HQ 0733563 - HQ 554971 revoked. Country of Origin Marking; Roasting and Blending of Coffee; Substantial Transformation - United States International Trade Commision Rulings

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HQ 733563

June 24, 1991

MAR-2-05 CO:R:C:V 733563 NL

CATEGORY: MARKING

M. Henri St-Georges
Director of Administrative Services
Cafe Quartier
1360 Rue Provinciale
Quebec, QC, Canada G1N4A2

RE: HQ 554971 revoked. Country of Origin Marking; Roasting and Blending of Coffee; Substantial Transformation

Dear Mr. St-Georges:

This is in response to your letter of May 28, 1990, in which you request clarification of U.S. Customs Service rulings with respect to the country of origin marking of roasted and blended coffees.

FACTS:

Headquarters Ruling HQ 554971 (December 1, 1988), held that the sorting, grading, blending, and roasting of imported coffee beans does not effect a substantial transformation so as to qualify the processed coffee as a product of the U.S. Virgin Islands eligible for free entry into the U.S. under general headnote 3(a), Tariff Schedules of the United States (now General Note 3(a)(iv), Harmonized Tariff Schedule of the United States). This ruling is in conflict with previous rulings which have held that roasting and blending, or roasting alone, effects a substantial transformation in coffee beans. See, e.g., HQ 070395 (June 6, 1983); HQ 722360 (June 6, 1984); HQ 722980 (October 17, 1983); HQ 725641 (July 25, 1984). HQ 554971 did not formally modify or revoke these previous rulings, or refer to them.

ISSUE:

Is the roasting of coffee beans a substantial transformation for country of origin marking and other purposes?

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. The purpose of the marking statute is to permit the ultimate purchaser to choose to buy or not buy on the basis of where the goods were produced. United States v. Friedlaender & Co., 27 CCPA 297, 302, C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. As provided at 19 CFR 134.1(b), the "country of origin" of an article is the country in which it was manufactured, produced, or grown. The country of origin may change if, in another country, further work or material is added which effects a substantial transformation in the article. A substantial transformation is said to occur if within the principle of United States v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267 (C.A.D. 98)(1940), the processing results in an article having a different name, character, or use.

In the case of coffee, the earlier rulings cited above have concluded that roasting, or roasting and blending, of coffee is sufficient to change its character and use and thus effect a substantial transformation. Ruling HQ 554971, applying more recent precedents with respect to substantial transformation, concluded the opposite. Specifically, HQ 554971 relied upon T.D. 85-158, in which Customs determined that the roasting of green pistachio nuts does not effect a substantial transformation so as to change their country of origin. The ruling also relied upon HQ 554739 (October 30, 1987), which concluded that the process of decaffeination does not substantially transform green coffee beans. It should also be noted that in National Juice Products Ass'n v. United States, 628 F. Supp. 978 (CIT 1986), the Court of International Trade upheld Customs determination that orange juice imported as manufacturing concentrate is not substantially transformed by conversion into frozen concentrated orange juice or reconstituted orange juice.

HQ 554971 relied upon precedents which, in our opinion, supported the conclusion reached. However, because that ruling apparently overlooked earlier rulings, i.e., that roasting, or roasting and blending of coffee effects a substantial transformation and thus changes a coffee's country of origin, Customs now believes that HQ 554971 should be revoked in light of earlier rulings.

It is noted, however, that the earlier rulings on coffee may be no longer consistent with rulings of Customs and decisions of the courts applying the broad principles of substantial transformation to other food products. See, e.g., National Juice Products, T.D. 85-158, and rulings regarding broccoli, honey, sugar, shrimp, and other foods, all concluding that no
substantial transformation results from processes such as cooking, refining, and blending. Customs may in the near future determine that it is appropriate to reconsider its earlier rulings finding that roasting coffee effects a substantial transformation.

HOLDING:

Until further notice, the roasting or roasting and blending of coffee is regarded by Customs as effecting a substantial transformation. Accordingly, HQ 554971 is hereby revoked.

Sincerely,

John Durant, Director,
Commercial Rulings Division

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