H323927

 HQ H323927 March 15, 2024 OT:RR:CTF:FTM HQ H323927 TJS CATEGORY: Classification TARIFF NO.: 2402.10.3030 Center Director Agriculture & Prepared Products CEE U.S. Customs and Border Protection 1800 Eller Drive, Suite 104 Fort Lauderdale, FL 33316 Attn: Ashley A. McDonough, Senior Import Specialist Re: Application for Further Review of Protest No. 5203-21-100349; Tariff classification of cigars Dear Center Director: The following is our decision regarding the Application for Further Review (“AFR”) of Protest No. 5203-21-100349, timely filed on November 17, 2021, on behalf of Congo Import and Export LLC (“Protestant” or “Congo”), contesting U.S. Customs and Border Protection’s (“CBP”) tax assessment and tariff classification under the Harmonized Tariff Schedule of the United States (“HTSUS”) of certain cigars. This decision takes into consideration meetings with the Protestant’s counsel on April 6, 2022, and July 28, 2022, as well as supplemental emails, dated June 6, 2022, June 28, 2022, and July 29, 2022. FACTS: The merchandise at issue consists of cigars manufactured in Brazil. The cigars comprise of two brands in a total of four styles. The two brands are (1) Calf and (2) A2. The four styles are (1) Calf Red, (2) Calf Green, (3) A2 Red, and (4) A2 Green. The cigars are composed of a tobacco blend, stems, and additives. In an email dated June 6, 2022, Protestant’s counsel provided the value of the cigars. Counsel stated that the sale price at the individual cigar unit level is between $0.02 and $0.03. The cigars are sold in packs each containing 20 cigars. The subject protest covers nine entries of the cigars entered between April and December 2020. The merchandise was entered under subheading 2402.10.8080, HTSUSA (“Annotated”), which provides for “Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes: Cigars, cheroots and cigarillos, containing tobacco: Each valued 23¢ or over: Other.” In April 2021, CBP sent a sample of the cigars from entry HG8-15826331 to the U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau (“TTB”) laboratory for weighing. The sample included 9 sealed hard packs of 20 sticks from the full carton of A2 Red cigars. The TTB laboratory found that the cigars weighed an average of 2.32 pounds per 1000 sticks, thereby meeting the definition of “small cigars” for excise tax and tariff classification purposes. Accordingly, on May 18, 2021, CBP issued two CF-29 Notices of Action Taken for entry HG8-15826331 and an additional eight entries in which CBP determined that the subject merchandise comprised entirely of “small cigars”. CBP reclassified the merchandise under subheading 2402.10.3030, HTSUSA, which provides for “Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes: Cigars, cheroots and cigarillos, containing tobacco: Each valued less than 15¢: Small cigars, cheroots and cigarillos (weighing not more than 1.36 kg/1000).” The entries were liquidated on May 21 and 28, 2021. After liquidation, Congo independently submitted a sample of 800 cigars (200 of each brand) to the TTB for additional weighing. On June 29, 2021, the TTB reported most of the samples met the appropriate weight threshold of 3 pounds per 1000 sticks for large cigars as set forth in the Internal Revenue Code at 26 U.S.C. § 5701(a) and TTB’s implementing regulations. However, one pack of Calf Red cigars weighed significantly less, at 2.382 pounds per 1000 sticks. Upon learning that a quality control issue may have existed, Congo initiated an internal investigation and implemented several remedial measures. Congo reviewed weight testing records from 2019 to 2021 and determined that no more than 4.5% of the cigars imported into the United States weighed under 3 pounds per 1000 sticks, while the remaining 95.5% weighed over 3 pounds per 1000 sticks. Congo included copies of the weight testing records and the TTB assessment in its protest submission. ISSUE: What is the tariff classification of the cigars at issue? LAW AND ANALYSIS: Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further Review of Protest No. 5203-21-100349 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b) because Protestant alleges that the protest involves questions which have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts. Specifically, Protestant alleges that the protest concerns whether CBP must consider weight