The tariff classification and status under the North American Free Trade Agreement (NAFTA) of American blanched and red skin peanuts that are honey roasted in Canada and then returned to the United States; Article 509

NY J87639 August 20, 2003 CLA-2-20:RR:NC:2:231 J87639 CATEGORY: Classification TARIFF NO.: 2008.11.4500; 2008.11.6000 Mr. Joseph Hoffacker Barthco Trade Consultants 7575 Holstein Avenue Philadelphia, PA 19153 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA) of American blanched and red skin peanuts that are honey roasted in Canada and then returned to the United States; Article 509 Dear Mr. Hoffacker: In your letter, dated July 16, 2003, on behalf of your client, Anne’s House of Nuts, Robersonville, NC, you requested a ruling on the status of American blanched and red skin peanuts that are honey roasted in Canada and then returned to the United States under the NAFTA. The merchandise is comprised of American blanched and red skin peanuts that are honey roasted in Canada and then returned to the United States. The ingredients are 52.36 percent white sugar (of Canadian origin), 44.84 percent peanuts (U.S.), 2.2 percent pasteurized honey (Argentina), 0.5 percent corn syrup (U.S.), and 0.1 percent Canola oil (Canada). The applicable subheading for these peanuts, if entered under quota, will be 2008.11.4500, Harmonized Tariff Schedule of the United States (HTS), which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included, nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together, peanuts (ground-nuts), other, described in additional U.S. note 2 to chapter 12 and entered pursuant to its provisions. The general rate of duty will be 6.6 cents per kilogram. The applicable subheading for these peanuts, if entered outside the quota, will be 2008.11.6000, HTS, which provides for fruit, nuts and other edible parts of plants, otherwise prepared or preserved, whether or not containing added sugar or other sweetening matter or spirit, not elsewhere specified or included, nuts, peanuts (ground-nuts) and other seeds, whether or not mixed together, peanuts (ground-nuts), other, other. The general rate of duty will be 131.8 percent ad valorem. In addition, products classified in subheading 2008.11.6000, HTS, are subject to additional safeguard duties based on their value, as described in subheadings 9904.12.01 – 9904.12.19, HTS, subchapter IV, chapter 99. However, U.S. Note 1, subchapter IV in chapter 99 states, “Goods of Canada or Mexico imported into the United States shall not be subject to any of the provisions, duties or limitations of this subchapter.” Accordingly, if a product of Canada, the safeguard duties will not apply. General Note 12(a)(1), HTSUSA, requires, for NAFTA eligibility, that goods produced in Canada must originate in the territory of a NAFTA party, under the terms of GN 12, and that they qualify to be marked as goods of Canada under the terms of the marking rules for NAFTA goods. In the instant case, each of the non-originating materials has satisfied the changes in tariff classification required under HTSUSA General Note 12(t)20.3. Although originating goods under GN 12, the blanched or red skin peanuts do not meet the requirements for marking as products of Canada, as set forth in section 102.20(d), Customs Regulations (CR). These peanuts retain their identity as United States goods. However, under the NAFTA preference override, the honey roasted peanuts may be entered as Canadian goods for duty purposes. Section 102.19(b) CR states that, “If, under any other provision of this part, the country of origin of a good which is originating within the meaning of Sec. 181.1(q) of this chapter is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.” As Customs regards these goods as products of the United States, country of origin marking is not required. Under the provision in Section 102.19(b), CR, these honey roasted peanuts will be subject to quota and dutiable at the preferential NAFTA rates. Accordingly, if entered under the Tariff Rate Quota (TRQ) in subheading 2008.11.4000, HTSUSA, they are entitled to duty free entry under NAFTA. If entered, after the quota has closed, in subheading 2008.11.6000, HTSUSA, they will be subject to duty at the General Column rate of 131.8 percent of the value. Additional requirements may be imposed on these products by the Food and Drug Administration. You may contact the FDA at: Food and Drug Administration Division of Import Operations and Policy 5600 Fishers Lane Rockville, MD 20857 This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR 181). This ruling is binding only as to the party to whom it is issued and may be relied on only by that party. 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 Thomas Brady at (646) 733-3030. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division