HQ 0735417 - Country of origin marking requirements for liquid multi- vitamin emulsion imported in bulk to be bottled and mixed in the U.S.; mixing; substantial transformation; ultimate purchaser; 19 CFR 134.35; National Juice; C.S.D. 84-112; HQ 729519 - United States International Trade Commision Rulings

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HQ 735417

July 25, 1994

MAR 2-05 CO:R:C:V 735417 AT

CATEGORY: MARKING

Mr. Olav E. Sandnes
Scandinavian Laboratories
125 Asia Place
Carlstadt, New Jersey 07072

RE: Country of origin marking requirements for liquid multi- vitamin emulsion imported in bulk to be bottled and mixed in the U.S.; mixing; substantial transformation; ultimate purchaser; 19 CFR 134.35; National Juice; C.S.D. 84-112; HQ 729519

Dear Mr. Sandnes:

This is in response to your letter dated October 28, 1993, concerning the country of origin marking requirements for liquid multi-vitamin emulsion imported in bulk from Norway to be mixed and bottled in the U.S. A marked sample retail container was submitted with your letter. We regret the delay in responding.

FACTS:

Scandinavian Laboratories intends to import liquid multi- vitamin emulsion from Norway in 55 gallon drums into the U.S. In the U.S., Scandinavian will remix, test and bottle the imported liquid multi-vitamin emulsion into consumer bottles (generally 4 or 8 fl.oz.). You state that Scandinavian does not add ingredients to the bulk product during the remixing and bottling operations performed in the U.S. After the liquid multi-vitamin is remixed and bottled in the U.S., Scandinavian will either sell the finished product in the U.S. or will export the product for sale. You also state that the cost of the bulk product constitutes approximately less than 50 percent of the cost of the finished retail product. You contend that the U.S. operations of mixing, testing and bottling the imported product constitute a substantial transformation because the imported liquid multi-vitamin emulsion cannot be consumed in its bulk form, but needs to be transformed into a retail product before consumption. Thus, you maintain that Scandinavian is the ultimate purchaser of the imported liquid multi-vitamin emulsion and it is excepted from country of origin marking.

ISSUE:

What are the country of origin marking requirements for imported liquid multi-vitamin emulsion which is to processed in the U.S. 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 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 its 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is the product. The evident purpose is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influence his will." United States v. Friedlaender & Co. 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. 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" within the meaning of the marking laws and regulations. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an imported article used in the U.S. in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed, and that the manufacturer or processor will be considered the ultimate purchaser of the imported article. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked (see section 134.35, Customs Regulations). We first must determine who is the ultimate purchaser of the imported liquid multi-vitamin emulsion in order to determine the appropriate country of origin marking requirements of the imported article. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article.

In National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986), the court upheld Customs ruling that imported manufacturing orange juice concentrate used to make frozen concentrated orange juice and reconstituted orange juice was not substantially transformed. The court stated that the manufacturing concentrate is the "major part of the end product, when measured by cost, value or quantity" and the further processing in the U.S. to make the manufacturing concentrate into frozen concentrated orange juice was considered a minor manufacturing process. The court noted that the imported product was the very essence of the retail product and that the addition of water, orange essence and oils to the concentrate, while making it suitable for retail sale, did not change the fundamental character of the product.

Similarly, in this case, we find that the imported liquid multi-vitamin emulsion is not substantially transformed as a result of the U.S. operations performed. As the concentrate in National Juice was determined to be the very essence of the finished retail product, the imported liquid multi-vitamin emulsion is the very essence of the finished consumer product. The operations of mixing, testing and bottling are nothing more than minor processing operations. See, C.S.D. 84-112 (July 12, 1994); imported honey which was purified, filtered, flash heated, and blended with domestic honey in the U.S. was determined not to be substantially transformed as a result of the minor operations performed in the U.S.

The imported liquid product's name, character and use does not change as a result of the U.S. processing performed. The finished retail product continues to be a liquid multi-vitamin emulsion after the U.S. processing is performed. Moreover, as you state in your submission, nothing is added to the imported liquid product in the U.S. that may cause a change in the product's name, character or use.

Although you contend that the imported liquid product is substantially transformed as a result of the U.S. processing, in that the imported product cannot be consumed in its bulk form, but needs to be transformed into a retail product before consumption, Customs has already determined that this alone does not constitute a substantial transformation. In HQ 729519 (May 18, 1988), a case involving wine coolers (a beverage consisting of a liquid flavor and carbonated water) Customs ruled that the processing in Canada by mixing and bottling imported liquid flavor base of U.S. origin with carbonated water did not substantially transform the U.S. liquid base, and thus the origin of the finished wine cooler was the U.S., the country of the liquid flavor base. This conclusion was based on the view that the flavor base "imparted the fundamental character of the wine cooler" although the Canadian processing was necessary to make the product salable and changed the character of the final product to a certain degree. Like the U.S. origin flavor base in HQ 729519, the imported liquid multi-vitamin emulsion imparts the fundamental character of the finished product, even though the U.S. processing is necessary to make the imported product fit for retail consumption.

Since the imported liquid multi-vitamin emulsion is not substantially transformed as a result of the U.S. processing, Scandinavian is not the ultimate purchaser of the imported liquid. Rather the person(s) who purchases the finished product at retail is the ultimate purchaser. Accordingly, the finished article or its retail container must be marked to indicate "Norway" as the country of origin of the liquid multi-vitamin emulsion to the ultimate purchaser.

Our review of the submitted sample retail cardboard box indicates that a U.S. reference "Moonachie, New Jersey" appears on the back panel of the box directly below the product's warranty and other consumer information. This U.S. reference triggers the special marking requirements of 19 CFR 134.46. 19 CFR 134.46 provides that when the name of any U.S. city or locality or the name of any foreign country other than the country or locality in which the article was manufactured or produced, appears on an imported article or its container, there shall appear, legibly, and permanently, in close proximity to such words, letters or name and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning.

Thus, in order to satisfy the special marking requirements of 19 CFR 134.46, the retail box must be marked with the country of origin "Norway" in close proximity to the U.S. reference (on the same back panel), in at least a comparable size lettering to the U.S. reference and the origin "Norway" must be preceded by the words "Made in", "Product of" or other words of similar meaning. We note that the marking requirements set forth in 19 U.S.C. 1304 and 19 CFR Part 134 do not apply to articles which are to be exported from the U.S. to another foreign country, but only apply to foreign articles imported into the U.S. Therefore, the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134 are not applicable to the finished retail product which is exported.

HOLDING:

Imported liquid multi-vitamin emulsion which is further processed by Scandinavian in the U.S. in the manner described above is not substantially transformed as a result of the U.S. processing performed. Thus, Scandinavian is not the ultimate purchaser of the imported product. Rather the person(s) who purchases the finished product at retail is the ultimate purchaser. Accordingly, the finished product or its retail container must be marked to indicate "Norway" as the country of origin of the consumer product to the ultimate purchaser at retail.

Sincerely,

John Durant, Director

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