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NY G89280





April 4, 2001

CLA-2-12:RR:NC:2:231 G89280

CATEGORY: CLASSIFICATION MARKING

TARIFF NO.: 1202.10.4040; 1202.10.8040

Mr. Russell Pronovost
Specialty Commodities, Inc.
1530 47th Street NW
Fargo, ND 58102

RE: The tariff classification and marking under the North American Free Trade Agreement (NAFTA) of raw, in-shell peanuts of United States origin that are colored in Canada and returned to the United States; Article 509

Dear Mr. Pronovost:

In your letter, dated February 28 2001, you requested a ruling on the classification and marking of raw, in-shell peanuts of United States origin that are colored in Canada and returned to the United States under the NAFTA.

The merchandise is comprised of raw, in-shell peanuts of United States origin that are grown in the United States. Then they are shipped to Canada to be colored red, green, blue or yellow with food coloring and returned to the United States.

The applicable subheading for raw, in-shell peanuts, if entered under quota, will be 1202.10.4040, Harmonized Tariff Schedule of the United States (HTS), which provides for peanuts (ground-nuts), not roasted or otherwise cooked, whether or not shelled or broken, in shell, described in additional U.S. note 2 to chapter 12 and entered pursuant to its provisions, other. The general rate of duty will be 9.35 cents per kilogram.

The applicable subheading for raw, in-shell peanuts, if entered outside the quota, will be 1202.10.8040, HTS, which provides for peanuts (ground-nuts), not roasted or otherwise cooked, whether or not shelled or broken, in shell, other, other. The rate of duty will be 163.8 percent ad valorem. In addition, products classified in subheading 1202.10.8040, HTS, will be subject to additional duties based on their value, as described in subheadings 9904.12.01 ā€“ 9904.12.19, HTS.

Products classifiable in subheading 1202.10.4040, HTS, being wholly obtained or produced entirely in the territory of Canada and/or the United States, will meet the requirements of HTSUSA General Note 12(b)(i), and will therefore be entitled to a free rate of duty under the NAFTA upon compliance with all applicable laws, regulations, and agreements.

In your correspondence you inquire as to whether the merchandise is entitled to duty free treatment under subheading 9801.00.10, HTS.

Subheading 9801.00.10, HTS, provides for the free entry of products of the United States when returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, provided the documentary requirements of section 10.1, Customs Regulations (19 CFR 10.1), are met.

Coloring, dying, painting and tinting that are done to primarily enhance the appearance of an item are considered to advance the item in value and improve it in condition.

Accordingly, raw, in-shell peanuts of United States origin that are colored in Canada and returned to the United States, are considered to have been advanced in value or improved in condition for the purposes of subheading 9801.00, HTS. As a result, the colored peanuts will be dutiable under the provisions of subheadings 1202.10.4040, HTS, or 1202.10.8040, HTS, when they are returned to the United States, and subheading 9801.00, HTS is inapplicable.

For marking purposes, these goods are of United States origin, and marking is not required. Since they have been advanced in value or improved in condition, they may be entered as Canadian goods for duty purposes. Sec. 102.19(b) CR states, ā€œIf, under any other provision of this part, the country of origin of a good which is originating within the meaning of Sec. 181.1(q) of this chapter is determined to be the United States and that good has been exported from, and returned to, the United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.ā€ Accordingly, for marking purposes, Customs regards these goods as originating in the United States and marking is not required. For duty purposes, they are considered to be Canadian goods, as they have been advanced in value or improved in condition in Canada [Sec. 102.19(b) CR].

In addition, this product may be subject to requirements imposed by the United States Department of Agriculture, Agricultural Marketing Service (AMS). For additional information regarding AMS requirements, you may contact Mr. James Wendland at (301) 734-5245. If you have any questions regarding the peanut quota, you may contact Ms. Constance Chancey, U.S. Customs Headquarters, Quota Section/Trade Programs at (202) 927-5399.

Additional requirements may be imposed on these products by the Food and Drug Administration. You may contact the FDA at:

Food and Drug Administration
Division of Regulatory Guidance
200 C Street, S.W.
Washington, DC 20204

This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR 181).

This ruling letter is binding only as to the party to whom it is issued and may be relied on only by that party

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Thomas Brady at 212-637-7064.

Sincerely,

Robert B. Swierupski
Director,

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