MAR-2-05 RR:TC:SM 560195 DEC
Jeremy P. Page
Sandler, Travis & Rosenberg, P.A.
The Waterford
5200 Blue Lagoon Drive
Miami, Florida 33126-2022
RE: Country of origin marking and classification of fabric
softener sheets; NAFTA;
Article 509; essential character; 19 CFR 102.18
Dear Mr. Page:
This is in response to your letters dated November 11 and
December 20, 1996, on behalf of The Procter & Gamble
Manufacturing Company (Procter & Gamble), requesting a ruling on
the proper classification and country of origin marking of fabric
softener sheets.
FACTS:
You state that Procter & Gamble is in the process of
establishing uniform labeling standards for products sold in the
U.S. and Canada. The purpose of this ruling request is to obtain
the proper marking and classification of certain fabric softener
sheets. Procter & Gamble has two scenarios under which it will
produce the fabric softener sheets.
Under scenario one, Procter & Gamble will source fabric,
chemicals, and perfumes in the U.S. The fabric will be
impregnated with the chemicals and the perfumes and then slit
into master rolls in the U.S. These rolls will be shipped to a
Procter & Gamble facility in Canada where they will be cut to
length and width, folded, and packed into consumer-ready cartons.
The individual cartons will then be distributed and sold in
Canada and/or returned to the U.S. for further distribution and
sales.
Under scenario two, Procter & Gamble will source fabric,
chemicals, and perfumes in the U.S. and then ship them to its
facility in Canada. The fabric will be impregnated with the
chemicals and the perfumes, and then slit into master rolls in
Canada. These rolls will then be shipped to a Procter & Gamble
facility in the U.S. where they will be cut to length and width,
perforated, and packed into consumer-ready cartons. The
individual cartons will then be distributed and sold in the U.S.
and/or exported for distribution and sale in Canada.
In either case, the consumer-ready cartons will bear both
U.S. and Canadian address information identifying the
distributor/owner/licensee of the fabric softener sheets. You
state that the legends could read as follows:
THE XMEN COMPANY, Toledo, Ohio 46592
In Canada: XMEN, INC., Toronto, Ontario MCX IW7
You state that the country of origin will be affixed to the
consumer-ready cartons immediately atop the above-noted address
information, in similar fonts and type size. For scenario one,
Procter & Gamble is seeking a ruling on the viability of using,
in order of preference, any of the following country of origin
markings:
A. Processed in Canada
B. Cut and Packaged in Canada
C. Converted in Canada
D. Cut, Folded and Packaged in Canada
E. Further Processed in Canada
F. Cut and Packed in Canada from U.S. Product
G. Converted in Canada from U.S. Product
H. Further Processed in Canada from U.S. Product
I. Made in Canada
For scenario two, Procter & Gamble will import the master
rolls from Canada in shipping containers with an outer marking
"Made in Canada." At the time of entry, Procter & Gamble will
certify pursuant to section 134.26, Customs Regulations (19 CFR
134.26), that any repacking performed subsequent to importation
will be completed in accordance with the Customs' requirements.
In furtherance of complying with the 19 CFR 134.26 requirements,
Procter & Gamble is seeking a ruling on the viability of using
the following country of origin marking requirements, in order of
preference, on all subsequently packaged and distributed
consumer-ready cartons.
A. Processed in Canada
B. Product of Canada, Cut and Packaged in the
U.S.
C. Canadian Product Converted in the U.S.
D. Further Processed in the U.S. from Canadian
Product
E. Made in Canada
ISSUE:
1. What is the proper classification of the finished
fabric softener sheets described above?
2. Whether the proposed markings described above are
acceptable country of origin markings for fabric softener sheets
processed in the manner described above.
LAW AND ANALYSIS:
1. Classification
The fabric softener sheets at issue are properly classified
under subheading 3809.91, Harmonized Tariff Schedule of the
United States (HTSUS). See New York Ruling Letter 891129, dated
November 9, 1993.
2. Country of Origin Marking
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 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 of the Customs Regulations implements the country of
origin marking requirements and exceptions of 19 U.S.C. 1304.
Section 134.41(b), mandates that the ultimate purchaser in the
United States must be able to find the marking easily and read it
without strain.
The country of origin marking requirements for a "good of a
NAFTA country" are also determined in accordance with Annex 311
of the NAFTA, as implemented by section 207 of the NAFTA
Implementation Act and the Customs Regulations. The Marking
Rules used for determining whether a good is a good of a NAFTA
country are contained in Part 102, Customs Regulations (19 CFR
Part 102).
Scenario 1
The first step in the production of the fabric softener
sheets under scenario 1 involves sourcing fabric, chemicals, and
perfumes of U.S. origin. For purposes of this
ruling, we are assuming that the fabric, chemicals, and perfumes
are, in fact, of U.S. origin under Part 102. The fabric will be
impregnated with the chemicals and the perfumes and then slit
into master rolls in the U.S. These rolls will be shipped to a
Procter & Gamble facility in Canada where they will be cut to
length and width, folded, and packed into consumer-ready cartons.
