CLA-2 OT:RR:CTF:TCM H175959 LWF
Ms. Sandra Liss Friedman, Esq.
Ms. Helena Sullivan, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016
Re: Country of origin of eau de toilette fragrances imported from Taiwan
Dear Mmes. Friedman and Sullivan:
This is in response to your letter of June 3, 2011, on behalf of First American Brands, Inc. (“FAB”), to the U.S. Customs and Border Protection (CBP) National Commodity Specialist Division (NCSD), in which you requested a binding ruling. At issue are the country of origin and marking requirements for certain eau de toilette fragrances imported from Taiwan, which incorporate U.S.-origin perfume oils. In preparation of this ruling, consideration was also given to your supplemental submission of August 15, 2011.
FACTS:
You have described the articles at issue as six different eau de toilette fragrances in 50mL spray bottles. The fragrances will be sold under “The Smurfs” cartoon trademark as “The Smurfs Grouchy,” “The Smurfs Gutsy,” The Smurfs Brainy,” “The Smurfs Papa,” “The Smurfs Smurfette,” and “The Smurfs Clumsy.” You have submitted a complete list of the ingredients for the perfume oil base that is used to produce “The Smurfs Smurfette” (No. #893483), and you have stated that the formulas for the other perfume oil bases are substantially similar to the one provided. The perfume oil bases are of U.S. origin, and you have provided a North American Free Trade Agreement (NAFTA) Certificate of Origin for each of the bases. The perfume oil bases will be exported to Taiwan, where the bases will be blended with specific measurements of ethyl alcohol and water. The blending dilutes the perfume oil bases to eau de toilette strength and decreases the viscosity of the fragrances so that they may be applied via a spraying mechanism. Each of the fragrances shall contain 80% ethyl alcohol, 12% water, and 8% perfume oil. The country of origin of the ethyl alcohol in each fragrance is Taiwan. The country of origin of the water is not stated. No other ingredients will be added to the mixture during processing in Taiwan.
You have indicated through your supplemental submission that after a perfume oil base is with mixed ethyl alcohol and water, the mixture will be allowed to rest for one week to ensure that the concentration of the dilution is uniform throughout the mixture. You have also submitted chromatography analysis of the finished eau de toilette that shows that the chemical ingredients in the perfume oil base are present in essentially identical relative percentages in the eau de toilette and that no chemical changes have occurred during the mixing and resting processes.
The finished eau de toilette will be bottled in Taiwan in 50mL bottles, each capped with a spraying mechanism that allows the consumer to apply the fragrance in the appropriate dosage. For each fragrance, 160kg of perfume oil will be use to produce 20,000 units of 50mL spray in a box, 15,000 units of 50mL spray bottles without a box, and 2,500 units of 50mL testers.
You suggest that the articles do not require origin marking under the customs laws because they are U.S.-origin products that have not been substantially transformed in Taiwan.
ISSUE:
What is the country of origin for marking purposes of the six eau de toilette fragrances?
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 (or its container) 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. Friedlaender & Co., 27 C.C.P.A. 297, 302, C.A.D. 104 (1940).
Part 134, U.S. Customs and Border Protection 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 marking purposes, a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. However, a substantial transformation will not result from a minor manufacturing or combing process that leaves the identity of the article intact. See United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (1940).
CBP has not ruled on the specific issue of whether processing perfume oil bases into an eau de toilette constitutes a substantial transformation. You assert that the processing performed in Taiwan, whereby ethyl alcohol and water are mixed with perfume oil bases to dilute the perfume oil bases into an eau de toilette, does not substantially transform the perfume bases and, therefore, that the eau de toilettes remain articles of the United States. If the perfume oil bases are not substantially transformed in Taiwan, they would be considered “products of the United States exported and returned,” and thus excepted from the country of origin marking requirements of 19 U.S.C. § 1304 by application of 19 C.F.R. § 134.32(m).
The Court of International Trade’s (CIT) analysis in National Juice Products Ass’n v. United States, 10 CIT 48, 628 F. Supp. 978 (Ct. Int’l Trade 1986), is applicable to this case. In National Juice, the CIT upheld CBP’s decision in Headquarters Ruling Letter (“HQ”) 728557, dated September 4, 1985, in which we held that imported orange juice concentrate was not substantially transformed when it was mixed with water, essential oils, flavoring ingredients and domestic fresh juice in order to produce frozen concentrated orange juice and reconstituted orange juice. CBP found that the manufacturing process did not create an article with a new name, character or use. CBP held, and the CIT agreed, that the manufacturing process did not change the "fundamental character of the product" as "it was still essentially the juice of oranges." See also HQ 562468, dated October 4, 2002.
