HQ 0734638 - Country of origin marking of imported frozen dough further processed in the U.S. into bread products; country of origin; NAFTA Marking Rules; section 134.1(b) of the interim regulations; section 134.35(b) of the interim regulations - United States International Trade Commision Rulings

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HQ 734638

April 21, 1994

Mar-2-05 CO:R:C:V 734638 AT

CATEGORY: MARKING

Mr. William J. Bugyra
Handel/Trade Inc.
76 St. Clair Ave. West Ste 101
Toronto, Ontario, Canada
M4V IN2

RE: Country of origin marking of imported frozen dough further processed in the U.S. into bread products; country of origin; NAFTA Marking Rules; section 134.1(b) of the interim regulations; section 134.35(b) of the interim regulations

Dear Sir:

This is in response to your letter dated April 20, 1992, on behalf of Der Brotkorb, Inc. ("Der Brotkorb") requesting a ruling on the country of origin marking requirements for frozen dough imported from Canada that is to be further processed in the U.S. into different variety breads. The classification issue raised in your letter has been addressed by the Food and Chemical Classification Branch in HQ 951723 (September 30, 1992). We regret the delay in responding.

FACTS:

You state that Der Brotkorb intends to import frozen bread dough from Canada into the U.S. After importation, the frozen dough will be sold to distributors or grocery store chain warehouses which in turn will bake the dough into different variety breads (including specialty breads and buns). The frozen dough will be packed twenty-four to a box, with each box weighing approximately thirty-three and one-third pounds. Each box will be marked with the type of dough it contains, quantity and net weight, and that it is a "Product of Canada" or "Made in Canada", and that the product must be kept frozen. A sample of the frozen dough or the marked container was not submitted for our review. ISSUE:

What are the country of origin marking requirements for imported frozen dough prepared in the U.S. into specialty breads and buns in the manner described above?

LAW AND ANALYSIS:

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate 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.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the interim amendments to the Customs Regulations published as T.D. 94-4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994 to coincide with the effective date of the NAFTA. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in T.D. 94-4 (adding a new Part 102, Customs Regulations). The marking requirements of these goods are set forth in T.D. 94-1 (interim amendments to various provisions of Part 134, Customs Regulations).

Section 134.1(b) of the interim regulations, 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 within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).
Section 134.1(j) of the interim regulations, provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the interim regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish. For purposes of this ruling we will assume that the frozen dough imported from Canada is of Canadian origin when imported into the U.S., prior to being prepared in the U.S., and therefore is considered to be a good of a NAFTA country as defined in section 134.1(g) of the interim regulations. Therefore, the issue presented is whether the imported product is excepted from marking. Section 134.35(b) of the interim regulations, provides that
a good of a NAFTA country which is to be processed in the United States in a manner that would result in the good becoming a good of the United States under the NAFTA marking rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.

Part 102 of the interim regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the interim regulations, sets forth the required hierarchy for determining country of origin for marking purposes.

Section 102.11(a) provides that the country of origin of a good is the country in which

(1) The good is wholly obtained or produced;

(2) The good is produced exclusively from domestic materials; or

(3) Each foreign material incorporated in that good undergoes an applicable change in tariff set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied

In this case, Canadian origin frozen dough is being imported into the U.S. to be prepared into different variety breads. The marking requirements hinge on whether the frozen dough undergoes the applicable change in tariff set out in section 102.20.

The finished article, variety breads, which is prepared in the U.S. from the Canadian frozen dough is classified in heading 19.05 HTSUS. The frozen dough imported from Canada is classified in heading 19.01 HTSUS according to HQ 951723. The applicable change in tariff set out in section 102.20 of the interim regulations provides

19.03-19.05 ..... A change to heading 19.03 through 19.05 from any other heading, including another heading within that group

Because the frozen dough does undergoes the applicable change in tariff set out in section 102.20, the imported frozen dough imported from Canada as a result of being prepared in the U.S. into variety breads becomes an article of U.S. origin under Part 102 of the interim regulations.

Accordingly, pursuant to section 134.35(b), the imported frozen dough which is processed in the U.S., in the manner described above, is excepted from marking. Since the imported dough will not be processed by Der Brotkorb, the importer, the outermost containers are required to be marked "Canada".

HOLDING:

Imported frozen dough which we have assumed to be a good of a NAFTA country (Canada) that is processed in the manner described above, is excepted from marking and only the outermost containers are required to be marked with the country of origin "Canada".

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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