The individual cartons will then be distributed and sold in
Canada and/or reimported into the U.S. for further distribution
and sales.
Section 102.11, Customs Regulations (19 CFR 102.11), of the
regulations sets forth the required hierarchy for determining
country of origin for marking purposes. Section 102.11(a) of the
regulations states that
[t]he country of origin of a good is the country in
which:
(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 section 102.20 and
satisfies any other applicable requirements of
that section, and all other requirements of these
rules are satisfied.
"Foreign Material" is defined in section 102.1(e) of the
regulations as "a material whose country of origin as determined
under these rules is not the same country as the country in which
the good is produced."
Section 102.11(a)(1) and section 102.11(a)(2) do not apply
to the fabric softener sheets imported into the U.S. from Canada
because the sheets will not be wholly obtained or produced in a
single country nor will they be produced exclusively from
domestic materials. Since an analysis of sections 102.11(a)(1)
and 102.11(a)(2) will not yield a country of origin
determination, we look to section 102.11(a)(3). Section
102.11(a)(3) provides that the country of origin is the country
in which "[e]ach foreign material incorporated in that good
undergoes an applicable change in tariff classification in
102.20. . .."
The finished fabric softener sheets are classified under
subheading 3809.91, HTSUS. The applicable tariff shift rule
found in section 102.20(f) provides as follows:
HTSUS Tariff Shift and/or other requirements
3809.91 ........... A change to subheading 3809.91 through
3809.99 from any
other subheading, including another
subheading within
that group.
Since the master rolls of fabric softener sheets as well as
the finished fabric softener sheets which have been cut, folded
and packed into consumer-ready cartons are classified under the
same subheading, the required change in tariff classification
does not occur for purposes of reaching an origin determination
under section 102.11(a)(3). Section 102.11(b) provides that
where the country of origin cannot be determined under section
102.11(a), and the good is not specifically designated as a set
pursuant to the Harmonized System nor classified as a set under
General Rule of Interpretation 3, the country of origin of the
article is "the country or countries of origin of the single
material that imparts the essential character of the good. . .."
In regard to determining the "essential character" of the
fabric softener sheets when they are imported into the U.S.,
section 102.18(b) of the regulations provides as follows:
(1) For purposes of identifying the material that
imparts the essential character to a good under
102.11, the only materials that shall be taken
into consideration are those domestic or foreign
materials that are classified in a tariff
provision from which a change in tariff
classification is not allowed under the 102.20
specific rule or other requirements applicable to
the good. For purposes of this paragraph (b)(1):
. . .
(iii) If there is only one material that is
classified in a tariff provision from which a
change in tariff classification is not allowed
under the 102.20 specific rule or other
requirements applicable to the good, then that
material will represent the single material that
imparts the essential character to the good under
102.11.
In this case, the only material that does not undergo the
applicable tariff shift is the master rolls of the fabric
softener. Therefore, the U.S.-origin fabric softener master roll
is the material that imparts the essential character of the good.
The country of origin of the finished fabric softener sheets
under scenario 1 is the U.S. Since the finished fabric softener
product will be a product of the U.S., it will not be subject to
the country of origin marking requirements set forth in 19 U.S.C.
1304. Accordingly, no statement as to the country of origin will
be required under the Customs laws.
Whether an article may be marked as "Made in the USA" is an
issue under the authority of the Federal Trade Commission (FTC).
We suggest that you contact the FTC Division of Enforcement, 6th
and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the
propriety of proposed markings indicating that an article is made
in the U.S.
Also, the provisions of 15 U.S.C. 1124 and 1125 may be
applicable. Imported merchandise which "shall bear a name or
mark calculated to induce the public to believe that the article
is manufactured in the United States, or that it is manufactured
in any foreign country or locality other than the country or
locality in which it is manufactured shall not be admitted to
entry." 15 U.S.C. 1124. Imported merchandise which bears
"...any false designation of origin, false or misleading
description of fact, or false or misleading representation of
fact, which is likely to cause confusion, or to cause mistake, or
to deceive ... as to the actual country of origin shall not be
admitted to entry." 15 U.S.C. 1125. Whether merchandise is
violative of these provisions must be decided on a case-by-case
basis and the totality of the circumstances presented in the
specific case must be taken into account.
For purposes of scenario 1, you requested that we rule on
the propriety of the following proposed country of origin
marking:
A. Processed in Canada
B. Cut and Packaged in Canada
C. Converted in Canada
D. Cut, Folded and Packaged in Canada
E. Further Processed in Canada
F. Cut and Packed in Canada from U.S. Product
G. Converted in Canada from U.S. Product
H. Further Processed in Canada from U.S. Product
I. Made in Canada
Any marking describing the processing performed in Canada will be
acceptable, so long as it is truthful and does not indicate an
incorrect country of origin. Therefore, since the articles are
deemed to be of U.S. origin, the marking "Made in Canada" (letter
"I") would incorrectly indicate a Canadian origin and thus,
constitute a possible violation of 15 U.S.C. 1125. The remaining
markings (letters "A-H") appear to be acceptable.
