CLA-2 OT:RR:CTF:TCM H039564 ARM
Port Director
U.S. Customs and Border Protection
6601 NW 25th Street Room 272 Miami, FL 33122
RE: Internal Advice 09/002; Classification and Country of Origin of Thera Tears® soft gel capsules in bulk
Dear Port Director:
The following is our decision regarding your memorandum dated September 16, 2008, requesting Internal Advice, and a request for a binding ruling, initiated by letter from counsel, to the National Commodities Specialist Division, dated May 13, 2008, on behalf of Advanced Vision Research, Inc., regarding the country of origin marking requirements for two entries of Thera Tears® bulk soft gel capsules, under the North American Free Trade Agreement (NAFTA)
FACTS:
In December 2007, Customs and Border Protection (CBP) seized cartons of Thera Tears® under 19 U.S.C. 1595 (c)(2)(E) for violation of the marking statute, 19 U.S.C. 1304(a). The disposition of the seizure case is contingent upon the petitioner actually marking the goods in accordance with the Country of Origin NAFTA marking rules.
The merchandise consists of boxes of soft gel capsules consisting of approximately 35% flax seed oil from Canada, 5% vitamin E from the U.S., less than 1% percent of mixed tocopherol from the U.S., and approximately 58% fish oil. The fish oil is derived from wild catch fish, such as sardines, anchovy, mackerel or herring caught off the coast of Peru. The fish are pressed in Chile,
and the crude oil is collected by “decanting” the oil layer. The crude oil is sent to the UK, where it is esterified into the ethyl ester form. Through molecular distillation, EPA and DHA are concentrated and converted back to triglycerides via glycerolysis. The processed fish oil product at this point is called 33/22 TG fish oil.
The 33/22 TG fish oil is shipped to Canada where it is processed with other ingredients into soft gel capsules. The encapsulation process is as follows: glycerin from the U.S. and gelatin from France or Japan is combined with purified water into a gel mass. The gel mass is pumped into left and right spreader boxes on the encapsulation machine, where it cools, and is fed between two dies on the machine. The fill material, in this case the mixture of 33/22 TG fish oil, flax seed oil, vitamin E and tocopherol vitamin mixture is pumped into the die cavities of the encapsulation machine. The dies are pressed together and the combination of heat and pressure causes the gel to fuse around the fill material and form the soft gel capsule. The formed soft gels are blown and dried until they reach a specific hardness. They are checked for size and uniformity and bulk packaged into boxes of 6,000 soft gels each. These boxes are labeled “Product of Peru” and “Manufactured in Canada” when shipped to the U.S. for individual packing and labeling into bottles and boxes of 90 individual capsules each. The labels and boxes state, the following: “There Tears Nutrition”, “Omega-3 Supplement,” “optimized flaxseed/fish oil blend” and “Made in USA.”
ISSUE:
What are the country of origin marking requirements for the Thera Tears® bulk soft gel capsules?
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.
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.
(a) 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.
(b) 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) of this section:
The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good, or
(2) If the material that imparts the essential character to the good is fungible, has been commingled, and direct physical identification of the origin of the commingled material is not practical, the country or countries of origin may be determined on the basis of an inventory management method provided under the appendix to part 181 of this chapter. . . .
The instant 33/22 TG fish oil imported into Canada is classified in subheading 2106.90.99, of the Harmonized Tariff Schedule of the United States (HTSUS), which provides for: “food preparations not elsewhere specified or included …other…other…other…other.” See NY I88871, dated December 9, 2002, wherein 33/22 TG fish oil, composed of 69.8 percent triglycerides, 25.8 percent diglycerides, 2.1 percent monoglycerides, 2.3 percent ethyl esters, and 1 percent free fatty acid, was classified in subheading 2106.90.99, HTSUS. The flaxseed oil from Canada is classified in heading 1516, HTSUS, the vitamin E and tocopherols from the U.S. are classified in heading 2936, HTSUS, the glycerin from Canada is classified in heading 2905, HTSUS, and the gelatin from France or Japan is classified in heading 3503, HTSUS. The final Thera Tears® soft gel capsules, obtained by mixing 33/22 TG fish oil with other ingredients and filling this mixture in to a glycerin based soft gel capsule in Canada, is also a product of subheading 2106.90, HTSUS.
