CBP Rules that Starbucks Tea Packaging Dutiable Separate from Tea
Starbucks must pay duties on the packaging of the company's Tazo brand tea, said CBP in a Dec. 17 ruling (here). The ruling, HQ H254133, was in response to an internal advice request with the Agriculture Center of Excellence and Expertise. Starbucks sought agency input on whether the packaging materials for single servings of Tazo tea should be separately classifiable from the tea. Tazo Tea consists of tea that is flavored with various ingredients and then packaged in single-serve tea bags for retail sale.
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The company objected to CBP's interpretation of Additional U.S. Note 4 to Chapter 9 that requires that all immediate containers of tea less than 2.3 kg "are dutiable at the rates applicable to such containers and wrappings." Starbucks argued that the legislative history of the Tariff Act of 1913 and 1921 amendments show that Congress did not intend to make such tea containers dutiable. But such a review is not necessary because "when a statute is clear on its face, an agency need not delve into the legislative history," said CBP. "The current language has been in effect since 1963 and the subsequent adoption of the tariff schedule shows that "Congress intended that all immediate and intermediate containers should be dutiable," the agency said. "Furthermore, in regard to the Congressional intent at the time the HTSUS was adopted, we see no indication of an expressed Congressional intent to alter Custom’s previous classification of containers of tea under the" tariff schedule of the U.S.
Starbucks also argued that the legislative history shows that the note was created to enforce the Tea Importation Act of 1897, which was repealed in 1996. Therefore, it's “illogical for CBP to apply an obsolete act,” the company told CBP. While the ruling doesn't directly address the argument, CBP said it is "of the opinion that Congress clearly intended that all immediate containers, wrappings, and all intermediate containers should be classified separately as if they had been entered apart from the tea being entered." Therefore, as past court decisions and CBP rulings have held, the tea packaging should be classified separately, said CBP.