Tea itself is usually duty free under the Harmonized Tariff Schedule of the United States (HTSUS).
While the HTSUS specifically provides only for green or black teas, U.S. Customs has considered oolong
tea leaves to be duty-free as fermented or partially fermented black tea. See Cust. Rul. NY 888788
(Aug. 4, 1993). However, no official or semi-official ruling has yet been published on the status of pu-
erh teas under the HTSUS.
Tea imports will not always be duty-free.
The U.S. Court of International
Trade has determined that a
“dietary supplement” that was
taken in small, measured doses,
and was neither “flavorful” nor
“refreshing” was subject to a 6.4%
ad valorem duty as “Food
preparations not elsewhere
specified or included” rather
than the 0.2 cents per liter of
“other nonalcoholic beverages.”
Maxcell Bioscience, Inc. v. U.S.,
533 F. Supp.2d 1261 (CIT 2007).
In other words, while tea is excluded
from import duties, it will lose that duty-free status where it is merely an additive to another beverage or
dietary supplement. Indeed, U.S. Customs has classified pellets of tea as food preparations, subject to
an ad valorem duty, rather than duty-free tea. See e.g. Lee Yuen Fung Trading Co. v. Department of
the Treasury, 16 ITRD 1145 (CIT 1994); and Peking Herbs Trading Co. v. Department of the Treasury,
15 ITRD 2387 (CIT 1993). This raises the issue of whether tea, imported in any form apart from dried
leaves, will deprive the tea of its duty-free status. Customs has not yet come to a conclusion regarding
whether green tea matcha powder from Japan is to be treated as “tea” under the HTSUS. See Cust.
Rul. NY K81317 (Dec. 11, 2003). However, green tea frappuccino mix has been declared an “extract” or
“concentrate,” and subject to import duty. Id. Certainly, green tea and chai tea lattes, imported in liquid
form, have been subject to ad valorem duties. See Cust. Rul. NY N025084 (Apr. 7, 2008).
Historic precedent in the United States also has held that where tea is shipped in bulk, but packaged in
amounts of less than five pounds, while the immediate tea wrappings are duty free, any outer container
of a reusable nature was subject to import duty. See U.S. Tariff Act of Oct. 3, 1913, para. 627. This
gave rise to considerable litigation over the dutiable status of tea packaging in the early twentieth
century. See Wright & Graham Co. v. U.S., 5 U.S. Cust. App. 453 (1914). The U.S. import statutes
have changed since 1913, however, to this day, Customs’ analysis of the immediate wrappings and
packaging of tea products can be quite complex, and often can result in the imposition of an ad valorem
import duty on the packaging material. See Cust. Rul. HQ 957210 (Mar. 6, 1995).
It should be remembered that some plants, such as American ginseng, are endangered, and the
importation of teas and tea products containing such plants will be subject to considerable restrictions in
countries that are parties to the 1973 Convention on International Trade in Species of Wild Flora and
Fauna (CITES). See Shui v. Customs & Excise, [2004] UKVAT (Cust.) C00187 (Mar. 17).
Many countries will take an approach similar to that of the United States. If tea is merely an ingredient in
another product, the import classification of the tea will change according to that product. For example,
the inclusion of tea tree oil in shampoos puts the imported product squarely into the realm of soaps and
shampoos. See Storey v. Revenue & Customs, [2007] UKVAT (Cust.) C00235 (Jan. 19). The Canadian
International Trade Tribunal (ITT) in Pepsi-Cola Canada Ltd. v. Canada (National Revenue), Appeal
Nos. AP-94-121 & AP-94-122 (CITT 1995), has ruled that a ready-to-drink iced tea was a "non alcoholic
beverage" rather than a "preparation with a basis of tea."
Once within the UK, foods are usually zero-rated for VAT purposes, although certain foods are excepted
from the zero-rating. Making this more complicated, if excepted foods have ingredients that override the
excepted status, the food product retains its zero-rated status for UK VAT purposes. See Unilever
Bestfoods UK Ltd v Commissioners of HM Rev. & Cust., [2007] UKVAT V20016 (Feb. 14). Tea is an
overriding food ingredient in the UK, as exemplified by the Snapple Beverage Corp decision (VATD
Decision 13690). See R. Twining & Co. Ltd. v. Revenue & Customs, [2007] UKVAT V20230 (Jul. 5).
