CLA-2 OT:RR:CTF:TCM H026522 GC
Gloria M. Marcantuono
Newport International of Tierra Verde, Inc.
155 8th Street North
Saint Petersburg, Florida 33701
RE: Country of origin marking of lobster meat processed in China
Dear Ms. Marcantuono:
This is in response to your request, received by Customs and Border Protection (CBP) on April 4, 2008, for a binding ruling on the country of origin marking requirements for certain lobster meat imported by your company, Newport International of Tierra Verde, Inc. (Newport).
FACTS:
You state that the lobsters, of the species Homarus americanus, which is found along the east coast of North America from Newfoundland to North Carolina, are harvested by an unspecified Canadian company in the North Atlantic Ocean.
In Canada, the tails, heads and claws are removed. The bodies of the lobsters are blanched and frozen (in shell) and exported by the Canadian company to China. In China, the lobster meat is picked from the shell, pasteurized and packaged in air-tight six ounce containers. The finished product, which you state is ready to eat, is then imported from China to the United States.
With your ruling request, you provided a copy of the labels that are attached to the containers holding the subject lobster meat. These labels consist of a circular label attached to the top of a container (top label), as well as a label that wraps around the circumference of the container (circumference label).
At the center of the top label is a graphic that reads “North Atlantic Lobster Meat” with a picture of a lobster next to the text. Above that graphic is information about the importing company, and below is an indication that no fillers, additives or chemicals are included in the product. There is no country of origin information.
The first half of the circumference label contains a paragraph explaining that the lobsters are harvested from “North American waters”. Towards the middle of the circumference label is a “North Atlantic Lobster Meat” graphic similar to that located on the top label. The second half of the circumference label contains the nutrition information, the country of origin marking information, a bar code and distribution information. Above the bar code, two lines of text read, “North Atlantic Lobster” and “Product of China”. Both lines of text are in capital letters of the same size and font. Below the UPC bar code is the distribution information for the subject merchandise, which contains a U.S. address.
In your ruling request, you submit several proposals to mark the merchandise, including, “Product of Canada and USA, Processed in China” and “Product of Canada and USA, packed in China”. You also request that we address the reference to “North Atlantic Lobster Meat” or “North American Lobster Meat” on the packaging.
ISSUE:
What are the country of origin marking requirements for the subject merchandise?
LAW AND ANALYSIS:
Country of Origin:
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. Congressional intent in enacting 19 U.S.C. §1304 was "that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is 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. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134, CBP Regulations (19 C.F.R. §134) implements the country of origin marking requirements of 19 U.S.C. §1304. 19 C.F.R. §134.1(b) defines “country of origin” as:
[T]he 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 [the marking regulations]…
A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. U.S. v. Gibson Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments v. United States, 681 F.2d 778, 782 (1982).
In this case, the Canadian origin materials are frozen lobsters bodies still in their shells. In China, the meat is removed from the bodies, pasteurized and sealed six-ounce containers. At the conclusion of this processing, the canned lobster meat is ready to eat.
Similar processing has been the subject of CBP rulings with regards to crab meat. In Headquarters Ruling Letter (HQ) 733162, dated November 5, 1990, CBP (then the U.S. Customs Service) concluded that shelling crabs constitutes a substantial transformation in that once removed from the shell, the crabmeat “no longer possesses the essential shape of the crab and has a different use”. This is distinguishable from peeling shrimp, which creates only a minor change in the appearance and use of the shrimp. See HQ 731472, dated June 23, 1988. In examining this administrative precedent, the decision by the Court of International Trade in Koru North American v. United States, 701 F.Supp. 229 (CIT 1988), is instructive. The court held that the processing of headed and gutted Hoki fish in Korea by thawing, skinning, boning, trimming, refreezing, and packaging into individual filets effected a substantial transformation.
In this case, the lobster bodies arriving in China are without their heads and claws. Nevertheless, the bodies still have the essential shape and character of lobsters. The canned lobster meat that emerges from the processing in China is an entirely new product than the Canadian origin material. As it has been repackaged in cans, it no longer has the essential shape of a lobster. In addition, it is ready to eat. Thus, the country of origin of the imported merchandise, for CBP purposes, is China. Consequently, the merchandise must not be marked as a “Product of Canada and USA”. It must be marked as a product of China.
In your submission, you inquired about whether the NAFTA marking rules of 19 C.F.R. §102 apply to the country of origin determination here. In this case, we are applying the Gibson-Thomsen substantial transformation test because the subject merchandise (canned lobster meat) is imported from China, which is not a party to NAFTA.
