MAR-05 RR:CR:SM 561330 RSD
Mr. Richard J. Salamone
Manager, Customs & International
Regulatory Compliance
BASF Corporation
3000 Continental Drive- North
Mount Olive, New Jersey 07828-1234
RE: Country of origin marking requirements for insecticides and herbicides; 19 CFR 134.35(a)
Dear Mr. Salamone:
This is in response to your letter dated March 23, 1999, requesting a ruling regarding the country of origin marking requirements for insecticides and herbicides formulated in the U.S. from ingredients imported from Germany, Japan, and Korea.
FACTS:
Four scenarios are described in which BASF imports ingredients that are used to formulate insecticides/herbicides in the U.S.
Scenario I:
BASF will import Pyridaben Manufacturing Concentrate (CAS No. 96489-71-3) from Japan either in drums or bags, marked “Made in Japan”. Pyridaben Manufacturing Concentrate is stated to be classifiable in subheading 2933.90.1700, Harmonized Tariff Schedule of the United States (HTSUS). In the U.S., the Pyridaben Manufacturing Concentrate is combined in a small hopper and fed to a mill where its particle size is reduced to within a specific range. The milled material is then blended with a proprietary mixture of formulation aids, such as dispersants, wetting agents, diluents, and anti-foaming agents and processed into the final form as wettable powder formulation. This process results in the production of two final products, Samite® Insecticide (CAS No. 96489-71-3) or Nexter® Insecticide (CAS No. 96489-71-3). These final products are then packaged for retail in the U.S. Samite® is used in controlling mites and whiteflies in ornamental shrubbery, while Nexter® is used in developing resistance to mites in the citrus industry.
Scenario II:
BASF will import Quinclorac (CAS No. 84087-01-4) from Korea in either steel drums or supersacks marked “Made in Korea”. Quinclorac is stated to be classifiable in subheading 2933.40.3000, HTSUS. The Quinclorac is blended with a proprietary mixture of formulation aids, such as dispersants, wetting agents, diluents, and anti-foaming agents and fed to a mill where its particle size is reduced to within a specific range. The milled material is then pan-granulated into the final form as a dry flowable. This process results in the finished product, Facet® 75 DF Herbicide (CAS No. 84087-01-4) which is packaged for retail sale in the U.S. Facet® is a herbicide used for weed control in rice production.
Scenario III
BASF will import Bentazon, technical grade (CAS No. 50723-80-3), from Germany in containers marked “Made in Germany”. Bentazon, technical grade, is stated to be classifiable under subheading 2934.90.1100, HTSUS. A proprietary mixture of formulation aids including dispersants, wetting agents, diluents and anti-foaming agents are blended together in a high shear mixer with the Bentazon, technical grade, and a second active ingredient, Atrazine (CAS No. 1912-24-9), which may either be imported or produced domestically. The mixture is then wet milled until the required particle size is achieved. The finished product, Laddok® S-12 herbicide (CAS Nos. 50723-80-3, 1912-24-9) is packaged for retail sale in the U.S. and is used in broadleaf weed and grass control in corn production.
Scenario IV
BASF imports Bentazon, technical grade (CAS No. 50723-80-3), from Germany in containers marked “Made in Germany”. Bentazon, technical grade, is stated to be classifiable in subheading 2934.90.1100, HTSUS. The Bentazon is added to a reactor vessel and diluted with water. Blazer®, technical grade (also known as Acifluorfen technical) (CAS No. 62476-59-59-9), which is domestically produced, is added and concentrations of the individual active ingredients are adjusted to the proper concentration for the specific formulation of the end product, Galaxy® herbicide. Bentazon technical is added to a kettle, the agitator is turned on and Blazer® technical grade is added along with the necessary water charge. The batch is sampled, analyzed and trimmed into specification. Galaxy® herbicide (CAS Nos. 62476-59-9,
50723-80-3) is then filtered and packaged for retail sale in the U.S. Galaxy® is used in broadleaf weed control in soybean production.
ISSUE:
What are the country of origin marking requirements for the insecticides/herbicides described in the four scenarios presented above?
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 U.S. 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 good 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 at 302; C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the 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 U.S.
