MAR 2-05 CO:R:C:V 733207 NL
Leslie A. Glick, Esq.,
Porter, Wright, Morris & Arthur
1233 20th Street, N.W.,
Washington, D.C. 20036-2395
RE: Country of Origin Marking - Potpourri; American Goods
Returned (HTS 9801.00.10); 19 CFR 134.24; 19 CFR 134.35;
19 CFR 134.32(m); Blending Diverse Articles
Dear Mr. Glick:
This is in response to your letters of March 21 and
November 5, 1990, in which you request a ruling concerning the
country of origin marking requirements applicable to certain
aromatic products. The first of these is an aromatic mixture of
herbs, flowers, spices, and woodchips ("raw botanicals") mixed in
the U.S., then packaged in Mexico and returned to the U.S. for
retail sale as potpourri. The other products are potpourri oil
and aromatic salt crystals.
FACTS:
Your client, Aromatic Industries, Inc., manufactures a
product known as potpourri in the U.S. from foreign and U.S. raw
botanical ingredients. The potpourri is intended to scent the
air. Depending upon the intended blend, between ten and twenty
items of raw botanicals are used for each final product. The
manufacturing process includes laying out and blending the
botanicals according to formula; mixing in U.S.- origin essential
oils, fragrances and fixatives; and further mixing and blending.
It is estimated that the value added in the U.S. to the raw
botanicals is between 57.1 percent and 75.1 percent, according to
the type of blend. The proportion of foreign to U.S. raw
ingredients is not stated.
The potpourri oil and the aromatic salt crystals are wholly
comprised of U.S. ingredients and produced in the U.S. The oil
is produced from aroma chemicals and natural extracts essential
oils derived by steam distillation of plant materials. The
aromatic salt crystals are produced by impregnating coarse solar
salt with the potpourri oil.
After production in the U.S. the three articles will be
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shipped to Mexico in bulk for packaging in disposable retail
containers consisting of plastic, paper, and glass vials. Your
letter of March 21, 1990, requests, among other things, a ruling
that the retail packaging, to the extent it is of foreign origin,
be excepted from country of origin marking as packaging not for
reuse. It is your position that upon reimportation to the U.S.
the potpourri, oil, and aromatic salt crystals will qualify for
duty-free treatment pursuant to subheading 9801.00.10 of the
Harmonized Tariff Schedule of the United States (HTSUS). It is
also your position that the articles may be excepted from
country of origin marking pursuant to 19 CFR 134.32(m) as
products of the U.S. exported and returned.
ISSUES:
1) Whether the foreign origin constituent materials of the
potpourri are substantially transformed when the potpourri is
produced in the U.S.
2) Whether the potpourri, oil, and aromatic salt crystals
may be excepted from the country of origin marking requirements
upon reimportation into the U.S. after packaging in Mexico.
3) Whether the potpourri, oil, and aromatic salt crystals
are eligible for duty free treatment under HTSUS 9801.00.10 upon
reimportation after packaging in Mexico.
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. As defined in 19 CFR 134.1(b), "country of origin"
means the country of manufacture, production, or growth of any
article of foreign origin entering the U.S. That section also
provides that further work or material added to an article in
another country must effect a substantial transformation in order
to change the articles' country of origin. A substantial
transformation is said to occur when, after further processing or
manufacture, an article emerges having a new name, character, or
use. See, 19 CFR 134.35.
The principal issue for resolution is whether the foreign
origin constituents of the potpourri are substantially
transformed into an article having a new name, character, or use
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when the potpourri is produced in the U.S. It is our opinion in
this case that a substantial transformation of the foreign-origin
constituents of the potpourri is effected by production of
potpourri in the U.S. The herbs, flowers, spices and woodchips
lose their separate identities upon incorporation into the
potpourri, and acquire a new name, character, and use. Despite
the fact that the botanicals, for example, remain recognizable as
parts of flowers and plants, their character and use becomes
entirely different, having taken on the commercial identity of
the potpourri.
The two earlier rulings to which you refer are of
substantial bearing on the instant ruling request. In HQ 553120
(September 28, 1984), Customs ruled that an extensive process of
moisturizing, curing, blending, cutting, cleaning, and drying
leaf tobacco so as to produce scrap tobacco was a substantial
transformation. In particular, Customs found this process
exceeded "merely blending" the tobacco, "merely chopping
...without further manufacturing", or simply performing
alterations. The production of the potpourri entails a
comparable degree of complexity as that considered in HQ 553120,
and in addition, involves the blending of diverse articles into a
final product having a new name, character and use. In the
second ruling, HQ 723312 (November 22, 1983), Customs was asked
to rule on the country of origin marking of perfume which had
been produced in the U.S. from imported essential oil by adding
special denatured alcohol, coloring matter, color stabilizer, and
water. The ruling found that a substantial transformation was
effected in the U.S. and further, that packaging in Mexico after
production did not change its U.S. origin. Thus, the two
previous rulings afford significant support for our finding that
the production of the potpourri in the U.S. substantially
transforms the imported constituent materials into a product of
the U.S.
The second issue raised by this request is whether the
subsequent retail packaging in Mexico affects the country of
origin marking requirements applicable to the three articles upon
importation into the U.S. Previous Customs rulings establish
that mere packaging of an article does not result in a change in
the country of origin of the article. See, HQ 723312 supra.
Accordingly, the packaged potpourri, potpourri oil, and aromatic
salt crystals remain products of the U.S., and may be excepted
from the requirements of 19 U.S.C. 1304 pursuant to 19 CFR
134.32(m) as products of the U.S. exported and returned.
We further find that there is no country of origin marking
required for the packaging, even though it is of Mexican origin,
as it is plain from an examination of the paper and plastic
wrappings of the potpourri and the glass vial for the oil that
they qualify as containers not designed for or capable of reuse
pursuant to 19 CFR 134.24(a). Thus, they may be excepted from
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country of origin marking pursuant to that provision.
Finally, we find that all three products are eligible for
duty free treatment upon importation into the U.S. pursuant to
subheading 9801.00.10, HTSUS, pertaining to products of the U.S.
returned after having been exported, without having been advanced
in value or improved in condition by any process of manufacture
or other means while abroad. As found above, all three articles
remain products of the U.S. even after packaging in Mexico. Such
packaging does not advance in value or improve in condition by
means of a process of manufacture or otherwise the U.S.-origin
articles exported and returned, and thus satisfies the
eligibility requirements of subheading 9801.00.10, HTSUS. See,
C.S.D. 90-66, 24 Cust. B. & Dec. 23 (June 6, 1990)(U.S.-origin
parts of garage door opener kits packaged in Mexico with foreign
origin kits found to be eligible). Provided the documentary
requirements set forth in section 10.1, Customs Regulations (19
CFR 10.1), are also satisfied, the potpourri, potpourri oil and
aromatic salt crystals are eligible for duty-free treatment under
subheading 9801.00.10, HTSUS.
HOLDING:
The foreign origin constituents of the potpourri are
substantially transformed by manufacture in the U.S. within the
meaning of 19 CFR 135.35. After retail packaging in Mexico the
potpourri, oil, and aromatic salt crystals may be excepted from
country of origin marking pursuant to 19 CFR 134.32(m), and their
retail paper, plastic, and glass packaging may be excepted from
country of origin marking pursuant to 19 CFR 134.24(a). Finally,
all three articles are eligible for duty-free treatment as U.S.
articles exported and returned pursuant to subheading 9801.00.10,
HTSUS.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch