N320151

N320151 July 19, 2021 CLA-2-18:OT:RR:NC:N2:N232 CATEGORY: Classification; Marking, Trade Programs TARIFF NO.: 1806.90.5500, 1806.90.5900, 1806.90.9090 Ms. Marie-Helene Roy Concept Gourmet du Village ULC 539 Chemin du Village Morin-Heights, QC J0R 1H0 Canada RE: The Classification, Marking and Eligibility of the United States-Mexico-Canada Trade Agreement (USMCA) for Double Truffle Hot Chocolate Drink Mix and No Sugar Added Hot Chocolate Drink Mix Dear Ms. Roy: This is in response to your letter dated June 10, 2021, requesting a ruling on classification, marking and the eligibility of the USMCA on Double Truffle Hot Chocolate Drink Mix and No Sugar Added Hot Chocolate Drink Mix. Double Truffle Hot Chocolate Drink Mix is said to contain 55 percent sugar (Product of Brazil), 10 percent creamer (Product of USA), 10 percent cocoa (Product of Netherlands), 20 percent modified milk (Product of Canada), 2 percent modified cellulose gum (Product of USA), 2 percent salt (Product of Canada), and1 percent flavor (Product of Canada). You state that the finished product contains less than 1 percent butterfat and 18 to 28 percent milk solids. All ingredients are received, mixed, weighed and packaged in Canada. The Double Truffle Hot Chocolate Drink Mix will be imported for retail sale in 35 grams pouches. Package instructions state that the product is consumed after being dissolved in boiling water or very hot milk. No Sugar Added Hot Chocolate Drink Mix is said to contain 40 percent cocoa (Product of Netherlands), 35 percent chicory root fiber (Product of Belgium), 20 percent modified milk (Product of Canada), 2 percent salt (Product of Canada), 2 percent sucralose (Product of China), and percent flavor (Product of Canada). You state that the finished product contains 0.71 to 1.92 percent butterfat and 18 to 28 percent of milk solids. All ingredients are received, mixed, weighed and packaged in Canada. The No Sugar Added Hot Chocolate Drink Mix will be imported for retail sale in 15 grams pouches. Package instructions direct the consumer to add hot milk to make the product. Classification: The applicable subheading for Double Truffle Hot Chocolate Drink Mix will be 1806.90.5500, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Chocolate and other food preparations containing cocoa: Other: Other: Other: Articles containing over 10 percent by dry weight of sugar described in additional U.S. note 3 to chapter 17: Described in additional U.S. note 8 to chapter 17 and entered pursuant to its provisions. The general rate of duty will be 3.5 percent ad valorem. If the quantitative limits of additional U.S. note 8 to chapter 17 have been reached, the product will be classified in subheading 1806.90.5900, HTSUS, and dutiable at the rate of 37.2 cents per kilo plus 6 percent ad valorem. In addition, products classified in subheading 1806.90.5900, HTSUS, may be subject to additional duties based on their value, as described in subheadings 9904.17.49 to 9904.17.65, HTSUS. The applicable subheading for No Sugar Added Hot Chocolate Drink Mix will be 1806.90.9090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for Chocolate and other food preparations containing cocoa: Other: Other: Other: Other: Other: Other. The general rate of duty will be 6 percent ad valorem. Country of Origin Marking The marking statute, Section 304(a), Tariff Act of 1930, as amended (19 U.S.C. § 1304(a)), provides that unless excepted, every article of foreign origin imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. § 1304 was “that the ultimate purchaser should be able to know by an inspection of the marking on imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will.” United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302 (1940). Pursuant to section 102.0, interim regulations, related to the marking rules, tariff-rate quotas, and other USMCA provisions, published in the Federal Register on July 6, 2021 (86 FR 35566), the rules set forth in §§ 102.1 through 102.18 and 102.20 determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes, with the exception of textile goods which are subject to the provisions of 19 C.F.R. § 102.21. Applied in sequential order, the required hierarchy establishes that: The country of origin of a good is the country in which: (a)(1) The good is wholly obtained or produced; (a)(2) The good is produced exclusively from domestic materials; or (a)(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 of that section, and all other requirements of these rules are satisfied. Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because both drink mixes are neither wholly obtained nor produced exclusively from “domestic” (Canada, in this case) materials. Accordingly, we look to section 102.11(a)(3). The applicable tariff shift requirement in section 102.20 for the drink mixes of subheading 1806.90, HTSUS, consist of the following: A change to subheading 1806.90 from any other subheading. Because the foreign materials contained in the Double Truffle Hot Chocolate Drink Mix (sugar, creamer, cocoa powder and modified cellulose gum) and the No Sugar Added Hot Chocolate Drink Mix (cocoa, chicory root fiber and sucralose) are classified in subheadings outside of subheading 1806.90, the tariff shift rule in 19 C.F.R. § 102.20 is met. Therefore, in accordance with 19 C.F.R. § 102.11(a)(3), the country of origin for marking purposes of both products is Canada. USMCA: The USMCA was signed by the Governments of the United States, Mexico, and Canada on November 30, 2018. The USMCA was approved by the U.S. Congress with the enactment on January 29, 2020, of the USMCA Implementation Act, Pub. L. 116-113, 134 Stat. 11, 14 (19 U.S.C. § 4511(a)). General Note (“GN”) 11, HTSUS, implements the USMCA. GN 11(b) sets forth the criteria for determining whether a good is an originating good for purposes of the USMCA. GN 11(b) states, in relevant part: For the purposes of this note, a good imported into the customs territory of the United States from the territory of a USMCA country, as defined in subdivision (l) of this note, is eligible for the preferential tariff treatment provided for in the applicable subheading and quantitative limitations set forth in the tariff schedule as a “good originating in the territory of a USMCA country” only if— the good is a good wholly obtained or produced entirely in the territory of one or more USMCA countries; the good is a good produced entirely in the territory of one or more USMCA countries, exclusively from originating materials; the good is a good produced entirely in the territory of one or more USMCA countries using nonoriginating materials, if the good satisfies all applicable requirements set forth in this note (including the provisions of subdivision (o)); or … Since both the Double Truffle Hot Chocolate Drink Mix and No Sugar Added Hot Chocolate Drink Mix contain non-originating materials, they are not considered goods wholly obtained or produced entirely in a USMCA country under GN 11(b)(i) and (ii). We must next determine whether the Double Truffle Hot Chocolate Drink Mix an