MAR-05 RR:CR:SM 560904 KKV
Mr. Gregory P. Benhard
Louisiana Premium Seafoods, Inc.
P.O. Box 68
Palmetto, LA 71358-0068
RE: Request for binding ruling regarding the country
of origin marking requirements applicable to whole
crawfish imported for further processing in the
U.S.; re-cooking; heading; peeling; de-veining;
not a substantial transformation; National Juice
Products; Koru North America; C.S.D. 88-10; HRL
731763
Dear Mr. Benhard:
This is in response to your letter dated February 16,
1998, which requests a binding ruling regarding the country
of origin marking requirements applicable to whole crawfish
imported from China for further processing in the U.S.
Specifically, you inquire whether imported crawfish is
substantially transformed in the U.S. as a result of post-importation processing and whether the finished product may
be marked, "Product of USA."
FACTS:
You indicate that Louisiana Premium Seafoods, Inc.
imports whole, cooked crawfish from China into the U.S. On
those occasions where your firm experiences a surplus of the
product, it is further processed in the U.S. by recooking,
removing the head, peeling and de-veining. We are informed
that the domestic processing results in a substantially
increase in the cost of the finished product (i.e., the
processed tail meat is 15% of the original weight and the
cost of the end product is more than twice the cost of the
imported whole, cooked product).
ISSUE:
Whether imported whole, cooked crawfish is
substantially transformed into a product of the U.S. for
purposes of 19 U.S.C. 1304 by domestic processing which
includes recooking, heading, shelling and de-veining
operations.
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 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.
Accordingly, the country of origin of an article is the
country in which it was wholly manufactured or, if processed
in several countries, the country in which the article last
underwent a substantial transformation. 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)).
Although neither the courts nor Customs has
specifically ruled on the country of origin marking
requirements of imported crawfish tail meat which has
undergone multi-country processing, two court decisions
involving the country of origin marking requirements
applicable to imported food products (one on orange juice
and another on fish) and two Customs decisions regarding
imported shrimp are instructive.
In National Juice Products v. United States, 628 F.
Supp. 978, 10 CIT 48 (CIT 1986), the Court of International
Trade considered the effects of domestic processing upon
frozen orange juice concentrate imported into the U.S. The
court upheld Customs determination in C.S.D. 85-47 (also
published as HQ 728557, dated September 4, 1985), that the
imported orange juice concentrate is not substantially
transformed when it is mixed with other batches of
concentrate, either foreign or domestic, water, orange
essences, orange oil and in some cases, fresh juice and
either packaged in cans and frozen or pasteurized, chilled
and packed in liquid form. Customs found, and the court
agreed, that the domestic processing did not produce an
article with a new name, character or use because the
essential character of the final product was imparted by the
imported concentrate and not the domestic processing. The
court stated that "the retail product in this case is
essentially the juice concentrate derived in substantial
part from foreign grown, harvested and processed oranges.
The addition of water, orange essences and oils to the
concentrate, while making it suitable for retail sale does
not change the fundamental character of the product, it is
still essentially the product of the juice of oranges."
Therefore, the repacked orange juice products had to be
marked with the country of origin of the imported
concentrate.
In Koru North America v. United States, 12 CIT 1120,
701 F. Supp. 229 (1988), the court considered whether the
processing of headed and gutted fish in South Korea by
thawing, skinning, boning, trimming, freezing and packaging,
changed the name, character or use of the fish so as to
effect a substantial transformation and render Korea the
country of origin for purposes of 19 U.S.C. 1304. The court
concluded that the processing performed in Korea constituted
a substantial transformation because it changed the name of
the article from "headed and gutted fish" to "individually
quick-frozen fillets" and more importantly, because it
vastly changed the fish's character. In this regard, the
court noted that while the fish arrive in Korea with the
look of a whole fish, when they leave they no longer possess
the essential shape of the fish. The court also noted that
the fillets are considered discrete commercial goods which
are sold in separate areas and markets. The fact that the
products also have different tariff classifications was
found to be additional evidence of a substantial
transformation.
In C.S.D. 88-10 (also published as HQ 731472, dated
June 23, 1988) Customs considered the effect of domestic
processing on foreign-origin shrimp. In that case, green
(raw), headed (without heads), frozen shrimp, with shell on,
was imported into the U.S. where it was thawed, sorted,
iced, peeled, de-veined, iced and packaged. Customs
determined that the processing did not result in a material
change of name (i.e., from "frozen shrimp" to "peeled and
de-veined" frozen shrimp). Likewise, Customs determined
that the processing did not result in a change in the
character of the imported product, stating:
The quality and size of the product is
attributable to the imported product and
not the domestic processing. While the
peeling and de-veining changes the
physical appearance of the shrimp to a
certain degree and renders the product
ready for eating, in our opinion the
change is minor and does not
fundamentally change the character of the
imported product. We believe that in
this case the imported shrimp similarly
imparts the essential character to the
final product.
