MAR-2 RR:CR:SM 563211 KSG
Jerome J. Zaucha, Esq.
Venable LLP
575 7th Street, NW
Washington, D.C. 20004-1601
RE: Country of origin marking of imported dehydrated vacu-puffed carrots; substantial transformation
Dear Mr. Zaucha:
This is in response to your letter dated March 3, 2005, requesting a country of origin ruling on behalf of Sensient Dehydrated Flavors Company, regarding the country of origin of imported dehydrated vacu-puffed carrots.
FACTS:
This case involves imported dehydrated vacu-puffed carrots. The carrots are grown and harvested in Poland. After harvesting in Poland, the carrots would undergo a dehydration process in Poland, which would involve:
The raw whole carrots would be pre-washed, destoned, and washed with both recycled and fresh water;
The carrots would be peeled, brushed to remove any remaining peels, and visually inspected to identify both defective specimens and any remaining foreign materials, which would be removed by hand;
The carrots would be cut to the desired shape and size and carried by water to a leveler distiller which would remove small stones and glass particles;
Once distilled, the cut carrots would be transferred via pump to a buffer tank where they would be held prior to blanching;
The carrots would be blanched via steam at approximately 98 degrees Celsius and held at that temperature for two to five minutes depending on the cut size to retard enzymatic activity;
The carrots would be air-dried in three phases over several hours at temperatures varying from 50 to 130 degrees Celsius to ensure homogenized drying;
The dehydrated carrots would be sieved to remove abnormally large and small pieces, ventilated by air to remove any remaining leaves, and scanned with a laser to identify any undesirable foreign matter.
The dehydrated carrots at this point would be dried with a moisture content of approximately 5 percent and require boiling for at least 5 to 15 minutes to be fully hydrated and prepared as a cooked carrot. Dried carrots of this type are sold as a food product to a variety of end users, including processed food companies, for use in prepared and other food applications, including Hamburger Helper-type meals, dried soups and other applications, where further cooking is required.
The dehydrated carrots would then be shipped to France where they would be further processed as follows:
The air dried carrots would be partially rehydrated (10-25 percent), and transferred to a pressure chamber where they are heated via steam injection in two phases under pressure of 1 bars absolute to 5 bars absolute for between 15 and 30 seconds;
The carrots are then released into a vacuum chamber where they are subjected to a rapid reduction in pressure to approximately 20 to 40 millibars. The rapid reduction in pressure vaporizes the moisture present within the carrots, which results in a spongy structure and imparts a puffed texture to the carrots;
The carrots are air dried conventionally at 50 to 70 degrees Celsius for approximately two to five hours to removed condensed water remaining on the surface; lastly, the vacu-puffed carrots are screened, electronically sorted and passed through a metal detector.
The vacu-puffed carrots are able to be rapidly rehydrated, by being placed in water for one minute to become fully hydrated and prepared as a cooked carrot. Accordingly, the vacu-puffed carrots are suitable for use in processed foods, such as cup of soup and cup of noodles products that are prepared by brief microwaving or the addition of boiling water.
ISSUE:
What is the country of origin for imported dehydrated vacu-puffed carrots which are processed as described above.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304), as amended, 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 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 of 19 U.S.C. 1304. Pursuant to 19 CFR 134.1(b), 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.
This issue would turn on whether carrots that are already dehydrated are substantially transformed by being further dehydrated and vacu-puffed in France.
A substantial transformation occurs when a new and different article of commerce emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940).
In National Juice Products Association v. United States, 628 F. Supp. 978 (CIT 1986), the court considered whether foreign manufacturing concentrate processed into frozen concentrated orange juice in the U.S. and reconstituted orange juice was considered substantially transformed. The U.S. processing involved blending the manufacturing concentrate with other ingredients to create the end product; the manufacturing concentrate was mixed with purified and dechlorinated water, orange essences, orange oil, and in some cases, fresh juice. The foreign manufacturing concentrate was blended with domestic concentrate, with ratios of 50/50 or 30/70 (foreign/domestic).
