H312440

HQ H312440 December 3, 2020 OT:RR:CTF:VS H312440 EE CATEGORY: Classification Mr. Harold C. Averill Parker & Company P.O. Box 271 4694 Jaime Zapata Ave. Brownsville, TX 78522 RE: Modification of NY N306886; Preferential Tariff Treatment under NAFTA; Instant Chai Teas Dear Mr. Averill: This letter is to inform you of the reconsideration of New York Ruling Letter (“NY”) N306886 which was issued to you by U.S. Customs and Border Protection (“CBP”) on November 18, 2019. NY N306886 concerns the tariff classification of certain instant chai teas and their eligibility for preferential tariff treatment under the North American Free Trade Agreement (“NAFTA”). We have reviewed NY N306886 and determined that it is partially incorrect with respect to the eligibility of the instant chai teas for preferential tariff treatment under NAFTA. For the reasons set forth below, we are modifying that ruling letter. FACTS: The subject merchandise is described as instant chai teas under the brand name “Tea India.” There are four varieties of sweetened teas and one unsweetened tea under the product name “Chai Moments.” Chai Moments Ginger Chai sweetened tea contains 55 to 60 percent cane sugar, 12 to 14 percent whole milk powder, 11 to 13 percent skim milk powder, 6 to 7 percent black tea extract, 4 to 5 percent chicory root inulin, 1 to 2 percent ginger flavor, and 1 to 2 percent ginger spice powder. The cane sugar, whole milk powder, skim milk powder, and ginger flavor are products of the United States. The total dry weight of sugar is said to be 59.86 percent. The non-originating ingredients of the Chai Moments Ginger Chai are as follows: Ingredient Origin HTSUS Classification  Black Tea Extract Kenya 2101.20.20  Chicory Root Inulin Belgium 1108.20.00  Ginger Spice Powder China, India or Nigeria 2106.90.09  Cane Sugar United States 1701.99.50  Whole Milk Powder United States 0402.10.00  Skim Milk Powder United States 0402.10.00  Ginger Flavor United States 2106.90.09   Chai Moments Matcha Latte sweetened tea contains 55 to 60 percent cane sugar, 17 to 19 percent non-dairy creamer, 10 to 12 percent malted milk powder, 4 to 6 percent matcha green tea, 4 to 6 percent skim milk powder, 3 to 5 percent whole milk powder, 1 to 2 percent green tea matcha flavor, and less than 1 percent of pectin and tara gum. The cane sugar, non-dairy creamer, malted milk powder, skim milk powder, whole milk powder, and green tea matcha flavor are products of the United States. The total dry weight of sugar is said to be 55.25 percent. The non-originating ingredients of the Chai Moments Matcha Latte are as follows: Ingredient Origin HTSUS Classification  Matcha Green Tea Japan 0902.10.10  Pectin Mexico, China or Spain 1302.20.00  Tara Gum Peru 1302.20.00  Cane Sugar United States 1701.99.50  Non Dairy Creamer United States 2106.90.09  Malted Milk Powder United States 2106.90.09  Skim Milk Powder United States 0402.10.00  Whole Milk Powder United States 0402.10.00  Green Tea Matcha Flavor United States 2106.90.09   Chai Moments Plain Chai sweetened tea contains 55 to 60 percent cane sugar, 14 to 16 percent whole milk powder, 11 to 13 percent skim milk powder, 6 to 8 percent black tea extract, and 9 to 11 percent chicory root inulin. The cane sugar, whole milk powder, and skim milk powder are products of the United States. The total dry weight of sugar is said to be 56.39 percent. The non-originating ingredients of the Chai Moments Plain Chai are as follows: Ingredient Origin HTSUS Classification  Black Tea Extract Kenya 2101.20.20  Chicory Root Inulin Belgium 1108.20.00  Cane Sugar United States 1701.99.50  Whole Milk Powder United States 0402.10.00  Skim Milk Powder United States 0402.10.00   Chai Moments Ginger Turmeric sweetened tea contains 55 to 65 percent cane sugar, 12 to 14 percent whole milk powder, 11 to 13 percent skim milk powder, 5 to 6 percent black tea extract, 5 to 6 percent chicory root inulin, 1 to 2 percent ginger flavor, less than 1 percent of ginger spice powder, turmeric spice powder, cinnamon spice powder, and pepper spice powder. The cane sugar, whole milk powder, skim milk powder, and ginger flavor are products of the United States. The total dry weight of sugar is said to be 59.45 percent. The non-originating ingredients of the Chai Moments Ginger Turmeric are as follows: Ingredient Origin HTSUS Classification  Black Tea Extract Kenya 2101.20.20  Chicory Root Inulin Belgium 1108.20.00  Ginger Spice Powder China, India or Nigeria 2106.90.09  Turmeric Spice Powder India 2106.90.09  Cinnamon Spice