MAR 2-05 CO:R:C:V 732337 LR

Donald W. Lewis, Esq.
Freeman, Wasserman & Schneider
300 Metropolitan Square
655 Fifteenth Street, NW.
Washington, D.C. 20005

RE: Country of Origin Marking of Cooked Shrimp

Dear Mr. Lewis:

This is in response to your letter dated September 8, 1988, submitted on behalf of the National Fisheries Institute (NFI), requesting a ruling on the country of origin marking requirements for imported raw shrimp which is cooked in the U.S. We have also considered the supplemental letter dated January 9, 1989, from the NFI and the arguments that were raised during a meeting at Customs on April 14, 1989.


According to your submission, raw shrimp is imported into the U.S. in three different forms: (1) shell-on shrimp (commercially known as "green headless shrimp"), (2) peeled, undeveined shrimp ("PUD shrimp"); and (3) peeled and deveined shrimp ("P&D shrimp)". The shrimp are imported frozen in either five pound or two kilogram blocks.

After importation, the shrimp are thawed, washed, graded and cooked. In some cases, the shrimp are also peeled and deveined. According to the NFI submission, the objectives of the cooking operations are to coagulate the protein and raise the temperature of the core of the shrimp above 167 degrees Fahrenheit to kill any pathogens.

The first step in the cooking operations is the dipping of the raw shrimp into a solution of salt and sodium tripolyphosphate (TPT). The salt enhances the flavor and texture, while the TPT stabilizes the loss of moisture during processing. In some cases, the shrimp are also marinated in

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herbs and spices to further enhance their flavor. The second step consists of the cooking of the raw shrimp by any one of three alternate methods. The first method utilizes high pressure cookers which employ steam under pressure to cook batches of the raw shrimp. The second method utilizes a continuous hot air oven in which very hot and humid air is blown over a moving belt carrying shrimp though the oven. The third method involves boiling the shrimp on either a batch or continuous basis. The actual cooking times needed to achieve these objectives vary depending upon the type of cooker used and the size of the shrimp. As a general rule, a batch steam cooker is operated for about 20-25 minutes which includes a heating up period, a cooking period from 1 to 5 minutes, and a cooling down period. When shrimp are cooked in a continuous hot air oven, the cooking times vary from about 2 to 7 minutes. No information was provided as to the cooking period when the shrimp are boiled. After cooking, the shrimp are immersed in a series of water baths, which is followed by a second freezing operation.

You state that cooking is a sophisticated process which produces significant changes in chemical composition, moisture content, physical appearance, marketability and cost per pound. The temperature at which the shrimp are cooked and the timing of the operation is said to require constant adjustment in order to produce a consistent cooked product from an inconsistent raw product.

With regard to chemical composition, cooking results in the coagulation of the protein in the raw shrimp, changes the levels of ash, cholesterol, fatty acids, vitamins and minerals, and causes a moisture loss. As to marketability, cooking reduces the shelf life of the product from about one year to three to six months and is said to result in a different commercial commodity. With regard to physical appearance, cooking turns the shrimp a uniform dark pink irrespective of the various colors of the raw product, changes the color of the meat from a translucent or opaque color to white, and changes the texture of the meat from watery or mushy to one which is firm and slightly resilient. Finally, the cooking process allegedly adds approximately 14 to 21 percent to the cost of a pound of green headless shrimp and about 35 percent to the cost of a pound of PUD or P&D shrimp. In light of these changes, it is claimed that the imported shrimp is substantially transformed into a new and different article which is not required to be labeled as a foreign product.