The court considered that the U.S. processing added relatively minor value to the product and that the manufacturing concentrate imparted the essential character to the juice and made it orange juice. The court concluded that the foreign manufacturing juice concentrate was not substantially transformed in the U.S. when it was processed into retail orange juice products.
In Koru North America v. United States, 701 F. Supp. 229 (CIT 1988), the court considered whether the processing of headed and gutted fish in South Korea by thawing, skinning, boning, trimming, freezing, and packaging constituted a substantial transformation. The court concluded that the processing performed in South Korea into “quick-frozen” fillets substantially transformed the headed fish because there was a change in name and character. The court noted that while the fish arrive in South Korea with the look of a whole fish, when they leave they no longer possess the essential shape of a fish. The fillets were considered discrete commercial goods and also had a different tariff classification.
U.S. Customs & Border Protection ruled in Headquarters Ruling Letter (“HRL”) 731763, dated May 17, 1989, that raw shrimp peeled, deveined, cooked, frozen and repackaged was not substantially transformed. Customs distinguished Koru because the processing of the shrimp was considered a minor change which merely rendered the product more suitable for consumption. The character of the shrimp (i.e., its size and quality) was not changed by the processing. See also HRL 731472, dated June 23, 1988.
In HRL 559965, dated January 24, 1997, Customs ruled that imported peanut slurry was not substantially transformed in the U.S. under 19 CFR 134.35(a) by being processed into peanut butter because the essential character of the finished peanut butter was imparted by the peanut slurry. The processing done in the U.S. included heating the peanut slurry, mixing, blending the imported slurry with U.S.- processed slurry, injecting additives, adding ingredients such as salt, sweeteners, peanut oil, stabilizers and sometimes, specialty flavors. The product was then pumped through heat exchangers and two reduction mills, cooled and packaged in jars. In that ruling, Customs cited to National Juice in concluding that the blending together of peanut slurry of U.S. and foreign origin along with other minor ingredients did not result in a substantial transformation of the materials.
In C.S.D. 86-28 (HRL 729365), dated June 25, 1986, Customs ruled that fresh broccoli processed in the U.S. by cutting to length, quartering or spearing, steam blanching for six minutes, freezing solid and packaging was not substantially transformed. Customs noted that while the shelf life of the broccoli was prolonged, its fundamental character and use did not change.
Counsel argues that the vacu-puffing processing in France would not alter the fundamental character or use of the product as dried carrot food additives for use in processed foods.
We find that the fresh carrots grown in Poland provide the essential character to the finished product in the instant case like the peanut slurry in HRL 559965. This case is similar to the broccoli in C.S.D. 86-28, in that further dehydration and vacu-puffing in France, while imparting a more specific use (such as in instant soup) to the carrots, does not result in a fundamental change in character or use compared to the fresh carrots that are grown and dehydrated in Poland. Like HRL 731763, in which Customs distinguished Koru because the processing of the shrimp was considered a minor change which merely rendered the product more suitable for consumption, the further dehydration and vacu-puffing of the dried carrots is a minor change which merely renders the product more suitable for the same use as the air dried carrots. Therefore, we find that the imported dehydrated carrots would not be substantially transformed by being further dehydrated and vacu-puffed in France.
We note that pursuant to subheading 9903.02.33, of the Harmonized Tariff Schedule of the United States (“HTSUS”), dried carrots, whole, cut, sliced, broken or in powder, but not further prepared (provided for in subheading 0712.90.10), that are the product of Austria, Belgium, Denmark, Finland, France, the Federal Republic of Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain or Sweden are subject to 100% duty rates.
Dried carrots that are determined to be a product of Poland would not be subject to the subheading 9903.02.33, HTSUS, duty rates.
HOLDING:
Polish-origin carrots that are further dehydrated and vacu-puffed in France do not undergo a substantial transformation. Pursuant to 19 CFR 134.1, the country of origin of the carrots would remain the country where they are grown and undergo initial dehydration, namely Poland.
A copy of this ruling letter 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,
Myles B. Harmon, Director
Commercial Rulings Division