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HQ 560681

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December 2, 1997

CLA-2 RR:CR:SM 560681 RSD

CATEGORY: MARKING

Ms. Jeanie McCombs
Executive Assistant
International BioProducts Incorporated
PO Box 2728
Redmond Washington 980783

RE: Country of origin marking requirements for diagnostic or laboratory reagents and prepared culture media exported to Canada for sterilization and returned to the United States; NAFTA marking rules; Essential character; 19 CFR Part 102

Dear Ms. McCombs:

This is in response to your letter dated August 29, 1997, addressed to the Director, National Commodity Specialist Division, requesting a ruling regarding reagent and culture media products known as "RediSwab" and "Quick Enrich" which will be sent to Canada for sterilization by an Electron Beam Machine. In response to an earlier ruling request dated May 16, 1997, NY ruling B89235 dated September 15, 1997, was issued which denied the eligibility of the products for the partial duty exemption under subheading 9802.00.50 Harmonized Tariff Schedule of United States (HTSUS), relating to articles exported for repairs or alterations. The National Commodity Specialist Division forwarded your subsequent ruling request to Customs Headquarters for a response. In a subsequent letter dated October 27, 1997, you indicate that you are requesting a ruling only on the country of origin marking requirements applicable to the products and their eligibility for tariff treatment under the North American Free Trade Agreement (NAFTA). Consequently, this ruling will only address the country origin and the NAFTA eligibility of the subject products and will not address issues related to subheading 9802.00.50, HTSUS.

FACTS:

The first product is called "RediSwab". It consists of ready-to-use plastic tubes, each containing a Dacron tipped swab affixed to a screw cap. The tubes are pre-filled with either 4 ml of sterile neutralizing buffer solution or 4 ml of sterile Letheen Broth culture media. You state that the product will be used by food producers and government agencies to detect bacterial contamination in food. In use, the cap is removed and the moistened swab is rubbed across the area to be sampled. The cap is returned to the tube and the "RediSwab" is transported to the laboratory for analysis.

The second product, "Quick Enrich", consists of sealed, plastic bags (pouches) containing either 225 ml or 400 ml of Modified Buffered Peptone Water culture media, Buffered Peptone Water culture media, Lactose Broth culture media, or Butterfield's Buffer solution. Some of the pouches may also have a sponge or swab in them, in addition to the sterile liquids. The "Quick Enrich" product will also be used to detect bacterial contamination in food.

You indicate that both products will be manufactured in the United States from ingredients and components that to the best of your knowledge are produced entirely in the United States. Although an attempt is made to make the products completely sterile in the United States, you are only able to reach a level of sterility so that one out of 1,000 or one out of 10,000 of the products is not sterile. To eliminate this one out of 1,000 or one of 10,000 items that may not be sterile, you plan to ship the subject products to Canada, where they will be further sterilized by the ionizing radiation produced by an electron beam machine. You describe the electronic beam machine as something like a large X-ray machine. It will ensure that the one out of 1,000 or one out of 10,000 products that is not sterile is rendered sterile after processing. You indicate that nothing else is done to the products in Canada other than the sterilization.

According to the National Commodity Specialist Division, the "RediSwab" containing Neutralizing Buffer and the "Quick Enrich" bag containing Butterfield's Buffer are classifiable under subheading 3822.00.5090, HTSUS, which provides for "Diagnostic or laboratory reagents on a backing and prepared diagnostic or laboratory reagents whether or not on a backing, other than those of heading 3002 or 3006". The applicable subheading for the "RediSwab" tubes containing Letheen Broth culture media, and the "Quick Enrich" sealed plastic bags containing Modified Buffered Peptone Water culture media, Buffered Peptone Water culture media, or Lactose Broth culture media, is 3821.00.0000, HTSUS which provides for "Prepared culture media for development of microorganisms."

ISSUES:

1. What are the country of origin marking requirements for the above described products, when returned to the United States after having been shipped to Canada for an ionizing sterilization process?

2. Whether the subject products are eligible for tariff preferences under the NAFTA.

LAW AND ANALYSIS:

I. Country of Origin Marking

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 ?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.

The country of origin marking requirements for a "good of a NAFTA country" are 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). Section 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. Section 134.1(g), Customs Regulations (19 CFR ?134.1(g)), defines a "good of a NAFTA country" 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 Part 102, Customs Regulations (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. That 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.

"Foreign material" is defined in section 102.1(e), Customs Regulations (19 CFR ?102.1(e)), 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."

In this case, based on your representations, we will assume that all the ingredients and the components used to make the products are of U.S. origin. Since both the "RediSwab" and the "Quick Enrich" products are processed in Canada with U.S.-origin materials, these goods are neither wholly obtained or produced, nor produced exclusively from domestic materials. Therefore, it must be determined whether pursuant to ?102.11(a)(3), the foreign materials incorporated into these products meet the specific tariff shift rule of ?102.20. Thus, we must look at those materials whose country of origin is other than Canada to see if they undergo the required change in tariff classification.

According to the information provided by the National Import Specialist, the "RediSwab" exported to Canada, containing Neutralizing Buffer and the sealed plastic bags containing "Quick Enrich" Butterfield's Buffer are classifiable under subheading 3822.00.5090, HTSUS. The "RediSwab" tubes containing Letheen Broth culture media and "Quick Enrich" the sealed plastic bags containing Modified Buffered Peptone Water culture media, Buffered Peptone Water culture media, and Lactose Broth culture media, are classifiable under subheading 3821.00.0000 HTSUS. The applicable change in tariff classification set out in Customs Regulations ?102.20(b) (19 C.F.R. ?102.20(b)) for articles classified under heading 3822 HTSUS is:

A change to heading 3822 from any other heading, except from subheading 3002.10 or 3502.90 or heading 3504.

