HQ H008509 - Modification of NY N005780; country of origin marking of SinuCleanse(r), under the North American Free Trade Agreement (NAFTA) - United States International Trade Commision Rulings

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HQ H008509

August 2, 2007

CLA-2 OT:RR:CTF:TCM H008509 ARM

CATEGORY: MARKING

Ms. Alma R. Carillo-Garza
M.J. Carillo Company, Inc.
P.O. Box 1475
Laredo, TX 78042-1475

RE: Modification of NY N005780; country of origin marking of SinuCleanse(r), under the North American Free Trade Agreement (NAFTA)

Dear Ms. Carillo-Garza:

This is in response to your request, dated February 13, 2007, on behalf of your client, S.F. Contract Packaging S. de R.L. de C.V. (S.F. Contract Packaging Mexico) of Carretera Internacional Km., to reconsider our decision in N005780, dated February 8, 2007, regarding the country of origin of SinuCleanse(r), a medicament consisting of two ingredients, namely: sodium chloride (subheading 2501.00, HTSUS) and sodium bicarbonate (subheading 2836.30, HTSUS). The product is indicated for use as a nasal wash to eliminate mucus buildup, improve nasal breathing, and obtain relief from sinus conditions. In that ruling, we found that pursuant to 19 CFR §102.11(d)(3), the country of origin of the good was Mexico. We have reviewed this ruling and find it to be incorrect with regard to the analysis as to the country of origin.

Notice of the proposed revocation was published on June 6, 2007, in Volume 41, Number 24, of the CUSTOMS BULLETIN. One comment was received in response to this notice supporting the proposed modification. This letter modifies that ruling and provides the correct marking of the product.

FACTS:

SinuCleanse(r) will be imported in granular form put up in sealed packets, each containing 700 mg of sodium bicarbonate (approximately 23% of the final product) and 2300 mg of sodium chloride (approximately 77% of the final product). The packets, in turn, will be put up packed for retail sale in sealed, paperboard containers that contain either 40 or 60 packets per container. You indicate that, in addition to shipping the sealed, paperboard retail packages to the U.S., your client will also ship the packets in bulk, in cartons containing 2,000 packets per carton, to their U.S. customers, who will then repack these packets in sealed paperboard containers for retail sale. Subsequent to importation, a purchaser would dissolve the contents of 1-2 packets of SinuCleanse(r) in a SinuCleanse(r) "Neti Pot" or SinuCleanse(r) Squeeze(tm) bottle containing lukewarm water. The resulting solution would then be used to wash the nasal passages. Neither the "Neti Pot" nor the Squeeze(tm) bottle will be imported with the sealed, paperboard retail packages or the packets shipped in bulk (i.e., in master cartons).

You indicate in your letter that the sodium chloride ingredient will be of U.S. origin and the sodium bicarbonate ingredient will be either of U.S. or Mexican origin. In Mexico, the two ingredients, in apportioned amounts (77/23%), will be blended together, with 3 gms of the blended mixture eventually being placed into an individual packet, which (as noted above) is then sealed and exported to the U.S.

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 United States 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.

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) defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico, or the United States 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 the purposes of country of origin marking. Paragraph (a) of 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.

Since the subject preparation is neither wholly obtained or produced in Mexico, nor produced exclusively from domestic (i.e., Mexican) materials, origin cannot be determined under sections 102.11(a)(1) and 102.11(a)(2) and analysis moves to section 102.11(a)(3).

Section 102.11(a)(3) provides that the country of origin is the country in which "each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20..." The term "foreign material" is defined in 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." Therefore, in order to determine whether Mexico is the country of origin, we must look at those materials whose country of origin is other than Mexico. Two scenarios are presented: (1) either just the sodium chloride (classifiable in subheading 2501.00, HTS), originates outside Mexico or (2) the sodium chloride and the sodium bicarbonate, (classifiable in subheading 2836.30,HTS), originate outside Mexico.

19 CFR 102.20(f) states in pertinent part:

3004.90... A change to subheading 3004.90 from any other subheading, except from subheading 3003.90 or 3006.80, and, provided that the domestic content of the therapeutic or prophylactic component is no less than 40 percent by weight of the total therapeutic or prophylactic content.

Both the sodium chloride and sodium bicarbonate are listed as "active ingredients" on the package and both should be considered "prophylactic or therapeutic." "Domestic material" is defined in 19 CFR §102.2(d) as "a material whose country of origin as determined under these rules is the same country as the country in which the good is produced." Since the instant product, packets of Sinucleanse(r) powder, are produced in Mexico, then "domestic material" would be material from Mexico. However, if both the sodium chloride and the sodium bicarbonate are of U.S. origin, then zero percent of the final product's prophylactic or therapeutic content is made of domestic material. If the sodium bicarbonate is from Mexico, then only 23% of the final product is made of domestic material. In either scenario, origin cannot be determined under section 102.11(a)(3), because the 40% threshold is not met.

Analysis proceeds to 19 CFR 102.11(b), 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) 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, 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 this chapter.

In NY N005780, we stated that "neither the sodium chloride nor the sodium bicarbonate can be said to impart the essential character to the good" because both ingredients are listed as "active" ingredients, and both are necessary to create the cleansing rinse. We find this statement to be incorrect. 19 CFR §102.18(b)(1) states, in pertinent part, the following:

For purposes of identifying the material that imparts the essential character to a good under Sec. 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 Sec. 102.20 specific rule or other requirements applicable to the good. . . .

In the instant product, neither the sodium chloride from the U.S., nor the sodium bicarbonate from the U.S. or Mexico, is allowed to undergo a change in tariff classification under the §102.20(f) specific rule for 3004.90, HTS, due to the limitation regarding domestic content of the final product. Therefore, both materials merit equal consideration for determining the essential character of the product.

19 CFR §102.18(b)(2) states:

For purposes of determining which one of two or more materials described in paragraph (b)(1) of this section imparts the essential character to a good under Sec. 102.11, various factors may be examined depending upon the type of good involved. These factors include, but are not limited to, the following:

(i) The nature of each material, such as its bulk, quantity, weight or value; and
(ii) The role of each material in relation to the use of the good.

The sodium chloride constitutes almost 77% by weight of the final product. Further, when the mixture is added to water by the ultimate purchaser and used as a sinus rinse, it is the sodium chloride that accounts for the sinus cleansing action. The sodium bicarbonate adjusts the pH of the resulting solution so that it does not cause pain, stinging or discomfort for the user. Therefore, we find that the sodium chloride imparts the essential character of the merchandise.

HOLDING:

Accordingly, the single material that imparts the essential character of the good is the sodium chloride and the country of origin of the packaged SinuCleanse(r) packets is the United States, pursuant to 19 CFR 102.11(b)(1). Inasmuch as the marking requirements of 19 U.S.C. 1304 are applicable only to articles of "foreign origin," the packaged SinuCleanse(r) packets are not required to be marked upon importation into the United States, regardless of the origin of the sodium bicarbonate. We note that claims of domestic origin is a matter under the jurisdiction of the Federal Trade Commission (FTC). Therefore, should you wish to mark the articles with the phrase "Made in the USA" we recommend that you contact that agency at the following address:

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

EFFECT ON OTHER RULINGS:

N005780, dated February 8, 2007, is modified with respect to the NAFTA marking analysis in accordance with the above holding.

In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after publication in the CUSTOMS BULLETIN.

Sincerely,

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