Country of Origin Marking requirements for Organic Multigrain Savory Herb Pilaf; Organic Quinoa from Bolivia, Lentils from Canada, and Rice from U.S.A.

HQ H262295 June 29, 2018 CLA-02 OT:RR:CTF:TCM H262295 GA CATEGORY: Marking Ms. Tina Fanfara Senior Manager, International Trade Compliance J.M. Smucker Company 1 Strawberry Lane Orrville, Ohio 44667 RE: Country of Origin Marking requirements for Organic Multigrain Savory Herb Pilaf; Organic Quinoa from Bolivia, Lentils from Canada, and Rice from U.S.A. Dear Ms. Fanfara: This is in response to your Electronic Ruling request (eRuling) dated January 9, 2015, on behalf of your Canadian subsidiary, Enray Inc., (“Enray”), sent to the National Commodity Specialist Division, requesting a ruling regarding the country of origin marking requirements for organic multigrain savory herb pilaf. Your request was forwarded by the Director, National Commodity Specialist Division to our office for a response. FACTS: You state that the product, Organic Multigrain Savory Herb Pilaf, is a combination of imported organic quinoa from Bolivia (10%), organic medium grain haiga rice grown in the United States (80%), organic black beluga lentils from Canada (5%), organic green lentils from Canada (5%), and a seasoning mix packet. In the U.S., the black and green lentils are cleaned, sprouted, and dehydrated. The rice, quinoa, and lentils are then combined together into a pilaf and packaged in the U.S. together with the dry seasoning mix packet as Organic Multigrain Savory Pilaf. You note that sprouting is a 24-48 hour process that involves soaking, sprouting, and dehydrating whole lentils to turn the product into sprouted lentils. You indicate that this process (1) causes the lentils to grow a physically visible sprout and/or split; and (2) significantly reduces the cooking time for the product. ISSUE: What is the country of origin marking for the Organic Multigrain Savory Herb Pilaf processed in the United States from lentils imported from Canada, quinoa from Bolivia, and rice from the United States? LAW AND ANALYSIS: 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 United States 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. Section 134.1(b), Customs 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 North America Free Trade Agreement (NAFTA) country, the NAFTA Marking Rules determine the country of origin. 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. A substantial transformation will not result from a minor manufacturing or combining process that leaves the identity of the article intact. See United States v. Gibson Thomsen Co, 27 CCPA 267 (1940) and National Juice Products Association v. United States, 628 F. Supp. 978 (Ct. Int’l Trade 1986). Section 134.35(a), CBP Regulations (19 C.F.R §134.35(a)), states: Articles other than goods of a NAFTA country. An article used in the United States in manufacture which results in an article having a name, character, or use differing from that of the imported article, will be within the principle of the decision in the case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98). Under this principle, the manufacturer or processor in the United States who converts or combines the imported article into a different article will be considered the “ultimate purchaser” of the imported article within the contemplation of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article shall be excepted from marking.The outermost containers of the imported articles shall be marked in accord with this part. Section 134.35(b), CBP Regulations (19 C.F.R. §134.35(b)), states: Goods of a NAFTA country. A good of a NAFTA country which is to be processed in the United States in a manner that would result in the good becoming a good of the United States under the NAFTA Marking Rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part. The issues to be considered here are whether the imported quinoa that is sourced from Bolivia undergoes a substantial transformation and whether the lentils from Canada undergo the requisite tariff shift rule as a result of the processing and mixing with U.S. origin rice in the U.S. Headquarters Ruling Letter (“HQ”) 561208, dated March 8, 1999, illustrates how the country of origin marking rules should be applied to NAFTA and non-NAFTA goods that are imported and blended together in the United States. In HQ 561208, CBP determined that Venezuelan crab meat blended with Mexican and/or U.S.