Scenario 2
Under scenario 2, you state that the fabric, chemicals, and
perfumes will be sourced in the U.S. (again, we are assuming that
they are of U.S. origin) and then shipped to Canada. The fabric
will be impregnated with the chemicals and the perfumes, and then
slit into master rolls in Canada. These rolls will then be
shipped to a facility in the U.S. where they will be cut to
length and width, perforated, and packed into consumer-ready
cartons. The individual cartons will then be distributed and
sold in the U.S. and/or exported for distribution and sale in
Canada.
Section 102.11(a)(1) and section 102.11(a)(2) do not apply
to the facts presented in this scenario because the fabric
softener sheets are not wholly obtained or produced in a single
country nor are they produced exclusively from domestic
materials. Since an analysis of sections 102.11(a)(1) and
102.11(a)(2) will not yield a country of origin determination, we
look to section 102.11(a)(3). Section 102.11(a)(3) provides that
the country of origin is the country in which "[e]ach foreign
material incorporated in that good undergoes an applicable change
in tariff classification in 102.20. . .."
As stated previously, the finished fabric softener sheets
are classified under subheading 3809.91, HTSUS, and the
applicable tariff shift rule found in section 102.20(f) provides
as follows:
HTSUS Tariff Shift and/or other requirements
3809.91 ........... A change to subheading 3809.91 through
3809.99 from any
other subheading, including another
subheading within
that group.
Since each of the foreign materials (the fabric, chemicals
and perfumes) are clearly classifiable in provisions other than
subheading 3809.91, they will all undergo the applicable change
in tariff classification in Canada. The country of origin under
scenario 2 will be Canada.
For purposes of scenario 2, you requested that we rule on
the propriety of the following proposed country of origin
markings:
A. Processed in Canada
B. Product of Canada, Cut and Packaged in the
U.S.
C. Canadian Product Converted in the U.S.
D. Further Processed in the U.S. from Canadian
Product
E. Made in Canada
Customs has no objection to additional language that provides
descriptive information to a prospective purchaser so long as it
is truthful and does not indicate an incorrect country of origin.
However, 19 CFR 134.46 provides that when the name of any
city or locality in the U.S., or the name of any foreign country
or locality other than the name of the country or locality in
which the article was manufactured or produced, appears on an
imported article or its container, there shall appear, legibly
and permanently, in close proximity to such words, letters or
name, and in at least a comparable size, the name of
the country of origin preceded by "Made in," "Product of," or
other words of similar meaning. The purpose of 19 CFR 134.46 is
to prevent the possibility of misleading or deceiving the
ultimate purchaser as to the origin of the imported article.
You state that the country of origin marking will be affixed
to the consumer-ready cartons immediately atop the address
information containing both the U.S. and Canadian
distributor/owner/licensee of the fabric softener sheets in
similar fonts and type size. For the fabric softener sheets
produced under scenario 2, the finished consumer-ready cartons
must be marked to indicate Canada as the country of origin.
Consequently, the last marking (letter "E") is clearly acceptable
provided it is legible and conspicuous. The marking "Product of
Canada, Cut and Packaged in the U.S." (letter "B") is also
acceptable since it unmistakably identifies the country of origin
and the additional descriptive language "packaged in the U.S."
will not confuse an ultimate purchaser as to the country of
origin of the finished fabric softener sheets.
"Processed in Canada" (letter "A") is not a statement of
origin. The statement merely conveys information to an ultimate
purchaser that the article was processed in Canada, but the
statement alone does not satisfy the requirement that the article
of foreign origin be marked with its country of origin. Lastly,
the phrase "Canadian Product Converted in the U.S." (letter "C")
is not acceptable to the Customs Service because it implies that
materials used in the production of the fabric softener sheets
were converted into a new and different product in the U.S. Our
conclusion that the processing in the U.S. does not result in an
origin change directly conflicts with this descriptive language.
The statement "Further Processed in the U.S. from Canadian
Product" (letter "D") is not an acceptable country of origin
marking because it does not comply with the requirements of 19
CFR 134.46 since the name of the country of origin must be
preceded by the words "made in" or "product of." Therefore,
"Further Processed in the U.S. from Product Made in Canada" would
be acceptable provided the same sized lettering is used.
HOLDING:
Under scenario 1, the fabric softener sheets are a product
of the U.S., and therefore, are not subject to the country of
origin marking requirements set forth in 19 U.S.C. 1304. Customs
has no objection to descriptions of processing performed in
Canada that appear on the packaging so long as it is truthful and
does not indicate an incorrect country of origin. Since the
articles are deemed to be of U.S. origin, the marking "Made in
Canada" would be improper.
Under scenario 2, the fabric softener sheets are a product
of Canada, and therefore, are subject to the country of origin
marking requirements set forth in
19 U.S.C. 1304. The proposed markings for production scenario 2
contained in letters B and E are proper, but the proposed
markings in letters A, C, and D do not satisfy the 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,
John Durant
Director
Tariff Classification Appeals
Division