In ruling NY N321763 (October 21, 2021), Customs and Border Protection (CBP) discussed the classification and country of origin of . The merchandise is described as carbonated vodka sodas – specifically Absolute Vodka Lime & Cucumber; Absolut Vodka Soda Grapefruit & Rosemary; and Absolut Soda Raspberry & Lemongrass. The vodka sodas are ready to drink products in cans that do not need to be mixed with any other beverage prior to consumption. They contain water, vodka, natural extracts and essences, and carbon dioxide. The production of the vodka itself begins in Sweden with an alcohol by volume of 60%. It is then exported to Canada in bulk, where the bulk vodka is diluted with water, natural extracts and essences, and carbon dioxide in order to form the bulk finished product. At this portion, the alcohol by volume content is of approximately 5%. The bulk finished product then undergoes a canning process whereby it is filtered and sealed in 35 ml cans. The cans are pasteurized to form the vodka sodas ready for export to the U.S.

Beginning with its classification, CBP looked towards the Harmonized Commodity Description and Coding System Explanatory Notes (EN) – which serves as the official interpretation of the Harmonized System at the international level. CBP noted that the EN to heading 2208 provides the following:

(A)  Spirits produced by distilling wine, cider or other fermented beverages or fermented grain or other vegetable products, without adding flavouring; they retain, wholly or partly, the secondary constituents (esters, aldehydes, acids, higher alcohols, etc.) which give the spirits their peculiar individual flavours and aromas.

Because flavoring was added to the vodka sodas in Canada, pursuant to the language of the EN, the vodka sodas cannot be classified as “Spirits.” As such, CBP determined that the applicable subheading for the three vodka soda products is 2208.90.8000, Harmonized Tariff System of the United States (HTSUS), which provides for “Undenatured ethyl alcohol of an alcoholic strength by volume of less than 80 percent vol.; spirits, liqueurs and other spirituous beverages: Other: Other: Other.” The general rate of duty is 21.1 cents per liter.

Regarding the country of origin marking, CBP referred to sections 102.1 through 102.18 and 102.20 of the USMCA, which determine the country of origin for marking purposes with respect to goods imported from Canada and Mexico. Section 102.11 provides a hierarchy for determining the country of origin for marking purposes, which establishes origin in the country in which:

  • (a)(1) The good is wholly obtained or produced;
  • (a)(2) The good is produced exclusively from domestic materials; or
  • (a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied.

CBP found that Sections 102.11(a)(1) and 102.11(a)(2) did not apply to the vodka sodas because neither were wholly obtained or produced exclusively from “domestic” – in this case Canadian – materials. As such, CBP turned to Section 102.11(a)(3) and found that the tariff shift rule was met. This was due to the fact that the foreign materials – the vodka and the natural extracts and essences – are classified under subheadings 2208.60 and 3302.10, respectively. As such, CBP determined that the country of origin for marking purposes of the vodka sodas was Canada.