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HQ 562820

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October 30, 2003

CLA-2 RR:IA 562820 RFC

CATEGORY: CLASSIFICATION MARKING

TARIFF NO.: 2104.10

Mr. M. Peter Thomson
Vermont Country Foods
River Road
P.O. Box 2010
Springfield, Vermont 05156

RE: Country of Origin of Certain Soups; NAFTA Marking

Dear Mr. Thomson:

This is in reference to your July 30, 2003, request concerning the country of origin of certain soups imported from Canada.

FACTS:

The facts as presented in the ruling request are as follows: Numerous ingredients (such as spices, broth, cream, etc.) will be exported from the United States to Canada. You provided a list of ingredients and their respective countries of origin for each soup that will be made from the ingredients. Most of the many ingredients originate in the United States. In Canada, the ingredients will be combined and processed into soup. There are five types of soups with the following names: New England Clam Chowder soup, Chicken with Pasta soup, Country Vegetable soup, Tuscan Minestrone soup and Cream of Potato soup. After completion, the soups will be exported from Canada to the United States.

In your request, you indicate that you would like to mark the soups when imported into the United States as “Product of USA, Processed in Canada.”

No proposed classifications for the finished soups or for the numerous ingredients used to make the soups were submitted with the ruling request.

ISSUE:

What is the country of origin for marking purposes of the soups when imported into the United States from Canada?

LAW AND ANALYSIS:

Classification of the Merchandise

Merchandise imported into the United States is classified under the Harmonized Tariff Schedule of the United States (HTSUS). The tariff classification of merchandise under the HTSUS is governed by the principles set forth in the General Rules of Interpretation (GRIs) and, in the absence of special language or context which otherwise requires, by the Additional U.S. Rules of Interpretation. The GRIs and the Additional U.S. Rules of Interpretation are part of the HTSUS and are to be considered statutory provisions of law for all purposes. See Sections 1204(a) and 1204(c) of the Omnibus Trade and Competitiveness Act of 1988 (19 U.S.C. § 1204(a), 1204(c)).

GRI 1 requires that classification be determined first according to the terms of the headings of the tariff schedule (i.e., (1) merchandise is to be classified under the 4-digit heading that most specifically describes the merchandise; (2) only 4-digit headings are comparable; and (3) merchandise must first satisfy the provisions of a 4-digit heading before consideration is given to classification under a subheading within this 4-digit heading) and any relative section or chapter notes and, provided such headings or notes do not otherwise require, then according to the other GRIs.

GRI 6 prescribes that, for legal purposes, GRIs 1 to 5 shall govern, mutatis mutandis, classification at subheading levels within the same heading. Therefore, merchandise is to be classified at equal subheading levels (i.e., at the same digit level) within the same 4-digit heading under the subheading that most specifically describes or identifies the merchandise.

The Explanatory Notes to the Harmonized Commodity Description and Coding System (hereinafter "Harmonized System") represent the official interpretation of the Customs Cooperation Council (also known by the informal working name “World Customs Organization”) on the scope of each heading. See H.R. Conf. Rep. No. 100-576, 100th Cong., 2d Sess. 549 (1988); 23 Customs Bulletin No. 36, 3 (T.D. 89-90, September 6, 1989), 59 F.R. 35127 (August 23, 1989). Although not binding on the contracting parties to the Harmonized System Convention or considered to be dispositive in the interpretation of the Harmonized System, the Explanatory Notes should be consulted on the proper scope of the Harmonized System. Id.

Heading 2104 provides for, among other things, “soups and broths and preparations therefor.” Within heading 2104, subheading 2104.10 provides for “soups and broths and preparations therefor.”

The Explanatory Notes to heading 2104 provide, in part, as follows:

(A) SOUPS AND BROTHS AND PREPARATIONS THEREFOR

This category includes:

(1) Preparations for soups or broths requiring only the addition of water, milk, etc.

(2) Soups and broths ready for consumption after heating.

These products are generally based on vegetable products (flour, starches, tapioca, macaroni, spaghetti and the like, rice, plant extracts, etc.), meat, meat extracts, fat, fish, crustaceans, molluscs or other aquatic invertebrates, peptones, amino-acids or yeast extract. They may also contain a considerable proportion of salt.

They are generally put up as tablets, cakes, cubes, or in powder or liquid form.

In light of the above, pursuant to GRI 1 and 6, the soups are classified in heading 2104, and within that heading, in subheading 2104.10.

For purposes of this ruling, we shall assume that all the ingredients used to make the soups are classified outside of heading 2104 with the exception of the clam broth used to make the New England Clam Chowder soup and the chicken broth used to make the Chicken with Pasta soup. Both these broths are classified within subheading 2104.10 and are stated in the ruling request to originate in the United States.

Country of Origin Marking for the Merchandise

The U.S. law relating to country of origin marking for imported merchandise (“the marking statute”) is found in section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304). This law provides that, unless excepted, every article of foreign origin (or its container) imported into the United States 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 United States the English name of the country of origin of the article. See 19 U.S.C. § 1304(a). Products made in the United States do not have to be marked with their country of origin under this statute. The purpose of the marking statute is to allow the ultimate purchaser of the goods to know, by simple inspection, specifically where they were made in case such knowledge might influence his or her decision to purchase the goods (i.e., to permit the ultimate purchaser in the United States to choose between domestic and foreign-made products, or between the products of different foreign countries). See generally, United States v. Friedlaender & Co. Inc., 27 C.C.P.A. 297, at 302 (1940).

