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HQ 559992





November 27, 1996

MAR-2-05 RR:TC:SM 559992 MLR

CATEGORY: MARKING

John M. Peterson, Esq.
Neville, Peterson & Williams
80 Broad Street
34th Floor
New York, NY 10004

RE: Country of origin marking for corn oils; commingled; fungible; Mexico; NAFTA; Article 509

Dear Mr. Peterson:

This is in reference to your letter of July 23, 1996, requesting a ruling on behalf of CPC International, Inc. ("CPC"), concerning the country of origin marking requirements for corn oil.

FACTS:

It is stated that CPC intends to import refined corn oil into the U.S., which was produced in Canada from Canadian grain. After importation into the U.S., it is stated that the Canadian corn oil will be commingled in storage tanks with fungible refined corn oil produced in the U.S. from grain grown in the U.S. On average, it is anticipated that over an annual period, 70 percent of the corn oil will be of U.S. origin and 30 percent will be of Canadian origin. The proportion of U.S. to Canadian corn oil will fluctuate, but it is anticipated that at all times during the year the commingled storage will contain both U.S. and Canadian origin corn oils.

The commingled corn oil will be drawn from the tankage and bottled in plastic containers of various capacities, including one gallon and 64 ounce containers. These containers will then be sold to retail purchasers in the U.S. The country of origin marking will appear on the paper label affixed to the plastic container. CPC intends to have the labels printed and to provide the labels to a contractor manufacturing plastic bottles for the corn oil, who will permanently affix the labels to the plastic containers by a molding-in process. It is claimed that the "inventory management methods" of marking provided under 19 CFR 102.11(b) are not practicable. Therefore, CPC wishes to mark the bottles using major supplier marking by marking each container "Product of U.S.A. and Canada."

ISSUE:

Whether the bottles of corn oil may be marked " "Product of U.S.A. and Canada".

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.

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 United States. 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 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), Customs Regulations (19 CFR 134.1(j)), provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. A "good of a NAFTA country" is defined in 19 CFR 134.1(g) as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at 19 CFR Part 102.

Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. This section states that the 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 applicable requirements of these rules are satisfied.

Section 102.1(f), Customs Regulations {19 CFR 102.1(f)}, defines fungible goods or fungible materials as "goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical." "Commingled" is defined as "physically combined or mixed." 19 CFR 102.1. Since the corn oil in the storage tank consists of a mixture of U.S. and Canadian corn oil, it is a commingled good, and, therefore, is neither wholly obtained or produced, nor produced exclusively from domestic materials. While the tariff classification of the commingled corn oil is not provided, we presume that the Canadian corn oil does not undergo the requisite tariff shift set out in 19 CFR 102.20 because the "commingled" Canadian and U.S. corn oil is not described as a type of corn oil that is different from the Canadian corn oil.

Accordingly, 19 CFR 102.11(b) of the hierarchial rules must be applied, which 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.

When determining the essential character of a good under 19 CFR 102.11, 19 CFR 102.18(b)(1) provides that only domestic and foreign materials that are classified in a tariff provision from which a change is not allowed shall be taken into consideration. Section 102.18(b)(1)(iii), Customs Regulations (19 CFR 102.18(b)(1)(iii)), provides that if there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed, then that material will represent the single material that imparts the essential character to the good under 19 CFR 102.11.

Pursuant to 19 CFR 102.18(b)(1)(iii), the single material that imparts the essential character of the commingled corn oil is the corn oil. As the countries of origin of this material is both Canada and the U.S., the countries of origin of the commingled corn oil is both Canada and the U.S. In regard to the application of 19 CFR 102.11(b)(2), the inventory management methods specified may be used to determine the country or countries of origin if direct physical identification of the origin of the commingled material is not practical. However, in this instance it is our opinion that the application of the inventory management methods are not necessary as the countries of origin of the commingled materials (i.e., the Canadian and U.S. corn oil) are known, and it is stated that at all times the commingled storage will contain both U.S. and Canadian origin corn oils. Accordingly, each container of the good (the commingled corn oil) must be marked to indicate the Canadian origin of its contents. Although Customs does not object to the additional indication of the U.S. origin of the content, the marking of articles in whole or in part as a "product of the U.S." is a matter within the jurisdiction of the Federal Trade Commission.

HOLDING:

Based upon the information provided, pursuant to 19 CFR 102.11(b)(1), the container of the good, the commingled corn oil, may be marked "Product of U.S.A. and Canada."

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
Tariff Classification Appeals

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