Saturday, August 09, 2014

Ruling of the Week 3: Mmmm Cinnamon Rolls

The New York Times occasionally profiles a business traveler. One of the questions the paper asks is whether the traveler has any secret airport vices. It surprises me that more of the profile subjects do not say cinnamon buns. Very few things on Earth smell better than airport cinnamon buns. But, I will admit, I do not think I have ever actually eaten one. They seem to me to be sized for a family of six. That is not intended to sound virtuous. I am not opposed to the airport beer or the airport milkshake. On rare occasions, I will indulge in the airport McFlurry. But, I find the cinnamon roll to be altogether too daunting a challenge.

Which brings me to the ruling of the week: HQ H158455, which is still proposed. 

The importer had requested a ruling on the tariff classification of unbaked cinnamon rolls imported for retail establishments to proof and bake. Originally, CBP classified them as food preparations of flour in HTSUS item 1901.90.90. Apparently, the importer was not happy with that result and asked CBP to reconsider the ruling. In that request, the importer provided additional information including details of the dry weight of the various ingredients. It may not surprise you to learn that more than 10% of that dry weight was white sugar derived from cane or beet.

Do you know what that means? It is not necessarily a good thing for the importer.

It means that the unbaked cinnamon rolls are classified in HTSUS item 1901.90.56 as products containing 10% or more sugar. That puts the products under the sugar quota system. If the goods are not from Mexico and the quota limit is filled, the duty on the merchandise is going to go from 10% ad valorem to 23.7 cents per kilo plus 8.5%, which I assume is more than 10%.

Is there a lesson here? For purposes of learning about tariff classification, this is a straight up GRI 1 analysis. The only fact that changed and resulted in the revocation was that Customs got better information from the importer about the product. From a strategy perspective, keep in mind that the facts you present may have apparently unintended consequences.

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