E6-14924. Receipt of Domestic Interested Party Petition Concerning Tariff Classification of Sugar Beet Thick Juice

AGENCY:

Customs and Border Protection, Department of Homeland Security.

ACTION:

Notice of receipt of domestic interested party petition; solicitation of comments.

SUMMARY:

The Bureau of Customs and Border Protection (CBP) has received a petition submitted on behalf of a domestic interested party requesting the reclassification under the Harmonized Tariff Schedule of the United States (HTSUS) of certain sugar beet thick juice. Petitioner contends that sugar beet thick juice competes directly with sugar and has been incorrectly classified in subheading 1702.90.4000, HTSUS, with a general rate of duty of 0.35¢ per liter, not subject to quota. Petitioner contends that the product is properly classifiable under various subheadings of heading 1701, HTSUS, or, in the alternative, in subheading 1702.90.5800, HTSUS, and subject to quota. This document invites comments with regard to the correctness of the current classification.

DATES:

Comments must be received on or before November 13, 2006.

ADDRESSES:

You may submit comments, identified by docket number, by one of the following methods:

• Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments via docket number USCBP-2006-0087.
• Mail: Trade and Commercial Regulations Branch, Office of Regulations and Rulings, Bureau of Customs and Border Protection, 1300 Pennsylvania Avenue, NW. (Mint Annex), Washington, DC 20229.

Instructions: All submissions received must include the agency name and docket number for this notice of domestic interested party petition concerning the tariff classification of sugar beet thick juice. All comments received will be posted without change to http://www.regulations.gov, including any personal information provided.

Docket: For access to the docket to read background documents or comments received go to http://www.regulations.gov. Submitted comments may also be inspected during regular business days between the hours of 9 a.m. and 4:30 p.m. at the Bureau of Customs and Border Protection, Office of Regulations and Rulings, Trade and Commercial Regulations Branch, 799 9th Street, NW., 5th Floor, Washington, DC. Arrangements to inspect submitted comments should be made in advance by calling Joseph Clark, Trade and Commercial Regulations Branch, at [phone].

FOR FURTHER INFORMATION CONTACT:

Heather K. Pinnock, Tariff Classification and Marking Branch, Office of Regulations and Rulings, at [phone].

SUPPLEMENTARY INFORMATION:

Background

A petition has been filed under section 516, Tariff Act of 1930, as amended (19 U.S.C. 1516), on behalf of the U.S. Beet Sugar Anticircumvention Coalition (USBSAC) representing over 85 percent of U.S. sugar beet processing capacity, requesting that Customs and Border Protection (CBP) reclassify imported sugar beet thick juice, as classified in New York Ruling letter (NY) J84482, dated October 21, 2003. CBP has classified this product under subheading 1702.90.4000, Harmonized Tariff Schedule of the United States, (HTSUS), which provides for: “Other sugars * * * sugar syrups not containing added flavoring or coloring matter * * * other * * * derived from sugar cane or sugar beets * * * other * * * other”, and has a general duty rate of 0.35 cents per liter, and is not subject to tariff-rate quota restrictions. The petition contends that sugar beet thick juice is sugar, competes directly with sugar, and should be subject to tariff-rate quota restrictions. Classification under the HTSUS is determined in accordance with the General Rules of Interpretation (GRIs). GRI 1 provides that the classification of goods shall be determined according to the terms of the headings of the tariff schedule and any relative Section or Chapter Notes. In the event that the goods cannot be classified solely on the basis of GRI 1, and if the headings and legal notes do not otherwise require, the remaining GRIs 2 through 6 may then be applied in order. Classification of sugar beet thick juice is based on the composition of the product.

In NY J84482, CBP classified sugar beet thick juice, labeled “Taber Thick Juice”, in subheading 1702.90.4000 HTSUS, as sugar syrup not containing added flavoring or coloring, derived from sugar beets. Petitioner contends that classification of sugar beet thick juice in subheading 1702.90.4000, HTSUS, which is not subject to tariff-rate quota restrictions, is wrong and defeats the legislative purpose of the soluble non-sugar solid threshold in subheading 1702.90, HTSUS, which is to prevent products that compete directly with sugar from entering the United States free of quota. Petitioner states that NY J84482 is apparently based on findings that sugar beet thick juice: (1) Is a sugar syrup not containing added flavoring or coloring, (2) is derived from sugar beets, and (3) contains soluble non-sugar solids greater than 6 percent by weight of the total soluble solids. Petitioner asserts that this analysis is perfunctory and opens the floodgates for quota-free imports of a product that directly competes with sugar.

In support of its position, Petitioner relies on CBP Headquarters Ruling Letter (HQ) 961273, dated August 25, 1999 and the Final Notice of Revocation of Ruling Letter and Treatment Relating to Tariff Classification of Certain Sugar Syrups, 33 Customs Bulletin 35/36 (Sept. 8, 1999) (“Stuffed Molasses Revocation Ruling”), a United States Department of Agriculture (USDA) ruling (Dairy and Sweeteners Analysis Group, Commodity Credit Corporation, Feb. 28, 2003), and legislative history surrounding development of item 155.35 of the Tariff Schedules of the United States (TSUS), the predecessor to the HTSUS.

Petitioner argues that sugar beet thick juice is sugar, and it is for this reason that the USDA has determined that it is squarely covered by the program that regulates the sale of domestically processed sugar in the United States. Petitioner maintains that the only commercial use for sugar beet thick juice is for further processing into sugar for human consumption and, as such, sugar beet thick juice clearly competes with sugar for human consumption. Petitioner states that given the history of tariff engineering with sugar products, CBP should apply strict scrutiny and give careful consideration to the commercial identity of sugar beet thick juice.