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 the marking laws and regulations. For country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in the U.S. in manufacture, which results in an article having a name, character, or use differing from that of the imported article. In such circumstances, the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the “ultimate purchaser” of the imported article, and the article is excepted from marking, although the outermost container of the imported article is required to be marked. See 19 CFR 134.35(a).
In determining whether a substantial transformation occurs in the manufacture of products from chemicals, Customs has consistently examined whether a chemical reaction occurs when two chemicals are mixed in the production of the final article. See Headquarter Ruling Letters (HRL's) 555248 dated April 9, 1990; 556064 dated March 29, 1990; and 555403 dated June 6, 1990. When chemical compounds are mixed together to form a different substance and the individual properties of each ingredient are no longer discernable, they have undergone a substantial transformation. See HRL 555989 dated June 24, 1991, in which we held that raw materials used to produce three varieties of antioxidants undergo a substantial transformation in the Bahamas.
In order to better understand the processing and the products involved in the four different scenarios, we conferred with the Customs Service Office of Laboratory and Scientific Services Division. After reviewing the description of the processing contained in the submission, the Office of Laboratory and Scientific Services advised that in the first scenario the final product remains essentially Pyridaben, only in a form and dilution that can be used by the end user after further dilution with water. In other words, the blending process simply produces a different grade of Pyridaben. Similarly in the second scenario, the Office of Laboratory and Scientific Services Division advises that the bulk active ingredient, the herbicide Quinclorac, is diluted and mixed with formulation aids that assist in the delivery during the end use. Accordingly, the blending simply changes the Quinclorac from a bulk technical grade to an end use form of the product, meaning that the product simply changes grade.
In contrast, in the third scenario, the imported bulk Bentazon, is mixed not only with formulation and application aids, but with another active ingredient, Atrazine. According to the Office of Laboratory Scientific Services, the addition of another active ingredient significantly changes the nature of the bulk Bentazon because the number of plants that the herbicide is effective against is significantly increased. In addition, in scenario four, Bentazon is mixed with a number of processing aids and another active ingredient, Blazer. The Blazer also broadens the scope of the effectiveness of the product to include more types of plants.
Based on the analysis presented by the Office of Laboratory Services, because the processing in the first and second scenarios merely involves a blending and diluting of the imported ingredients, we conclude that the processing performed in the U.S. does not substantially transform the imported ingredients, Pyridaben (scenario I) and Quinclorac
(scenario II). Therefore, the country of origin of the finished herbicides/insecticides described in the first two scenarios would be the country of origin of the imported active ingredients, Pyridaben and Quinclorac. Accordingly, the proposed marking “Formulated in the United States from components from Germany (Japan/Korea) and USA” would not be acceptable because it does not clearly indicate the country of origin of the imported products. However, as long as the country of origin of the product is clearly shown and the country of origin marking meets the requirements of 19 CFR 134.46 with regard to close proximity, and comparative size, and is preceded by the words “made in,” “product of”, or similar wordings, it is acceptable to indicate that the product was processed in the U.S. and contains U.S. ingredients. An example of an acceptable country of origin marking for the finished products would be: “Product of Korea; Formulated in the United States with U.S. and imported ingredients”.
With respect to the third and fourth scenarios, in accordance with the analysis provided by the Office of Laboratory Services, we conclude that there is a significant change in the character and use of the imported herbicide/insecticide ingredients. Therefore, the processing performed in the U.S. substantially transforms the imported active ingredients. In accordance with 19 CFR 134.35(a), BASF as the processor will be considered the ultimate purchaser and only the outermost cartons in which the foreign ingredients are imported are required to be marked with their country of origin.
HOLDING:
In the first two scenarios presented, the imported active ingredients are not substantially transformed by the processing performed in the U.S. Therefore, the containers in which the finished herbicide/insecticides are sold to the ultimate purchasers in the U.S. must be marked with the country of origin of the imported active ingredients, and the requirements of 19 CFR 134.46 must be satisfied if additional information is presented concerning the formulation in the U.S. In the third and fourth scenarios, the imported active ingredients are substantially transformed by the processing performed in the U.S. and, thus, only the outermost containers in which the imported active ingredients are shipped to BASF must be marked with their country of origin.
A copy of this ruling 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,
John Durant, Director
Commercial Rulings Division