MAR-05 RR:TC:SM 559984 BLS
David A. Holzworth, Esq.
Lepon McCarthy White & Holzworth
1225 19th Street, N.W.
Washington, D.C. 20036
RE: Country of origin marking of table grapes; reconsideration
of NY Ruling A81143; outermost container; immediate
container; J-List; 19 CFR
134.33; unsealed containers
Dear Mr. Holzworth:
This is in reference to your letter dated July 17, 1996, on
behalf of the Chilean Exporters Association, requesting a ruling
concerning country of origin marking of unsealed polyethylene
sleeves used in transporting table grapes. You also ask that we
reconsider NY Ruling A81143 dated March 18, 1996.
FACTS:
You advise that approximately 80 percent of the table grapes
shipped from Chile to the U.S. are placed in unsealed
polyethylene stretch-vent sleeves, samples of which are enclosed
with your ruling request. The remainder of the grapes are
wrapped in tissue paper. Sleeves containing several bunches of
grapes are packed in crates or cases for shipment. You point out
that the grapes are often displayed for retail sale while
remaining inside the shipping container with the lid and packing
material removed.
You also state that all table grapes exported from Chile to
the U.S. are packed in 16 or 18 pound cardboard cases and/or wood
crates. These cases or crates have labels affixed to or
imprinted on their ends which bear country of origin labeling
information required by Customs as well as other information
required by other concerned Governmental agencies.
NY Ruling A81143
In this ruling, bunches of grapes packed in clear plastic
bags similar to the
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subject polyethylene sleeves were imported in cartons from
Mexico. The bags are described as in the shape of an inverted
triangle, open at the top,
perforated along the vertical axis, and said to be made of clear,
polyethylene film. Each bag is imprinted with the fruit's PLU
("price look-up" )
code number in red or green ink, on a white background. One
sample bag also contained the logo for the "5 a Day - for Better
Health!" promotional program.
Applying the NAFTA Marking Rules, Customs found in that case
that the purchaser at retail is the ultimate purchaser of the
grapes, and that the "outermost container" in which the grapes
reach the ultimate purchaser is the clear plastic bag. Since the
grapes are excepted from individual country of origin marking
under 19 U.S.C. 1304(a)(3)(J), we held that the clear plastic bag
must be marked to indicate Mexico as the country of origin.
In a separate letter dated July 29, 1996, you request that
if Customs requires country of origin marking of the polyethylene
sleeves, that a temporary exception from the marking requirements
be granted based on economic considerations. In this regard, you
have included information from the Chilean Exporters Association
reflecting that the producers' inventory of such unmarked bags
numbers about 80 million, and that it would cost approximately 1
million dollars to acquire replacement sleeves or label existing
inventory.
ISSUE:
Whether the subject plastic polyethylene bags are considered
"outermost containers" and therefore are required to be marked
with Chile as the country of origin.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that, unless excepted, every article of foreign
origin imported into the U.S. shall be marked in a conspicuous
place as legibly, indelibly, and permanently as the nature of the
article (or 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.
Fresh grapes are among the articles listed by the Secretary
of the Treasury under the authority provided in 19 U.S.C.
1304(a)(3)(J) and 19 CFR 134.33. This list, known as the
"J-List", excepts from country of origin marking articles
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which were not required to be marked during the five year period
prior to 1937. Specifically, the J-List includes "natural
products, such as vegetables, fruits, nuts, berries...in their
natural state or not advanced in any manner further than is
necessary for their safe transportation".
Section 304(b) of the Tariff Act of 1930, as amended (19
U.S.C. 1304(b)), provides that whenever an article is excepted
from marking [pursuant to the J-List], "the immediate container
if any, of such article, or such other container or containers of
such article as may be prescribed by the Secretary of the
Treasury, shall be marked..." Section 134.33 , Customs
Regulations (19 CFR 134.33) provides that if a J-Listed article
is imported in a container, "the outermost container in which the
article ordinarily reaches the ultimate purchaser is required to
be marked in accordance with the requirements of Subpart C of
this part." Emphasis added. Subpart C sets forth the
requirements for the marking of containers and articles
repackaged after importation. Thus, the J-List reflects a
recognition that some articles are themselves not susceptible of
marking, but nevertheless attempts to ensure that the ultimate
purchaser of an imported article is aware of its country of
origin. The requirement is satisfied by marking the "outermost
container" in which the article ordinarily reaches the ultimate
purchaser.
Section 134.1(d), Customs Regulations (19 CFR 134.1(d),
provides that generally, the ultimate purchaser is the last
person in the U.S. to receive the article in the form in which it
was imported. Thus, the ultimate purchaser of the subject grapes
(as in NY Ruling A1143) is the person who buys them for
consumption.