However, it is noteworthy that the NAFTA marking rules of General Note 12(b), HTSUS, if applied here, would yield the same result as the Gibson-Thomsen substantial transformation test. The subject merchandise, as imported, is classifiable in subheading 1605.30, HTSUS, as “[c]rustaceans, mollusks and other aquatic invertbrates, prepared or preserved: [l]obster.” For the subject merchandise to be considered a good of China, General Note 12(t) 16, which is the applicable NAFTA rule of origin for heading 1605, HTSUS, requires “[a] change to headings 1601 through 1605 from any other chapter.” Because the lobsters imported from Canada to China are classifiable in subheading 0306.12, HTSUS, which provides for, inter alia, “[c]rustaceans, whether in the shell or not, live, fresh, chilled, frozen, dried…: [l]obsters…”, the tariff shift rule is satisfied, thus requiring that China be considered the country of origin for the subject merchandise.
Country of Origin Marking:
The country of origin marking is considered to be conspicuous if the ultimate purchaser in the United States is able to find the marking easily and read it without strain. See 19 CFR §134.41(b), CBP Regulations, and Headquarters Ruling (HQ) 562832, dated October 23, 2003. On the submitted copies of the labels, the words “Product of China” next to the nutrition facts can be found and read without strain.
You also asked requested that we consider non-origin references on the label, which implicates 19 CFR §134.46, which provides as follows:
In any case in which the words "United States," or "American," the letters "U.S.A.," any variation of such words or letters, or the name of any city or location in the United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced appear on an imported article or its container, and those words, letters or names may mislead or deceive the ultimate purchaser as to the actual country of origin of the article, there shall appear legibly and permanently in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning. (Emphasis added).
Section 134.46 is applicable in this case for several reasons. First, the end of the circumference label containing the bar code contains the text “North Atlantic Lobster” immediately above “Product of China”. The reference to “North Atlantic” constitutes a reference to a locality other than the country of origin of the merchandise. However, because the words “Product of China” are in close proximity and in the same size, we find that this aspect of the sample label adheres to 19 C.F.R. §134.46. It is also worth noting that on the same section of the label exists distribution information for the subject merchandise, which consists of a reference to St. Petersburg, Florida. While this address is separated from the words “Product of China” by the UPC bar code on the label, we find that the country of origin marking is still in sufficient proximity to the non-origin reference to satisfy the requirements of section 134.46.
Another reference to a non-origin locality exists on the other end of the circumference label. In the paragraph explaining how the subject lobster meat is caught and prepared, there is a reference to North American waters. Because the label is wrapped around a cylindrical container, the text “Product of China” (above the UPC bar code) will be adjacent to the paragraph containing reference to North American waters. We find that this also fulfills the proximity requirement of section 134.46.
The graphic towards the middle of the circumference label refers to the “North Atlantic” area. In terms of proximity, a customer looking at the graphic likely would not be able to see the “Product of China” country of origin marking located above the bar code unless he or she rotated the container. Therefore, the country of origin marking is not of sufficiently close proximity to the non-origin reference in order to satisfy the requirements of 19 C.F.R. §134.46. This is particularly relevant in light of the fact that the reference to the “North Atlantic” is located within the graphic on the label, which is the one area of the label that is designed to draw the attention of the consumer because of its size and coloring. Consequently, we find that in order to comply with 19 C.F.R. §134.46, the country of origin must be marked in sufficiently close proximity to the reference to “North Atlantic” on the graphic located on the label running the circumference of the container. It is also permissible to include text directing the consumer to the location on the label where the proper country of origin is located.
There is also a reference to the “North Atlantic” area located on the top label. Being on a different face of the container, this non-origin reference is not within sufficient proximity to the existing country of origin marking on the circumference container to satisfy section 134.46. In order to comply with the marking regulations, the country of origin, or text directing the consumer to the proper location on the container, must be marked in close proximity and in a comparable size to the reference to “North Atlantic” on the top label. We further note that marking the product only as “Processed in China” or “Packed in China” would not satisfy the requirement of 19 C.F.R. §134.46 that “… the name of the country of origin [be] preceded by ‘Made in’, ‘Product of’, or other words of similar meaning.”
HOLDING:
Pursuant to the Gibson-Thomsen substantial transformation test, the subject lobster meat is a product of China as a result of the shelling, pasteurization and packing process undertaken in that country. Consequently, the merchandise must be marked as a product of China.
The text located on the submitted sample label, “Product of China”, satisfies the requirements of 19 C.F.R. §134.41(b). However, we find that the country of origin marking on the sample label does not satisfy the requirements of 19 C.F.R. §134.46 with respect to non-origin references. Because the references to “North Atlantic” on the graphic located on the label on the top of the container as well as the graphic located on the label wrapping around the circumference of the container are not within reasonably close proximity to the country of origin marking (“Product of China”), we find that the sample label is likely to mislead the ultimate purchaser. To comply with section 134.46, the country of origin marking (“Product of China”) must be located within sufficient proximity, in a comparable size, to these non-origin references.
For information about the application of the regulations of the U.S. Department of Agriculture (USDA) country of origin labeling (COOL) regulations, contact the Agriculture Marketing Service of the USDA.
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 CBP officer handling the transaction.
Sincerely,
Gail A. Hamill, Chief
Tariff Classification and Marking Branch