CLA-2 RR:CTF:VS 563499 KSG
Jonathan M. Epstein, Esq.
Holland & Knight LLP
2099 Pennsylvania Ave., NW
Suite 100
Washington, D.C. 20006
RE: Eligibility for UAFTA Preference for canned salmon
Dear Mr. Epstein:
This is in response to your letter dated March 20, 2006, requesting a binding ruling on behalf of Aussie Imports US, LLC (“Aussie”), as to whether certain imported canned salmon would qualify for preferential tariff treatment under the United States Australia Free Trade Agreement (“UAFTA”).
FACTS:
Aussie plans to import canned salmon classified in subheading 1604.11 of the Harmonized Tariff Schedule of the United States (“HTSUS”), from an Australian manufacturer/supplier, Port Lincoln Tuna Processors Pty Ltd (“Port Lincoln”). Uncooked frozen salmon fillets of U.S. origin (Alaskan origin) are shipped to Australia for processing. Other ingredients mixed with the salmon include Australian and imported vegetables, canola oil of Australian origin and other ingredients such as salt, pepper, spring water and spices. You state that all these ingredients are either sourced in Australia or classified in chapters other than Chapter 16, HTSUS.
The processing in Australia involves receiving the frozen ship and storing it in freezers; steam cooking the fish in large ovens; picking and cleaning surplus bones and other waste product; canning the salmon and other ingredients, including salt, water and oil. The sealed cans of salmon are washed with hot water and an anti-foam detergent and imprinted with a processing batch number comprising the product number, export license number, and four digits representing the year and production day of the year. They are then automatically loaded onto the loaded conveyor to the sterilizing retorts. The cans are then left to dry, labeled and packed into cartons for direct shipment to the U.S. The cans and labels are of Australian-origin.
ISSUE:
Whether the imported canned salmon described above is eligible for preferential tariff treatment under the U.S.- Australia FTA.
What is the proper country of origin marking for the imported canned salmon?
LAW AND ANALYSIS:
The U.S.-Australia Free Trade Agreement was signed on May 18, 2004, and entered into force on January 1, 2005, as approved and implemented by the UAFTA Implementation Act, Pub. L. 108-286, 118 Stat. 919 (August 3, 2004).
General Note 28(b), HTSUS, provides, in pertinent part:
For purposes of this note, subject to the provisions of subdivisions (c), (d), (m), and (n) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UAFTA country under the terms of this note only if--
the good is a good wholly obtained or produced entirely in the territory of Australia or of the United States, or both;
(ii) the good was produced entirely in the territory of Australia or of the United States, or both, and –-
each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (n) of this note;
the good otherwise satisfies any applicable regional value content requirement referred to in subdivision (n) of this note; or
the good meets any other requirements specified in subdivision (n) of this note;
and such good satisfies all other applicable requirements of this note….
We note that not all the ingredients are originating from Australia or the United States, so this product would not be considered “wholly obtained or produced” as set forth in GN 28(b)(i).
Therefore, we must determine whether the canned salmon would satisfy GN 28(b)(ii) when imported into the U.S. You state that the canned salmon would be classified in subheading 1604.11, HTSUS. The rule set forth in GN 28(n) for Chapter 16 is:
A change to headings 1601 through 1605 from any other chapter.
You state that the salmon is of U.S. origin and therefore, is an originating material. Further, you state that the vegetables and other ingredients would be classified in chapters other than Chapter 16, HTSUS. For the purposes of this ruling, we assume that these classifications are correct. The canned salmon is processed entirely in Australia. Based on the above, the canned salmon would satisfy the tariff shift rule set forth in GN 28(n)(ii) by undergoing the required chapter change. The canned salmon would be considered originating under the U.S.-Australia Free Trade Agreement if imported directly into the United States.
II. Substantial Transformation
Section 304 of the Tariff Act of 1930 (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 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), the country of origin is 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. 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 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 arrived in South Korea with the look of a whole fish, when they left they no longer possessed the essential shape of a fish. The fillets were considered discrete commercial goods and had a different tariff classification.
In Headquarters Ruling Letter (“HRL”) 562708, dated June 13, 2003, Customs considered the processing of raw tuna and the canning of tuna for purposes of the African Growth & Opportunity Act and determined that the tuna did undergo a substantial transformation. Accordingly, based on Koru and HRL 562708, the canned salmon in this case would be substantially transformed in Australia when processed and canned. Therefore, the cans should be marked to indicate that Australia is the country of origin.
HOLDING:
Based on the processing described above, the imported canned salmon would be considered an originating good under the U.S.-Australia Free Trade Agreement when imported directly into the U.S. The imported canned salmon would be considered a product of Australia pursuant to 19 U.S.C. 1304 and should be marked accordingly.
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 official handling the transaction.
Sincerely,
Monika R. Brenner
Chief, Valuation & Special Programs Branch