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HQ 733207


November 21, 1990

MAR 2-05 CO:R:C:V 733207 NL

CATEGORY: MARKING

Leslie A. Glick, Esq.,
Porter, Wright, Morris & Arthur
1233 20th Street, N.W.,
Washington, D.C. 20036-2395

RE: Country of Origin Marking - Potpourri; American Goods Returned (HTS 9801.00.10); 19 CFR 134.24; 19 CFR 134.35; 19 CFR 134.32(m); Blending Diverse Articles

Dear Mr. Glick:

This is in response to your letters of March 21 and November 5, 1990, in which you request a ruling concerning the country of origin marking requirements applicable to certain aromatic products. The first of these is an aromatic mixture of herbs, flowers, spices, and woodchips ("raw botanicals") mixed in the U.S., then packaged in Mexico and returned to the U.S. for retail sale as potpourri. The other products are potpourri oil and aromatic salt crystals.

FACTS:

Your client, Aromatic Industries, Inc., manufactures a product known as potpourri in the U.S. from foreign and U.S. raw botanical ingredients. The potpourri is intended to scent the air. Depending upon the intended blend, between ten and twenty items of raw botanicals are used for each final product. The manufacturing process includes laying out and blending the botanicals according to formula; mixing in U.S.- origin essential oils, fragrances and fixatives; and further mixing and blending. It is estimated that the value added in the U.S. to the raw botanicals is between 57.1 percent and 75.1 percent, according to the type of blend. The proportion of foreign to U.S. raw ingredients is not stated.

The potpourri oil and the aromatic salt crystals are wholly comprised of U.S. ingredients and produced in the U.S. The oil is produced from aroma chemicals and natural extracts essential oils derived by steam distillation of plant materials. The aromatic salt crystals are produced by impregnating coarse solar salt with the potpourri oil.

After production in the U.S. the three articles will be
shipped to Mexico in bulk for packaging in disposable retail containers consisting of plastic, paper, and glass vials. Your letter of March 21, 1990, requests, among other things, a ruling that the retail packaging, to the extent it is of foreign origin, be excepted from country of origin marking as packaging not for reuse. It is your position that upon reimportation to the U.S. the potpourri, oil, and aromatic salt crystals will qualify for duty-free treatment pursuant to subheading 9801.00.10 of the Harmonized Tariff Schedule of the United States (HTSUS). It is also your position that the articles may be excepted from country of origin marking pursuant to 19 CFR 134.32(m) as products of the U.S. exported and returned.

ISSUES:

1) Whether the foreign origin constituent materials of the potpourri are substantially transformed when the potpourri is produced in the U.S.

2) Whether the potpourri, oil, and aromatic salt crystals may be excepted from the country of origin marking requirements upon reimportation into the U.S. after packaging in Mexico.

3) Whether the potpourri, oil, and aromatic salt crystals are eligible for duty free treatment under HTSUS 9801.00.10 upon reimportation after packaging in Mexico.

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. 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 U.S. the English name of the country of origin of the article.

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. As defined in 19 CFR 134.1(b), "country of origin" means the country of manufacture, production, or growth of any article of foreign origin entering the U.S. That section also provides that further work or material added to an article in another country must effect a substantial transformation in order to change the articles' country of origin. A substantial transformation is said to occur when, after further processing or manufacture, an article emerges having a new name, character, or use. See, 19 CFR 134.35.

The principal issue for resolution is whether the foreign origin constituents of the potpourri are substantially transformed into an article having a new name, character, or use
when the potpourri is produced in the U.S. It is our opinion in this case that a substantial transformation of the foreign-origin constituents of the potpourri is effected by production of potpourri in the U.S. The herbs, flowers, spices and woodchips lose their separate identities upon incorporation into the potpourri, and acquire a new name, character, and use. Despite the fact that the botanicals, for example, remain recognizable as parts of flowers and plants, their character and use becomes entirely different, having taken on the commercial identity of the potpourri.

The two earlier rulings to which you refer are of substantial bearing on the instant ruling request. In HQ 553120 (September 28, 1984), Customs ruled that an extensive process of moisturizing, curing, blending, cutting, cleaning, and drying leaf tobacco so as to produce scrap tobacco was a substantial transformation. In particular, Customs found this process exceeded "merely blending" the tobacco, "merely chopping ...without further manufacturing", or simply performing alterations. The production of the potpourri entails a comparable degree of complexity as that considered in HQ 553120, and in addition, involves the blending of diverse articles into a final product having a new name, character and use. In the second ruling, HQ 723312 (November 22, 1983), Customs was asked to rule on the country of origin marking of perfume which had been produced in the U.S. from imported essential oil by adding special denatured alcohol, coloring matter, color stabilizer, and water. The ruling found that a substantial transformation was effected in the U.S. and further, that packaging in Mexico after production did not change its U.S. origin. Thus, the two previous rulings afford significant support for our finding that the production of the potpourri in the U.S. substantially transforms the imported constituent materials into a product of the U.S.

The second issue raised by this request is whether the subsequent retail packaging in Mexico affects the country of origin marking requirements applicable to the three articles upon importation into the U.S. Previous Customs rulings establish that mere packaging of an article does not result in a change in the country of origin of the article. See, HQ 723312 supra. Accordingly, the packaged potpourri, potpourri oil, and aromatic salt crystals remain products of the U.S., and may be excepted from the requirements of 19 U.S.C. 1304 pursuant to 19 CFR 134.32(m) as products of the U.S. exported and returned.

We further find that there is no country of origin marking required for the packaging, even though it is of Mexican origin, as it is plain from an examination of the paper and plastic wrappings of the potpourri and the glass vial for the oil that they qualify as containers not designed for or capable of reuse pursuant to 19 CFR 134.24(a). Thus, they may be excepted from
country of origin marking pursuant to that provision.

Finally, we find that all three products are eligible for duty free treatment upon importation into the U.S. pursuant to subheading 9801.00.10, HTSUS, pertaining to products of the U.S. returned after having been exported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad. As found above, all three articles remain products of the U.S. even after packaging in Mexico. Such packaging does not advance in value or improve in condition by means of a process of manufacture or otherwise the U.S.-origin articles exported and returned, and thus satisfies the eligibility requirements of subheading 9801.00.10, HTSUS. See, C.S.D. 90-66, 24 Cust. B. & Dec. 23 (June 6, 1990)(U.S.-origin parts of garage door opener kits packaged in Mexico with foreign origin kits found to be eligible). Provided the documentary requirements set forth in section 10.1, Customs Regulations (19 CFR 10.1), are also satisfied, the potpourri, potpourri oil and aromatic salt crystals are eligible for duty-free treatment under subheading 9801.00.10, HTSUS.

HOLDING:

The foreign origin constituents of the potpourri are substantially transformed by manufacture in the U.S. within the meaning of 19 CFR 135.35. After retail packaging in Mexico the potpourri, oil, and aromatic salt crystals may be excepted from country of origin marking pursuant to 19 CFR 134.32(m), and their retail paper, plastic, and glass packaging may be excepted from country of origin marking pursuant to 19 CFR 134.24(a). Finally, all three articles are eligible for duty-free treatment as U.S. articles exported and returned pursuant to subheading 9801.00.10, HTSUS.

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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