Classification of a sugar blend

HQ 952272 December 8, 1992 CLA-2 CO:R:C:F 952272K CATEGORY: Classification TARIFF No.: 1701.99.0125; 9904.40.20 Mr. Michael Dahm Willson Freight Services Inc. 560 Delaware Ave. Buffalo, New York 14202 RE: Classification of a sugar blend Dear Sir: This is in response to your letter of July 21, 1992, in which you asked for a ruling concerning the classification of a sugar blend and for other information. FACTS: Sugar from either Australia or Swaziland will be imported into Canada and refined and then blended with fructose and dextrose of U.S. origin. The product will then be imported into the United States in bulk form. The composition of the blend consists of 64 percent refined cane sugar, 31 percent dextrose and 5 percent fructose. ISSUE: What is the tariff classification of the blended sugar and is the product free of duty under the Canadian Free Trade Agreement (CFTA)? LAW AND ANALYSIS: The classification of imported merchandise under the Harmonized Tariff Schedule of the United States (HTSUS) is governed by the principles set forth in the General Rules of Interpretation (GRI). GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule and any relative section and chapter notes and, unless otherwise required, according to the remaining GRI, taken in their appropriate order. Because there is no heading that provides for blends or mixtures of the sugars, as identified -2- above, classification may not be accomplished at the heading or GRI 1 level. GRI 2(b) then requires that "the classification of goods consisting of more than one material or substance shall be according to the principles of rule 3." GRI 3(b) is applicable for mixtures and that rule requires that "mixtures, composite goods of different materials or made up of different components ...which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable." Headquarters Ruling Letter (HRL) 082230 dated January 12, 1989 (082230), concerned a blend of 65 percent sugar and 35 percent dextrose. In applying the above rule, we held that the sucrose (sugar) was the essential character of the blend and it is considered as sugar, classifiable in subheading 1701.99, HTSUS, for cane or beet sugar. We affirm our position that is also applicable to your merchandise which is classifiable in subheading 1701.99.0125, HTSUS. You also inquired as to the country of origin of the blend, whether the blend is subject to quota, and whether the blend is entitled to treatment under the Canadian Free Trade Agreement (CFTA). In HRL 082033 dated September 5, 1989 (082033), we held that raw sugar from Australia which is refined in Canada is not substantially transformed into a Canadian product since the refining process does not change the essential character of the sugar. Accordingly, raw sugar from Australia and Swaziland that is refined in Canada remains a product of Australia and Swaziland. Australia and Swaziland are both subject to the sugar quota provided for by the Additional U.S. Note 3 (a) and (b), Chapter 17, HTSUS. The sugar blend is classifiable under subheading 1701.99.0125, HTSUS, as sugar not to be further refined or improved in quality. Accordingly, the sugar is subject to an additional agricultural fee of 2.2 cents per kilogram under subheading 9904.40.20, HTSUS, with a Certificate of Quota Eligibility. If a Certificate of Quota Eligibility is not submitted, the classification would be under subheading 1701.99.0225, HTSUS, and the additional agricultural fee under subheading 9904.40.20, HTSUS, would also apply. With respect to the application of duty reductions under the CFTA, raw cane sugar is classifiable under subheading 1701.11, HTSUS; dextrose is classifiable under subheading 1702.30, HTSUS; and fructose is classifiable under subheading 1702.50, HTSUS. After refining the raw sugar in Canada and the blending with -3- dextrose and fructose, the product is classifiable under subheading 1701.99, HTSUS. To qualify for a duty reduction under the CFTA, the product must be wholly obtained or produced in the territory of Canada and/or the United States or, for purposes here, must have been transformed in the territory of Canada and/or the United States, so as to be subject to a change in the tariff classification as set forth in the General Notes to the HTSUS. General Note (3)(c)(vii)(R)(4)(bb), HTSUS, for Section IV, Chapters 16 through 24, requires a change in the merchandise to heading 1704 from any other heading to qualify as a change in tariff classification. Because the blending of the components does not create the requisite change in tariff classification, the product does not qualify for duty reduction under the CFTA. HOLDING: Merchandise consisting of raw sugar from Australia or Swaziland that was refined in Canada and used in a blending process resulting in a blend composed of 64 percent sugar, 31 percent dextrose and 5 percent fructose is classifiable as sugar, not to be further refined or improved in quality, under subheading 1701.99.0125, HTSUS. Further, the merchandise is not eligible for duty reduction treatment under the Canadian Free Trade Agreement. Sincerely, John Durant Director Commercial Rulings Division