duty-free treatment of articles assembled or processed in beneficiary countries of the Caribbean Basin Initiative from fabricated components, materials or ingredients that are a product of the United States. The purpose of this limited exception to the general Caribbean Basin Initiative rules of origin is to encourage small-scale investment in assembly and processing facilities in areas of the Caribbean that are not able to support full-fledged manufacturing or processing operations. In turn, the amendment encourages greater sales of U.S. products and further integration of production between the United States and the Caribbean. See § 2007, S. Rep. No. 252, 101th Cong. (1990). Note 2(b) to Subchapter II, Chapter 98, HTSUS, provides, in pertinent part that: ********** No article (except a textile article, apparel article, or petroleum, or any product derived petroleum, provided for in heading 2709 or 2710) may be treated as a foreign article, or as subject to duty if - - the article is – assembled or processed in whole of fabricated components that are a product of the United States, or processed in whole of ingredients (other than water) that are a product of the United States, in a beneficiary country; and neither the fabricated components, materials or ingredients, after exportation from the United States, nor the article itself, before importation into the United States, enters the commerce of any foreign country other than a beneficiary country. As used in this paragraph, the term “beneficiary country” means a country listed in general note 7(a). ********** Articles entitled to duty-free treatment under Note 2(b) are classified, for statistical purposes only, in subheading 9802.00.5010, HTSUS, (for articles processed in whole of ingredients that are a product of the U.S. in a beneficiary country, as in this case) or subheading 9802.00.8040, HTSUS, (for articles assembled in whole of components that are a product of the U.S. in a beneficiary country). Such articles need not meet the conditions and requirements of those subheadings. We note that the Dominican Republic is enumerated in general note 7(a) as a beneficiary country. You also represent that the ingredients would be shipped from the U.S. to the Dominican Republic directly and that the final product would be shipped from the Dominican Republic directly to the U.S., in compliance with Note 2(b)(ii). In Headquarters Ruling Letter (HRL) 562157, dated November 27, 2001, Customs ruled that canning of various beans that are products of the U.S. in the Dominican Republic qualified for duty-free treatment under U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS. In that case, as in the instant case, the water and packaging materials were products of the Dominican Republic. In HRL 562147, citing HRL 556072, dated July 1, 1991, and HRL 557544, dated October 28, 1993, Customs ruled that non-U.S. packaging materials would not disqualify the product from duty-free treatment. The issue in this case is whether the manufacturing process in the Dominican Republic fits within the provision - “processed in whole of ingredients. . .” It is our opinion that the manufacturing process in the instant case fits within the meaning of “processing” as provided under U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS, as intended by Section 222 of the Customs and Trade Act of 1990. For goods that qualify for duty-free treatment under U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS, other requirements including statistical and value reporting as stipulated in the “Statistical Notes” section of Subchapter II, Chapter 98, HTSUS, and direct shipment to and from the beneficiary country as prescribed under U.S. Note 2(b)(ii) must be followed. 19 U.S.C. 1304 As you are aware, Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. 19 C.F.R. part 134 implements the country of origin marking requirements of 19 U.S.C. § 1304. We note that articles that qualify for duty-free treatment under U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS, may not be treated as foreign articles. Therefore, goods that qualify for Note 2(b) treatment are excepted from country of origin marking requirements of 19 U.S.C. § 1304. See also HRL 562157, citing Telex 9264071, dated September 28, 1990. HOLDING: Based on the facts provided and assuming compliance with other requirements of U.S. Note 2(b) to Subchapter II, Chapter 98, HTSUS, the fruit juices as described above made in the Dominican Republic with U.S. ingredients meet the requirements for duty-free treatment provided under Note 2(b). A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents are filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction. Sincerely, John Durant Director Commercial Rulings Division