COUNTRY OF ORIGIN STATUS, UNDER THE NORTH AMERICAN FREEE TRADE AGREEMENT (NAFTA), OF ARGENTINE OR U.S. PEANUTS THAT HAVE BEEN PROCESSED IN CANADA; ARTICLE 509

N055695 April 21, 2009 MAR-2 OT:RR:E:NC:2:231 CATEGORY: MARKING Ms. Leslie Dawn Rother Nutco Inc. 30 Citizen Court Markham, Ontario L6G 1C4 Canada RE: COUNTRY OF ORIGIN STATUS, UNDER THE NORTH AMERICAN FREEE TRADE AGREEMENT (NAFTA), OF ARGENTINE OR U.S. PEANUTS THAT HAVE BEEN PROCESSED IN CANADA; ARTICLE 509 Dear Ms. Rother: This is in response to your letter dated March 24, 2009, requesting a ruling on the country of origin status of an imported article which is processed in a NAFTA country prior to being imported into the U.S. You have outlined a scenario in which raw, shelled peanuts grown/harvested in Argentina or the United States will initially be imported into Canada. In Canada, the raw peanuts will be blanched, dry roasted, and chopped into small pieces. The resulting product, said to be ready for sale for use as an ingredient in confectionery and ice-cream products, will then be packed in plastic-lined, vacuum-sealed cartons. It is understood that these goods will then be exported to the United States; you seek a determination as to the country of origin properly applicable to them. For the purposes of this ruling, it is assumed that the raw peanuts imported into Canada fall in subheading 1202.20 of the Harmonized Tariff Schedule of the United States (HTSUS), while the finished blanched/roasted/chopped peanuts fall in subheading 2008.11, HTSUS. Section 304 of the Tariff Act of 1930 (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. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements of 19 U.S.C. 1304. Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty. Paragraph (a) of this section states that the 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. In this case, the finished peanuts are not wholly obtained or produced in a single country or produced exclusively from domestic materials. Therefore, we proceed to paragraph (a)(3). The rule for subheading 2008.11 is set forth in 19 CFR 102.20(d): 2008.11………………………… A change to subheading 2008.11 from any other chapter, provided that the change is not the result of mere blanching of peanuts. The Chapter 20 note provides that: Notwithstanding the specific rules of this chapter, fruit, nut and vegetable preparations of Chapter 20 that have been prepared or preserved merely by freezing, by packing (including canning) in water, brine or natural juices, or by roasting, either dry or in oil (including processing incidental to freezing, packing, or roasting), shall be treated as a good of the country in which the fresh good was produced. As the raw peanuts exported to Canada appear to be classified in heading 1202, HTSUS, the peanuts change to subheading 2008.11 from another chapter as a result of the processing in Canada. However, the Chapter 20 note disallows the tariff shift if it is the result of roasting (including processing incidental to roasting). Since Customs and Border Protection has previously taken the position that blanching is incidental to the roasting process (see HQ 561579, dated July 20, 2000), the tariff shift is not allowed here. (It is further noted that the chopping or breaking of the nuts into small pieces does not constitute “preparation or preservation” for tariff purposes, and therefore does not affect this tariff-shift determination. That is, the nuts have been “prepared or preserved” merely by roasting and the incidental process of blanching.)Since the country of origin of the peanuts cannot be determined under 19 CFR 102.11(a)(3), pursuant to the hierarchical rules, we proceed to 19 CFR 102.11(b). Section 102.11(b) provides, in pertinent part: Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section, (1) the country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good.... Pursuant to 19 CFR 102.18(b)(1)(i), only materials that do not undergo the applicable tariff shift or satisfy any other applicable requirements will be considered in determining the single material that imparts the essential character to the good. Since the raw peanuts sent to Canada for finishing do not undergo the requisite tariff shift, the raw peanuts impart the essential character to the good in accordance with 19 CFR 102.18(b)(iii). Accordingly, pursuant to 19 CFR 102.11(b), the country of origin, for marking, duty and quota purposes, of the finished peanuts processed from raw Argentine peanuts, is Argentina. The country of origin, for marking purposes, of the finished peanuts processed from raw U.S. peanuts, is the United States. However, pursuant to the NAFTA Preference Override, as set forth in 19 CFR 102.19(b), the country of origin, for duty and quota purposes, of these finished peanuts processed from raw U.S. peanuts, is Canada. The language of 19 U.S.C. 1304 only applies to articles of foreign origin. The Federal Trade Commission has jurisdiction over goods marked “Made in the U.S.A.” Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin should be directed to the FTC, at the following address: Federal Trade Commission, 6th & Pennsylvania Avenue, N.W., Washington, D.C. 20508. This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR Part 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. Should you wish to request an administrative review of this ruling, submit a copy of this ruling and all relevant facts and arguments within 30 days of the date of this letter, to the Director, Commercial Rulings Division, Headquarters, Bureau of Customs and Border Protection, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229. Sincerely, Robert B. Swierupski Director National Commodity Specialist Division