HQ 559984 - Country of origin marking of table grapes; reconsideration of NY Ruling A81143; outermost container; immediate container; J-List; 19 CFR - United States International Trade Commision Rulings

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HQ 559984

November 4, 1996

MAR-05 RR:TC:SM 559984 BLS

CATEGORY: MARKING

David A. Holzworth, Esq.
Lepon McCarthy White & Holzworth
1225 19th Street, N.W.
Washington, D.C. 20036

RE: Country of origin marking of table grapes; reconsideration of NY Ruling A81143; outermost container; immediate container; J-List; 19 CFR
134.33; unsealed containers

Dear Mr. Holzworth:

This is in reference to your letter dated July 17, 1996, on behalf of the Chilean Exporters Association, requesting a ruling concerning country of origin marking of unsealed polyethylene sleeves used in transporting table grapes. You also ask that we reconsider NY Ruling A81143 dated March 18, 1996.

FACTS:

You advise that approximately 80 percent of the table grapes shipped from Chile to the U.S. are placed in unsealed polyethylene stretch-vent sleeves, samples of which are enclosed with your ruling request. The remainder of the grapes are wrapped in tissue paper. Sleeves containing several bunches of grapes are packed in crates or cases for shipment. You point out that the grapes are often displayed for retail sale while remaining inside the shipping container with the lid and packing material removed.

You also state that all table grapes exported from Chile to the U.S. are packed in 16 or 18 pound cardboard cases and/or wood crates. These cases or crates have labels affixed to or imprinted on their ends which bear country of origin labeling information required by Customs as well as other information required by other concerned Governmental agencies.

NY Ruling A81143

In this ruling, bunches of grapes packed in clear plastic bags similar to the
subject polyethylene sleeves were imported in cartons from Mexico. The bags are described as in the shape of an inverted triangle, open at the top, perforated along the vertical axis, and said to be made of clear, polyethylene film. Each bag is imprinted with the fruit's PLU code number in red or green ink, on a white background. One sample bag also contained the logo for the "5 a Day - for Better Health!" promotional program.

Applying the NAFTA Marking Rules, Customs found in that case that the purchaser at retail is the ultimate purchaser of the grapes, and that the "outermost container" in which the grapes reach the ultimate purchaser is the clear plastic bag. Since the grapes are excepted from individual country of origin marking under 19 U.S.C. 1304(a)(3)(J), we held that the clear plastic bag must be marked to indicate Mexico as the country of origin.

In a separate letter dated July 29, 1996, you request that if Customs requires country of origin marking of the polyethylene sleeves, that a temporary exception from the marking requirements be granted based on economic considerations. In this regard, you have included information from the Chilean Exporters Association reflecting that the producers' inventory of such unmarked bags numbers about 80 million, and that it would cost approximately 1 million dollars to acquire replacement sleeves or label existing inventory.

ISSUE:

Whether the subject plastic polyethylene bags are considered "outermost containers" and therefore are required to be marked with Chile as the country of origin.

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 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.

Fresh grapes are among the articles listed by the Secretary of the Treasury under the authority provided in 19 U.S.C. 1304(a)(3)(J) and 19 CFR 134.33. This list, known as the "J-List", excepts from country of origin marking articles
which were not required to be marked during the five year period prior to 1937. Specifically, the J-List includes "natural products, such as vegetables, fruits, nuts, berries...in their natural state or not advanced in any manner further than is necessary for their safe transportation".

Section 304(b) of the Tariff Act of 1930, as amended (19 U.S.C. 1304(b)), provides that whenever an article is excepted from marking [pursuant to the J-List], "the immediate container if any, of such article, or such other container or containers of such article as may be prescribed by the Secretary of the Treasury, shall be marked..." Section 134.33 , Customs Regulations (19 CFR 134.33) provides that if a J-Listed article is imported in a container, "the outermost container in which the article ordinarily reaches the ultimate purchaser is required to be marked in accordance with the requirements of Subpart C of this part." Emphasis added. Subpart C sets forth the requirements for the marking of containers and articles repackaged after importation. Thus, the J-List reflects a recognition that some articles are themselves not susceptible of marking, but nevertheless attempts to ensure that the ultimate purchaser of an imported article is aware of its country of origin. The requirement is satisfied by marking the "outermost container" in which the article ordinarily reaches the ultimate purchaser.

Section 134.1(d), Customs Regulations (19 CFR 134.1(d), provides that generally, the ultimate purchaser is the last person in the U.S. to receive the article in the form in which it was imported. Thus, the ultimate purchaser of the subject grapes (as in NY Ruling A1143) is the person who buys them for consumption.