Two Headquarters Rulings (HQ), 070395, June 6, 1983, pertaining to roasting of green coffee beans, and 726040, August 30, 1984, pertaining to roasting of macadamia nuts, are cited in support of your contentions. In both cases, Customs determined

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that the roasting process resulted in a substantial transformation. In your opinion, cooking of shrimp involves more extensive processing than roasting. It was also argued during the meeting that the two court decisions, Koru North America v. U.S., Slip Op. 88-162 (Court of International Trade, decided November 23, 1988) and The Torrington Co. v. U.S. 764 F.2d 1563 (1985) support a finding of substantial transformation in this case. 1/

Finally, it was stated during the meeting that there are stronger quality controls in the U.S. market so that the consumer would want to know that the shrimp are processed in the U.S.


For purposes of 19 U.S.C. 1304, does the cooking of shrimp constitute a substantial transformation?


Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires that, unless excepted, every article of foreign origin, or its container, must be legibly, permanently, and conspicuously marked to indicate the country of origin to an ultimate purchaser in the U.S. The primary purpose of the country of origin marking statute 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, C.A.D. 104 (1940) (quoted in Globemaster, Inc. v. United States, 68 Cust. Ct. 77, 79-80, 340 F. Supp. 975-76 (1972) and National Juice Products Association v. United States, 10 CIT 48, 628 F. Supp. 978 (1986).

The regulations implementing the requirements and exceptions to 19 U.S.C. 1304 are set forth in Part 134, Customs Regulations (19 CFR Part 134). Under 19 CFR 134.1(d), the ultimate purchaser is generally the last person in the U.S. who will receive the article in the form in which it was imported. If an imported

1/ In Torrington, the Court of Appeals for the Federal Circuit affirmed a decision of the CIT that certain sewing machine needles may be entered free of duty under the Generalized System of Preferences. Although the case involved the issue of substantial transformation, it is not relevant here since Customs determined in T.D. 86-7 that the decision shall be applied only in those instances in which the factual situation conforms to the one on which the decision is based.

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article is further manufactured in the U.S. and the manufacturing process is merely a minor one which leaves the identity of the imported article intact, pursuant to 19 CFR 134.1(d)(2), the consumer or user of the article who obtains the article after the processing, will be regarded as the ultimate purchaser.

Foreign natural products (such as shrimp) are on the so- called "J-list" and are excepted from individual marking require- ments pursuant to 19 U.S.C. 1304(a)(3)(J) and 19 CFR 134.33. However, the outermost container in which the article ordinarily reaches the ultimate purchaser is required to be marked to indicate the origin of its contents. As provided in 19 CFR 134.25, if the imported J-list product will be repacked prior to sale to the ultimate purchaser, the importer must certify to Customs that he will properly mark the new package or alternatively, notify the repacker of the obligation to mark the new package. The certification procedures, which are for the purpose of ensuring that the ultimate purchaser will be advised of the country of origin, apply to imported J-list articles processed and repacked after importation unless the articles are substantially transformed prior to repacking. Absent a substantial transformation, the consumer or other recipient of the shrimp is considered the ultimate purchaser and must be advised of the country of origin of the shrimp.

For a substantial transformation to be found, an article having a new name, character or use must emerge from the processing. See United States v. Gibson-Thomsen Co, Inc, 27 C.C.P.A. 267, C.A.D. 98 (1940).

Koru North America v. United States, supra, is the most recent judicial decision involving the issue of substantial transformation in the context of 19 U.S.C. 1304. Specifically, the court considered whether the processing of headed and gutted fish in South Korea by thawing, skinning, boning, trimming, refreezing and packaging, changed the name, character or use of the fish so as to effect a substantial transformation and render Korea the country of origin for marking purposes. The court concluded that the processing performed in Korea constituted a substantial transformation because it changed the name of the article from "headed and gutted fish" to "individually quick- frozen fillets" and more importantly, because it vastly changed the fish's character. In this regard, the court noted that while the fish arrive in Korea with the look of a whole fish, when they leave they no longer possess the essential shape of the fish. The court also noted that the fillets are considered discrete commercial goods which are sold in separate areas and markets. The fact that the products also have different tariff classifications was found to be additional evidence of substantial transformation.

