HQ 085216
October 27,1989
CLA-2 CO:R:C:G 085216 SS
Mr. Paul G. Saam
Wessex Corporation
P.O. Box 307
Flint, Michigan 48501
RE: Classification and country of origin of certain sugars
Dear Mr. Saam:
We are in receipt of your letter dated June 19, 1989, and
your additional submission dated August 10, 1989, concerning the
country of origin of certain sugars, and the applicability of
Section 22 fees. This ruling letter, as set forth below, is in
response to submissions 1(a), 2(a), 3(a), 4(a) of your request.
Due to insufficient information, we are unable to issue a ruling
for the syrups (1(b-d), 2(b-d), 3(b-d), 4(b-d) of your
submissions) which are produced in Canada from the imported
sugars.
If you are still interested in obtaining a ruling for the
remaining products, please submit the following information:
1. All steps, from beginning to end, involved in the
processing of the dry sugar into syrup.
2. The cost, time involved, condition and use of the sugar
at each step of the process.
3. The total cost and time needed for the processing.
FACTS:
The merchandise in issue is stated to consist of the following:
1.(a) Raw cane sugar in solid form, wholly the growth,
product, and manufacture of India, and having a polarity of
99.3, is transhipped to Windsor, Ontario, Canada, in 100
kilogram bags. The bags are subsequently opened and the
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sugar is sifted and magnetically treated to remove tramp
iron, then repacked in various sized paper bags. This
sugar is not further refined or improved in quality after
importation into the United States.
This process converts the sugar from a non-food grade to
food grade by U.S. Food and Drug Administration (USFDA)
standards.
2.(a) Sugar in solid form, wholly the growth and product
of India, and having a polarity above 99.5, i.e., refined,
is transshipped to Windsor, Ontario, Canada, where it is
sifted and magnetically treated to remove tramp iron, then
repacked into paper bags of various sizes. This sugar is
not further refined or improved in quality after
importation into the United States.
3.(a) Raw cane sugar in solid form, wholly the growth,
product and manufacture of the United States, and having a
polarity less than 99.5, is transshipped to Windsor,
Ontario, Canada, in 100 kilogram bags, where it is sifted
and magnetically treated to remove tramp iron, then
repacked in various sized paper bags. This sugar in not
refined or improved in quality after importation into the
United States.
This process converts the sugar from a non-food grade to
food grade by USFDA standards.
4.(a) Sugar in solid form, wholly the growth and product
of the United States, and having a polarity of above 99.5,
i.e., refined, is transshipped to Windsor, Ontario, Canada,
where it is sifted and magnetically treated to remove tramp
iron, then repacked into paper bags of various sizes. This
sugar is not further refined or improved in quality after
importation into the United States.
ISSUE:
What is the country of origin for marking and quota
purposes of the sugars described above?
LAW AND ANALYSIS:
Section 134.1(b), Customs Regulations (19 CFR 134.1(b))
provides that the "Country of origin" means the country of
manufacture, production, or growth of any article of foreign
origin entering the United States. Further work or material
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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 Part 134, Customs Regulations
(19 CFR Part 134).
Substantial transformation requires that there must be a
transformation; a new and different article must emerge, having a
distinctive name, character, or use as a result of the
processing. See, United States v. Gibson-Thomsen Co., Inc., 27
C.C.P.A. 267, C.A.D. 98 (1940). This test remains the
fundamental test for substantial transformation, and has been
applied to cases involving a variety of issues including marking
issues.
In the four situations described above, raw and refined
sugar grown in and a product of India and raw and refined sugar
grown in and a product of the United States, are shipped to
Canada where they undergo sifting, magnetic removal of tramp
iron, and repackaging, then exported to the United States where
they are not further refined or improved in quality.
Therefore, the question presented in the instant case is
whether the sifting, magnetic removal of tramp iron, and
repackaging, is of such a nature to justify the conclusion that
the resulting product has undergone a substantial transformation.
The sifting, magnetic removal of tramp iron and the
repackaging do not result in a new and different article having a
distinctive name, character, or use. The sugar, whether raw or
refined, remains raw or refined. It retains its crystalline form
and polarity, and has not undergone any changed characteristics.
Although the processes performed in Canada result in converting
the sugars in the above situations 1(a) and 3(a) from non-food
grade sugar to food grade sugar under USFDA standards, it is the
same article except that impurities have been removed by the
sifting and the magnetic process.
Further, in a recent ruling, Headquarters Ruling Letter
082033, dated September 5, 1989, we ruled that the refining of
raw sugar was not a substantial transformation for quota
purposes. In the instant case, the processes involved are less
than refining; they are merely "cleanup".
In view of the foregoing, the subject sugars have not
undergone a substantial transformation.
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Subheading 9802.00.50 HTSUS, provides for a partial duty
exemption for articles returned to the United Stated after having
been exported for alterations. The product must be completely
finished when exported from the United States, and not undergo
any intermediate processing operations to finish them while
abroad. This provision allows the duty to be assessed only on
the cost of the foreign processing. However, its application is
precluded where the processing results in commercially different
articles. Dolliff & Company, Inc. v. U.S., 66 CCPA 77, C.A.D.
1225, 599 F.2d 1015 (1979).
The cleaning process performed on the exported U.S. raw and
refined sugar in Canada merely removes impurities by mechanical
means. The subject sugars remain the same chemically and
physically. The removal of unwanted substances by a mechanical
process which does not physically or chemically change the
exported product is an operation within the scope of an
alteration. Wilbur G. Hallauer v. U.S., 40 CCPA 197, C.A.D. 518
(1953).
Accordingly, the sifting, magnetic removal of tramp iron
and repackaging in Canada of the U.S. exported sugar in above
situations 3(a) and 4(a), constitutes an alteration under the
provision of subheading 9802.00.50, HTSUS, upon compliance of
section 10.8, Customs Regulations (19 CFR 10.8).
The solid sugar which is imported from Canada, and is a
product of India, is subject to Section 22 fees under subheading
9904.40.20, HTSUS. This subheading requires a 2.2 cents per
kilogram fee on sugar principally of crystalline structure or in
dry amorphous form, not to be further refined or improved in
quality as defined in Chapter 99, U.S. Note 4(b).
The solid sugar which remains a product of the United
States is also subject to Section 22 fees when imported into the
United States. However, the applicability of Section 22 fees and
the quota status of the subject sugar are questions which should
be addressed to the Foreign Agricultural Service Sugar Group.
HOLDING:
For marking and quota purposes:
The sugar grown in India and transhipped to Canada where it
is sifted, magnetically treated to remove the tramp iron,
and repackaged, is a product of India.
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The sugar grown in the United States and transhipped to
Canada where it is sifted, magnetically treated to remove
the tramp iron, and repackaged, is a product of the United
States.
The process of sifting, magnetic removal of tramp iron, and
repackaging in Canada on U.S. exported raw and refined sugar
constitutes an alteration within the scope of subheading
9802.00.50, HTSUS.
Sincerely,
John Durant, Director
Commercial Rulings Division
singh library 085216
6cc: Area Director, New York Seaport
SSingh:jaj:10/27/89