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HQ 558692




July 11, 1995

MAR 2-05 R:C:S 558692 AT

CATEGORY: MARKING

Mr. Joseph S. Aiello
General Manager
Tricon Colors Incorporated
16 Leliarts Lane
Elmwood Park, New Jersey 07407-3291

RE: Country of origin marking requirements for imported pyranine 120 to be further processed in the U.S.; substantial transformation; ultimate purchaser; 19 CFR 134.35

Dear Mr. Aiello:

This is in response to your letters dated August 11, 1994 and June 28, 1995, concerning the country of origin marking requirements for pyranine 120 imported from Germany that is to be further processed in the U.S. into D&C Green #8. We regret the delay in responding.

FACTS:

You state that Tricon Colors Incorporated ("Tricon") intends to import pyranine 120 which is made in Germany into the United States. The imported product, pyranine 120 is also known as C.I. Solvent Green #7. Once imported, Tricon further processes the imported material by reducing (diluting) it with 5 to 9 percent sodium sulfate. After this dilution, the diluted pyranine 120 meets the standards of identity issued by the Food and Drug Administration ("FDA") for color additive D&C Green #8. The prefix D&C is used to identify dyes that have been certified by the FDA for use in the U.S. for coloring drugs and cosmetics. You state that the imported pyranine 120 is classified under subheading 3204.19.1100, HTSUS, and the finished D&C Green #8 is classified under subheading 3204.17. After the U.S. processing is completed, the D&C Green #8 is submitted to the FDA for certification. You have inquired as to whether the imported pyranine 120 from Germany becomes a product of the U.S. as a result of the U.S. processing performed by Tricon to make D&C Green #8.

ISSUE:

What are the country of origin marking requirements for imported pyranine 120 which is to be used in the production of D&C Green #8 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).

The country of origin marking requirements for the imported pyranine 120 that is to be further processed into D&C Green #8 by Tricon in the U.S. depends upon whether Tricon is the ultimate purchaser of the imported article.

The "ultimate purchaser" is defined generally as the last person in the U.S. who will receive the article in the form in which it was imported. See, 19 CFR 134.1(d). If an imported article will be used in domestic manufacture, the manufacturer may be the "ultimate purchaser" if he or she subjects the imported article to a process which results in a substantial transformation of the article. However, if the manufacturing process is a minor one which leaves the identity of the imported article intact, the consumer or user of the article, who obtains the article after the processing, will be regarded as the "ultimate purchaser." 19 CFR 134.1(d)(1) and (2).

For country of origin marking purposes, a substantial transformation occurs when an article loses its identity and becomes a new article having a new name, character or use. United States v. Gibson-Thomsen Co., 27 CCPA 267 (1940); National Juice Products Association v. United States, 10 CIT 48 (1986). Under this principle, the manufacturer or processor in the U.S. who converts or combines the imported article into a different article will be considered the "ultimate purchaser" of the imported article, and the article shall be excepted from marking. However, the outermost container of the imported article must be marked (See, 19 CFR 134.35). Whether a substantial transformation occurs is determined on a case-by-case basis.

The issue involved in this case is whether the imported pyranine 120 which is processed as described above in the U.S. to make D&C Green #8 is substantially transformed into a new article having a new name, character or use.

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 pyranine 120 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, we find that the imported pyranine 120 is the very essence of the finished D&C Green #8. The operation of diluting the pyranine 120 with 5-9 sodium sulfate is a minor processing operation which does not change the essential character of the pyranine 120. See, HQ 729519 (May 18, 1988), a case involving wine coolers (a beverage consisting of a liquid flavor and carbonated water) where 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.

Diluting the imported pyranine 120 with 5-9 sodium sulfate also does not chemically change the imported product. In fact, we are advised by the Food and Chemical Branch that D&C Green #8 is a commercial designation for the Solvent Green #7 diluted, and thus the D&C Green #8 is classifiable in subheading 3204.19.11, HTSUS, rather than in subheading 3204.17, HTSUS, as you state. Moreover, as you state in your submission, nothing is added to the imported pyranine 120 in the U.S. that may cause a change in the product's name, character or use.

Since the imported pyranine 120 is not substantially transformed as a result of the U.S. processing, Tricon is not the ultimate purchaser of the imported product. Rather the person(s) who purchases the finished D&C Green #8 is the ultimate purchaser. Accordingly, the finished article or its container must be marked to indicate "Germany" as the country of origin of the pyranine 120 to the ultimate purchaser.

HOLDING:

Imported pyranine 120, also known as C.I. Solvent Green #7, which is made in Germany which is used by Tricon to produce D&C Green #8 in the U.S. in the manner described above, is not substantially transformed as a result of the U.S. processing. Thus, Tricolor is not the ultimate purchaser of the imported product. Rather the person(s) who purchases the finished D&C Green #8 is the ultimate purchaser. Accordingly, the finished article or its container must be marked to indicate "Germany" as the country of origin of the pyranine 120 to the ultimate purchaser.

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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