In ruling N324972 (June 24, 2022), Customs and Border Protection (CBP) discussed the tariff classification and country of origin of liquid sugar from Canada. The subject merchandise contains 66.7% sugar and 33.3% water and trace amounts of Calcium hydroxide. The raw cane sugar is a product from Brazil that is granulated, diluted with water, heated, filtered, and packed. The finished product is shopped to the U.S. in 20,000 liters bulk tanks, where, upon importation, the liquid sugar is used in the production of a variety of foodstuffs.
CBP first determined that the applicable tariff classification of the liquid sugar would be 1702.90.4000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for
“Other sugars, including chemically pure lactose, maltose, glucose and fructose, in solid form; sugar syrups not containing added flavoring or coloring matter; artificial honey, whether or not mixed with natural honey; caramel: Other, including invert sugar and other sugar and sugar syrup blends containing in the dry state 50 percent by weight of fructose: Derived from sugar cane or sugar beets: Other: Other.” The general rate of duty is 0.35 cents per liter.
For the country of origin ruling, CBP established that, as defined under 19 CFR 134.1(b), the country of origin is the country of “manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the ‘country of origin’ within the meaning of this part; however, for a good of a…USMCA country, the marking rules set forth in part 102 of this chapter (hereinafter referred to as the part 102 Rules) will determine the country of origin.”
According to 19 CFR 102.11(a), which provides a required hierarchy for country of origin determinations for marking purposes for goods imported from Canada and Mexico, the country of origin is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Part 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
CBP determined that paragraph 102.11(a)(3) must be applied to determine the origin of the finished article. The applicable tariff shift requirement in section 102.20 for the liquid sugar of subheading 1702.90, HTSUS, consist of the following:
A change to heading 1701 through 1702 from any other chapter.
Because the foreign material (the Brazilian raw cane sugar) contained in the liquid sugar is classified in heading 1701, the tariff shift rule in 19 CFR 102.20(a)(3) is not met. As such, CBP turned to 19 CFR 102.11(b) to determine the country of origin. 19 CFR 102.11(b) states, in part, that “the country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good.” CBP found that the raw cane sugar from Brazil imparts the essential character of the liquid sugar. Accordingly, the country of origin would be Brazil.