N325637

N325637 May 19, 2022 CLA-2-17:OT:RR:NC:N2:232 CATEGORY: Classification; Country of Origin; Trade Programs TARIFF NO.: 1701.99.1050; 1701.99.5050 Mr. Jason Cetel Crook & Marker LLC 1 N. Johnston Avenue Hamilton, NJ 08609 RE: The tariff classification, country of origin and eligibility of the United States-Mexico-Canada Agreement (USMCA) of Fermentation Starters from Canada Dear Mr. Cetel: In your letter dated April 25, 2022, you requested a binding ruling on the classification, country of origin and eligibility of Fermentation Staters under the United States-Mexico-Canada Agreement (USMCA). An ingredients breakdown, manufacturing flowchart and descriptive literature were included with your request. The subject merchandise is described as two Fermentation Starters. FermGo™ FG-01 is said to contain 99 percent granulated sugar (with a polarity greater than or equal to 99.5) and 1 percent active yeast. FermGo™ FG-02 is said to contain 99.98 percent granulated sugar (with a polarity greater than or equal to 99.5), 0.1 percent active yeast and 0.1 percent inactive yeast cell hulls. The granulated sugar (product of Brazil or Columbia) and yeast (product of the European Union) are blended, homogenized and packed in Canada. The finished product will be shipped to the United States in approximately 2,100-2,400-pound supersacks or 44-pound bags. The Fermentation Starter products will be used in the commercial manufacturing of alcoholic beverages. Classification: In your request, you suggest that the correct classification for the Fermentation Starters is 2102.10.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provide for “Yeasts (active or inactive); other single-cell microorganisms, dead (but not including vaccines of heading 3002); prepared baking powders: Active yeasts. We disagree. Classification under the Harmonized Tariff Schedule of the United States (HTSUS) is made in accordance with the General Rules of Interpretation (GRI). GRI 3(b) provides that mixtures and composite goods consisting of different materials or components shall be classified as if the consisted solely of the material or component that which gives them their essential character. Explanatory Note VIII to GRI 3(b) states that the factor which determines essential character will vary as between different kinds of goods. It may, for example, be determined by the nature of the material or component, its bulk, quantity, weight or value, or by the role of a constituent material in relation to the use of the good. The Fermentation Starters consist of 99-99.98 percent sugar and 0.2-1 percent yeast and are used as sugar to start the fermentation process in the manufacture of alcoholic beverages. Thus, the sugar imparts the essential character of the Fermentation Starters. CBP has consistently classified mixtures of sugar and other ingredients in heading 1701, HTSUS, when an analysis of the mixture indicated that the sugar gave the mixture its essential character. CBP has consistently classified such blends in heading 1701, HTSUS. For example, see NY G86340, dated January 29, 2001, 99% sugar, 1% gelatin; NY G86384, dated February 8, 2001, 95% sugar, 5% gelatin; NY G86512, dated February 12, 2001, 99% sugar, 1% dried apple juice; NY H82796, dated July 12, 2001, 99.5% sugar, .5% cocoa; and NY I86961, dated October 30, 2002, cinnamon sugar and vanilla sugar blends. Therefore, in accordance with GRI 3(b), the applicable subheading for Fermentation Starters will be 1701.99.1050, HTSUS, which provides for “Cane or beet sugar and chemically pure sucrose, in solid form: Other: Other: Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions: Other: Other.” The rate of duty will be 3.6606 cents per kilogram less 0.020668 cents per kilogram for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 3.143854 cents per kilogram. If not described in additional U.S. note 5 to chapter 17 and not entered pursuant to its provisions, the applicable subheading will be 1701.99.5050, HTSUS. The rate of duty will be 35.74 cents per kilogram. Country of Origin: 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. The “country of origin” is defined in 19 C.F.R. § 134.1(b) as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 the meaning of this part; however, for a good of a NAFTA or USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.” 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. See 19 C.F.R. § 102.11. Applied in sequential order, 19 C.F.R. § 102.11(a) provides that the country of origin of a good is the country in which: (1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or (3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied. The Fermentation Starters are neither “wholly obtained or produced” nor “produced exclusively from domestic materials.” Therefore, paragraphs (a)(1) and (a)(2) cannot be used to determine the country of origin of the Fermentation Starters, and paragraph (a)(3) must be applied next to determine the origin of the finished article. The Fermentation Starters are classified under heading 1701, Harmonized Tariff Schedule of the United States (HTSUS). The tariff shift requirement in Part 102.20 for the heading 1701 at issue states: A change to heading 1701 through 1702 from any other Chapter. The Fermentation Starters do not meet the tariff shift because the foreign material, granulated sugar (Product of Brazil or Columbia) is also classified under heading 1701. As a result, Part 102.11(a) does not apply. Section 102.11(b) states, in relevant part: Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section: The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good…. In determining the “essential character” of the finished good, Section 102.18(b)(1) provides, in relevant part: (b)(1) For purposes of identifying the material that imparts the essential character to a good under § 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the § 102.20 specific rule or other requirements applicable to th

of the mixture indicated that the sugar gave the mixture its essential character. CBP has consistently classified such blends in heading 1701, HTSUS. For example, see NY G86340, dated January 29, 2001, 99% sugar, 1% gelatin; NY G86384, dated February 8, 2001, 95% sugar, 5% gelatin; NY G86512, dated February 12, 2001, 99% sugar, 1% dried apple juice; NY H82796, dated July 12, 2001, 99.5% sugar, .5% cocoa; and NY I86961, dated October 30, 2002, cinnamon sugar and vanilla sugar blends. Therefore, in accordance with GRI 3(b), the applicable subheading for Fermentation Starters will be 1701.99.1050, HTSUS, which provides for “Cane or beet sugar and chemically pure sucrose, in solid form: Other: Other: Described in additional U.S. note 5 to this chapter and entered pursuant to its provisions: Other: Other.” The rate of duty will be 3.6606 cents per kilogram less 0.020668 cents per kilogram for each degree under 100 degrees (and fractions of a degree in proportion) but not less than 3.143854 cents per kilogram. If not described in additional U.S. note 5 to chapter 17 and not entered pursuant to its provisions, the applicable subheading will be 1701.99.5050, HTSUS. The rate of duty will be 35.74 cents per kilogram. Country of Origin: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.The “country of origin” is defined in 19 C.F.R. § 134.1(b) as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render suc