By contrast, CBP held in HQ 731685, dated March 15, 1990, that converting imported fruit concentrates and other imported ingredients into fruit drinks in Mexico constituted a substantial transformation. The manufacturing process involved mixing the juice concentrates with other ingredients including water, artificial flavor, sodium benzoate, and food coloring. We held that, considering the totality of the circumstances, a substantial transformation of the foreign ingredients had occurred because “[t]he juice concentrates are subsumed into a product that is no longer considered a juice.” Essentially, a substantial transformation was found because raw ingredients had been converted into a different article of commerce through a process beyond simple combining, packaging or mere diluting.
In the instant case, the processing that occurs in Taiwan involves the simple combination, resting, and bottling of a perfume oil base, ethyl alcohol and water mixture. Unlike the mixing ingredients involved in HQ 731685, the perfume oil base at issue is not subsumed by the addition of ethyl alcohol and water. Consequently, the finished eau de toilette is essentially a dilution of the perfume oil base. Chromatography analysis that you provided shows that no chemical changes occur during processing. The fundamental character of the perfume oil base is not altered and has not been substantially transformed. Furthermore, we have repeatedly held that the mere packaging of an item does not constitute a substantial transformation. See New York Ruling Letter (“NY”) N121580, dated September 27, 2010; see also HQ 561521, dated January 4, 2000. While value may be added by virtue of the processing operations, the eau de toilette has not undergone a change in identity. See Gibson-Thomsen, supra.
Based on the totality of the circumstances, we find that the processing of perfume oil bases in Taiwan into eau de toilettes does not constitute a substantial transformation for country of origin marking purposes under 19 U.S.C. § 1304. While the finished eau de toilettes are made suitable for spraying by diluting perfume oil bases, they retain the same chemical identity and character as the precursor perfume oil bases. In this case, mere changes in concentration and viscosity do not result in a substantial transformation, despite the fact that the processing operations in Taiwan make the eau de toilettes suitable for human application. Therefore, for the purposes of 19 U.S.C. § 1304, the country of origin of perfume oil bases, which determines the essential character of the eau de toilettes, remains the United States.
19 C.F.R. § 134.32(m) excepts from country of origin marking requirements products of the United States which are exported and returned. Even though this provision is included as an “exception,” articles which qualify under 19 C.F.R. § 134.32(m) are actually outside the scope of 19 U.S.C. § 1304. This is because the marking requirements set forth in 19 U.S.C. § 1304 apply only to “articles of foreign origin (or its container) imported into the United States.” 19 C.F.R. § 134.11. Accordingly, by application of 19 C.F.R. § 134.32(m), the finished eau de toilettes are exempt from country of origin marking requirements under 19 U.S.C. § 1304.
We note that marking the eau de toilette fragrances as products of the United States is a matter under the jurisdiction of the Federal Trade Commission (FTC). Therefore, should you wish to mark the articles with the phrase “Made in the U.S.A.,” we recommend that you contact them at: U.S. Federal Trade Commission, Bureau of Consumer Protection, Division of Enforcement, 600 Pennsylvania Avenue N.W., Washington, D.C. 20580, or at the FTC’s website, http://www.ftc.gov.
Please also note that perfumery, cosmetic, and toiletry products are subject to the requirements of the Federal Food, Drug, and Cosmetic Act, which are administered by the U.S. Food and Drug Administration (FDA). You may contact them at: U.S. Food and Drug Administration, Office of Cosmetics and Colors, 5100 Paint Branch Parkway, College Park, MD 20740-3835, telephone number (301) 436-1130, or at the FDA’s website, http://www.fda.gov.
HOLDING:
The U.S.-origin perfume oil bases are not substantially transformed in Taiwan. By application of 19 C.F.R. § 134.32(m), the finished eau de toilette fragrances are exempt from the marking requirements of 19 U.S.C. § 1304.
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 officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation & Special Programs Branch