HQ 0732260 - Country of origin marking requirements applicable to imported whiskey - United States International Trade Commision Rulings

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HQ 732260

June 20, 1989

MAR-2-05 CO:R:C:V 732260 jd

CATEGORY: MARKING

Irene F. Bahr, Esq.
127 West Willow Avenue
Wheaton, Illinois 60187

RE: Country of origin marking requirements applicable to imported whiskey

Dear Ms. Bahr:

This is in reply to your letter of March 23, 1989, concerning the country of origin marking requirements applicable to whiskey imported into the United States.

FACTS:

According to your submission your client, a whiskey manufacturer, wishes to know the country of origin marking implications of the following three situations:

1. Various whiskeys, e.g., Scotch and Canadian, are imported into the U.S. in bulk where they are blended and up to 2.5% blenders by volume are added.

2. The same procedure as #1, but performed at your client's European location.

3. The same procedure as above, and the government of the European country wherein the blending took place is of the opinion the resulting product could not be considered a product of that country.

ISSUE:

What is the proper country of origin marking of the products processed and imported in the manner described above?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article.

Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin". The significance of a substantial transformation is evident also in { 134.35, Customs Regulations (19 CFR 134.35), which provides that an article used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be considered substantially transformed, and therefore the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the ultimate purchaser of the imported article within the contemplation of 19 U.S.C. 1304(a).

A recent court decision involving a substantial transformation issue is highly analogous to the situations you have described. In National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986), the Court of International Trade determined that the blending of orange juice concentrates, which could include the addition of water, oils and essences, and pasteurization, was not a substantial transformation and consequently the origin of all the constituent concentrates would need to be revealed to ultimate purchasers.

Concerning the blending of whiskeys, we consider the change in name from "whiskey" to "blended whiskey" to be of no significance. In regard to character, although whiskey manufacturers go to great lengths to highlight the subtle differences between the various blended whiskeys, in a substantial transformation context, the essence of a blended whiskey is determined from its constituent parts; both single type whiskeys and blended whiskeys are alcoholic beverages. Finally, there is no change in use.

Accordingly, the country of origin marking required of the blended whiskey referred to in your three situations would be: (1) the origin of the constituent whiskeys would have to be revealed; the product could not be considered of U.S. origin, (2) the origin of the constituent whiskeys would have to be revealed; the product could not be considered as originating in the European country where the blending occurred, and (3) the application of 19 U.S.C 1304 would take precedence over the law of the foreign country involved. However, the result would be the same in this instance.

HOLDING:

The country wherein various whiskeys are blended and a small volume of blenders added is not the country of origin of the resulting blended whiskey. The label of such a blended whiskey must clearly and conspicuously reveal the origin of each constituent whiskey in the blend. The country in which the blending took place may be disclosed as long as it not done in a manner to suggest origin. For example, "Scotch and Irish Whiskey Blended in Canada", is permissible; "Canadian Whiskey- A Blend of Scotch and Irish Whiskeys", is not permissible.

Based on a recent phone conversation with a member of my staff, it was agreed we would not respond to your questions concerning the Kyoto Convention. You have indicated you have other sources to answer your questions on that point. Also, we take this opportunity to mention H.R. 1688, a bill introduced by Rep. Garcia (D-NY), to amend the Lanham Act to prevent the admission into the U.S. of articles of imported merchandise that are labeled with the name of a foreign country in contravention of the law of that country. Such a law would be of relevance to the problem being encountered by your client of parties trying to profit from the reputation of Irish whiskey.

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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