HQ 0731618 - Country of origin marking requirements of U.S.-grown carrots exported for processing and packaging and returned to the U.S. - United States International Trade Commision Rulings

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HQ 731618

March 14, 1989

MAR 2-05 CO:R:C:V 731618 pmh

CATEGORY: MARKING

Mr. S. Richard Shostak
Stein Shostak Shostak & O'Hara
Suite 606
1101 Seventeenth Street, N.W.
Washington, D.C. 20036-4704

RE: Country of origin marking requirements of U.S.-grown carrots exported for processing and packaging and returned to the U.S.

Dear Mr. Shostak:

This is in response to your letters of July 21, 1988 and January 9, 1989, on behalf of your clients, William Bolthouse Farms, Inc. and Grimmway Farms, requesting a ruling on country of origin marking requirements for carrots which are grown in the U.S., washed, sized and packaged in Mexico and returned to the U.S. for sale.

FACTS:

You indicate that the subject carrots are grown in the U.S. and exported to Mexico where they are washed, cooled for preservation, sorted according to size, graded for quality and packaged. Thereafter, the carrots are returned to the U.S. for sale to retailers. No further processing of the carrots is performed before sale.

ISSUE:

Whether there has been a substantial transformation of the carrots grown in the U.S. by the processing operations performed in Mexico, so as to render the carrots products of Mexico.

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304) provides in general that all articles of foreign origin imported into the U.S., or their containers, shall be legibly and conspicuously marked to indicate the country of origin to an ultimate purchaser in the U.S. U.S. products exported and
returned are specifically excepted from country of origin marking requirements under section 134.32(m), Customs Regulations (19 CFR 134.32(m)). In applying this section, Customs has ruled that products of the U.S. which are exported for further processing and subsequently returned, are generally not subject to country of origin marking upon importation to the U.S., unless the further processing in the foreign country constituted a substantial transformation of the product. See e.g. C.S.D. 80- 15; C.S.D. 79-443.

In defining what constitutes a substantial transformation, Customs has held that a new and different article of commerce having a new name, character and use must emerge from the processing. See United States v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267, C.A.D. 98 (1940). In addition, factors such as complexity and cost of the processing operations and whether the essence of the article has been changed, have also been considered. See Uniroyal Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).

In National Juice Products Association v. United States, 10 C.I.T. 48, 628 F. Supp. 978 (1986), the Court of International Trade upheld Customs' determination that orange juice concentrate is not substantially transformed when it is processed into retail orange juice products. Although the orange juice concentrate at issue in that case underwent significant processing, was mixed with orange essences and oils, purified and dechlorinated water and was either packaged in cans and frozen or pastuerized and packaged in liquid form, Customs found that such processing did not change the fundamental character of the orange juice concentrate. Customs further determined, and the court agreed, that it was orange juice concentrate that imparted the essential character to the final product.

Customs has not previously ruled on whether washing and packaging vegetables constitutes a substantial transformation of the vegetables. However, in C.S.D. 86-28, dated June 25, 1986, Customs determined that raw broccoli was not substantially transformed as a result of sorting, trimming, cutting into spears, steam blanching, freezing and packaging. Following the direction it had taken in National Juice Products Association, Customs found that such processing did not change the fundamental character and identity of the broccoli and was, in fact, performed to preserve the original characteristics of the broccoli.

As in the broccoli case, the carrots in the present case undergo relatively simple processing. In fact, the processing operations described here consist merely of washing and packaging and do not include the extra steps of steam blanching and freezing that were performed on the broccoli. Consequently, we
find that this case is well within the boundaries established by Uniroyal and National Juice Products Association and that such superficial processing does not change the fundamental character of the carrots or subordinate their identity in any way. Before and after they are washed, sized and packaged in Mexico, the carrots are, and may be marketed as, a "fresh" product. It is our opinion that no new article of commerce has emerged from the Mexican processing and that the final product remains the same in name, character and use.

HOLDING:

Carrots grown in the U.S. and exported for washing, sizing and packaging as described in this letter, do not undergo a substantial transformation. They remain products of the U.S. and are exempt from the marking requirements of 19 U.S.C. 1304 upon importation to the U.S.

Sincerely,

John Durant, Director,
Commercial Rulings Division

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