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

NY R01631 April 11, 2005 CLA-2-21:RR:NC:2:228 R01631 CATEGORY: Classification TARIFF NO.: 2106.90.8200 Ms. Heather Marcaccini Cargill, Inc. P.O. Box 5626 Minneapolis, MN 55440-5626 RE: The tariff classification and status under the North American Free Trade Agreement (NAFTA), of confectionery coatings from Canada; Article 509 Dear Ms. Marcaccini: In your letter dated March 16, 2005, you requested a ruling on the status of a confectionery coating from Canada under the NAFTA. An Ingredients breakdown and a description of the manufacturing process were submitted with your letter. The product is described as a butterscotch flavored confectionary coating material in liquid or flake form. The coating consists of 56.8 percent sugar, 29.9 percent hydrogenated palm kernel oil, 1.13 percent amber cocoa, 6.26 percent non-fat milk powder, 5.3 percent whole milk powder, and trace amounts of lecithin, butterscotch flavor, orange and yellow coloring. The sugar will be a product of the Philippines, Australia, or Costa Rica, the palm kernel oil is from Malaysia, the amber cocoa is from Holland, and the milk powders, color, lecithin, and butterscotch flavor are from Canada. In Canada the ingredients are blended and viscosity is adjusted. When made into flakes the liquid is dried and broken. The coating will be used on confectionery products such as snack bars, candy bars, etc. The applicable subheading for the coatings will be 2106.90.8200, Harmonized Tariff Schedule of the United States Annotated (HTSUSA), which provides for food preparations not elsewhere specified or included…other…containing over 10 percent by weight of milk solids…other…other. The general rate of duty will be 6.4 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 Based on the facts provided, the product described above qualifies for NAFTA preferential treatment, because it will meet the requirements of HTSUSA General Note 12(b)(ii)(A) and Note 12(t)/21.12. The coating will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements. 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 181 of the Customs Regulations (19 C.F.R. 181). This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party. 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 Stanley Hopard at 646-733-3029. Sincerely, Robert B. Swierupski Director, National Commodity Specialist Division