quality control issues when classifying imported cigars under the HTSUS. Classification of goods under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and, mutatis mutandis, to GRIs 1 through 5. The 2020 HTSUS provisions under consideration are as follows: 2402: Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes: 2402.10: Cigars, cheroots and cigarillos, containing tobacco: 2402.10.30: Each valued less than 15¢… 2402.10.3030: Small cigars, cheroots and cigarillos (weighing not more than 1.36 kg/1000) 2402.10.3070: Other * * * 2402.10.80: Each valued 23¢ or over… 2402.10.8080: Other * * * As the subject cigars contain tobacco and cost approximately 2 to 3 cents each, there is no dispute that the merchandise is classified in subheading 2402.10.30, HTSUS, as “Cigars, cheroots and cigarillos, containing tobacco: each valued less than 15¢.” The remaining issue lies at the 10-digit statistical level of classification, which is divided based on cigar size. Subheading 2402.10.3030, HTSUSA, applies to small cigars, which weigh not more than 1.36 kg/1000. Subheading 2402.10.3070, HTSUSA, applies to cigars that weigh more than 1.36 kg/1000. Congo claims that due to quality control issues, only 4.5% of the imported cigars weighed less than 3 pounds per 1000 sticks, including the sample taken by CBP. Therefore, Congo requests that, for excise tax and duty purposes, 95.5% of the cigar imports be treated as large cigars and 4.5% of the cigar imports be treated as small cigars. Congo made this calculation after examining weight testing records from various months between 2019 and 2021. Upon reviewing the records provided, we find they do not sufficiently corroborate Congo’s assertion and calculation. The weight records, which reflect an intermittent production schedule, do not clearly account for the imported entries of cigars. Additionally, Congo’s calculation takes into consideration weight testing results that post-date the entries at issue. Including weights beyond the scope of the entries affects the accuracy of Congo’s assessment. Thus, in our opinion, Congo’s calculation is unreliable. Regardless of whether Congo intended to manufacture large cigars, they have not provided substantive proof that the imported entries were composed of 95.5% large cigars. To further support its position, Congo sought another TTB weight assessment in June 2021, after the subject entries were liquidated. Although the TTB found most of the packs weighed over 3 pounds per 1000 sticks, one pack weighed significantly less. That CBP is not bound by this TTB assessment notwithstanding, we note 

Initially, we note that the matter is protestable under 19 U.S.C. § 1514(a)(2) as a decision on classification. The protest was timely filed, within 180 days of liquidation of the first entry. (Miscellaneous Trade and Technical Corrections Act of 2004, Pub. L. 108-429, § 2103(2)(B)(ii), (iii) (codified as amended at 19 U.S.C. § 1514(c)(3) (2006)). Further Review of Protest No. 5203-21-100349 is properly accorded to Protestant pursuant to 19 C.F.R. § 174.24(b) because Protestant alleges that the protest involves questions which have not been ruled upon by the Commissioner of CBP or his designee or by the Customs courts. Specifically, Protestant alleges that the protest concerns whether CBP must consider weight quality control issues when classifying imported cigars under the HTSUS. Classification of goods under the HTSUS is made in accordance with the General Rules of Interpretation (“GRIs”). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative section or chapter notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. GRI 6 requires that the classification of goods in the subheadings of headings shall be determined according to the terms of those subheadings, any related subheading notes and, mutatis mutandis, to GRIs 1 through 5.The 2020 HTSUS provisions under consideration are as follows:2402: Cigars, cheroots, cigarillos and cigarettes, of tobacco or of tobacco substitutes:2402.10: Cigars, cheroots and cigarillos, containing tobacco:2402.10.30: Each valued less than 15¢…2402.10.3030: Small cigars, cheroots and cigarillos (weighing not more than 1.36 kg/1000)2402.10.3070: Other* * *2402.10.80: Each valued 23¢ or over…2402.10.8080: Other* * *As the subject cigars contain tobacco and cost approximately 2 to 3 cents each, the