CBP administers the tariff and follows the principles of classification as set forth by the GRIs and U.S. Notes. CBP has in the past found that, for tariff classification purposes, the percentage of soluble non-sugar solids present in sugar syrup determines where that syrup is classified. In this instance, NY J84482 indicates that the CBP laboratory determined that the submitted sample of the thick juice contained 7.7 percent soluble non-sugar solids in the total soluble solids. Petitioner does not dispute the chemical composition of the subject sugar beet thick juice. Rather, Petitioner states that products that compete with sugar should be classified in subheadings subject to quota, even if the product meets the terms of a quota-free subheading, such as 1702.90.40, HTSUS.

Petitioner submits that CBP should classify sugar beet thick juice as raw sugar under subheading 1701.12.1000 or 1701.12.5000, HTSUS, which provides for, inter alia, raw beet sugar, in solid form, not containing added flavoring or coloring matter. These subheadings are subject to quota. Petitioner states that there is no such thing as solid raw beet sugar—as a technical and commercial matter, it does not exist. Petitioner argues that, while heading 1701, HTSUS, generally applies to sugar solids, CBP should disregard the water contained in the sugar beet thick juice with the result that the remaining solid would contain a Brix of 68.7 and the non-sugar solids would account for 7.7 percent by weight of all the soluble solids.

CBP notes the well-established classification principle that goods are classified in their imported condition. XTC Products, Inc. v. United States, 771 F. Supp. 401, 405 (1991). See also United States v. Citroen, 223 U.S. 407 (1911). GRI 1 requires us to classify goods according to the terms of the headings of the HTSUS. By its terms, heading 1701 provides for: “Cane or beet sugar and chemically pure sucrose, in solid form.” In addition, Subheading Note 1 to Chapter 17, HTSUS, provides that for the purposes of subheading 1701.12 “raw sugar means sugar whose content of sucrose by weight, in the dry state, corresponds to a polarimeter reading of less than 99.5 degrees.” (Emphasis added.) EN 17.01 further explains that, “sugar syrups of cane or beet sugar, consisting of aqueous solutions of sugars, are classified in heading 17.02 when not containing added flavoring or coloring matter and otherwise in heading 21.06.” CBP has previously considered sugar beet thick juice to be precluded from classification in heading 1701, HTSUS, because it is an aqueous solution and not in solid form.

In the alternative, Petitioner submits that CBP should classify sugar beet thick juice as blended syrup under subheading 1702.90.5800, HTSUS. Subheading 1702.90.5800, HTSUS, provides for, inter alia: “Other sugars; * * * sugar syrups not containing added flavoring or coloring matter * * *: Other * * *: Other: Other: Blended syrups described in additional U.S. note 4 to chapter 17: Other.” Additional U.S. Note 4 to Chapter 17 provides: “For the purposes of this schedule, the terms ‘blended syrups described in additional U.S. note 4 to chapter 17’ means blended syrups containing sugars derived from sugar cane or sugar beets, capable of being further processed or mixed with similar or other ingredients, and not prepared for marketing to the ultimate consumer in the identical form and package in which imported.” Petitioner contends that sugar beet thick juice can be reasonably interpreted to be a blended syrup within the meaning of the HTSUS, because sugar beet thick juice is formed through the blending of different sugar beet juices with various concentrations of sugar and viscosities (e.g., carbonation juice, thin juice, thick juice).

It has been CBP's view that the “blended syrups” of subheading 1702.90.5800, HTSUS, do not include sugar beet thick juice that is formed through the blending of different sugar beet juices with various concentrations of sugar and viscosities (carbonation juice, thin juice, thick juice), as described by the Petitioner. Subheading 1702.90.5800, HTSUS, provides for sugar syrups other than those derived from sugar cane or sugar beets. When this subheading is analyzed in the context of Additional U.S. Note 4 to Chapter 17, HTSUS, CBP's view has been that the blended syrups of subheading 1702.90.5800, HTSUS, must partly consist of sugar syrups not derived from sugar cane or sugar beets. Because the entire Taber Thick Juice product is derived from sugar beets, CBP has considered it to be precluded from classification in subheading 1702.90.5800, HTSUS.

Comments

Pursuant to section 175.21(a), CBP Regulations (19 CFR § 175.21(a)), before making a determination on this matter, CBP invites written comments on the petition from interested parties.

The domestic interested party petition concerning the tariff classification of sugar beet thick juice, as well as all comments received in response to this notice will be available for public inspection in accordance with the Freedom of Information Act (5 U.S.C. 552, and Section 103.11(b), CBP Regulations (19 CFR 103.11(b)), between the hours of 9 a.m. and 4:30 p.m. on regular business days at the Bureau of Customs and Border Protection, Office of Regulations and Rulings, Trade and Commercial Regulations Branch, 799 9th Street, NW., 5th Floor, Washington, DC.

Arrangements to inspect submitted comments should be made in advance by calling Joseph Clark at 202-572-8768.

Authority: This notice is published in accordance with section 175.21(a), CBP Regulations (19 CFR 175.21(a)) and 19 U.S.C. 1516.

Dated: August 17, 2006.

Deborah J. Spero,

Acting Commissioner, Bureau of Customs and Border Protection.