HQ 0731994 - Country of origin marking requirements for 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 731994

March 13, 1989

MAR 2-05 CO:R:C:V 731994 pmh

CATEGORY: MARKING

Mr. Paul R. Wassenaar
Lillick McHose & Charles
101 West Broadway, 18th Floor
San Diego, CA 92101

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

Dear Mr. Wassenaar:

This is in response to your letter of November 28, 1988, on behalf of Mike Yurosek & Son (MYS), to the Customs office in San Diego, 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 imported to the U.S. for sale. Your letter has been referred to this office for reply.

FACTS:

You indicate that prior to being shipped to Mexico, the U.S.-grown carrots are topped, i.e., the green stems are removed. The carrots are then bulk loaded and transported to a processing plant in Mexico where they are washed, sized and packed in 1- pound, 2-pound and 3- to 5-pound bags. These bags are then placed in 50-pound master bags, boxed, palletized, wrapped and loaded into refrigerated vans by which means they are transported back to the U.S. for redistribution and ultimate sale in the individual bags. There is no further processing of the carrots 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 into 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 pasteurized 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 the 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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