While the HTSUS specifically provides only for green or black teas, U.S. Customs has considered oolong
tea leaves to be duty-free as fermented or partially fermented black tea. See Cust. Rul. NY 888788
(Aug. 4, 1993). However, no official or semi-official ruling has yet been published on the status of pu-
erh teas under the HTSUS.
Tea imports will not always be duty-free.
The U.S. Court of International
Trade has determined that a
“dietary supplement” that was
taken in small, measured doses,
and was neither “flavorful” nor
“refreshing” was subject to a 6.4%
ad valorem duty as “Food
preparations not elsewhere
specified or included” rather
than the 0.2 cents per liter of
“other nonalcoholic beverages.”
Maxcell Bioscience, Inc. v. U.S.,
533 F. Supp.2d 1261 (CIT 2007).
In other words, while tea is excluded
from import duties, it will lose that duty-free status where it is merely an additive to another beverage or
dietary supplement. Indeed, U.S. Customs has classified pellets of tea as food preparations, subject to
an ad valorem duty, rather than duty-free tea. See e.g. Lee Yuen Fung Trading Co. v. Department of
the Treasury, 16 ITRD 1145 (CIT 1994); and Peking Herbs Trading Co. v. Department of the Treasury,
15 ITRD 2387 (CIT 1993). This raises the issue of whether tea, imported in any form apart from dried
leaves, will deprive the tea of its duty-free status. Customs has not yet come to a conclusion regarding
whether green tea matcha powder from Japan is to be treated as “tea” under the HTSUS. See Cust.
Rul. NY K81317 (Dec. 11, 2003). However, green tea frappuccino mix has been declared an “extract” or
“concentrate,” and subject to import duty. Id. Certainly, green tea and chai tea lattes, imported in liquid
form, have been subject to ad valorem duties. See Cust. Rul. NY N025084 (Apr. 7, 2008).
Historic precedent in the United States also has held that where tea is shipped in bulk, but packaged in
amounts of less than five pounds, while the immediate tea wrappings are duty free, any outer container
of a reusable nature was subject to import duty. See U.S. Tariff Act of Oct. 3, 1913, para. 627. This
gave rise to considerable litigation over the dutiable status of tea packaging in the early twentieth
century. See Wright & Graham Co. v. U.S., 5 U.S. Cust. App. 453 (1914). The U.S. import statutes
have changed since 1913, however, to this day, Customs’ analysis of the immediate wrappings and
packaging of tea products can be quite complex, and often can result in the imposition of an ad valorem
import duty on the packaging material. See Cust. Rul. HQ 957210 (Mar. 6, 1995).
It should be remembered that some plants, such as American ginseng, are endangered, and the
importation of teas and tea products containing such plants will be subject to considerable restrictions in
countries that are parties to the 1973 Convention on International Trade in Species of Wild Flora and
Fauna (CITES). See Shui v. Customs & Excise, [2004] UKVAT (Cust.) C00187 (Mar. 17).
Many countries will take an approach similar to that of the United States. If tea is merely an ingredient in
another product, the import classification of the tea will change according to that product. For example,
the inclusion of tea tree oil in shampoos puts the imported product squarely into the realm of soaps and
shampoos. See Storey v. Revenue & Customs, [2007] UKVAT (Cust.) C00235 (Jan. 19). The Canadian
International Trade Tribunal (ITT) in Pepsi-Cola Canada Ltd. v. Canada (National Revenue), Appeal
Nos. AP-94-121 & AP-94-122 (CITT 1995), has ruled that a ready-to-drink iced tea was a "non alcoholic
beverage" rather than a "preparation with a basis of tea."
Once within the UK, foods are usually zero-rated for VAT purposes, although certain foods are excepted
from the zero-rating. Making this more complicated, if excepted foods have ingredients that override the
excepted status, the food product retains its zero-rated status for UK VAT purposes. See Unilever
Bestfoods UK Ltd v Commissioners of HM Rev. & Cust., [2007] UKVAT V20016 (Feb. 14). Tea is an
overriding food ingredient in the UK, as exemplified by the Snapple Beverage Corp decision (VATD
Decision 13690). See R. Twining & Co. Ltd. v. Revenue & Customs, [2007] UKVAT V20230 (Jul. 5).
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