MAR-05 RR:TC:SM 560161 KKV
Harold I. Loring, Esq.
Grunfeld, Desiderio,
Lebowitz & Silverman, LLP
245 Park Avenue
New York, NY 10167-0002
RE: Request for a ruling regarding the country of
origin marking of certain rawhide dog chews; 19
CFR 134.46; 19 CFR 134.47; conspicuous; boldface
type in font larger than surrounding type; NAFTA
Marking
Rules; substantial transformation
Dear Mr. Loring:
This is in response to your letter dated September 17,
1996, and subsequent submissions dated November 6, 1996, and
November 12, 1996, on behalf of Petrapport, Inc., requesting
a binding ruling regarding the country of origin of rawhide
dog chews under two separate manufacturing scenarios.
Additionally, you have requested a ruling regarding proposed
country of origin marking language. Samples of the dog
chews and proposed labels have been submitted for our
consideration.
FACTS:
Under the first proposed manufacturing scenario,
rawhide dog chews will be produced in Mexico in the
following manner:
1. Salted hides of U.S. origin are shipped to
Mexico.
2. The hides are soaked with chemicals to remove
preservatives.
3. The hides are chemically dehaired.
4. Excess fat and meat are mechanically removed.
5. The hides are split.
6. The split is cleaned and whitened in drums
containing hydrogen peroxide and water.
7. The whitened split is mechanically wrung to
remove water.
8. The split is cut into shapes.
9. The cut shapes are tied by hand into dog bone
shapes.
10. The dog chews are dried in drying tunnels
(ovens).
11. Some of the dog chews may be basted with
flavor ingredients and further dried.
12. The dog chews are packaged for consumer retail
sales or, alternatively, shipped in bulk to
Petrapport's U.S. facility for consumer retail
packaging.
Under the second proposed manufacturing scenario,
rawhide dog chews will be manufactured in Korea and China in
the following manner. Salted hides of U.S. origin are
shipped to Korea, where they are soaked with chemicals to
remove preservatives and chemically dehaired. Any excess
fat and meat is mechanically removed and the hides are
split.
Subsequently, the split hides are exported to China
where they will undergo the following manufacturing
processes. In China, 50-75% of the raw splits will be
further processed on dividing machines to perfect the gauge
of the splits. The splits are cleaned and whitened in drums
containing hydrogen peroxide and water. The whitened split
is mechanically wrung to remove water and cut into shapes.
The cut shapes are tied by hand into dog bone shapes and
dried in drying tunnels (ovens). Some of the dog chews may
be basted with flavor ingredients and further dried. The
dog chews are packaged for consumer retail sales or,
alternatively, shipped in bulk to Petrapport's U.S. facility
for consumer retail packaging.
Petrapport sells the dog chews in sealed retail bags
with header cards. Several examples of proposed labels have
been submitted. The front side of the each of the proposed
labels is printed with the identifier "Tarter Control," the
trade name "Beefeaters American Beefhide" or "Beefeaters
American Cowhide" and the product identity, "All Natural
Chews for Dogs."
Printed on the reverse side of each proposed label, in
addition to the product attributes, is the company
identification, "Beefeaters** 1996 Petrapport, Petrapport,
Inc. Carlstadt, NJ 07072" and one of the following country
of origin designations, printed in the same size font as the
surrounding type: "Made in Mexico," "Made in Mexico from
American Beefhide," "Made in China"or "Made in China from
American Beefhide." On some of the samples, the phrase
"Made in Mexico" or "Made in China" is printed in boldface
type in the same size font as the surrounding type. On
other samples, "Made in Mexico" or "Made in China" is
printed in boldface type in a font distinctly larger than
the surrounding type.
ISSUE:
What are the country of origin and marking requirements
for rawhide dog chews which are processed in the manner
described above?
LAW AND ANALYSIS:
I. Determination of Country of Origin
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 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. By enacting 19 U.S.C.
