Eligibility of fish oil in capsule form for preferential tariff treatment under the U.S.- Peru FTA; further production

HQ H078175 December 15, 2009 CLA-2 OT:RR:CTF:VS H078175 KSG CATEGORY: Classification Linda Louie United Customhouse Brokers, Inc. 540 E. Alondra Blvd. Gardena, CA 90248 Re: Eligibility of fish oil in capsule form for preferential tariff treatment under the U.S.- Peru FTA; further production Dear Ms. Louie: This is in reply to your letter dated September 24, 2009, on behalf of your client, California Health Food, Inc., concerning the eligibility of certain imported fish oil capsules for preferential tariff treatment under the United States-Peru Trade Promotion Agreement (“Peru FTA”) . FACTS: You state that anchovy, sardines, and mackerel fish are caught in Peruvian waters and are processed into fish oil in Peru. The fish oil is stored in 190 kg. drums. About 400 drums are shipped to China. In China, the fish oil is processed into soft gelatin capsules, and the capsules are then packaged in blisterpacks and labeled. You did not indicate the country of origin of the gelatin capsules. The packaged fish oil in capsule form is then shipped to the U.S. ISSUE: Whether the imported fish oil in capsule form is considered an originating good pursuant to the Peru FTA? LAW AND ANALYSIS: The United States-Peru Trade Promotion Agreement was signed on April 12, 2006. The United States-Peru Trade Promotion Agreement Implementation Act (Pub. L. 110-138, 121 Stat. 1455 (19 U.S.C. 3805 note)), as amended by § 1634 of the Pension Protection Act of 2006 (Pub. L. 109-280, 120 Stat. 1167), implemented the Agreement in General Note 32, of the Harmonized Tariff Schedule of the United States (“HTSUS”). GN 32(c)(iii) states that “A good that has undergone production necessary to qualify as an originating good under this note shall not be considered to be an originating good if, subsequent to that production, the good—(A) undergoes further production or any other operation outside the territory of Peru or the United States, other than unloading, reloading or any other operation necessary to preserve the good in good condition or to transport the good to the territory of a party to the Agreement; or (B) does not remain under the control of customs authorities in the territory of a country other than Peru or the United States. In this case, the Peruvian-origin fish oil is shipped to China, which is not a party to the Peru FTA. In China, the fish oil is filled into gelatin capsules and packaged. We find that this processing is considered further production outside the territories of Peru or the United States. The Chinese processing is not necessary to preserve the fish oil in good condition. Therefore, pursuant to GN 32(c)(iii)(A) , the imported fish oil capsules would not be considered an originating good under the Peru FTA . HOLDING: The imported fish oil capsules involved in this case undergo further production in China. Pursuant to GN 32(c)(iii)(A), the capsules will not be eligible for preferential tariff treatment under the Peru FTA. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs official handling the transaction. Sincerely, Monika R. Brenner, Chief Valuation & Special Programs Branch