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HQ 559932




October 8, 1996

MAR-2-05 RR:TC:SM 559932 MLR

CATEGORY: MARKING

Mr. Peter L. Stormer
Product Integrity Department
Rohm and Haas Company
Independence Mall West
Philadelphia, PA 19105

RE: Country of Origin Marking for Kathon MWX Bulk Granular Microbicide; Chemical; Substantial Transformation

Dear Mr. Stormer:

This is in reference to your letter of June 26, 1996, requesting a ruling concerning the country of origin marking for Kathon MWX bulk granular microbicide.

FACTS:

It is stated that the bulk of the materials that make up Kathon MWX bulk granular microbicide (hereinafter "MWX") comes from the U.S., and that the active ingredient is a product of the United Kingdom. On September 17, 1996, you provided the chemical composition of the active ingredient in MWX. It is stated that the bulk, stabilized ingredient is imported from the United Kingdom into the U.S. and is loaded onto silica and packaged into 2 ounce tyvek film pouches. These pouches are then overpacked in foil wrap and then in box cartons. It is also stated that the Environmental Protection Agency requires that the active ingredient (as imported) and the final product have different registration numbers under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).

ISSUE:

Whether the active ingredient imported from the United Kingdom is substantially transformed in the U.S., such that the MWX does not require marking pursuant to 19 U.S.C. 1304.

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. 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. Inc., 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.

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. For country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in the U.S. in manufacture, which results in an article having a name, character, or use differing from that of the imported article. See 19 CFR 134.35.

You claim that the active ingredient is substantially transformed in the U.S., such that the Kathon MWX bulk granular microbicide may be appropriately marked as a product of the U.S.

In Headquarters Ruling Letter (HRL) 734558 dated July 22, 1992, Customs addressed the manipulation of a herbicide and found that there was no substantial transformation when the herbicide, exported in bulk to France, was encapsulated into a water-soluble film, since the operation did not change the chemical composition but only facilitated its use. See also HRL 556616 dated June 16, 1992. In HRL 555064 dated March 29, 1990, Customs determined that the formulation of propanil-4, a herbicide for rice, from technical propanil did not constitute a substantial transformation for purposes of the Caribbean Basin Economic Recovery Act. This decision was based on T.D. 78-168, 12 Cust. Bull. 353 (1978), which held that the formulation of the herbicide diuron wettable powder by mixing technical diuron with various agents was not a substantial transformation for purposes of the Generalized System of Preferences. These findings are also consistent with National Juice Products Association v. United States, 628 F. Supp. 978 (CIT 1986), where the court found that imported manufacturing orange juice concentrate was the very essence of frozen concentrate orange juice and reconstituted orange juice. The court noted 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 imported product, and therefore, was not a substantial transformation.

Based on these cases, it is our opinion that the active ingredient is not substantially transformed in the U.S. since it appears that the MWX and imported active ingredient are chemically similar and the active ingredient does not undergo a chemical reaction in the U.S. by being loaded onto silica. Furthermore, while the EPA regulations may require the MWX and active ingredient to have different registration numbers, we note that the EPA's requirement for identifying the producer serves a different purpose and has different criteria from the criteria required for determining the country of origin of an article under 19 U.S.C. 1304.

Additionally, in regard to the value added in the U.S., the Court of International Trade has stated in numerous cases that the name, character and use test is entitled to continued adherence in view of its affirmance in recent opinions by the appellate court, and to avoid "ludicrous results," should generally be determinative of the country of origin of imported articles. See Ferrostaal 664 F. Supp. at 538; and National Hand Tool Corp. v. United States, 16 CIT 308, 312 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993). Accordingly, it is our opinion that the imported active ingredient is not substantially transformed in the U.S.

HOLDING:

Based upon the information provided, it is our opinion that the imported active ingredient is not substantially transformed in the U.S. Therefore, the MWX will require marking pursuant to 19 U.S.C. 1304.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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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