Country of Origin; Substantial Transformation refrigerant gases and hydrofluorocarbons blend

HQ H276411 February 28, 2017 CLA-2 OT:RR:CTF:TCM H276411 MG CATEGORY: MARKING Nithya Nagarajan, Esq. 9101 Friars Road Bethesda MD 20817 Re: Country of Origin; Substantial Transformation refrigerant gases and hydrofluorocarbons blend Dear Ms. Nagarajan: This is in reference to your ruling request, dated June 3, 2016, and supplemental submission, dated February 2, 2017, submitted on behalf of Harp International Limited (“Harp”), regarding the country of origin of a certain blend of imported refrigerant gases, Harp® 410A, Harp® 407C, and Harp® 404A. FACTS: The three refrigerant gases at issue are used in air conditioning systems, refrigeration systems or heat pumps. The three blended refrigerant gases at issue consist of virgin refrigerant gas from China and waste refrigerant gases from the United Kingdom (UK) and Europe, which are reclaimed at a plant in the UK. In the UK, air, acids, water and compression sealing material are removed from reclaimed refrigerant gases and the refrigerant is tested for quality control. Sampling of the virgin Chinese gases establishes conformity to specification, and then the reclaimed and virgin refrigerant gasses are blended and filled into disposable pressurized cylinders of Portuguese origin. These cylinders account for approximately 20 percent of the cost of the finished imported product. Harp is unable to identify the portion of the refrigerant gas that is comprised of virgin Chinese gases and the portion that is comprised of reclaimed gases of European origin. In this regard, Harp argues that the country of origin of the refrigerant gases at issue is the UK. ISSUE: Whether the processing in the UK (i.e., reclaiming, purifying refrigerants and blending and packaging them with virgin refrigerants) constitutes a substantial transformation. 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 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 (1940). Part 134 of the Customs and Border Protection (CBP) Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), provides that: "country of origin" means 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" for marking purposes. A substantial transformation occurs when articles lose their identity and become new articles having a new name, character and use. To determine whether a substantial transformation has occurred, each case must be decided on its own particular facts. Uniroyal, Inc. v. United States, 3 CIT 220, 224, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). In HQ H265712, dated September 18, 2015, we determined that refining and purification does not generally effect a substantial transformation. In HQ H113256, dated December 27, 2010, we also held that the processing of crude pigment into finished pigment does not constitute a substantial transformation for country of origin marking purposes. Similarly, in Headquarters Ruling Letter (HQ) 561986, dated August 21, 2001, CBP ruled that blending gasoline did not result in a substantial transformation. Blending did not create a new article with a new name, character or use. In New York Ruling N065436, dated June 30, 2009, which was issued to Harp, CBP concluded that repackaging refrigerant gas into cylinders was not a substantial transformation and the country of origin of the refrigerant gas did not change. In National Juice Prods. Ass’n v. United States, 628 F. Supp. 978 (CIT 1986), the court also ruled that blending does not cause a substantial transformation. Additionally, although your submission claims that the value added by the processing and packaging done in the UK accounts for 40% to 45% of the final finished blend, CBP has ruled that value alone is not dispositive in the determination of substantial transformation. See HQ 734052, citing Superior Wire v. United States, 11 CIT 608, 669 F. Supp. 472 (1987), aff’d, 867 F.2d 1409 (Fed. Cir. 1989). Based on the analysis set forth in the previously cited cases and rulings, we find that removing impurities from reclaimed refrigerant gases does not substantially transform them into a product of the UK. Furthermore, blending with virgin Chinese gasses and packaging of the three refrigerant gases at issue would also not result in a substantial transformation and the cylinders would have to be marked to indicate China and the European country or countries from which the Harp® 410A, Harp® 407C, and Harp® 404A originate, as their country of origin. Harp states that it is 100% likely that each cylinder contains reclaimed gas from several different reclamation countries in addition to virgin refrigerant gas from China. Harp also indicates that it can identify the source of the reclaimed gas and that each shipment of waste refrigerant shows the source of the gas to be reclaimed. In this regard, Harp avers that it can identify the name of the company shipping the waste, its location within Europe or the UK, as well as instances where waste gas is utilized in a specific country and reclaimed from equipment used in such country. The issue of the country of origin marking of commingled goods from different countries is addressed in HQ 734165, dated December 2, 1991. In this ruling, LEGO and DUPLO sets consisting of various pieces made in different countries, were commingled and packaged together in storage bins. We determined that, since the pieces for the LEGO and DUPLO sets were fungible, and it was likely that each set would contain pieces from each representative country, the country of origin of the sets could be marked with all of the countries where the individual pieces were made. Harp has indicated that it can identify the name of the company shipping the waste, its location within Europe or the UK, as well as instances where waste gas is utilized in a specific country and reclaimed from equipment used in such country. Accordingly, the containers of Harp® 410A, Harp® 407C, and Harp® 404A may be marked to reflect the Chinese, UK, and European country or countries from which the gases originate. HOLDING: Based on the information provided, the imported refrigerant gases, Harp® 410A, Harp® 407C, and Harp® 404A, consisting of a blend of virgin refrigerant gas from China and reclaimed refrigerant gases of UK and European origin, are not substantially transformed when blended and packaged in the UK. Accordingly, the containers of Harp® 410A, Harp® 407C, and Harp® 404A may be marked to reflect the Chinese, UK, and European country or countries from which the gases originate. 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 with a copy, this ruling should be brought to the attention of the CBP officer handling the transaction. Sincerely, Ieva K. O’Rourke, Chief Classification and Marking Branch