For articles classified under heading 3821, the applicable change in tariff classification is

A change to heading 3821 from any other heading

In this instance, the tariff classification of the products sent to Canada will not change as a result of the sterilization process performed in Canada. Therefore, the requisite tariff classification changes for the products in question cannot be met in this case. In these circumstances, Customs 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....

Section 102.18(b)(1) Customs Regulations, states that:

For purposes of identifying the material that imparts the essential character to a good under ? 102.11, the only materials that shall be taken into consideration are those domestic or foreign materials that are classified in a tariff provision from which a change in tariff classification is not allowed under the ? 102.20 specific rule or other requirements applicable to the good. For purposes of this paragraph (b)(1):
. . .

(iii) If there is only one material that is classified in a tariff provision from which a change in tariff classification is not allowed under the ? 102.20 specific rule or other requirements applicable to the good, then that material will represent the single material that imparts the essential character to the good under ? 102.11.

For the goods in question, there is only one material in each product that is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule in ? 102.20. These materials are the "RediSwab" and "Quick Enrich" products themselves. Accordingly, Customs finds that these are the materials that impart the essential character to the finished articles. Because the U.S. is the country of origin of the materials that impart the essential character to the products, Customs finds that the country of origin of the finished products known as "RediSwab" and "Quick Enrich" for purposes of the marking requirements under 19 U.S.C. to the provisions of 19 U.S.C. ?1304 because they are not "article(s) of foreign origin." Thus, the "RediSwab" and "Quick Enrich" products do not require country of origin marking upon importation into the U.S.

II. NAFTA Eligibility

The next issue that we will address is whether the "RediSwab" and the "Quick Enrich" products will be entitled to preferential tariff treatment under the NAFTA when they are returned to the United States after they are further processed in Canada. The General Note 12, HTSUS, incorporates Article 401 of the North American Free Trade Agreement ("NAFTA") into the HTSUS. Note 12(a)(i) provides, in pertinent part:

(i) Goods that originate in the territory of a NAFTA party under subdivision (b) of this note and that qualify to be marked as goods of Canada under the terms of the marking rules set forth in regulations issued by the Secretary of the Treasury (without regard to whether the goods are marked), when such goods are imported into the customs territory of the United States and are entered under a subheading for which a rate of duty appears in the Special' subcolumn followed by the symbol CA' in parentheses, are eligible for such duty rate...

Accordingly, the "RediSwab" and the "Quick Enrich" products will be eligible for the "Special" "CA" rate of duty provided they are NAFTA "originating" goods under General Note 12(b), HTSUS, and if they qualify as products of Canada under the marking rules.

First, we consider whether the products are "originating goods" within the rules of origin in General Note 12(b), HTSUS. General Note 12(b)(i) HTSUS, states in pertinent part as follows:

[f]or the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as "goods originating in the territory of a NAFTA party" only if--

(i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or

(ii) they have been transformed in the territory of Canada, Mexico and/or the United States so

(A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or...

(iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials....

You have stated that both that the "RediSwab" and "Quick Enrich" products are made in the U.S. exclusively from U.S. made ingredients and materials. Therefore, assuming that the subject articles are made in U.S. exclusively from originating materials, they will be originating goods pursuant to General Note

Next, in determining the whether the products are eligible for NAFTA duty preference, we must consider whether the products qualify as products of Canada under the NAFTA marking rules. As previously discussed, for marking purposes the appropriate country of origin of the
products under the NAFTA marking rules is the United States. However, according to the terms of section 102.19(b), Customs Regulations (19 C.F.R. ?102.19(b):

If, under any other provision of this part, the country of origin of a good which is originating within the meaning of section
181.1(q) of this chapter is determined to be the United States and that good has been exported from, and returned to, the
United States after having been advanced in value or improved in condition in another NAFTA country, the country of origin of such good for Customs duty purposes is the last NAFTA country in which that good was advanced in value or improved in condition before its return to the United States.

As the processes performed in Canada, sterilizing the products by ionizing radiation, clearly advance them in value and improve them in condition, section 102.19(b), Customs Regulations, is applicable, and the country of origin of the products, for duty purposes is Canada. Thus, when the "RediSwab" and the "Quick Enrich" products are returned to United States they are entitled to NAFTA preferential treatment at the "CA" rate, assuming a Certificate of Origin (See 19 C.F.R. ?181.11) is completed and signed for the goods.

HOLDING:

Based upon the information provided, the proposed Canadian processing by sterilizing the U.S. made "RediSwab" and "Quick Enrich" products does not change their country of origin for marking purposes. Customs also concludes that, for purposes of country of origin marking, the country of origin of these articles is the U.S. Upon importation they are not subject to the marking requirements of 19 U.S.C. ?1304 as they are not foreign articles. Assuming that the "RediSwab" and "Quick Enrich" products are made elusively from U.S. ingredients and materials, they would be eligible for preferential duty treatment under the NAFTA pursuant to General Note 12(b)(iii) and 19 CFR 102.19(b).

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
Commercial
Rulings Division

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See also:

• Tariff No.: 3821.00.00 - Prepared culture media for development of microorganisms
• Tariff No.: 3822.00.50 - Composite diagnostic or laboratory reagents, nesoi
• Tariff No.: 9802.00.50 - Articles returned to the U.S. after having been exported for repairs or alterations, nesi