CLA-2-03:OT:RR:NC:N2:231
Ms. Ashley Hong
Nissin International Transport USA, Inc.
1540 West 190th Street
Torrance, CA 90501
RE: The tariff classification, country of origin marking, and status under the United States-Korea Free Trade Agreement (UKFTA), of frozen escolar (fish) portions from Korea.
Dear Ms. Hong:
In your letters dated February 28 and March 19, 2013, you requested a ruling on the status of certain frozen fish cuts from Korea under the United States-Korea Free Trade Agreement (UKFTA). Your letters were submitted on behalf of your client, Nishimoto Trading Co., Ltd. (Santa Fe Springs, CA). Color photos illustrating the various stages of production accompanied your most recent letter.
You have outlined a scenario in which escolar will be caught by Taiwan-flag vessels in Taiwan ocean waters. (For the purposes of this ruling, it is assumed that the escolar will be fish of the species Lepidocybium flavobrunneum.) Onboard the vessels, the heads, tails and guts will be removed from the fish, which will then be frozen and exported to Korea.
Although lacking heads, tails or viscera, the frozen escolar will arrive in Korea having the basic look of whole fish. In Korea, the bellies, skins, bones, and blood spots will be removed, and the fish will be cut into pieces consisting of meat from one side of the fish only. These pieces will be further cut into relatively small, blocky “saku” portions generally having smooth, flat surfaces and sharp edges. These neatly sculpted portions will be vacuum-packed, either individually or severally (i.e., in 1-kg multi-packs) in plastic, and refrozen. The finished saku portions, which in our understanding are typically used for sushi or sashimi applications, will then be exported from Korea to the United States.
The applicable tariff provision for the frozen, skinless/boneless escolar saku portions will be 0304.89.5090, Harmonized Tariff Schedule of the United States (HTSUS), which provides for fish fillets and other fish meat (whether or not minced), fresh, chilled or frozen: frozen fillets of other fish: other: other: other. The general rate of duty will be free.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on World Wide Web at http://www.usitc.gov/tata/hts/.
General Note 33, HTSUS, sets forth the criteria for determining whether a good is originating under the UKFTA. General Note 33(b), HTSUS, (19 U.S.C. §1202) states that
For the purposes of this note, subject to the provisions of subdivisions (c), (d), (n) and (o) thereof, a good imported into the customs territory of the United States is eligible for treatment as an originating good of a UKFTA country under the terms of this note if—
(i) the good is wholly obtained or produced entirely in the territory of Korea or of the United States, or both;
(ii) the good is produced entirely in the territory of Korea or of the United States, or both, and—
(A) each of the nonoriginating materials used in the production of the good undergoes an applicable change in tariff classification specified in subdivision (o) of this note; or
(B) the good otherwise satisfies any applicable regional value-content or other requirements set forth in such subdivision (o); and
satisfies all other applicable requirements of this note and of applicable regulations; or
(iii) the good is produced entirely in the territory of Korea or of the United States, or both, exclusively from materials described in subdivisions (i) or (ii), above.
For the purposes of this note, the term “UKFTA country” refers only to Korea or to the United States.
Based on the facts provided, we find that the merchandise imported into the United States does not qualify for preferential treatment under the UKFTA because none of the above requirements are met. (It is noted that in Korea, the nonoriginating (Taiwanese) escolar undergoes a classification shift from heading 0303, HTSUS, to heading 0304, HTSUS, whereas the pertinent GN 33(o) rule requires a shift from another chapter of the tariff schedule.)
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.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Pursuant to 19 CFR Section 134.1(b), the country of origin is the country of manufacture, production or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such country the country of origin within the meaning of Part 134 of the regulations.
A substantial transformation occurs when a new and different article of commerce emerges from a process with a new name, character or use different from that possessed by the article prior to processing. See United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940).
Based on Koru North America v. United States, 12 CIT 1120, 701 F. Suppl. 229 (C.I.T., 1988), it is a longstanding position of U.S. Customs and Border Protection (CBP) that the conversion of whole fish (including headed, de-tailed and eviscerated whole fish) into boneless portions (e.g., fillets) constitutes a substantial transformation. See, for example, Headquarters Ruling Letter 735084, dated August 17, 1993, and New York Ruling Letter J84290, dated June 10, 2003.
In the present case, the largely-whole (headed/gutted/de-tailed) escolar are deemed to be goods of Taiwan when they arrive in Korea. However, while in Korea, they are converted into skinless/boneless fillet sections (saku portions). We thus find that the fish are substantially transformed as a result of the Korean processing, and that therefore the country of origin of the frozen saku portions imported into the United States is Korea. The packages should be marked accordingly, e.g., “Product of Korea.”
This merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling FDA at 301-575-0156, or at the Web site www.fda.gov/oc/bioterrorism/bioact.html.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
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. If you have any questions regarding the ruling, contact National Import Specialist Nathan Rosenstein at (646) 733-3030.
Sincerely,
Thomas J. Russo
Director
National Commodity Specialist Division