You contend that the subject polyethylene sleeves are not
intended to be used as retail containers and should not be
considered an outermost container. Therefore, you argue that
these bags should not be required to be marked with the country
of origin of the grapes. In this regard, you note that unlike
certain other containers of produce such as for potatoes and
oranges, the subject bags are not closed at the top, and are not
designed to be filled with a fixed amount of product by weight or
by volume. Thus, retail customers may add to or subtract from
the quantity of table grapes in the sleeve, and that most
retailers carry produce bags which are used by retail customers
to carry the contents of one or more sleeves to the check-out
counter. You further contend that as the
polyethylene sleeve is used to reduce the amount of spillage
during transport and display for retail sale, it does not advance
the grapes "in any manner further than is necessary for [their]
safe transportation" and, therefore, is
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excepted from marking under the specific language of 19 CFR
134.33 related to this product. You also believe that NY Ruling
A81143 is not in accord with 21 U.S.C. 343(1) of the Food, Drug
and Cosmetic Act which expressly exempts raw agricultural
commodities displayed for retail out of the shipping container in
accordance with the customs and practices of the trade from
certain labeling requirements.
The question of whether the unsealed plastic sleeve is an
"outermost container" depends upon whether the enclosed J-List
article(s) ordinarily will reach the ultimate purchaser in the
container. In the instant case, the ultimate purchaser is the
customer who purchases the grapes at the retail level.
In Headquarters Ruling Letter (HRL) 733798 dated April 11,
1991, fresh tomatoes imported from Mexico were packed in master
containers marked with their country of origin. The tomatoes
were unloaded in the U.S. and repacked in sealed "controlled
atmosphere" trays and then packed in master cartons marked with
Mexico as their country of origin. The tomatoes were then
distributed to retail grocery and produce outlets. In that case,
we found that the imported tomatoes had not been transformed in
the U.S. in any manner by the packaging, and that the ultimate
purchaser in the U.S. is the person who buys the tomatoes for
consumption. Accordingly, since there was no doubt that the
sealed tray was a retail container which would reach the ultimate
purchaser, we held that this packaging was the "outermost" (or
"immediate") container and was required to be marked.
We take note of the fact that in HRL 733798 and in other
situations involving retail sale of produce or other foodstuffs
on the J-List sold by weight or quantity (such as carrots,
oranges and potatoes), the containers are ordinarily sealed to
ensure that the specific quantity or weight of the produce will
reach the ultimate purchaser in that container. In the present
situation, however, the plastic sleeve normally contains bunches
of grapes varying as to weight, and as unsealed permits the
retail purchaser to add or subtract grapes from the bag as
desired. In addition, the purchaser may remove grapes from the
vented sleeve and may not use this container as a final container
to make his\her purchase. However, the issue we must address, as
framed by 19 CFR 134.33, is not whether the container holds a
particular weight or quantity of
grapes, or is necessarily sealed, but whether the grapes
ordinarily reach the ultimate purchaser in the container.
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As described, the vented bags containing the produce may
either remain in the opened cartons or may be placed on racks for
purchase at retail. In either case, the grapes will remain in
the plastic sleeves to prevent spillage until purchase by the
consumer. For purposes of determining whether the unsealed
sleeve is an "outermost" container, it is irrelevant whether the
purchaser buys the entire sleeve of grapes, removes or adds
grapes to the sleeve, or removes the grapes from the sleeve for
transfer to a store container. Rather, it is
apparent from these facts that the grapes will ordinarily be in
the vented sleeve when examined by the consumer, and under this
scenario the sleeve is "the outermost container in which the
article ordinarily reaches the ultimate purchaser", and must be
marked.
Section 134.32(c), Customs Regulations (19 CFR 134.32(c))
provides an exception from the marking requirements for articles
that cannot be marked prior to shipment to the U.S., except at an
economically prohibitive expense.
In this regard, we note that it is Customs policy not to allow a
permanent marking exception based upon this prohibitive economic
expense provision. See Headquarters Ruling Letter (HRL) 559453
dated July 16, 1996. Based on the facts in this case, we find
that pursuant to 19 CFR 134.32(c), a temporary exception to the
marking requirements is warranted.
HOLDING:
The ultimate purchaser of table grapes sold at grocery
stores or produce markets is the person who purchases the grapes
for consumption. See 19 CFR 134.1(d). Therefore, since vented
polyethylene sleeves displaying the grapes in produce bins or
other display vehicle will ordinarily reach the ultimate
purchaser, the polyethylene sleeve is an "outermost" container
and must be marked with the country of originof the grapes. See
19 U.S.C. 1304(b) and 19 CFR 134.33. NY Ruling Letter A81143 is
affirmed.
Pursuant to 19 CFR 134.32(c), a temporary exception to
marking of the polyethylene sleeves is granted. This exception
will commence on the letter date of this ruling, and will extend
for a period of six months. After the six month period, the
polyethylene sleeves must be marked conspicuously, legibly and
permanently with the country of origin of their contents.
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A copy of this ruling should be attached to the entry
documents filed at the time this merchandise is 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 Division