The “ultimate purchaser” is defined, in pertinent part, in Part 134 of the Customs Regulations as:

[G]enerally the last person in the United States who will receive the article in the form in which it was imported; however, for a good of a NAFTA country, the “ultimate purchaser”' is the last person in the United States who purchases the good in the form in which it was imported.

19 CFR § 134.1(d)

Annex 311 to the North American Free Trade Agreement (NAFTA) requires the parties to the agreement to establish rules for determining whether a good is a good of a party for country of origin marking purposes. See Annex 311, North American Free Trade Agreement, December 17, 1992, Can-Mex-U.S., 32 I.L.M. 289 (1993). The NAFTA was implemented into U.S. law through the North America Free Trade Agreement Implementation Act. Pub. L. 103-182, 107 Stat. 2057 (December 8, 1993). For the United States, the rules discussed in Annex 311 can be found in part 102 of the Customs Regulations. See 19 CFR § 102. They are known as the “NAFTA Marking Rules,” and they are to be used for “determining whether a good is a good of a NAFTA country.” See 19 CFR § 134.1(j). A good of a NAFTA country is an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. See 19 CFR § 134.1(g). The NAFTA Marking Rules are the rules to be used to determine the country of origin for marking purposes for goods imported into the United States from Canada or Mexico. See generally, Bestfoods v. United States, 165 F.3d 1371 (Fed. Cir. 1999).

In regard to the NAFTA Marking Rules, section 102.11 to those rules provides, in pertinent part, as follows:

The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel products covered by Sec. 102.21.

(a) 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 Sec. 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

(b) 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) of this section:

(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good.

19 CFR § 102.11

With respect to interpreting these rules, section 102.18 provides, in pertinent part, as follows:

(b) (1) 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):

(i) The materials to be considered must be classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good under consideration. For example, in the case of a good classified in HTSUS subheading 8607.11 (the rule for which specifies a change to subheading 8607.11 from any other subheading, except from subheading 8607.12, and except from subheading 8607.19 when that change is pursuant to GRI 2(a)), the only materials that may be considered for purposes of identifying the materials that impart the essential character to the good are those that are classified in subheadings 8607.11, 8607.12 and, if the tariff shift is pursuant to GRI 2(a), 8607.19;

(ii) Materials that may be considered include materials produced by the producer of the good and incorporated in the good. For example, if a producer of a good purchases raw materials and converts those raw materials into a component that is incorporated in the good, that component is a material that may be considered for purposes of identifying the materials that impart the essential character to the good, provided that the component is classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good; and

(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.

19 CFR § 102.18

“Foreign material” is defined in 19 CFR 102.1(e) as “a material whose country of origin determined under these rules is not the same country as the country in which the good is produced.”

The country of origin of the soups cannot be determined under section 102.11(a)(1) or (a)(2) because they are not wholly obtained or produced, or produced exclusively from domestic (Canadian) materials. Since an analysis of section 102.11(a)(1) and (a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3).

With respect to the above-listed rule in section 102.11(a)(3), the required change in tariff classification or tariff shift in section 102.20 for goods classified in HTSUS subheading 2104.10 is as follows:

A change to subheading 2104.10 from any other subheading.

19 CFR § 102.20

In the instant case, with the exception of the New England Clam Chowder soup and the Chicken with Pasta soup, the “foreign” (non-Canadian) materials in all the soups satisfy the above-mentioned rule. Therefore, the country of origin for marking purposes for the soups identified as Country Vegetable soup, Tuscan Minestrone soup and Cream of Potato soup is Canada.

As concerns the New England Clam Chowder soup and the Chicken with Pasta soup, the broth used in both soups does not make the required change in classification insofar as the broths used to make the soups are classified in the same subheading as the final soups, i.e., subheading 2104.10. Therefore, the origin of these two soups cannot be determined by application of the rule in section 102.11(a)(3): each foreign material incorporated in the goods does not undergo the above-listed change in tariff classification (as the broths do not undergo the above-listed change in tariff classification based on the processing that occurs in Canada, i.e., the broths are classified in subheading 2104.10 when imported into Canada and remain classified in that heading after being processed into finished soups in Canada).

Applying the rules in the required hierarchical order, reference must be made to section 102.11(b)(1) to determine the single material that imparts the essential character to the good.

With respect to the material that imparts the essential character to the good, section 102.18(b)(1)(iii) to the Customs Regulations provides 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 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 section 102.11 (b)(i).

As concerns the New England Clam Chowder soup and the Chicken with Pasta soup, the one material that does not undergo a change in tariff classification for both soups is the broth (i.e., clam broth for the New England Clam Chowder soup and chicken broth for the Chicken with Pasta soup). Therefore, as the origin of both broths is stated to be the United States, the country of origin of both soups under the NAFTA Marking Rules is the United States.

With respect to your request concerning use of the phrase “Product of USA,” please be advised that the Federal Trade Commission ("FTC") has jurisdiction concerning the use of the phrase "Made in the U.S.A.," or similar words denoting U.S. origin. Consequently, any inquiries regarding the use of such phrases reflecting U.S. origin should be directed to:

Division of Enforcement
Federal Trade Commission
600 Pennsylvania, Avenue, N.W.
Washington, D.C. 20580

Telephone: 202-326-2996
URL address: www.ftc.gov

HOLDING:

The country of origin for marking purposes of the above-mentioned Country Vegetable soup, Tuscan Minestrone soup and Cream of Potato soup is Canada, and these soups must be marked as products of Canada.

The country of origin for marking purposes of the New England Clam Chowder soup and the Chicken with Pasta soup is the United States. As products of the United States, these soups are not subject to the country of origin marking statute.

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 Service officer handling the transaction.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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