CLA-2 OT:RR:CTF:TCM H050245 GC
John M. Peterson, Esq.
Neville Peterson LLP
17 State Street, 19th Floor
New York City, New York 10004
RE: Country of origin marking requirements for certain imported promotional items packaged in the United States in cereal boxes containing American-made cereal
Dear Mr. Peterson:
This letter pertains to your correspondence of January 19, 2009, on behalf of your client General Mills, Inc. (General Mills), in which you requested a binding ruling on the country of origin marking requirements for unspecified imported articles to be used as premium incentives packaged with domestically-made cereal or other food products.
FACTS:
According to your ruling request, the premiums, sometimes originating in China, are wrapped in a food grade over-wrap in Canada and then imported into the United States, where they are packaged in cereal boxes of various General Mills brands, including Cheerios, Chex, Trix, Wheaties, and Lucky Charms. The subject premiums are always directly marked with the appropriate country of origin. In addition, the boxes into which the premiums are packed are labeled to indicate the presence of the premiums. However, the label does not include reference to the country of origin of the premiums. You did not submit a sample of the subject premiums (either alone or in their packaging), nor did you submit a sample of the proposed marking for the cereal boxes into which the premiums will be placed after importation.
You state that the subject premiums typically consist of a toy-like figurines of relatively little value (between $0.05 and $0.30). You also indicate that the cost of the premiums is absorbed by General Mills and does not result in a retail price increase of the food product with which the premiums are packaged. According to you, General Mills absorbs the cost of the premiums because it considers them a reward to its customers for their brand loyalty.
ISSUE:
Whether the cereal boxes into which the subject premiums are packed are required to be labeled to indicate the country of origin of the imported premiums?
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 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, U.S. Customs and Border Protection (CBP) Regulations (19 C.F.R. §134) implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. Section 134.1(b), CBP Regulations (19 C.F.R. §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 [the marking laws and regulations].” For country of origin making purposes, a substantial transformation of an article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the article before the processing. However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 Ct. Int’l Trade 220, 543 F.Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
Section 134.26 of the CBP Regulations (19 C.F.R. §134.26), which is the country of origin marking rule for “[i]mported articles repacked or manipulated”, states, in pertinent part:
(a) Certification requirements. If an article subject to these requirements is intended to be repacked in retail containers (e.g. blister packs) after its release from [CBP] custody… the importer shall certify to the port director that: (1) If the importer does the repacking, he shall not obscure or conceal the country of origin marking appearing on the article, or else the new container shall be marked to indicate the country of origin of the article in accordance with the requirements of this part…
You argue that General Mills should not be required to label its cereal boxes in such as a manner as to indicate the country of origin of the premiums packaged therein, and take the position that the “common sense approach” referred to in Treasury Decision (T.D.) 91-7, 25 Cust. B. & Dec. No. 2, dated January 8, 1991, applies to the facts of this case. In T.D. 91-7, CBP (formerly the U.S. Customs Service) discussed, among other issues, the proper application of country of origin marking requirements to collections, sets or composite goods whereby a portion of such merchandise consists of American-made goods returned to the U.S. and/or articles assembled abroad in whole or in part of U.S. components. With regard to the common sense approach to country of origin marking requirements of 19 U.S.C. §1304, CBP noted that:
[I]n certain circumstance, the marking of every item in a collection of goods may not be consistent with the purpose of the statute, or may be impractical and/or undesirable. This may be because one or more items in the collection are relatively insignificant and would have no influence on the purchasing decision, because the items in the collection are too numerous, making it impractical to specify the country or origin of each item, or for various other reasons. Therefore, [CBP] will continue to employ a “common sense” approach to determine the marking requirements applicable to articles with comprise a collection of goods.
As an example of the common sense approach, CBP cited Headquarters Ruling Letter (HQ) 555365, dated September 7, 1990. In that ruling, CBP held that the packaging of domestically produced junction boxes was not required to indicate the country of origin of three foreign-produced screws also contained therein because the screws were of minor importance to the product as a whole and did not change the name, character or use of the junction box or substantially transform it into a product of Mexico.
By analogy, you conclude that because the subject premiums are inexpensive in relation to the cereal sold by General Mills and because of General Mills’ stated purpose of incorporating the premiums to thank customers for brand loyalty and not to drive purchasing decisions, General Mills should not be required to indicate the country of origin of the premiums on the boxes of the food products with which they are packaged.
However, we note that in HQ 555365 CBP found that:
[T]he foreign-made screws are also excepted from the requirements of 19 U.S.C. 1304 because, when packaged with the U.S. junction box, the screws lose their separate identity and become an integral part of the U.S. product. What the ultimate purchaser in the U.S. is buying is a junction box kit and not individual screws.
In this case, unlike the screws in the junction box kit, the premiums maintain their separate identities and do not become integral parts of the domestically produced cereal. Because the premiums maintain their separate identity, the statute requires that the outermost packaging (the cereal box) indicate the country of origin of the premiums. This is the case even if we were to accept your statement that the premiums are included inside the cereal box and advertised thereon as a reward for customer loyalty and not to affect the purchasing decisions of customers. With respect to the practicality of such marking, we note simply that if the boxes will be marked to advertise the presence of the premiums in the box, then it does not appear unduly burdensome to include a reference to the premiums’ country of origin as part of this advertisement.
Our decision on this matter is consistent with HQ 733839, dated January 31, 1991, in which CBP held that the country of origin marking of imported “sound boxes” must be indicated on the cereal boxes containing them. In that case, we held that the act of packing the sound boxes into cereal boxes to serve as premium incentives did not constitute a substantial transformation of the sound boxes. Furthermore, because the marking on the sound boxes was obscured by the packaging, we held that the cereal boxes must be marked in accordance with 19 C.F.R. §134.26.
Accordingly, upon importation of the subject premiums, General Mills must certify, per 19 C.F.R. §134.26, to the port director that the cereal boxes into which the foreign-made premiums will be repacked will adhere to the requirements of 19 U.S.C. §1304 and the related marking regulations.
HOLDING:
Even if the subject premiums are properly marked within the meaning of 19 U.S.C. §1304 at the time of importation, repackaging the premiums into cereal boxes obscures the country of origin marking, thus making the requirements of 19 C.F.R. §134.26 applicable. Thus, the boxes into which the premiums are packaged must be marked to indicate their country of origin.
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