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HQ 085336


December 20, 1989

CLA-2 CO:R:C:G 085336 JBW

CATEGORY: CLASSIFICATION

TARIFF NO.: 0603.90.00; 9802.00.80

Ms. Elva Arzate
Account Manager
Rudolph Miles & Sons, Inc.
4950 Gateway East
P. O. Box 144
El Paso, Texas 79942

RE: Dried Flower Bouquet

Dear Ms. Arzate:

This ruling is in response to your inquiry of August 8, 1989, on behalf of American Oak Preserving Company, regarding the classification under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA) and the country of origin of a dried flower bouquet.

FACTS:

The sample submitted is a floral bouquet consisting of dried flowers and foliage and artificial flowers, all wrapped in tissue paper and bound with a paper-covered wire tie. Arranged in the bouquet are the following components, which are purchased from the country listed and which have undergone the process described:

Campo Flower: Country of growth: Brazil. The flowers are imported into the United States in bulk, sorted cleaned, trimmed, and subjected to a forced air and heat process to open the flower heads.

Lagurus: Country of growth: Italy. The material is imported into the United States in bulk, cleaned, cut to length, dyed, centrifuged, and dried by forced air and heat.

Ruscus: Country of growth: Italy. The material is imported into the United States in bales, cut, sorted, graded, painted, and dried by forced air and heat.

Gypsy Grass: Country of growth: United States. The material is trimmed, dyed, centrifuged, and dried by forced air and heat.

Large Yarrow: Country of growth: United States. The material is graded and cut.

Small Wood Flower: Country of manufacture: India. The item is not subject to processing in the United States.

The final bouquet is created in Mexico from the components exported from the United States. While in Mexico, the components are arranged in the bouquet, bound with a paper- covered wire tie, trimmed, and wrapped in tissue paper that is attached by another paper-covered wire tie.

ISSUES:

(1) What is the classification under the HTSUSA of a floral bouquet consisting of dried flowers and foliage and artificial flowers?

(2) Whether dried flowers and foliage of foreign origin, which are dyed, painted, or dried in the United States, acquire United States origin by virtue of the processes to which they are subjected?

(3) Whether arrangement of dried flowers and foliage and artificial flowers in a bouquet, where certain components are of United States origin, is an assembly under subheading 9802.00.80, HTSUSA?

(4) What are the country of origin and marking requirements for the complete floral arrangement?

LAW AND ANALYSIS:

I. Classification of the Floral Arrangement under the HTSUSA.

The General Rules of Interpretation (GRI's) set forth the legal framework in which merchandise is to be classified under the HTSUSA. GRI 1 requires that classification be determined first according to the terms of the headings of the tariff and any relative section or chapter notes and, unless otherwise required, according to the remaining GRI's.

The dried floral arrangement consists of dried flowers, dried foliage, and artificial flowers. These components, if imported separately, are classified under different headings of the tariff: dried flowers, Heading 0603, HTSUSA; dried foliage, Heading 0604, HTSUSA; artificial flowers, Heading 6702, HTSUSA.

GRI 3 applies when goods are classifiable under two or more headings. The Explanatory Notes, which provide the official interpretation of the HTSUSA at the international level, define composite goods to include goods made up of different components, even if the components are separable, as long as they are adapted one to the other, are mutually complementary, and together form a whole that would not normally be offered for sale in separate parts. The bouquet is a composite good, for the individual components create a floral arrangement that derives its aesthetic value from the mutually complementary positioning of the components. Furthermore, even though the individual components may be sold separately, the value of any individual component appears limited when compared to the overall value of the components when arranged together. Thus, the components may be sold separately, but in this case, they do not appear to be of the type normally offered for sale in separate parts.

GRI 3(b) governs the classification of composite goods. GRI 3(b) requires classification of a composite good as if it consists of the component that gives it its essential character. The Explanatory Notes state that the factors determining essential character may vary as between different kinds of goods. The Notes suggest that essential character may be determined by the nature of a component or material, its bulk, quantity, weight, or value, or by the role of a constituent material in relation to the use of the goods.

The dried flowers impart the essential character to the bouquet. The dried flowers constitute the principal bulk, quantity, and weight of the arrangement. Moreover, as you state in your letter, the dried foliage and artificial flowers serve the subordinate roles of embellishing the beauty of the principal object, the dried flowers.

The dried flower bouquet is classified under subheading 0603.90.00, HTSUSA, as cut flowers and flower buds of a kind suitable for bouquets or for ornamental purposes, fresh, dried, dyed, bleached, impregnated or otherwise prepared: other. The column one rate of duty is 5 percent ad valorem, and the bouquet is eligible for duty-free treatment under the Generalized System of Preferences, provided all legal eligibility requirements, as set out in 19 C.F.R. 10.171 et seq. (1989), are met.

II. Country of Origin for Dried Flowers and Foliage that is Dyed, Painted, or Heated in the United States.

The Campo, Lagurus, and Ruscus will be imported into the United States and will be subjected to a dyeing, painting, or heat process. For the purpose of determining whether these components assume United States origin to permit the floral bouquet to obtain special classification as articles assembled abroad produced with United States components, the question arises of whether these products undergo a process that results in their substantial transformation. 19 C.F.R. 10.14(b) (1989). A substantial transformation occurs when an article loses its identity through processing and emerges as a new article having a new name, character, or use. Koru North America v. United States, 12 CIT ___, 701 F. Supp. 229, 234 (1988); see also, Anheuser-Busch Brewing Ass'n v. United States, 207 U.S. 556, 562 (1908); United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267, 273 C.A.D. 98 (1940).

