April 24, 2009 CBP Bulletin Notice on UAFTA Preferential Treatment for Certain Meal Replacement Soups

Modification of ruling, revocation of treatment.CBP is modifying one ruling on the UAFTA preferential treatment for certain meal replacement soups; in addition, this notice covers any rulings on this merchandise which may exist but have not been specifically identified. CBP is also revoking any treatment it has previously accorded to substantially identical transactions.

According to CBP, the modification and revocation are effective for merchandise entered or withdrawn from warehouse for consumption on or after June 23, 2009.

Meal replacement soups. The products are described as meal replacement soups put up for retail sale in single serving packets. The powdered chicken flavored and tomato flavored soups each contain milk solids, maltodextrin, thickeners, glucose syrup solids, flavor enhancers, salt, milk minerals, emulsifiers, vitamins, and silicon dioxide. The chicken flavor also contains vegetable fat, chicken flavor, food acid, vegetable powder, dehydrated chicken, animal fat, spice extract, potassium chloride, and color. The tomato flavor also contains tomato powder, palm oil, onion powder, yeast extract, artificial tomato flavor, ground coriander, parmesan cheese powder, garlic powder, dill, basil, and parsley. The purchaser of the dried mixes adds boiling water to make the soups.

CBP is issuing HQ H044090 in order to modify NY N016004 and determine that the meal replacement soups qualify for preferential treatment under the UAFTA. The other aspects of NY N016004 remain unchanged.

All but thirteen ingredients used to make the soups originate in either the United States or Australia. In Australia, the ingredients of the soups are blended, weighed, and packed for retail sale in 54 gram sachets. Since thirteen ingredients originate in countries other than Australia or the United States, the soups at issue would not be considered ''wholly obtained or produced'' and therefore it must be must determined whether the soups would satisfy the applicable change in tariff classification.

The soups are classified in HTS 2104.10.00. The applicable rule set forth in HTSUS General Note (GN) 28(n) provides as follows: "A change to heading 2104 from any other chapter." Eleven of the non-originating ingredients are classified in chapters other than Chapter 21. However, the beverage whitener contained in both products and the yeast extract contained in the tomato soup are classified in Chapter 21. Since these two ingredients are classified in the same chapter as the meal replacement products at issue, the tariff shift rule is not met.

Failure to satisfy the required tariff change is not necessarily fatal to a product's UAFTA eligibility. GN 28(e)(i) provides the following de minimis rule:

"Except as provided in subdivision (e)(ii) below, a good (other than a textile or apparel good described in subdivision (d) above) that does not undergo a change in tariff classification pursuant to subdivision (n) of this note shall nonetheless be considered an originating good if -

(A) the value of all non-originating materials that are used in the production of the good, and do not undergo the applicable change in tariff classification, does not exceed 10 percent of the adjusted value of the good;

(B) the value of such non-originating materials is included in calculating the value of non-originating materials for any applicable regional value content requirement for the good; and

(C) the good meets all other applicable requirements of this note."

The beverage whitener and yeast extract ingredients make up less than 10 percent of the meal replacement products' value. However, there are limitations to the de minimis principle. GN 28(e)(ii)(H) provides that the de minimis principle does not apply to:

"A non-originating material used in the production of a good provided for in chapters 1 through 21, inclusive, unless the non-originating material is provided for in a different subheading than the good for which origin is being determined under this note."

The beverage whitener and yeast extract ingredients are goods classified in subheading 2106.90. Since both ingredients are classified in a different subheading than the meal replacement soups which are in subheading 2104.10, GN 28(e)(i) and GN 28(e)(ii)(H) are satisfied.

Based upon the above information, CBP determines that the Chicken Flavored Meal Replacement Soup and the Tomato Flavored Meal Replacement Soup are eligible for preferential treatment under the UAFTA.

(See ITT's Online Archives or 02/26/09 news, 09022650, for BP summary of proposed HQ H044090.)

April 24, 2009 CBP Bulletin (Vol. 43, No. 17) available athttp://www.cbp.gov/xp/cgov/trade/legal/bulletins_decisions/bulletins_2009/