MAR-2 RR:TC:SM 560394 JML
Mr. Lai Ki Mok, P.Eng
Technical Manager
Household Laundry Products Inc.
5070 Benson Drive
Burlington, Ontario
Canada L7L 5N6
RE: Country of origin determination for laundry additive powder;
19 U.S.C. 1304; 19 CFR Part 102.
Dear Mr. Mok:
This is in response to your letter of February 19, 1997,
requesting a binding ruling regarding the country of origin
marking requirements for United States ("U.S.") origin laundry
additive powder exported to Canada to be packaged for retail
sale.
FACTS:
The original ruling request was initiated on behalf of North
American Detergents Inc., which is no longer in business.
Instead, through a letter dated June 24, 1997, you informed our
office that a different company, Household Laundry Products Inc.,
is now pursuing the request.
The product at issue is a laundry additive powder put up for
retail sale in small cartons. You indicate that the powder and
retail packaging are of U.S. origin. Currently, the filling or
packaging operations are performed in the U.S. The outside of
the retail packaging displays the name of the U.S. manufacturer,
its U.S. mailing address, and "Made in the U.S.A."
The powder in question is of the bleach variety, and
consists of 5%-25% sodium perborate (bleaching agent), less than
2% subtilisin protease (enzyme), less than 1% fragrance and
coolant, with the balance being sodium carbonate, (ash-like
filler). Before packaging, Customs notes that the powder would
be classifiable under subheading 3402.90.50, Harmonized Tariff
Schedule of the United States ("HTSUS"), (Organic surface-active
agents (other than soap); surface-active preparations, washing
preparations) and cleaning preparations, whether or not
containing soap, other than those of heading 3401: Other: Other:
cleaning preparations). After packaging for retail sale, the
product is classifiable in subheading 3402.20.50, HTSUS ( Organic
surface-active agents (other than soap); surface-active
preparations, washing preparations) and cleaning preparations,
whether or not containing soap, other than those of heading 3401:
Other: Preparations put up for retail sale: Containing any
aromatic or modified aromatic surface-active agent: Other).
As a change in the production process, your company intends
to export the U.S. origin components of the product -- powder and
cartons -- into Canada where it will be packaged into the cartons
for retail sale with no additions or alterations. The packaged
powder will then be exported to the U.S. for market.
ISSUE:
What are the country of origin marking requirements for the
powder which is put up for retail sale?
LAW AND ANALYSIS:
304 of the 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 requirements and exceptions as provided for in
19 U.S.C. 1304.
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. (Emphasis added)
Section 134.1(j), Customs Regulations (19 CFR 134.1(j)),
provides that the "NAFTA Marking Rules" are the rules promulgated
for the 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 U.S. as
determined under the NAFTA Marking Rules set out at 19 CFR Part
102. See 19 CFR 134.1(g). Section 102.11, Customs Regulations
(19 CFR 102), articulates the relevant test for determining
whether a good is a good of a NAFTA country for marking purposes.
Specifically, section 102.11(a), Customs Regulations (19 CFR
102.11(a)), 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 102.20 and satisfies any other
applicable
requirements of that section, and all other applicable
requirements
of these rules are satisfied.
Since the powder will be packaged in Canada from all U.S.
origin components, it cannot be considered wholly obtained or
produced, or produced exclusively from domestic materials.
Accordingly, paragraph (a)(3) of section 102.11 is the applicable
rule that must be applied to determine the country of origin of
the product. Under the present scenario, there are only two
foreign materials incorporated into the finished product -- the
powder itself and the carton packaging. Section 102.15, Customs
Regulations (19 CFR 102.15) however, states that packaging
materials and containers in which a good is packaged for retail
sale that are classified with the product are to be disregarded
when determining if a good undergoes an applicable change in
tariff classification under the section. Thus, the laundry
additive powder is the only material to be considered. Customs
notes that the laundry additive powder, before packaging, is
classifiable under subheading 3402.90.5030, HTSUS. The packaged
laundry additive powder put up for retail sale is classifiable in
subheading 3402.20.5000. The applicable change in tariff
classification set out in section 102.20(b), Customs Regulations
(19 CFR 102.20(b)), Section VI, Chapters 28 through 38 is:
3402.12-3402.20 ...A change to heading 3402.11 through
3402.20 from any other subheading, including another
subheading within that group.
Because the unpackaged and packaged powder are
classifiable under different subheadings, the requisite tariff
classification change is met in this case.
However, section 102.17(c), Customs Regulations (19 CFR
102.17(c)), states that a foreign material will not be considered
to have undergone a change in tariff classification specified by
section 102.20, Customs Regulations, by reason of simple packing,
repacking or retail packaging without more than minor processing.
Because the Canadian operations consist only of packaging the
powder for retail sale, the operation of section 102.17(c),
Customs Regulations, precludes the powder from meeting the
specified change in tariff classification. In these
circumstances, section 102.11(b), Customs Regulations (19 CFR
102.11(b)), provides that:
Except for a good that is specifically described in the
Harmonized
System as a set, or is classified as a set pursuant to
General Rule of Interpretation 3, where the country of
origin cannot be determined
under paragraph (a), the country of origin of the good:
(1) Is the country or countries of origin of the
single material that imparts the essential character
of the good....
Section 102.18(b)(1), Customs Regulations (19 CFR
102.18(b)), states:
For purposes of identifying the material that imparts the
essential
character to a good under 102.11, the only materials that
shall be
taken into consideration are those domestic or foreign
materials that
are classified in a tariff provision from which a change in
tariff classification
is not allowed under the 102.20 specific rule or other
requirements
applicable to the good.
In this present case, as there is only one material to be
considered -- the laundry additive powder -- which does not meet
the applicable change in tariff classification, we turn to
section 102.18(b)(1)(iii) which states:
If there is only one material that is classified in a tariff
provision
from which a change in tariff classification is not allowed
under
102.20 specific rule or other requirements applicable to
the good,
then that material will represent the single material that
imparts the
essential character to the good under 102.11.
Therefore, the material that imparts the essential character
is clearly the U.S. origin laundry additive powder. Customs
therefore determines that the country of origin of the laundry
additive powder put up for retail sale, for purposes of the
marking requirements under 19 U.S.C. 1304, is the U.S. The
product is not subject to the provisions of 19 U.S.C. 1304
because it is not considered an "article(s) of foreign origin."
Accordingly, the laundry additive powder put up for retail sale
does not require country of origin marking upon importation into
the U.S.
With regard to the appropriateness of the "Made in the
U.S.A." claim appearing on the retail carton of the packaged
powder, the Federal Trade Commission ("FTC") has jurisdiction
over such matters. Any questions or inquiries regarding such
claims should be directed to that office.
HOLDING:
Based upon the information provided, Customs is of the
opinion that the laundry additive powder put up for sale in
retail cartons after having been packaged in Canada, is not an
article of foreign origin for purposes of 19 U.S.C. 1304, and
therefore is excepted from country of origin marking upon
importation into the U.S.
A copy of this ruling letter should be attached to the entry
documents at the time the merchandise is entered. If the
documents have been filed without a copy, this ruling letter
should be brought to the attention of the Customs officer
handling the transaction.
Sincerely,
John Durant,
Director
Tariff Classification Appeals Division