CBP Rules NAFTA Exception Leaves Salad Toppings From Canada Ineligible for Preferential Treatment

A mix of sunflower seeds, cranberries, pumpkin seeds and tamari sauce imported from Canada does not qualify as a NAFTA originating good because the raw sunflower seeds come from China, CBP said in a July 31 ruling. The ruling, HQ H286682, was requested by NaturSource after the CBP Agriculture and Prepared Products Center of Excellence and Expertise began a NAFTA verification claim. The classification of the product in subheading 2008.19.85 as "fruit, nuts and other edible parts of plants, otherwise prepared or preserved" wasn't disputed, CBP said. The cranberries in the mixture, which is meant to be put on salads, originate in Canada, while the sunflower and pumpkin seeds come from China.

The issue is whether to salad topper product is eligible for NAFTA preferential treatment. While the tariff shift rule for NAFTA eligibility here seems to have been met, CBP said an exception in General Note "12(s)(ii) prevents the Smart Life salad topper from originating under the NAFTA." Under that exemption, the salad mix "will not be considered an originating good if (1) the product is a 'fruit, nut [or] vegetable preparation of chapter 20'; (2) the product was prepared or preserved merely by roasting, either dry or in oil (including processing incidental to roasting); and (3) the fresh good was wholly produced or obtained outside the territory of one of the NAFTA parties," CBP said.

Food preparation types are generally based on which ingredient provides the essential character and here, sunflower seeds make up the most weight of the product, CBP said. Although NAFTA doesn't define "fruit," court precedent and dictionary definitions show that sunflower seeds, "fall within the common meaning of the term 'fruit.'" NaturSource argued that the processing in Canada exceeds "roasting," but CBP said "exposing the sunflower seeds to dry heat in order to cook them, is a form of roasting." The agency also noted that the addition of the tamari sauce is a "type of lesser processing" that is incidental.

The last test for the NAFTA eligibility requires that the "fresh good" come from a NAFTA country. "Here, the 'fresh goods' are the raw sunflower seeds, raw pumpkin seeds, and cranberries," CBP said. "While the cranberries were wholly obtained in one or more NAFTA parties (Canada and the United States), the Chinese-origin sunflower seeds and pumpkin seeds were not. As a result, the fresh good was not 'wholly produced or obtained entirely in the territory of one or more of the NAFTA parties.'" As a result, the salad toppings are ineligible for NAFTA preferences.