The tariff classification and country of origin of Refined Sugar from the United States

N041420 November 14, 2008 CLA-2-17:OT:RR:NC:232 CATEGORY: Classification TARIFF NO.: 1701.99.1090; 1701.99.5090 Ms. Marcela B. Stras Baker & Hostetler LLP Washington Square, Suite 1100 1050 Connecticut Avenue, N.W. Washington, DC 20036 RE: The tariff classification and country of origin of Refined Sugar from the United States Dear Ms. Stras: In your letter dated October 14, 2008, on behalf of your client, The Western Sugar Cooperative, you requested a ruling regarding the country of origin marking of Refined Sugar. The subject merchandise is described as Mexican cane sugar refined in the United States (approximately 5 percent or less of the finished product) mixed with United States beet sugar (at least 95 percent of the finished product). The applicable subheading for the Refined Sugar will be 1701.99.1090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for cane or beet sugar and chemically pure sucrose, in solid form: Other: Other… Other. The general rate of duty will be 3.6606 cents per kilogram less 0.020668 cents per kilogram for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 3.143854 cents per kilogram. If not described in additional U.S. note 5 to chapter 17 and not entered pursuant to its provisions, the applicable subheading will be 1701.99.5090, HTS. The duty rate will be 35.74 cents per kilogram. 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 U.S. 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b) of the regulations, defines "country of origin" as: the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within this part; however, for a good of a NAFTA country, the NAFTA marking rules will determine the country of origin. (Emphasis added). Section 134.1(j), of the regulations, provides that the "NAFTA marking rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the regulations defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA marking rules. Section 134.35(b), provides that: A good of a NAFTA country which is to be processed in a manner that would result in the good becoming a good of the United States under the NAFTA Marking Rules is excepted from marking . Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part. Part 102 of the regulations sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the regulations, sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) of the regulations states that "[t]he country of origin of a good is the country in which: (1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or (3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied." Since the Refined Sugar is neither wholly obtained or produced in a single country nor produced exclusively from domestic materials, section 102.11(a)(1) and (2) are not applicable for purposes of determining whether the Refined Sugar is a good of the U.S. Therefore, it must be determined whether pursuant to section 102.11(a)(3), the foreign materials incorporated into the Refined Sugar meets the specific tariff rule of section 102.20. The Refined Sugar has two components: Mexican cane sugar and United States beet sugar. The Mexican cane sugar will be refined in the United States and mixed with United States beet sugar. Western Sugar anticipates that 5 percent or less of the sugar in the final product will be of Mexican origin. Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the refining process does not create a new article with a new name, character or use. In September 1989, Headquarters Ruling Letter, (HQ) 082033 supports the question of whether the refining of sugar is a substantial transformation. The qualities sought after in sugar (its sweetness and nutritional value) are still present after the refining process. To paraphrase the court in National Juice Products Assn. v. the United States, 10 CIT 49, 628 F. Supp. 978 (1986), while refining may make raw sugar more suitable for retail sale, the processing of the cane into raw sugar imparted the essential character of the sugar. Therefore, after the refining process, the Refined Sugar is classified in subheading 1701.99.10, HTSUS. Thus, the specific tariff rule for these goods is set out in section 102.20(d) (Section IV: Chapters 16 through 24) of the regulations, which states: "A change to headings 1701 through 1703 from any other chapter.” The Mexican cane sugar is classified in heading 1701, HTSUS, and the United States beet sugar is also classified in heading 1701, HTSUS. Therefore, the components from Mexico do not undergo the necessary change in tariff classification. The Mexican cane sugar comprises less than 7 percent of the total weight of the finished product. According to Section 102.13, which sets out the De Minimis rule, foreign components that do not undergo the tariff shift specified in Section 102.21 are to be disregarded in determining the country of origin of the good if the total weight of those components is not more than 7 percent of the total weight of the good. The only remaining component that makes the finished product is the United States beet sugar. As the finished product is produced in a single country, following the terms of the tariff shift requirement, the country of origin of the Refined Sugar is conferred in the United States. If a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580 on the propriety of proposed markings indicating that an article is made in the U.S. 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/. 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 telephone number (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 177 of the Customs Regulations (19 C.F.R. 177). 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. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division