The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a confectionery coating from Canada; Article 509Mr. Michael RollPisani & Roll LLP1875 Century Park East, Suite 600Los Angeles, CA 90067

N291530 November 22, 2017 CLA-2-21:OT:RR:NC:N2:228 CATEGORY: Classification TARIFF NO.: 2106.90.9898 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a confectionery coating from Canada; Article 509 Mr. Michael Roll Pisani & Roll LLP 1875 Century Park East, Suite 600 Los Angeles, CA 90067 Dear Mr. Roll: In your letter dated October 24, 2017 you requested a ruling on the status of the “CN High Protein White Confectionary Coating-MB” from Canada under the NAFTA. An ingredients breakdown, manufacturing flowchart, description of the manufacturing process, and product specification sheet were provided with your inquiry. The “CN High Protein White Confectionary Coating-MB” product is said to contain approximately 30 to 38 percent palm kernel oil, 26 to 34 percent polidextrose, 24 to 28 percent milk protein isolate, 3 to 6 percent reduced mineral whey, 2 to 4 percent sodium caseinate, and less than one percent each soy lecithin, natural vanilla, and sucralose. The product will be produced in Canada using originating and non-originating ingredients. The product will be imported as molded disks, 40 lb. each, net weight, in polylined cartons. The product will be used for enrobing high protein health/wellness bars. The applicable subheading for the “CN High Protein White Confectionery Coating-MB” will be 2106.90.9898, Harmonized Tariff Schedule of the United States (HTSUS), which provides for food preparations not elsewhere specified or included . . . other . . . other . . . other . . . other. The general 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 https://hts.usitc.gov/current. The rules for determining whether the high protein white confectionary coating is to be considered an “originating good” of Canada and thus eligible for preferential tariff treatment under the provisions of the North American Free Trade Act are provided for in General Note 12 of the HTSUS, which provides, in relevant part, as follows: (a) Goods in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided therein. For the purposes of this note - (a)(i) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (whether or not the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the “Special” subcolumn followed by the symbol “CA” in parentheses, are eligible for such duty rate, in accordance with section 201 of the North American Free Trade Implementation Act. 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, or (B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or (iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; . . . . Based on the facts provided, the goods described above qualify for NAFTA preferential treatment because they will meet the requirements of HTSUS General Note 12(b) (ii) (A). The goods will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements. That is, six of the eight ingredients are non-originating in the NAFTA Territory, however, they meet the tariff shift required by General Note (GN) 12 (b)(ii)(A), and GN 12 (t)/21.14 “A change to heading 2106 from any other chapter.” Therefore, the “CN High Protein White Confectionary Coating-MB” product is eligible for preferential treatment under the NAFTA. The country of origin for customs duty purposes will be Canada. The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) 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 and exceptions of 19 U.S.C. 1304. The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the North American Free Trade Agreement (“NAFTA”), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. 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. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Section 134.1(d) of the regulations, provides that the ultimate purchaser of a good of a NAFTA country is the last person in the United States who purchases the good in the form in which it was imported. If an imported article is to be sold at retail in its imported form, the purchaser at retail is the ultimate purchaser. With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 CFR 134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 CFR 134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable. An article is excepted from marking under 19 U.S.C. 1304 (a)(3)(D) and section 134.32(d), Customs Regulations (19 CFR 134.32(d)), if the marking of a container of such article will reasonably indicate the origin of such article. Accordingly, if Customs is satisfied that the article will remain in its container until it reaches the ultimate purchaser and if the ultimate purchaser can tell the country of origin of the confectionary coating product by viewing the container in which it is packaged, the individual ingredients would be excepted from marking under this provision. In this case, the packaging of the “CN High Protein White Confectionery Coating-MB” product may be marked with the country of origin Canada. 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 United States as determined under the NAFTA Marking Rules. Section 134.45(a) (2) of the regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish. 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. Applying the NAFTA Marking Rules set forth in Part 102 of the regulations to the facts of this case, we find that the country of origin of the CN high protein white confectionary coating-MB for marking purposes is Canada. That is, based on the facts provided, the rule of origin that applies is 19 Code of Federal Regulations 102.11 (a) (3) that states: That the country of origin of a good is the country in which each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in §102.20, and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. The §102.20 rule for Chapter 21, HTSUS, subheading 2106.90, requires “A change to a good of subheading 2106.90, other than to compound alcoholic preparations, from any other subheading, except from Chapter 4, Chapter 17, heading 2009, subheading 1901.90 or subheading 2202.90; . . . .” “All of the foreign materials incorporated in the “CN High Protein White Confectionary Coating-MB” product of subheading 2106.90, HTSUS, undergo a change in tariff classification, therefore, the product for marking purposes is Canada and its polylined cartons may be marked “product of”, or “made in” Canada. 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. Sincerely, Steven A. Mack Director National Commodity Specialist Division