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

NY R00826 October 12, 2004 CLA-2-17:RR:NC:SP:232 R00826 CATEGORY: Classification TARIFF NO.: 1806.20.9900 Ms. Heather Marcaccini 15407 McGinty Road West MS 26 Wayzata, MN 55391 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of a chocolate coating from Canada; Article 509 Dear Ms. Marcaccini: In your letter dated September 15, 2004, on behalf of Wilbur Chocolate, you requested a ruling on the status of a chocolate coating from Canada under the NAFTA. Information was submitted with your initial request dated July 28, 2004. The subject merchandise is stated to contain 60.7 percent sugar, 28.7 percent hydrogenated palm kernel oil, 6.04 percent cocoa powder (5.3 percent nonfat solids of the cocoa bean nib), 2.7 percent whey, 1.8 percent skim milk powder and traces of lecithin, salt and vanillin. The sugar will be refined in Canada from raw cane sugar produced in Australia and the Philippines. The hydrogenated palm kernel oil will be from the United States or Malaysia. The cocoa powder will be manufactured in Brazil or Holland. The other ingredients will be from Canada. The chocolate coating will be produced in Canada and shipped to the United States in bulk liquid form or in 10 pound blocks. The merchandise will be used to enrobe confectionery. The applicable subheading for the chocolate coating will be 1806.20.9900, Harmonized Tariff Schedule of the United States (HTS), which provides for chocolate and other food preparations containing cocoa...other preparations...in liquid, paste, powder, granular or other bulk form in containers or immediate packings, of a content exceeding 2 kg...other...other...other. The general rate of duty will be 8.5 percent ad valorem. 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; or (iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for "parts" and used in the production of such goods does not undergo a change in tariff classification because-- (A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or (B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts, provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note. Based on the facts provided, the chocolate coating described above qualifies for NAFTA preferential treatment, because it will meet the requirements of HTSUSA 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. 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 John Maria at 646-733-3031. 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, Bureau of Customs and Border Protection, 1300 Pennsylvania Ave. N.W., Washington, D.C. 20229. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division