1304, Congress intended to ensure that the ultimate
purchaser would be able to know by inspecting the marking on
the imported goods the country of which the goods are the
product. The evident purpose is to mark the goods so that
at the time of purchase the ultimate purchaser may, by
knowing where the goods were produced, be able to buy or
refuse to buy them, if such marking should influence his
will. United States v. Friedlaender & Co., 27 C.C.P.A. 297,
302 C.A.D. 104 (1940).
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), Customs Regulations (19 CFR 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 United States as determined under the
NAFTA Marking Rules, set forth at 19 CFR Part 102. Section
134.45(a)(2) of the Customs regulations (19 CFR
134.45(a)(2)), provides that a "good of a NAFTA country" may
be marked with the name of the country of origin in English,
French or Spanish.
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.
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.
Section 102.1(e), Customs Regulations (19 CFR 102.1(e))
defines "foreign material" as "a material whose country of
origin as determined under these rules is not the same
country or origin as the country in which the good is
produced."
In the first proposed manufacturing scenario, raw hides
of U.S. origin are exported to Mexico for further processing
into finished dog chews. Because the dog chews are
processed in Mexico of U.S. material, the dog chews are
neither wholly obtained or produced, nor produced
exclusively from domestic materials. Accordingly, 19 CFR
102.11(a)(3) is the applicable rule that next must be
applied to determine the origin of the dog chew.
Upon examination of the submitted sample, the Food and
Chemicals Branch has concluded that, upon importation into
the U.S., the dog chews are classified under subheading
0511.99.2000, HTSUS, as "animal products not elsewhere
specified or included; dead animals of chapter 1 or 3, unfit
for human consumption: other: parings
and similar waste of raw hides or skins; glue stock not
elsewhere specified or included." Your letter indicates that
the raw animal hides exported for further manufacture are
classifiable under heading 4101, HTSUS.
Pursuant to 19 CFR 102.11(a)(3), the country of origin
of a good 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, which
sets forth the specific tariff classification changes and/or
other operations, which are specifically required to occur
in order for country of origin to be determined on the basis
of operations performed on the foreign materials contained
in a good. In the case before us, because the finished dog
chew imported into the U.S. from Mexico is classified under
subheading 0511.99.2000, HTSUS, the change in tariff
classification must be made in accordance with section
102.20(a), Section I: Chapters 1 through 5, subheading 05.01
- 05.11, HTSUS, which requires "[a] change to heading 05.01
through 05.11 from any other chapter." The raw animal
hides, which are initially classified under heading 4101,
HTSUS, are subsequently classified under subheading,
0511.99.2000, HTSUS, as a result of further processing in
Mexico. Accordingly, the foreign material incorporated in
the dog chew undergoes the applicable tariff shift.
Consequently, the country of origin of the finished dog chew
is Mexico.
Under the second proposed manufacturing scenario,
finished dog chews are produced as a result of multi-country
processing operations in Korea and China. Inasmuch as the
finished dog chews are not produced as a result of
processing in a NAFTA country, the NAFTA marking rules
discussed above are inapplicable for determining origin in
this instance. Instead, the country of origin for dog chews
manufactured in this manner is determined upon the basis of
the occurrence of a substantial transformation, within the
meaning of 19 CFR 134.1(b).
The well-established test for determining whether a
substantial transformation has occurred is derived from
language enunciated by the court in Anheuser-Busch Brewing
Association v. United States, 207 U.S. 556, 562 (1908),
which defined the term "manufacture" as follows:
Manufacture implies a change, but every
change is not manufacture and yet
every change in an article is the result
of treatment, labor and manipulation.
But something more is necessary, as set
forth and illustrated in Hartranft v.
Wiegmann, 121 U.S. 609. There must be
transformation; a new and
different
article
must
emerge,
having a
distinctive name,
character
or use.
