Decision on Application for Further Review of Protest No. 3304-92-100052, on the Merchandising Processing Fee Assessed on Juice Imported from Canada

HQ 953326 April 27,1993 CLA-2 CO:R:C:F 953326 JGH CATEGORY: Classification TARIFF NO.: 2009.70.000 District Director of Customs 300 Second Ave Great Falls, Montana 59401 RE: Decision on Application for Further Review of Protest No. 3304-92-100052, on the Merchandising Processing Fee Assessed on Juice Imported from Canada Dear Sir: This protest involves the amount of merchandise processing fee imposed on certain entries in 1992 at Sweet Grass, Montana, of reconstituted juice. FACTS: Headquarters Ruling Letter (HRL) 556597 concerned the classification of the merchandise in issue here: processed juice concentrates. The issue in that case was whether a juice concentrate which was at least 83% U.S. origin could be returned after processing in Canada as American Goods, under subheading 9801.00.10 or 9802.00.50, HTSUS. However, it was concluded that the processing in Canada, which consisted of diluting the concentrate with water and packaging, was a finishing operation; thus, beyond the scope of the claimed provisions. Both the juice concentrate and reconstituted juice are classifiable under the provision for apple juice in subheading 2009.70.000, HTSUS. It is now claimed that under General Note 3(c)(vii) H, United States-Canada Free-Trade Agreement Implementation Act of 1988 (CFTA), (Annex 301, CFTA), based on the value of the originating goods and cost of assembly in Canada, the entries are entitled to a lower merchandise processing fee. - 2 - ISSUE: Whether the entries are entitled to lower merchandise processing fees by virtue of the CFTA. LAW AND ANALYSIS: As previously stated, both the concentrated and reconstituted juices are classifiable in subheading 2009.70.000, HTSUS. Under General Note 3(c)(vii)(4)(aa) a change from one chapter to another is required for the provisions of the CFTA to apply to products of this type classifiable in Chapter 20. Thus, the juice product is not a product of Canada for the purposes of the CFTA. Furthermore, the provisions of General Note 3(c)(vii) G and H apply to assembly operations. The reconstitution of the juice was not an assembly operation. Section 203 of the United States-Canada Free-Trade Agreement Act of 1988 (Act of Sept. 28, 1988, 102 Stat 1851, Pub.L. 100- 449) amended 19 U.S.C. 58c(b) by adding a new subparagraph (10) which provided in pertinent part: The fee charged under subsection (a)(9) or (10) of this section with respect to goods of Canadian origin (as determined under section 202 of the United States-Canada Free-Trade Agreement Implementation Act of 1988) shall be in accordance with Article 403 of the United States-Canada Free-Trade Agreement. The merchandise that is the subject of this protest was entered on October 6, and 8, 1992. For that period of time Article 403 of the Agreement provided that the user fee for Canadian-origin goods was to be 40 percent of the user fee otherwise applicable. The provision applied only to goods determined to originate in Canada under Section 202 of the Implementation Act. In this situation the Customs Service determined that the apple juice which was imported after reconsitution did not qualify as a Canadian article. Therefore, the reduction in the user fee does not apply. - 3 - HOLDING: You are directed to deny the protest in full. A copy of this decision should be provided to the protestant with the Form 19 Notice of Action. Sincerely, John Durant, Director