MAR-2-05 RR:CR:SM 560612 MLR
John M. Peterson, Esq.
Margaret R. Polito, Esq.
Neville, Peterson & Williams
80 Broad Street, 34th Floor
New York, NY 10004
RE: Country of Origin Marking for Pepper Salads;
Substantial Transformation
Dear Mr. Peterson and Ms. Polito:
This is in reference to your letters of August 8, 12,
September 16 and 25, 1997, requesting a ruling on behalf of
Pillsbury Company ("Pillsbury"), concerning the country of
origin marking for two pepper salads.
FACTS:
It is stated that Pillsbury sells two pepper salads.
The first pepper salad is produced using primarily red and
green bell peppers grown in the U.S. Tuscan peppers grown
in Greece are also used. All of these peppers are washed,
blanched, de-stemmed, de-seeded, and cut into pieces. The
pepper pieces are then mixed with spices and placed in a
solution containing water, vinegar, oils, garlic, calcium
chloride, benzoate of soda, coloring, and preservatives. In
its finished condition, it is stated that the pepper salad
can be used as a condiment or accompaniment for meats,
poultry, and similar dishes. It is stated that the pepper
salad has a shelf life of one year.
The second pepper salad consists primarily of tuscan
peppers grown in Greece. The tuscan peppers are imported
into the U.S. and washed, blanched, de-stemmed, de-seeded,
and cut into pieces. The peppers are then placed in a
solution of water, vinegar, salt, coloring, citric acid and
preservatives. The finished salad has a stated shelf life
of one year.
ISSUE:
Whether the imported peppers undergo a substantial
transformation in the U.S. for purposes of 19 U.S.C. 1304.
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 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.
I. Substantial Transformation
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 U.S. 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 the marking laws
and regulations. For country of origin marking purposes, a
substantial transformation of an imported article occurs
when it is used in the U.S. in manufacture, which results in
an article having a name, character, or use differing from
that of the imported article. See 19 CFR 134.35.
It is claimed that the tuscan peppers for both salads
undergo a substantial transformation in the U.S. As
support, Koru North America v. United States, 701 F. Supp.
229 (CIT 1988), is cited, where the court considered whether
headed and gutted fish underwent a change in origin when
they were processed into fish fillets. The fish were boned,
skinned, cut into fillets, fat was trimmed, and the fillets
were glazed to preserve their moisture content and enhance
their shelf life. The court held that the headed and gutted
fish underwent a substantial transformation and noted that
the fillets were different articles of commerce than the
fish itself and were sold in different areas of supermarkets
than fresh fish.
It is claimed that as in Koru, the Greek tuscan peppers
undergo a substantial transformation in the U.S. as they are
converted from fresh produce that is sold in the vegetable
section of a supermarket with a limited shelf life, into
condiments sold in a different area of a supermarket with an
extended shelf life. It is also claimed that the pepper
salads are a different article of commerce than fresh
peppers, just as fish fillets are a different article of
commerce than headed and gutted fish.
Azteca Milling Co. v. United States, 703 F. Supp. 949,
aff'd, 890 F.2d 1150 (Fed. Cir. 1989), is also cited as
support. In Azteca, corn grown in the U.S. was exported to
Mexico where it was removed from the cob, cleaned and cooked
in vats with lime to produce masa, or corn flour. The court
concluded that there was not a double substantial
transformation in Mexico but only a single transformation
from corn to corn flour. Based upon Azteca, it is claimed
that the fresh peppers are converted into a processed food
product that has a different use. It is claimed that the
imported tuscan peppers can be used as an ingredient in a
Greek Salad or a variety of recipes and are converted into a
condiment that has a single use . It is claimed that as in
Azteca, a chef cannot substitute the pepper salads for
tuscan peppers in a recipe that requires tuscan peppers
since the pepper salads contain additional ingredients, such
as oils and vinegar, that may spoil a recipe that calls for
fresh tuscan peppers.
It is claimed that National Juice Products, Ass'n v.
United States, 10 CIT 48 (1986), does not apply, where the
court considered frozen orange juice concentrate which was
mixed in the U.S. with other concentrate, diluted with
water, flavored, and packaged. The court held that the
addition of water and orange flavors did not change the
fundamental character of the imported concentrate, and you
note that National Juice was expressly distinguished in
Koru:
Unlike the product in National Juice Products, the
fresh article here (the headed and gutted fish)
undergoes its transformation into a retail product
(fillet) in the second country (Korea). These
changes go to the fundamental nature and character
of the fish; the fish have been transformed, both
in name and character. Therefore a new article of
commerce has been created. 701 F. Supp. at 235.
Headquarters Ruling Letter (HRL) 558733 dated December
28, 1994, is also cited as support, where Customs held that
whole avocadoes from Chile underwent a substantial
transformation in the U.S. when processed into guacamole.
The U.S. processing operation entailed removing the seeds
and blending the avocado pulp with water, citric acid,
seasonings, and chile peppers.
In HRL 559841 dated July 25, 1996, Customs held that
tomato sauce used for cooking traditional Hispanic dishes as
well as to marinate meats and fish, and composed of tomato
paste concentrate from a non-beneficiary country, various
spices, modified corn starch, beet powder, and water was
eligible for preferential tariff treatment under the
Caribbean Basin Economic Recovery Act (CBERA), as the mixing
of these ingredients was a substantial transformation.
In this case, we agree that the imported Greek tuscan
peppers undergo a substantial transformation in the U.S.
when they are processed by blanching, de-stemming, de-seeding, cut into small pieces, and blend with oils, to
become pepper salads. After chopping and blending the
peppers with the various ingredients, the finished pepper
salads have an entirely different appearance, consistency,
and purpose than fresh peppers. Furthermore the pepper
salads/condiments have a different name, character, and use
from the imported fresh tuscan peppers. We also note that
the peppers are not merely mixed together, but are combined
with other ingredients to transform the fresh peppers into a
processed food product which has different uses and tastes.
Accordingly, we find that Pillsbury will be the ultimate
purchaser of the imported tuscan peppers and the finished
salads will not be required to be marked with a foreign
country of origin.
HOLDING:
Based upon the information provided, it is our opinion
that the imported Greek Tuscan peppers are substantially
transformed in the U.S. when they are processed by
blanching, de-stemming, de-seeding, cut into small pieces,
and blended with oils, to become pepper salads. Therefore,
Pillsbury will be the ultimate purchaser of the imported
tuscan peppers and the finished salads will not be required
to be marked with a foreign country of origin.
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
Commercial Rulings Division