-origin crab meat did not undergo a substantial transformation; similarly, the Mexican crab meat did not undergo the requisite tariff shift rule set forth in 19 CFR Part 102. With regard to the lentils from Canada that are sprouted and blended/mixed in the United States with quinoa from Bolivia and rice from the United States, the NAFTA Marking Rules apply. Except for textile and apparel products, Part 102, CBP Regulations (19 CFR § 102), sets forth the rules for determining the country of origin of imported goods for NAFTA purposes, which include the country of origin marking and the rate of duty applicable to originating goods. Section 102.11, CBP Regulations (19 CFR § 102.11), provides the hierarchical rules for determining the country of origin of imported goods for NAFTA purposes, in part, as follows: (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. As the Organic Multigrain Savory Herb Pilaf is made from imported organic quinoa from Bolivia, lentils from Canada, and rice from the United States, section 102.11(a)(1) and (2) do not apply. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination for the herb pilaf, we look to section 102.11(a)(3). Section 102.11(a)(3) provides that the country of origin is the country in which “each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20....” The herb pilaf is classified in heading 1006. The applicable tariff shift rule found in section 102.20(a) provides as follows: 1001-1008 ........A change to heading 1001 through 1008 from any other chapter. Since the lentils, classified in chapter 7, are from any other chapter, the requisite tariff shift is met, and the Canadian origin of the lentils does not need to be reflected on the herb pilaf product that reaches the ultimate purchaser. Regarding the quinoa from Bolivia, the issue to be considered is whether the combining of the quinoa with the rice and lentils in the United States constitutes a substantial transformation. In National Juice Products Association v. United States, 628 F. Supp. 978 (CIT 1986), the court found that no substantial transformation occurred in the production of retail orange juice products from imported manufacturing concentrate. The court found that the change in name from "concentrated orange juice for manufacturing" to "frozen concentrated orange juice" and "orange juice from concentrate" was not significant to a finding of substantial transformation. Instead, the court stated that these names "merely refer to the same product, orange juice, at different stages of production." Id. at 989. In HQ 967925, dated February 28, 2006, CBP determined that blending and thermally processing U.S.-origin wild rice and Spanish-origin long grain rice into a long grain/wild rice blend in Spain did not constitute a substantial transformation. It was determined that the wild rice remained readily discernable in the finished product. This determination was supported by HQ 735085, dated June 4, 1993, which involved the country of origin marking of a frozen mixed vegetable product consisting of cut and frozen broccoli and cauliflower produced in Mexico, raw water chestnuts and peas imported from China (cleaned, cut, and peeled and frozen in the U.S.), and carrots, yellow peppers, and asparagus grown in the U.S. (sized, cleaned, peeled or trimmed, cut and frozen at U.S. plants). These foreign and domestic bulk vegetables were combined in the United States with unspecified non-vegetable ingredients from an unknown source and packaged in 16 oz. polyurethane bags for retail sale as part of the “American Mixtures” line. Beyond bagging, there was no processing of the combined frozen vegetables such as cooking or adding sauces. CBP found that mixing foreign-grown produce in the United States with domestically grown produce did not effect a substantial transformation. Similarly, the quinoa is not subjected to additional processing in the United States, but is only blended with the U.S.-origin rice to create the herb pilaf. Inasmuch as the quinoa is not substantially transformed pursuant to 19 CFR 134.35(a), we find that the herb pilaf package must list the foreign country of origin of the quinoa, i.e., “Bolivia.” If you also wish to identify the U.S. origin of the rice, in this regard, it should be noted that the marking of articles in whole or in part as “Made in the U.S.” or reference to U.S. content is a matter within the jurisdiction of the Federal Trade Commission (FTC) and we suggest that you contact that agency for a determination. Lastly, no information was provided on the country of origin of the seasoning packet. HOLDING: Pursuant to 19 CFR 134.35(a), the non-NAFTA origin quinoa will not undergo a substantial transformation in the United States through the blending process; however, pursuant to 19 CFR 102.11(a)(3), the lentils from Canada will undergo the requisite tariff shift. Accordingly, the herb pilaf must be marked to indicate the Bolivian origin of the quinoa. Marking of the product to also identify the U.S. content, is a matter within the jurisdiction of the FTC. A copy of this 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 Customs officer handling the transaction. Sincerely, Ieva K. O’Rourke Chief, Food, Textiles and Marking Branch