Country of Origin Marking - Packaged Planter Sets Containing Seeds, Pots, and Peat Moss; Sets and Composite Goods; 19 CFR 134.14; 19 CFR 134.32(m); T.D. 91-7; 9801.00.10, HTSUS; Superscope, Inc. v. U.S..

HQ 734620 May 26, 1992 MAR-2-05 CO:R:C:V 734620 NL CATEGORY: Marking Mr. Scott Goodwin Grafx P.O. Drawer 1328 Santa Fe, NM 87504 RE: Country of Origin Marking - Packaged Planter Sets Containing Seeds, Pots, and Peat Moss; Sets and Composite Goods; 19 CFR 134.14; 19 CFR 134.32(m); T.D. 91-7; 9801.00.10, HTSUS; Superscope, Inc. v. U.S.. Dear Mr. Goodwin: This is in response to your letter dated April 8, 1992, in which you request a ruling concerning the country of origin marking requirements for a set of U.S. and Canadian articles which are to be packaged in Mexico. FACTS: The following articles will be delivered to Mexico for packaging: retail packaging box; instruction booklet; pot cap; and seeds, all of U.S. origin, and peat moss and peat pots of Canadian origin. The Mexican packaging consists of filling the peat pot with peat moss; counting and placing the seeds in the box; setting the pot cap on the pot; putting the pot into the box; putting the instruction booklet in the box, packing the boxes into point of sale or bulk cartons, and palletizing the packed product for importation to the U.S. The final product is sold as a kit for growing seedling trees. Your letter indicates that you would prefer to be able to mark the imported article as "assembled in Mexico", while remaining free to advise purchasers that the seeds and packaging are products of the U.S. ISSUE: How must the articles be marked for purposes of 19 U.S.C. 1304 when imported into the U.S.? 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 U.S. must be marked 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, implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. As provided at 19 CFR 134.1(b), "country of origin" means the country of manufacture, production, or growth of an article. 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". A substantial transformation is said to occur if, after manufacture or processing, an article emerges having a new name, character, or use. In this instance it is clear that the processing performed in Mexico is not a process of manufacture which effects a substantial transformation. The articles packaged in Mexico do not, therefore, lose their separate identities; they remain products of, respectively, the U.S. and Canada. Nor do the articles become products of Mexico for marking purposes by reason of any processing recognized as an assembly pursuant to subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS). Rather, the processing is at most a mixing or combining which, as specified at section 10.16(b), Customs Regulations (19 CFR 10.16(b), does not qualify as an assembly, precluding eligibility for tariff treatment of the U.S. articles (seeds and pot tops) under subheading 9802.00.80, HTSUS. As the articles are not so eligible, the marking "assembled in Mexico" is unacceptable, as the phrase "assembled in" may be used only to designate articles eligible for tariff treatment under subheading 9802.00.80. Such articles are deemed to be of foreign origin for marking purposes pursuant to section 10.22, Customs Regulations (19 CFR 10.22). See HQ 734141 (September 12, 1992)(the phrase "assembled in" may be used only to indicate the origin of articles eligible for importation under section 10.22). In this instance we are satisfied that the U.S. articles are not advanced in value by the packaging operation in Mexico. Even though, as imported into the U.S., there is an "article" (a pot with soil ready for planting with the enclosed seeds), it is composite in nature, and its U.S. constituents have not been advanced in value or improved in condition. Accordingly, the U.S. articles are eligible to be imported free of duty as products of the U.S. under subheading 9801.00.10, HTSUS. See Superscope, Inc. v. U.S., 727 F. Supp. 629 (CIT 1989)(U.S. origin glass panels packaged and imported with unassembled New Zealand furniture components are eligible to be imported free of duty as articles of the U.S. under item 800.00, TSUS). The country of origin marking of the composite article - the packaed pot, seeds, peat moss, etc., is to be determined in accordance with the principles set forth in T.D. 91-7, which implemented an interpretive rule for the marking of sets, mixtures, and composite goods which contain a portion of goods from the U.S. which have been exported from the U.S. and are being returned as part of the set, mixture, or composite good. As stated there, the fact that a composite article is subject to classification pursuant to General Rule of Interpretation (GRI) 3(b), providing for classification as the constituent article which provides the composite article's essential character, is not determinative of marking. Thus, although a micro-garden consisting of seeds, peat moss, instruction booklet, etc. is held to be classified under the provision for seeds or bulbs in the tariff schedule, See HQ 950234 (December 4, 1991), the composite article would be subject to marking according the the origin of its constituents, which are not substantially transformed by placing them together in the same package. Applying this principle, we find that the U.S. origin seeds, pot tops, and instruction booklets may be excepted from country of origin marking as articles of the U.S. exported and returned, under the exception set forth at 19 CFR 134.32(m). However, the Canadian origin peat moss and peat pots are subject to the country of origin marking requirements, notwithstanding that they are imported into the U.S. from Mexico in a package containing U.S. origin constituents. It is our opinion that the Canadian origin constituents are sufficiently important in themselves that they may not be excepted from marking under the "common sense" approach described in T.D. 91-7, which recites as an example that "common sense" may be applied to excuse marking for foreign origin screws included as part of a junction box kit. For country of origin marking purposes, it will be sufficient to mark the Canadian origin constituents on the outside of the packaging in accordance with 19 CFR 134.32(d). However, inasmuch as the packaging will contain both U.S. origin and foreign origin materials, the marking must be rendered in such a manner as to make clear to the ultimate purchaser, as required by 19 CFR 134.14, that only the peat moss and peat pots are of Canadian origin. It is assumed that there are no Mexican- origin articles in the package to be sold, and that to the extent that any packaging materials are of Mexican origin, they are disposable containers within the meaning of 19 CFR 134.24. Based upon this assumption, there is no requirement to refer to the fact that the article was packaged in Mexico, or to refer on the article to Mexico at all. While we would not object if the packages also indicated that the seeds are of U.S. origin, we suggest that since the Federal Trade Commission (FTC) has primary jurisdiction over marks referring to the U.S., you contact the FTC concerning the acceptability of references to U.S. origin. The address of the Federal Trade Commission is: 6th and Pennylvania Avenue, N.W., Washington, D.C. 20580. HOLDING: Articles packaged in Mexico consisting of seeds, booklets, peat pots and tops, and peat moss, are considered products of the U.S. and excepted from country of origin marking pursuant to 19 CFR 134.32(m), except that the package must be marked to indicate the Canadian origin of the peat pots and peat moss. The U.S. origin articles are eligible to be imported free of duty pursuant to subheading 9801.00.10, HTSUS. Sincerely, John Durant Director, Commercial Rulings Division