Ruling of the Week 30: Tapenade and the Chutney Problem

It is apparent that I did not succeed in my goal of getting 52 Rulings of the Week into the Blog. Despite, that, I think this has been a pretty productive blog year. This will be my 71st post of the year, with one to follow. That will probably cap 2015. Next year, I hope to pick up the pace somewhat. I'll continue trying to post the Ruling of the Week and court cases. I'll also make an effort at other administrative news.

You know what I miss? Posts about animal smuggling. Keep an eye on my Twitter feed for news, mostly in the form or retweets from other bloggers.

For now, consider the chutney problem.

Headquarters Ruling H259324 (Sep. 3, 2015) involved the tariff classification and NAFTA status of green olive tapenade from Canada. This ruling is from a protest with an application for further review. That means that Customs and Border Protection denied the NAFTA claim made on this merchandise and the importer protested. In what appears to have been an effort to make the product satisfy the applicable NAFTA rule of origin, the importer suggested that its original classification as prepared or preserved vegetables of Heading 2005 was incorrect and the tapenade was classifiable as a sauce or a preparation for a sauce in Heading 2103.

Tapenade via Wiki Media

If you have been to a snooty restaurant serving Mediterranean-inspired New American California farm to table cuisine (and who hasn't?), you have had tapenade. It is, in my experience, a spread of mashed olives (usually black ones) with other flavorings. In this case, it was made form non-NAFTA olives, diced tomatoes, red peppers, carrots, onions, vegetable oil, garlic, and lemon juice. Not all of those ingredients originated in the territory of a NAFTA country. As a result, to qualify for the NAFTA preference, the production of the product must produce a qualifying change in tariff classification for all of the non-originating materials. The qualifying change depends on the classification of the finished product.

The importer asserted that the tapenade was properly classified as a sauce or sauce preparation. But, CBP and the Court of International Trade have been down that road before. A sauce is defined as a homogenous preparation that it is not intended to be eaten on its own. Rather, a sauce is to be added to food as a condiment, usually in liquid form, to make the food more palatable. And, dipping a piece of bread still counts as eating it alone.

Here, the tapenade appears to have been chunks of vegetables mixed with oil. It also appeared based on marketing information that it was both intended and actually eaten alone.

The importer did a fantastic piece of lawyering by introducing into the record recipes by which the tapenade could be added to broth and other ingredients to make a sauce. I hope Customs has a test kitchen and tried out the preparations. [GaK, please let me know if you did!] The importer argued this showed that the tapenade is a sauce preparation. Customs did not buy that argument. If it did, I suspect every tomato would also be a sauce preparation.

As I read this, it appeared to me that Customs was doing a fine analysis. But, then we hit the chutney wall. Chutney is a delicious combination of sliced fruit sweetened with sugar and flavored with lemon and mustard. It is a thick, globulous  preparation that does not readily pour over food. It is, however, used as a condiment for meat and other dishes. Personally, I like mango chutney on a turkey sandwich, but that's just me.

Muffuletta from Wiki Media

In HQ 962419, Customs held that chutney is a sauce of 2103 rather than a preparation of fruit. To distinguish the tapenade from chutney, Customs pointed out that the solid portion of the tapenade is suspended is a semi-transparent red liquid. Customs noted that unlike chutney, this tapenade is not gelatinous, not creamy, and not a spreadable paste. It sounds to me that this was a runny form of tapenade, possibly more like an olive giardiniera or even a muffuletta, either of which is delicious but not a tapenade.

You know what a runny liquid with suspended vegetables is? A sauce. If this stuff was runny enough to be poured over meat and if there was evidence of that use, it seems to me that it might be properly classified as a sauce. If, on the other hand, it looks like the muffuletta in the picture above, it is really not much more than chopped olives and other vegetables in oil, which seem not very homogenous and sauce-like to me.

Customs classified the tapenade in Heading 2005.

On the NAFTA front, once CBP determined the correct classification to be in Heading 2005, the applicable rule of origin requires that the non-originating green olives make a change from another tariff heading. Unfortunately, the olives are also classifiable in Heading 2005. That is not a qualifying shift and the goods are non-NAFTA originating. Tasty, but non-originating.


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