The name, character, or use test has been the focus of inquiry in numerous recent court and Customs Service decisions. In National Juice Products, the question before the Court of International Trade was whether imported orange juice concentrate is substantially transformed by the mixture in the United States of the foreign concentrate with water, orange essences, and oils, and by repacking the mixture frozen in cans or as a liquid after pasteurization. The court held that these processes did not result in a new product with a new name, character, or use, for the imported concentrate imparts the essential character of the resulting product. National Juice Products, 10 CIT at ___, 628 F. Supp. at 978. The domestic process did not change the "fundamental character" of the product. Id.

In a more recent case, Koru North America, the issue before the Court of International Trade was whether a process of thawing, skinning, boning, trimming, glazing, freezing, and repackaging headed and gutted fish effects a substantial transformation. The court in this case held that the processing did effect a substantial transformation. Koru North America, 12 CIT at ___, 701 F. Supp. at 235. The name of the product changed from "headed and gutted fish" to "individually quick-frozen fillets." Id. Moreover, the court identified changes that "go to the fundamental nature and character of the fish ...." Id. Such changes in this case included a change in the shape, marketing, and tariff classification of the product resulting from the processes.

No prior Customs Service rulings have specifically addressed whether dyeing, painting, or heating dried flowers or foliage changes the country of origin for these products. However, Customs Service rulings relating to similar processes have been issued. In Headquarters Ruling Letter 554971, December 1, 1988, the Customs Service determined that the sorting, grading, blending, and roasting of coffee beans does not substantially transform the beans. Likewise, peeling, deveining, and cooking shrimp does not effect a substantial transformation. 23 Cust. B. & Dec. 21, 27, C.S.D. 89-101 (1989). The process of dyeing, Headquarters Ruling Letter 079909, June 4, 1987, or of painting, Headquarters Ruling Letter 071403, August 25, 1983, have been held not to result in substantial transformations of the products in question.

From the discussion above, we determine that the process of dyeing, painting, or heating to which the dried flowers and foliage under consideration are subjected does not effect a substantial transformation and consequently does not make the United States the country of origin for these products. The products through the processing do not assume a new name. The process of dyeing, painting, or heating clearly imparts physical changes to the items thereby making them more suitable for retail sale. However, the fundamental character of the products is not changed by the processing. Both before and after processing, it is the imported product that imparts the essential character to the final product. Finally, the ultimate use of the product is not changed by the processing. Although the flowers or foliage may have little or no aesthetic value before processing, they will always be used, if used at all, as dried flowers or foliage.

In sum, the process of dyeing, painting, or heating the dried flowers or foliage are minor processes that leave the identity of the imported products intact. The country of origin for the Campo, Lagurus, and Ruscus will not change by virtue of the processes performed in the United States.

III. Articles Assembled Abroad from United States Components.

The Gypsy Grass and Large Yarrow are grown and dried or dyed in the United States. Subheading 9802.00.80, HTSUSA, provides for special classification of articles assembled abroad from United States components. More specifically, this subheading includes:

Articles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly, (b) have not lost their physical identity in such articles by change in form, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating, and painting.

The process of arranging the bouquet and joining the separate components together by a paper covered wire is an "assembly" for the purpose of subheading 9802.00.80, HTSUSA. As defined in the regulations, an assembly consists of "any method used to join or fit together solid components, such as ... the use of fasteners[.]" 19 C.F.R. 16(a) (1989). Furthermore, the trimming of the bouquet is an operation incidental to assembly and therefore does not constitute further fabrication. 19 C.F.R. 10.16(b)(4) (1989).

Consequently, the United States goods, specifically the Gypsy Grass and the Large Yarrow, which are assembled into the bouquet in Mexico, are entitled to the benefits of subheading 9802.00.80, HTSUSA. As a result, the duty on the imported dried flower bouquet is placed on the full value of the imported article, minus the cost or value of the components of United States origin.

IV. Country of Origin and Marking Requirements for the Imported Dried Flower Bouquet.

Section 304 of the Tariff Act of 1930, as amended, 19 U.S.C.A. 1304 (West Supp. 1989), requires that every article imported into the United States, subject to specific exceptions, be marked to indicate the country of origin to the ultimate purchaser in the United States. The Customs Regulations except articles assembled abroad in whole or in part from United States components from the normal country of origin marking requirements and direct that such products are considered products of the country of assembly for country of origin marking purposes. 19 C.F.R. 10.22 (1989). The country of origin for marking purposes for the dried flower bouquet is therefore Mexico. The bouquet may be marked "Mexico," "Product of Mexico," "Assembled in Mexico from United States and foreign components," or other similar phrases.

HOLDING:

The dried flower bouquet is classified under subheading 0603.90.00, HTSUSA, as cut flowers and flower buds of a kind suitable for bouquets or for ornamental purposes, fresh, dried, dyed, bleached, impregnated or otherwise prepared: other. The rate of duty is 5 percent ad valorem, and the product is eligible for duty-free treatment under the Generalized System of Preferences provided the legal eligibility requirements, as set out in 19 C.F.R. 10.171 et seq. (1989), are met.

The components of United States origin, which are assembled into the final product in Mexico, are entitled to the benefits of subheading 9802.00.80, HTSUSA. The duty is assessed against the full value of the imported article, less the cost or value of such products of the United States. Finally, the country of origin for the imported articles, for the purpose of marking, is Mexico.

Sincerely,

John Durant, Director
Commercial Rulings Division

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