Simply stated, a substantial transformation occurs
"when an article emerges from a process with a new name,
character, or use different from that possessed by the
article prior to processing." See Texas Instruments, Inc.
v. United States, 69 CCPA 152, 681
F.2d 778 (1982) (cited with approval in Torrington Co. v.
United States, 764 F. 2d 1563, 1568 (1985)).
In the second proposed manufacturing scenario, animal
hides are exported from the U.S. to Korea where they are
chemically treated to remove preservatives and hair,
mechanically "fleshed" (detached of excess fat and meat) and
split into two layers, the bottom portion of which is
utilized in the production of dog chews. Subsequently, the
split hides are exported to China where undergo additional
operations including chemical treatment, water removal,
cutting, hand shaping, drying and, in some cases, flavoring.
We are informed that, upon exportation from Korea, the
hides are classifiable under heading 4101, HTSUS, as a "raw
split" and are suitable for a variety of uses including
gelatin (pharmaceutical, photographic or edible), suede
leather or imitation leather for flat goods or footwear.
Additionally, we note that, in its condition upon
importation into China, the hides possess few of the
characteristics of dog chews. Although the hides have
undergone initial cleaning and sizing operations by virtue
of having been cleansed of preservatives, hair and flesh and
split into the appropriate gauge, the hides do not have the
finish or color, are not the proper shape or length, have
unfinished ends, have an inappropriate moisture content and,
in some cases, lack the appropriate flavor for dog chews.
Accordingly, we find that the combination of all of the
processing operations performed in China on the imported raw
splits constitutes a substantial transformation of the
imported raw split into a new and different article having a
new name, character and use. We are of the opinion that the
chemical treatment, wringing, cutting, shaping drying and,
in some cases, flavoring process convert the raw split from
a product which is suitable for many uses into a product
which is suitable for a particular use. Consequently, the
country of origin of the finished dog chew is China.
II. Marking Requirements
Part 134, Customs Regulations (19 CFR Part 134),
implements the country of origin marking requirements and
exceptions of 19 U.S.C. 1304. One of the exceptions to the
general marking requirement is codified in 19 U.S.C.
1304(a)(3)(D) (as implemented by 19 CFR 134.32(d)), which
provides that an article may be excepted from marking if the
marking of its container will reasonably indicate its origin
to the ultimate purchaser. As provided in section 134.41,
Customs Regulations (19 CFR 134.41), the country of origin
marking is considered to be conspicuous if the ultimate
purchaser in the United States is able to find the marking
easily and read it without strain. The degree of
permanence of the marking should be at least sufficient to
insure that in any reasonably foreseeable circumstance, the
marking shall remain on the article until it reaches the
ultimate purchaser unless it is deliberately removed. The
marking must survive normal distribution and store handling.
Of concern here are the requirements of two related
provisions of the marking regulations, section 134.46,
Customs Regulations (19 CFR 134.46) and section 134.47,
Customs Regulations (19 CFR 134.47).
Specifically, 19 CFR 134.46 requires that, in instances
where the name of any city or locality in the U.S., or the
name of any foreign country or locality other than the name
of the country or locality in which the article was
manufactured or produced, appears on an imported article or
its container, there shall appear, legibly and permanently,
in close proximity to such words, letters or name, and in at
least a comparable size, the name of the country of origin
preceded by "Made in," "Product of," or other words of
similar meaning. Customs has ruled that in order to satisfy
the close proximity requirement, the country of origin
marking must appear on the same side(s) or surface(s) in
which the name of the locality other than the country of
origin appears (See HQ 708994, dated April 24, 1978). The
more restrictive requirements of 19 CFR 134.46 are designed
to alleviate the possibility of misleading an ultimate
purchaser with regard to the country of origin of an
imported article, if such article or its container includes
language which may suggest a U.S. origin (or other foreign
locality not the correct country of origin).