Powder Vietnam 2106.90.09  Pepper Spice Powder India, Indonesia, Malaysia or Vietnam 2106.90.09  Cane Sugar United States 1701.99.50  Whole Milk Powder United States 0402.10.00  Skim Milk Powder United States 0402.10.00  Ginger Flavor United States 2106.90.09   Chai Moments Unsweetened Masala tea contains 45 to 50 percent whole milk powder, 35 to 40 percent chicory root inulin, 8 to 10 percent black tea extract, 1 to 2 percent cinnamon spice powder, and less than 1 percent of clove spice powder, ginger spice powder, cardamom spice powder, and pepper spice powder. The whole milk powder is a product of the United States. The non-originating ingredients of the Chai Moments Unsweetened Masala are as follows: Ingredient Origin HTSUS Classification  Chicory Root Inulin Belgium 1108.20.00  Black Tea Extract Kenya 2101.20.20  Cinnamon Spice Powder Vietnam 2106.90.09  Clove Spice Powder Brazil, Comoros, Indonesia, Madagascar, Vietnam or Zanzibar 2106.90.09  Ginger Spice Powder China, India, or Nigeria 2106.90.09  Cardamom Spice Powder Guatemala, Honduras or India 2106.90.09  Pepper Spice Powder India, Indonesia, Malaysia or Vietnam 2106.90.09  Whole Milk Powder United States 0402.10.00   All ingredients will be shipped to Mexico where they will be manufactured into instant chai tea products. They are then packaged into individual units (sticks) varying from 12.5g to 25g. These individual packages are then packaged in boxes of either 10 or 20 units each. Both are then bulk packed in master cartons of 6 each. The boxes that have 10 sticks each will be put up for retail sale. The boxes with 20 sticks will be sold as individual single serve per stick. The product is steeped in a cup of hot water to make a beverage. In NY N306886, CBP determined the Chai Moments Ginger Chai, Chai Moments Matcha Latte, Chai Moments Plain Chai, and Chai Moments Ginger Turmeric were classified under subheading 2101.20.54, Harmonized Tariff Schedule of the United States (“HTSUS”), or 2101.20.58, HTSUS, if the quantitative limits of Additional U.S. Note 8 to Chapter 17 have been reached. The Chai Moments Unsweetened Masala was classified under subheading, 2101.20.90, HTSUS. Additionally, CBP determined none of the five instant chai teas qualified for preferential tariff treatment under NAFTA because the non-originating materials used in the production of the instant chai teas did not undergo the change in tariff classification required by General Note 12(t)/21.2, HTSUS. CBP also determined that the country of origin of the Chai Moments Ginger Chai, Chai Moments Plain Chai, Chai Moments Ginger Turmeric and Chai Moments Unsweetened Masala for marking purposes was the United States and that the country of origin of the Chai Moments Matcha Latte for marking purposes was Kenya. ISSUES: Whether the instant chai teas classified under subheadings 2101.20.54, 2101.20.58, and 2101.20.90, HTSUS, imported into the United States from Mexico are eligible for preferential tariff treatment under the NAFTA. What is the country of origin of the instant chai teas for purposes of country of origin marking? LAW AND ANALYSIS: General Note (“GN”) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(a)(ii), HTSUS, provides that goods are eligible fo

General Note (“GN”) 12, HTSUS, incorporates Article 401 of the NAFTA into the HTSUS. GN 12(a)(ii), HTSUS, provides that goods are eligible for the NAFTA rate of duty if they originate in the territory of a NAFTA party and qualify to be marked as goods of Mexico. GN 12(b), HTSUS, sets forth the various methods for determining whether a good originates in the territory of a NAFTA party. Specifically, these provisions provide, in relevant part, as follows:(a) Goods originating in the territory of a party to the North American Free Trade Agreement (NAFTA) are subject to duty as provided herein. For the purposes of this note-- *          *          *          * (i) Goods that originate in the territory of a NAFTA party under the terms of subdivision (b) of this note and that qualify to bemarked as goods of Mexico under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury(without regard to whether the goods are marked), and goods enumerated in subdivision (u) of this note, when such goodsare imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appearsin the “Special” subcolumn followed by the symbol “MX” in parentheses, are eligible for such duty rate, in accordance withsection 201 of the North American Free Trade Agreement Implementation Act.(b) 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