You contend that the subject polyethylene sleeves are not intended to be used as retail containers and should not be considered an outermost container. Therefore, you argue that these bags should not be required to be marked with the country of origin of the grapes. In this regard, you note that unlike certain other containers of produce such as for potatoes and oranges, the subject bags are not closed at the top, and are not designed to be filled with a fixed amount of product by weight or by volume. Thus, retail customers may add to or subtract from the quantity of table grapes in the sleeve, and that most retailers carry produce bags which are used by retail customers to carry the contents of one or more sleeves to the check-out counter. You further contend that as the polyethylene sleeve is used to reduce the amount of spillage during transport and display for retail sale, it does not advance the grapes "in any manner further than is necessary for [their] safe transportation" and, therefore, is
excepted from marking under the specific language of 19 CFR 134.33 related to this product. You also believe that NY Ruling A81143 is not in accord with 21 U.S.C. 343(1) of the Food, Drug and Cosmetic Act which expressly exempts raw agricultural commodities displayed for retail out of the shipping container in accordance with the customs and practices of the trade from certain labeling requirements.

The question of whether the unsealed plastic sleeve is an "outermost container" depends upon whether the enclosed J-List article(s) ordinarily will reach the ultimate purchaser in the container. In the instant case, the ultimate purchaser is the customer who purchases the grapes at the retail level.

In Headquarters Ruling Letter (HRL) 733798 dated April 11, 1991, fresh tomatoes imported from Mexico were packed in master containers marked with their country of origin. The tomatoes were unloaded in the U.S. and repacked in sealed "controlled atmosphere" trays and then packed in master cartons marked with Mexico as their country of origin. The tomatoes were then distributed to retail grocery and produce outlets. In that case, we found that the imported tomatoes had not been transformed in the U.S. in any manner by the packaging, and that the ultimate purchaser in the U.S. is the person who buys the tomatoes for consumption. Accordingly, since there was no doubt that the sealed tray was a retail container which would reach the ultimate purchaser, we held that this packaging was the "outermost" (or "immediate") container and was required to be marked.

We take note of the fact that in HRL 733798 and in other situations involving retail sale of produce or other foodstuffs on the J-List sold by weight or quantity (such as carrots, oranges and potatoes), the containers are ordinarily sealed to ensure that the specific quantity or weight of the produce will reach the ultimate purchaser in that container. In the present situation, however, the plastic sleeve normally contains bunches of grapes varying as to weight, and as unsealed permits the retail purchaser to add or subtract grapes from the bag as desired. In addition, the purchaser may remove grapes from the vented sleeve and may not use this container as a final container to make his\her purchase. However, the issue we must address, as framed by 19 CFR 134.33, is not whether the container holds a particular weight or quantity of grapes, or is necessarily sealed, but whether the grapes ordinarily reach the ultimate purchaser in the container.

As described, the vented bags containing the produce may either remain in the opened cartons or may be placed on racks for purchase at retail. In either case, the grapes will remain in the plastic sleeves to prevent spillage until purchase by the consumer. For purposes of determining whether the unsealed sleeve is an "outermost" container, it is irrelevant whether the purchaser buys the entire sleeve of grapes, removes or adds grapes to the sleeve, or removes the grapes from the sleeve for transfer to a store container. Rather, it is apparent from these facts that the grapes will ordinarily be in the vented sleeve when examined by the consumer, and under this scenario the sleeve is "the outermost container in which the article ordinarily reaches the ultimate purchaser", and must be marked.

Section 134.32(c), Customs Regulations (19 CFR 134.32(c)) provides an exception from the marking requirements for articles that cannot be marked prior to shipment to the U.S., except at an economically prohibitive expense.
In this regard, we note that it is Customs policy not to allow a permanent marking exception based upon this prohibitive economic expense provision. See Headquarters Ruling Letter (HRL) 559453 dated July 16, 1996. Based on the facts in this case, we find that pursuant to 19 CFR 134.32(c), a temporary exception to the marking requirements is warranted.

HOLDING:

The ultimate purchaser of table grapes sold at grocery stores or produce markets is the person who purchases the grapes for consumption. See 19 CFR 134.1(d). Therefore, since vented polyethylene sleeves displaying the grapes in produce bins or other display vehicle will ordinarily reach the ultimate purchaser, the polyethylene sleeve is an "outermost" container and must be marked with the country of originof the grapes. See 19 U.S.C. 1304(b) and 19 CFR 134.33. NY Ruling Letter A81143 is affirmed.

Pursuant to 19 CFR 134.32(c), a temporary exception to marking of the polyethylene sleeves is granted. This exception will commence on the letter date of this ruling, and will extend for a period of six months. After the six month period, the polyethylene sleeves must be marked conspicuously, legibly and permanently with the country of origin of their contents.

A copy of this ruling 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,

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