OT:RR:CTF:TCM H034737 ARM
Philip Yale Simons, Esq.
Simons & Wiskin
102 South Broadway
South Amboy, NJ 08879
RE: Country of Origin Marking of SABOURAUD DEXTROSE AGAR in TRIPLE WRAP PLATES; Reconsideration of NY N029442
Dear Mr. Simons:
This is in response to your submission, dated July 24, 2008, on behalf of your client, EMD Chemicals, Inc., requesting reconsideration of New York Ruling Letter (“NY”) N029442, dated June 25, 2008, regarding the Country of Origin Marking of Sabouraud Dextrose Agar in Triple Wrap Plates. In reaching our decision, we have also considered your supplementary submission dated November 5, 2008.
FACTS:
Sabouraud Dextrose Agar (EMD Catalog No, 4.86648.P100), is imported into the United States from Canada in Triple Wrap 100mm plates, 100 plates per pack. Prior to importation into the U.S., the Sabouraud Agar plates are prepared in Canada from material sourced from Germany. The starting German product is a dehydrated granular culture medium consisting of peptone (pancreatic digest of casein and peptic digest combined in equal parts), dextrose, and agar as the solidifying agent (matrix). In Germany, the material components of the dehydrated media are mixed, dehydrated and pressed into granular form.
In Canada, the dehydrated media is placed in purified water and mixed thoroughly into a solution. The solution is boiled until the powder dissolves and the agar melts. The solution is then placed in an autoclave and allowed to cool. The pH may be adjusted by the addition of hydrochloric acid or sodium hydroxide and lecithin and polysorbate may be added to neutralize the inhibitory effects of germicidal residue on the sterile Petri dishes into which the solution is poured. Due to the presence of agar in the solution and its having been melted, the liquid solidifies into a colloidal suspension. The product is then packaged for use and gamma irradiated for sterilization.
ISSUE:
Whether the addition of water and other substances, heating and sterilization, and repacking into Petri dishes of dehydrated culture media constitute minor processing under Section 102.11, CBP Regulations (19 CFR 102.11).
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 United States 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 United States the English name of the country of origin of the article. Part 134, CBP Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of §1304. Section 134.1(b), CBP 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.
The country of origin marking requirements for a "good of a NAFTA country" are determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057) (December 8, 1993). Section 134.1(j), CBP Regulations (19 CFR 134.1(j)) provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g), CBP 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 Part 102, CBP Regulations (19 CFR Part 102).
Section 102.11, CBP Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for marking purposes. That section states, in pertinent part, the following:
§102.11 General rules.
The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel products covered by §102.21.
* * * * * *
(d) Where the country of origin of a good cannot be determined under paragraph (a), (b) or (c) of this section, the country of origin of the good shall be determined as follows:
(1) If the good was produced only as a result of minor processing, the country of origin of the good is the country or countries of origin of each material that merits equal consideration for determining the essential character of the good;
(2) If the good was produced by simple assembly and the assembled parts that merit equal consideration for determining the essential character of the good are from the same country, the country of origin of the good is the country of origin of those parts; or
(3) If the country of origin of the good cannot be determined under paragraph (d)(1) or (d)(2) of this section, the country of origin of the good is the last country in which the good underwent production.
The term “minor processing” is defined in CBP Regulation 102.1 as follows:
(m) Minor processing. “Minor processing” means the following:
(1) Mere dilution with water or another substance that does not materially alter the characteristics of the good;
* * *
(6) Putting up in measured doses, packing, repacking, packaging, repackaging;
(7) Testing, marking, sorting, or grading;
* * *
(9) Repairs and alterations, washing, laundering, or sterilizing.
You argue that the processing the merchandise undergoes in Canada is not minor processing for three reasons. First, the merchandise changes physical state from a powder to a sterile colloidal suspension. Second, heat treatment of the merchandise forming a colloidal suspension, irradiation and packing in sterile containers are operations that constitute greater processing than mere dilution and minor processing. Lastly, the processing in Canada has the indicia of substantial transformation.
In support of your claim, you cite the following rulings: NY N006623, dated March 9, 2007, in which U.S. manufactured polypropylene pellets and assorted additive pellets mixed in Mexico and returned to the United States underwent production other than minor processing; Headquarters Ruling Letter (HQ) 563497, dated August 7, 2006, in which finished rakes produced in Mexico using both NAFTA and non-NAFTA originating materials underwent more than "minor processing" as defined in 19 C.F.R. 102.1(m); HQ 560992, dated July 6, 1998, in which ink refill kits assembled from US origin and non-NAFTA originating goods in Mexico underwent production other than minor processing; HQ I83777, dated July 22, 2002, in which voltage starters made in the United States sent to Canada to be mounted in various types of enclosures and added with components such as switches and/or pilot lights underwent more than minor processing; HQ W231514, dated July 22, 2008, in which ingredients added in a foreign trade zone to a concentrate materially altered the characteristic of the concentrate for purposes of NAFTA drawback; HQ 231372, dated May 4, 2006, in which painting adhesive on brushing sleeves so that rubber would bond to the sleeves materially altered the characteristics of the sleeves for purposes of NAFTA drawback; HQ 555740, dated May 28, 1991, in which formulation and granulation operations constitute an alteration constituted an alteration for purposes of a partial duty exemption and; HQ 228961, dated January 23, 2002, in which indigo powder passed through a sand mill after adding water and antimicrobial agent was determined to have been materially altered for purposes of NAFTA drawback.
You also cite to Drexel Chemical Company v. United States, 27 C.I.T. 804 (2003), in which air milling of dichloro diphenyl dimethyl urea (DCU) cake into fine particles, five microns or less in size, effected a second substantial transformation for purposes of the Generalized System of Preferences (GSP); Sassy, Inc. v. United States, 24 C.I.T. 700 (2000), in which components assembled into a pacifier underwent a substantial transformation for purposes of the GSP and; National Hand Tool Corp. v. United States, 16 C.I.T. 308, aff’d 989 F2d 1201 (Fed. Cir. 1993), in which additional processing such as heat treatment and assembly of hot-forged or cold-formed hand tools did not effect a substantial transformation for country of origin marking purposes.
None of the processes mentioned above are substantially similar to the operations being performed herein (i.e., hydration or reconstitution, sterilization and packaging). Moreover, many of the processes mentioned above involve the assembly of components, which is not at issue herein. Further, resolution of the instant matter is dependent upon application of the NAFTA rules of origin for country of origin marking purposes. As such, any determination made using a substantial transformation analysis is irrelevant.
In the instant matter, the change in physical state from a powder to a colloidal suspension is induced by the addition of water to the powder and the application of heat incidental to the sterilization process. Although the culture medium does not undergo dilution, its state is altered by the application of water. We do not deem the incremental difference in processing to be significantly distinguishable so as to consider hydration or reconstitution outside the scope of minor processing as set forth in §102.11(m). Furthermore, sterilization, packing in plates, or measured doses and the addition of stabilizers in relation to testing or grading the product are minor processes as set forth in §102.11(m)(6-7, 9).
HOLDING:
Pursuant to CBP Regulations, Title 19, section 102.11(d)(3) (19 CFR §102.11(d)(3)), the country of origin of the SABOURAUD DEXTROSE AGAR in TRIPLE WRAP PLATES is Germany.
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 CBP officer handling the transactions.
EFFECT ON OTHER RULINGS:
NY N029442, dated June 25, 2008, is affirmed.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division