HQ 735388 - Country of origin marking requirements for wildberry sangria imported from Canada; Article 509; NAFTA Marking Rules; section 134.1(d) of the interim regulations; section 102.11(a) and (b) of the interim regulations; section 102.20 of the interim regulations - United States International Trade Commision Rulings

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HQ 735388

September 30, 1994

Mar-2-05 CO:R:C:S 735388 AT

CATEGORY: MARKING

Ann Williams
A.N. Deringer, Inc.
30 West Service Road
Champlain, New York 12919-9703

RE: Country of origin marking requirements for wildberry sangria imported from Canada; Article 509; NAFTA Marking Rules; section 134.1(d) of the interim regulations; section 102.11(a) and (b) of the interim regulations; section 102.20 of the interim regulations

Dear Ms. Williams:

This is in response to your letter dated October 8, 1993, on behalf of Celliers du Monde, Inc. ("Celliers"), requesting a ruling on the country of origin marking requirements for wildberry sangria imported from Canada to be distributed and sold in the U.S. We regret the delay in responding.

FACTS:

You state that Celliers intends to import into the U.S. from Canada wildberry sangria. The sangria will be processed in Canada in the following manner. Grape wine from Chile is imported into Canada and mixed with various ingredients of Canadian origin (consisting of sugar, water sulfite, sorbate, citric acid, tropical flavor, orange flavor, raspberry ginger ale flavor, wildberry flavor, caramel and natural flavor beverage). The wine is filtered, and then filtered again, after which it is bottled, labelled and packaged for shipment to the U.S.

ISSUE:

What are the country of origin marking requirements for imported wildberry sangria processed from Chilean wine in Canada 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 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.

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. In this case, Chilean grape wine is imported into Canada to be mixed with Canadian ingredients and processed into wildberry sangria prior to being imported into the U.S. Thus, in order to determine the appropriate marking requirements for the imported wildberry sangria we must determine under the NAFTA Marking Rules the country of origin of the wildberry sangria imported from Canada.

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) of the interim regulations states that "[t]he 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 classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied."

"Foreign Material" is defined in section 102.1(e) of the interim regulations as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced."

The application of the hierarchial rules of section 102.11 of the interim regulations for marking purposes, requires a determination of the country of origin of the finished article, in this case, wildberry sangria. Since the wildberry sangria is produced in Canada from Chilean grape wine (foreign as defined in section 102.1(e) of the interim regulations) the sangria is neither wholly obtained/produced nor is produced exclusively from domestic materials and therefore paragraphs (a)(1) and (a)(2) of section 102.11 cannot be used to determine the country of origin of the sangria. Thus, paragraph (a)(3) of section 102.11 is the applicable rule that first must be applied to determine the origin of the finished article. The wildberry sangria is classified under heading 2205, HTSUS. The grape wine is classified in heading 2204, HTSUS. The applicable change in tariff classification set out in section 102.20(d), Section IV, Chapters 16 through 24, 2205 of the interim regulations provides:

2205 .... A change to heading 2205 from any other heading, except from heading 2204; or a change to vermouth of heading 2205 from heading 2204.

In this case, we find that the Chilean grape wine does not undergo the applicable change in tariff classification set out in section 102.20(d), and, as a result, section 102.11(b) of the hierarchial rules must be applied next to determine the country of origin of the wildberry sangria.

Section 102.11(b) of the interim regulations provides that:

Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a), the country of origin of the good:

(1) Is the country or countries of origin of the single material that imparts the essential character of the good, or

(2) If the material that imparts the essential character of the good is fungible, has been commingled, and direct physical identification of the origin of the commingled material is not practical, the country or countries of origin may be determined on the basis of an inventory management method provided under the Appendix to part 181 of the Customs Regulations.

Here, because section 102.11(b)(2) is not applicable in this case, the applicable rule that must be applied to determine the country of origin of the wildberry sangria is section 102.11(b)(1). Applying section 102.11(b)(1) to the facts of this case, we find that the single material that imparts the essential character of the wildberry sangria is the grape wine. Since the grape wine's origin does not change as a result of the processing operations performed in Canada under section 102.20(d), as explained above, the country of origin of the wildberry sangria, for marking purposes, is Chile (the origin of the grape wine). Accordingly, the bottles in which the wildberry sangria is bottled in Canada must be marked to indicate "Chile" as the country of origin of the imported wildberry sangria. HOLDING:

Chilean grape wine imported into Canada to be mixed with Canadian ingredients and processed into wildberry sangria, in the manner described above, does not undergo the applicable tariff change set forth in section 102.20(d). Thus, pursuant to section 102.11(b)(1) the essential character of the wildberry sangria is the grape wine. Accordingly, the country of origin of the wildberry sangria for marking purposes is Chile, and the bottles in which the wildberry sangria is bottled in Canada must be marked to indicate "Chile" as the country of origin of the imported wildberry sangria.

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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