Finally, Customs determined that the domestic processing did
not significantly change the product's intended use, which
was primarily dictated by the nature (raw) and size of the
imported article, as these attributes had already been
determined at the time of importation. Accordingly, based
on the rationale of National Juice Products, supra, Customs
held that the peeling and de-veining of shrimp in the U.S.,
which did not change the name, character or use of the
imported product, did not constitute a substantial
transformation.
The same rationale was applied in HRL 731763, dated May
17, 1989, where Customs considered raw, frozen shrimp
imported into the U.S. in three different forms: 1) shell-on
shrimp (commercially known as "green headless shrimp"); 2)
peeled, unde-veined shrimp ("PUD shrimp"); and 3) peeled and
de-veined shrimp ("P&D shrimp)." After importation, the
shrimp was thawed, washed, graded, cooked and, in some
cases, also peeled and de-veined. Customs referenced its
previous holding in HRL 731472, supra, and considered
whether the additional cooking operations were sufficient to
effect a substantial transformation of the imported
merchandise. Customs determined that the imported
merchandise did not undergo a change in name as a result of
processing, as the article was referred to as "shrimp" both
before and after the cooking operations. While noting that
the cooking process produced some changes in the color,
texture and chemical composition, Customs determined that
the character of the shrimp ( i.e, size and quality) was
unaffected by domestic cooking operations. Lastly, Customs
concluded that the use of the product was unchanged as a
result of the cooking process, as this process, like the
peeling and de-veining in C.S.D. 88-10, supra, is
essentially a simple process which may be performed in the
kitchen of a consumer, and which all shrimp must undergo
before consumption.
In the matter under consideration, whole, cooked,
frozen crawfish, with shell on, classifiable under
subheading 0306.19.0010, HTSUS, is imported into the U.S.
from China, and undergoes post-importation processing which
includes re-cooking, heading, peeling and deveining
operations. For processing to effect a substantial
transformation, a new and different article must emerge,
with a new name, character, or use different from that
possessed by the article prior to processing." See Texas
Instruments, supra.
Unlike Koru, supra, where the processing of fish
resulted in a change in the name of the article, from
"headed and gutted fish" to "individually quick-frozen
fillets," the crawfish undergo no such distinctive change of
name as a result of the domestic processing. The article
imported into the U.S. and the finished article are
essentially the same thing - cooked crawfish. Despite the
fact that the product imported into the U.S. is "whole"
crawfish whereas the processed product is crawfish "tails,"
the fundamental identity of the crawfish is maintained
throughout, and is not lost or subordinated in the processed
product. As with the shrimp in HRL 731763, supra, the fact
that the products may have different modifiers is not
determinative. See also C.S.D. 86-26 ("fresh" broccoli
processed into "frozen" broccoli or "chopped" broccoli did
not constitute a substantial transformation).
Likewise, the domestic processing does not change the
fundamental character of the imported crawfish. Like the
shrimp in C.S.D. 88-10 and HRL 731763, supra, the character
of the crawfish (i.e., quality) has already been determined
at the time of importation into the U.S. Although the
domestic processing changes the appearance of the crawfish
to a certain degree, it does not impact the fundamental
nature of the article. Like the imported orange juice
concentrate in National Juice, supra, the crawfish imported
into the U.S. imparts the essential character to the
finished product.
Lastly, the use of the product is not changed as a
result of the domestic processing operations. Re-cooking,
heading, peeling and de-veining are simple operations which
render the product ready for eating. While the added
convenience of having these processes completed may be a
factor considered by a purchaser, these processes may easily
be performed by consumers in their own kitchens.
Based on the above considerations, we conclude that the
process of re-cooking, heading, peeling and de-veining is
not a substantial transformation but rather, a minor one
which leaves the identity of the imported crawfish intact.
Therefore, for purposes of 19 U.S.C. 1304, imported crawfish
is not substantially transformed into a product of the U.S.
by post-importation processing but remains a product of
China. Accordingly, upon importation into the U.S., the
certification procedures of 19 CFR 134.25 must be satisfied
and upon completion of domestic processing, the finished
article must be marked with its country of origin.
HOLDING:
Based upon the information provided, frozen, cooked
crawfish from China, imported into the United States for
domestic processing operations consisting of re-cooking,
heading, peeling and de-veining, is not substantially
transformed into a product of the U.S. but remains a product
of China. Accordingly, upon importation into the U.S., the
certification procedures of 19 CFR 134.25 must be satisfied
and, upon completion of domestic processing, the finished
product must be marked with its 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