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In the other recent "food marking case" National Juice Products, supra, the Court of International Trade considered the effects, for purposes of marking, of domestic processing of foreign orange juice concentrate. The court upheld Customs determination that imported orange juice concentrate is not substantially transformed when it is mixed with water, orange essences, orange oil and in some cases, fresh juice and either packaged in cans and frozen or pasteurized, chilled and packed in liquid form. Customs found, and the court agreed, that the domestic processing did not produce an article with a new name, character or use because the essential character of the final product was imparted by the imported concentrate and not the domestic processing. The court stated "the retail product in this case is essentially the juice concentrate derived in substantial part from foreign grown, harvested and processed oranges. The addition of water, orange essences and oils to the concentrate, while making it suitable for retail sale does not change the fundamental character of the product, it is still essentially the product of the juice of oranges." Therefore, the orange juice products had to be marked with the country of origin of the imported concentrate.

Based on the rationale of National Juice Products, Customs determined in HQ 731472, June 23, 1988, published as C.S.D. 88- 10 on August 17, 1988, that the peeling and deveining of shrimp in the U.S. does not change the name, character or use of the imported product and thus, does not constitute a substantial transformation. In this regard, Customs stated that: "the quality and size of the product is attributable to the imported product and not the domestic processing. While the peeling and deveining changes the physical appearance of the shrimp to a certain degree and renders the product ready for eating, in our opinion, the change is minor and does not fundamentally change the character of the imported product. We believe that in this case the imported shrimp similarly imparts the essential character to the final product."

The issue presented here is whether the additional cooking operations performed in the U.S. is enough to substantially transform the imported shrimp so that it does not have to be labeled as a foreign product. We find that it is not.

Although Customs has not previously ruled on this precise issue, there are rulings regarding the effects of somewhat similar processes. For example, in C.S.D. 86-26, June 25, 1986, Customs determined that for marking purposes, the blanching, cutting and freezing of broccoli and other vegetables did not constitute a substantial transformation. Blanching is a process which prepares vegetables for freezing whereby the vegetables are subjected to steam heat to partially cook and retard any deterioration of the vegetable from within. Customs found that

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the blanching and other processing did not change the fundamental character and identity of the imported broccoli. In this regard, the ruling states: "despite the fact that the imported product may be known as "fresh" broccoli whereas the processed products may be described as "frozen" broccoli or "chopped" broccoli, the fundamental identity of the imported product (as broccoli) is maintained, and is not lost or subordinated in the processed product." The broccoli had been steam blanched for 6 minutes at 210 degrees Fahrenheit. The shrimp undergoes processing similar to blanching. Like the broccoli, some of the shrimp are subjected to steam heat for approximately the same amount of time to raise the internal temperature of the product.

Customs has also ruled on the effects of roasting, another process which involves the application of high heat to raise the internal temperature of the product. In T.D. 85-158, dated June 2, 1985 (overruling earlier rulings), Customs found that for purposes of 19 U.S.C. 1304, the roasting of pistachio nuts for 20-30 minutes to bring the internal temperature of the nut to 280 degrees Fahrenheit, did not substantially transform the nut. Customs concluded that the physical and commercial changes which occur in the pistachio nuts as a result of roasting are not significant and that the identity and use of the pistachio nuts remains intact. The decision states that roasting appears to be, like picking, sorting, and bagging, simply one of several processing steps to which all pistachio nuts are subjected, no one of which alters or limits the intended or potential commercial use. See also HQ 730058, June 2, 1987 (roasting of pecan nuts is not a substantial transformation).

Although Customs has ruled that the roasting of coffee beans and macadamia nuts does result in a substantial transformation (HQ 722360, June 6, 1984, and HQ 722980, October 17, 1983, both relating to country of origin marking; and 070395, June 6, 1983, relating to tariff classification), these rulings are of limited precedential value. This is because of the more recent rulings on the roasting of pistachio and pecan nuts mentioned above and a recent ruling on the roasting of coffee, HQ 554971, December 1, 1988, which held that for purposes of the free entry provisions of General Headnote 3(a), TSUS, which was replaced by General Note 3(a)(iv), Harmonized Tariff Schedule of the United States (HTSUS), the sorting, grading, blending, and roasting of coffee beans is not sufficient to substantially transform them into a new and different article of commerce.