Section 134.47, Customs Regulations (19 CFR 134.47),
provides that when as part of a trademark or trade name or
as part of a souvenir marking, the name of a location in the
U.S. appears, the article shall be legibly, conspicuously,
and permanently marked to indicate the name of the country
of origin of the article preceded by the words "Made in,"
"Product of," or other similar words, in close proximity or
in some other conspicuous location. In such circumstance,
no comparable size requirement exists.
The purpose of both provisions is the same, namely to
prevent the ultimate purchaser from being misled or deceived
when the name of a country or place other than the country
of origin appears on an imported article or its container.
The critical difference between the two provisions is that
19 CFR 134.46 requires that the name of the actual country
of origin appear "in close proximity" to the U.S. reference
and in lettering of at least comparable size. By contrast,
19 CFR 134.47 is less stringent, providing that when as part
of a trade name, trademark or souvenir mark, the name of a
location in the U.S. or "United States" or "America" appears
on the imported article, the name of the country of origin
must appear in close proximity or "in some other conspicuous
location". In other words, the latter provision triggers
only a general standard of conspicuousness. In either case,
the name of the country of origin must be preceded by "Made
in", "Product of", or other similar words.
As applied to the proposed marking submitted for
consideration, both provisions are triggered. The more
stringent requirements of 19 CFR 134.46 apply where the U.S.
address "Carlstadt, NJ 07072" appears on the reverse side of
the label. In C.S.D. 90-31, dated December 20, 1989,
Customs held that, under certain conditions, geographic
names appearing in connection with imported articles do not
necessarily trigger the requirements of 19 CFR 134.46 if the
context in which the names are used is such that confusion
by the ultimate purchaser regarding country of origin is not
possible. In that decision, Customs cited to several
rulings including HQ 732329 (July 12, 1989), (address on a
warranty card did not pose a risk of confusion to ultimate
purchasers) and HQ 732816 (November 24, 1989), (address
printed on display ticket was provided to assist customer in
the event of questions concerning guarantees) where it was
decided that the context in which the names and addresses
were used was such that confusion regarding country of
origin was not conceivable.
Here, however, because the U.S. address is not
accompanied by any warranty information or as a point of
reference for customer service concerns, the address is used
in a context more likely to create confusion as to the
origin of the product, triggering the applicability of the
special marking requirements of 19 CFR 134.46. Upon review
of the proposed marking samples submitted for our
examination, it is our determination that use of the phrase
"Made in Mexico," "Made in Mexico from American Cowhide,"
"Made in China" or "Made in China from American Cowhide"
printed in boldface type in letters which are of comparable
size or in a distinctly larger font than a non-origin
locality reference, where the country of origin designation
immediately follows the non-origin U.S. address, such
country of origin marking fully satisfies the special
marking requirements of 19 CFR 134.46.
Additionally, the less restrictive requirements of 19
CFR 134.47 are triggered by the use of the phrase
"Beefeaters American Beefhide" or "Beefeaters American
Cowhide," which appear on the front side of the label.
Although 19 CFR 134.47 applies when a locality reference
appears as part of a trademark, Customs has accepted a filed
application with the U.S. Patent and Trademark Office as
sufficient evidence of a trademark for purposes of 19 CFR
134.47 because the regulation does not specify what evidence
is needed to establish a trademark.
You have presented evidence that an application for the
trademarks "Beefeaters American Beefhide" and "Beefeaters
American Cowhide"were filed with the U.S. Patent and
Trademark Office on September 3, 1996 and have advised our
office that the matter is still pending. In HQ 734455 (July
1, 1992), Customs considered whether the mere filing of a
trademark registration was sufficient evidence to establish
a trademark for purposes of 134.47. In that ruling Customs
held that "until further notice we will continue to accept a
filed application with the U.S. Patent and Trademark Office
as sufficient evidence of a trademark for the purposes of 19
C.F.R. 134.47." We note, however, that if the application
is denied, the more restrictive requirements of 19 CFR
134.46 will need to be satisfied. See HRL 734455 dated July
1, 1992, and HRL 735180 dated May 17, 1994. Therefore, in
this case, although only an application has been filed,
Customs finds that the more lenient requirements of 19 CFR
134.47 apply.
