The tariff classification, and status under the North American Free Trade Agreement (NAFTA) of a seasoning from Canada; Article 509

N251884 April 25, 2014 CLA-2-21:OT:RR:NC:N2:228 CATEGORY: Classification TARIFF NO.: 2103.90.8000 Ms. Lisa Desjardins Newly Weds Foods 450 Superior Boulevard Mississauga, Ontario L5T 2R9 Canada RE: The tariff classification, and status under the North American Free Trade Agreement (NAFTA) of a seasoning from Canada; Article 509 Dear Ms. Desjardins: In your letter dated March 26, 2014, you requested a tariff ruling on the status of a seasoning blend from Canada under the NAFTA. An ingredients breakdown and the cost of each ingredient were provided with your letter. Additional ingredient information was received via eMail dated April 22, 2014. The French Onion Dip is said to contain approximately 26 percent salt, 26 percent onion powder, 10 percent buttermilk powder, 7 percent monosodium glutamate, 6 percent onions, 5 percent sugar, 5 percent cream powder, 4 percent yeast extract, 3 percent sour cream flavor, one percent each lactic acid powder, canola oil, buttermilk flavor, and non-fat milk powder, and less than one percent each flavor enhancer, rosemary oleoresin, white pepper, modified corn starch, brown sugar, and silicon dioxide. The rosemary oleoresin, and canola oil are products of Canada. The salt, buttermilk flavor, onion powder, cream powder, sour cream flavor, non-fat milk powder, modified corn starch, buttermilk powder, brown sugar, silicon dioxide, and onions are products of the United States. The lactic acid powder, and yeast extract are products of The Netherlands. The monosodium glutamate is a product of Taiwan. The sugar is a product of Argentina. The flavor enhancer is a product of Thailand. The white pepper is a product of Indonesia. In Canada, all ingredients are mixed to form a seasoning blend, and packed for export to the United States. The applicable subheading for the seasoning blend will be 2103.90.8000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for mixed condiments and mixed seasonings . . . other. The rate of duty will be 6.4 percent ad valorem. 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 the World Wide Web at http://www.usitc.gov/tata/hts/. General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part, that For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if— (i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or (ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that— (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein . . . . Based on the facts provided, the product described above does not qualified as an originating good under General Note 12(b)(ii)(A), HTSUS, since two of the non-originating ingredients, the yeast extract and the flavor enhancer, do not undergo the change in tariff classification described in General Note 12 (t)/21.7A(A). Therefore, the merchandise does not qualify for preferential treatment under the NAFTA. However, by application of the de minimis allowances of General Note 12(f), it is possible that the presence of the yeast extract and the flavor enhancer may be disregarded. General Note 12(f) states, in pertinent part: (f) De minimis. Except as provided in subdivisions (f)(iii) through (vi), inclusive, a good shall be considered to be an originating good if the value of all non-originating materials used in the production of the good that do not undergo an applicable change in tariff classification set out in subdivision (t) of this note is not more than 7 percent of the transaction value of the good, adjusted to a F.O.B. basis, or, if the transaction value is unacceptable under section 402(b) of the Tariff Act of 1930, as amended, the value of all such non-originating materials is not more than 7 percent of the total cost of the good, provided that--- if the good is subject to a regional value-content requirement, the value of such non-originating materials shall be taken into account in calculating the regional value content of the good; and the good satisfies all other applicable requirements of this note.... (v) Subdivision (f)(i) of this note does not apply to a non-originating material used in the production of a good provided for in chapters 1 through 27, inclusive, of this schedule unless the non-originating material is provided for in a different subheading than the good for which origin is being determined under this note.... You state the flavor enhancer and the yeast extract are classified in chapter 21, HTSUS. We presume they both are classified in heading 2106, HTSUS. The seasoning blend is determined to be classified in heading 2103, HTSUS. Clearly, non-originating materials and the good are in different subheadings. Thus, the General Note 12(f)(v) exception does not apply to General Note 12(f)(i) in this case. Based on the costs you have submitted, it appears that the value of the yeast extract and the flavor enhancer accounts for approximately 12.7 percent of the total raw material cost of the seasoning blend. However, this office is unable to make a determination as to whether the value of the yeast extract and the flavor enhancer is considered to be de minimis because the transaction value of the imported article, adjusted to a F.O.B. basis, cannot be determined until the time of entry. Although the total cost of the good can be used, it must first be established that the transaction value is unacceptable under section 402(b) of the Tariff Act of 1930, as amended. Please note that the total raw material cost that you provided is not the total cost of the good, which includes other costs, such as the labor cost. Therefore, we cannot currently rule as to the applicability of the de minimis rule to the seasoning blend. 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 301-575-0156, or at the Web site ww.fda.gov/oc/bioterrorism/bioact.html. This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 C.F.R. 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 Bruce N. Hadley, Jr. at bruce.hadleyjr@cbp.dhs.gov. 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, U.S. Customs and Border Protection, Regulations & Rulings, 90 K Street, N.E. – 10th floor, Washington, DC 20229-1177. Sincerely, Gwenn Klein Kirschner Acting Director National Commodity Specialist Division