The capsules are neither wholly obtained or produced in Canada, nor are they produced exclusively from domestic materials. As such, we note that sections 102.11(a)(1) and (a)(2), CBP Regulations (19 CFR §§102.11(a)(1) and (a)(2)) are not applicable to the country of origin determination of the instant merchandise.
Section 102.20, CBP Regulations (19 CFR §102.20), states, in pertinent part, the following “A change to a good of subheading 2106.90, other than to compound alcoholic preparations, from any other subheading, except from Chapter 4, Chapter 17, heading 2009, subheading 1901.90 or subheading 2202.90: . . . .” Thus, all of the foreign materials in the instant soft gel capsules, except for the 33/22 TG fish oil, undergo the applicable change in tariff classification. Therefore, section 102.11(a)(3) is also inapplicable to the country of origin determination because one of the foreign ingredients does not undergo an applicable change in tariff classification.
Rather, section 102.11(b)(1), CBP Regulations (19 CFR §102.11(b)(1)) applies to the instant merchandise. It states that the country of origin is determined by the single material that gives the good its essential character.
The essential character of the good is determined under section 102.18 (b)(1)(iii), CBP Regulations (19 CFR §102.18(b)(1)(iii)), which states, in pertinent part, the following:
(b) (1) 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. For purposes of this paragraph (b)(1):
* * * * *
(iii) If there is only one material that is 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, then that material will represent the single material that imparts the essential character to the good under §102.11.
As noted above, only the 33/22 TG fish oil fails to undergo the required change in tariff classification under the applicable rule of 19 CFR §102.20. Therefore, the 33/22 TG fish oil is the single material that imparts the essential character to the good under 19 CFR §102.11(b)(1). Hence, the country of origin is determined by the origin of the 33/22 TG fish oil, a product of the UK.
The marking statute, section 304, 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. As provided in section 134.41(b), CBP Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.
Section 134.33, CBP Regulations (19 CFR §134.26) excepts capsules of dietary supplements from the marking requirement in accordance with the provisions of section 304(a)(3)(J), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)(3)(J)). However, the outermost container in which the article ordinarily reaches the ultimate purchaser is required to be marked to indicate the origin of its contents. Hence, the instant Thera Tears® soft gel capsules imported in bulk must be marked as products of the UK on the outermost container in which they are imported.
Once imported into the U.S., the articles will be repackaged. As such, section 134.26, CBP Regulations (19 CFR §134.26) requires a “Certificate of Marking by Importer” stating that the country of origin will be indicated on the new container in such a manner as to indicate to the ultimate purchaser in the U.S. that the merchandise is a product of the UK. As noted, the repacked containers are labeled “Made in the U.S.A.” For the aforementioned reasons, these printed labels and boxes with the words “Made in USA”, are incorrect and unusable for this merchandise, as they would tend to confuse the ultimate purchaser as to the correct origin of the goods.
Moreover, if there is a legitimate purpose for using the words “United States” or “American”, the letters U.S.A., or any variation thereof, such as for a distributor’s address or the like, section 134.46, CBP Regulations (19 CFR § 134.46) directs that the country of origin preceded by “Made in,” “Product of” or other words of similar meaning must appear legibly and permanently in close proximity to such words, letters or name and in at least a comparable size print.
HOLDING:
By application of 19 CFR §102.11(b)(1), the country of origin of Thera Tears® soft gel capsules imported in bulk is the UK. By application of 19 CFR §134.26 and §134.33, the bulk soft gel capsules must be marked as products of the UK on the outermost container in which they are imported. A Certificate of Marking must be signed by the importer and the retail bottles, boxes and/or jars must be marked in a conspicuous place as legibly, indelibly and permanently as the container will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. that the merchandise is a product of the UK. A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported.
You are directed to mail this decision to the internal advice applicant, no later than 60 days from the date of this letter. On that date, the Office of Regulations and Rulings will make the decision available to CBP personnel, and to the public on the CBP Home Page on the World Wide Web at www.CBP.gov, by means of the Freedom of Information Act, and other public methods of distribution.
Sincerely,
Myles B. Harmon, Director
Commercial and Trade Facilitation Division