Therefore, the country of origin need appear in close
proximity or "in some other conspicuous location" preceded
by words such as "Made in" or "Product of."
As previously indicated, a variety of different
examples of proposed labels have been submitted for our
review. All proposed labels contain the phrase "Beefeaters
American Beefhide" or "Beefeaters American Cowhide" on the
front side of the label. Additionally, on the reverse side
of all proposed labels submitted, the country of origin
designation "Made in Mexico," "Made in Mexico from American
Beefhide," "Made in China" or "Made in China from American
Beefhide" appears in the bottom right land corner of the
label together with trademark and copyright information,
separated from other product information which is aligned
upon the left margin of the label. On some of the proposed
labels, the phrase "Made in Mexico" or "Made in China" is
printed in boldface type in the same size font as the
surrounding type. On other proposed labels, "Made in
Mexico" or "Made in China" is printed in boldface type in a
font distinctly larger than the surrounding type.
While origin information printed on the reverse side of
a label may not meet the general requirement for
conspicuousness in all cases, we note that, in this
particular instance, the front side of the label contains
only the brand information without other consumer
information; thus, a potential purchaser would be more
likely to examine the reverse side of the header card for
this material. Upon examination of the reverse side of the
label, although the country of origin information appears in
the bottom right-hand corner with separated from other
product information it is printed directly below trademark
and copyright information. Where boldface type is not used,
the country of origin designation is not readily apparent
and is difficult to distinguish from surrounding trademark
and copyright information. Accordingly, we find that these
samples do not satisfy the requirement of conspicuousness of
19 CFR 134.47. However, on those samples in which the
country of origin information is printed in boldface type,
the information is more easily distinguished from the
surrounding material and can be easily located and read by a
potential purchaser. Such conspicuousness is particularly
enhanced when the country of origin designation is printed
in boldface type in a font distinctly larger than the
surrounding type. Accordingly, we find that the samples
which contain the country of origin information printed in
boldface type, both in the same size font as the surrounding
type or in a font distinctly larger than the surrounding
type satisfy the requirement of conspicuousness of 19 CFR
134.47.
HOLDING:
With regard to the first proposed manufacturing
scenario, on the basis of the information presented, we are
of the opinion that, pursuant to section 102.11(a)(3) of the
NAFTA Marking rules, the finished dog chews are considered
to be a product of Mexico for purposes of country of origin
marking.
With regard to the second proposed manufacturing
scenario, on the basis of the information presented, we are
of the opinion that the raw splits exported to China where
they undergo additional operations including chemical
treatment, wringing, cutting, shaping, drying and, in some
cases, flavoring, are substantially transformed within the
meaning of 19 CFR 134.1(b) into a new and different article
and are considered to be a product of China for country of
origin marking purposes.
Where the country of origin designation "Made in
Mexico. "Made in Mexico from American Cowhide," "Made in
China" or "Made in China from American Cowhide" is printed
in boldface type in letters which are of comparable size or
in a distinctly larger font than a non-origin locality
reference, and this country of origin designation
immediately follows the non-origin U.S. address, such
country of origin marking fully satisfies the special
marking requirements of 19 CFR 134.46.
Where the phrase "Beefeaters American Beefhide" or
"Beefeaters American Cowhide" appears on the front side of a
head card without any additional consumer information, the
country of origin marking "Made in Mexico" or "Made in
China" printed in boldface type in a comparable size or in a
font distinctly larger than the surrounding type and located
in the lower right-hand corner separated from other product
information alligned on the left-hand margin, is sufficient
to satisfy the requirement for conspicuousness of 19 CFR
134.47.
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
Tariff Classification
and Appeals Division