Finally, in HQ 729256, May 23, 1988, Customs ruled that the smoking of raw salmon did not result in a substantial transformation for purposes of marking. The smoking process involves the introduction of smoke to the product to alter the taste and render it ready for eating.

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The principle underlying each of the above marking decisions is that the processing in question did not create an article with a different name, character or use, but resulted in minor changes which rendered the product more suitable for consumption. In each case, Customs concluded that despite some physical changes that the processing produced to the article in question, the basic character and use of the product was attributable to the imported product and not, the domestic processing.

Applying the principles set forth above to the facts in this case, we conclude that cooking shrimp, like blanching vegetables, roasting pistachio nuts and smoking salmon, does not result in a change in the name, character or use of the imported product which is significant. First, the name of the product remains basically the same. Both before and after the cooking, the product is referred to as shrimp. As indicated in the broccoli decision, the fact that the product may have a different modifier preceding it is not determinative.

More important, cooking does not change the fundamental character of the imported shrimp. Both before and after the cooking, the product is still basically the same, frozen shrimp. As stated in our previous shrimp ruling, we are of the opinion that the character of the shrimp (i.e., its size and quality) is determined at the time of importation. This character is not changed significantly by cooking. Although the cooking process produces some changes in the color, texture and chemical composition, it does not change the basic shape of the product as did the processing of a whole fish into fillets in Koru or change the essential character of the imported product as described in National Juice. The character of the imported product, as frozen shrimp, is not lost or subordinated in the final product.

Finally, we are of the opinion that the use of the product is not changed as a result of the cooking process. Cooking, like peeling and deveining, are simple operations which merely render the product ready for eating. Like roasting of pistachio nuts, cooking is one process which all shrimp undergo before eating. Our observation in the earlier shrimp ruling that peeling and deveining are operations that are easily performed by a consumer in the kitchen, is also applicable here. Although the cooking of shrimp in a processing plant involves more sophisticated machinery, we note that cooking of shrimp can also be performed in the consumer's kitchen by simply placing the shrimp into boiling water for a few minutes. In our opinion, none of these operations is sufficient to render the shrimp outside the purview of the country of origin marking requirements.

Although the finished product would be classified differently than the imported product under the Harmonized Tariff

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Schedule of the U.S., a change in tariff classification is but one factor to consider and is certainly not determinative.

Based on the above considerations, we conclude that the manufacturing process of peeling, deveining and cooking shrimp is not a substantial transformation but rather, a minor one which leaves the identity of the imported shrimp intact. Therefore, the consumer who obtains the shrimp after the processing is the ultimate purchaser.

A determination that the imported shrimp is not substantially transformed as a result of the processing described above, is consistent with the primary purpose of the country of origin marking statute which is to mark the goods so that at the time of purchase the ultimate purchaser may, by knowing where the goods were produced, by able to buy or refuse to buy them, if such marking should influence his will. This purpose is not served if the package of the cooked shrimp is not required to indicate the country of origin of the imported shrimp. With regard to the argument that the consumer may want to know that the shrimp was processed in the U.S. because of higher health standards, so long as the country of origin of the shrimp is clearly stated, the label may also indicate that the shrimp is processed in the U.S.


For purposes of 19 U.S.C. 1304, the domestic processing of imported shrimp consisting of peeling, deveining, cooking, freezing, and repacking, does not constitute a substantial transformation. Accordingly, the repacked shrimp is subject to the country of origin marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134 and the importer must follow the certification procedures of 19 CFR 134.25.

Based on the information we received from the industry regarding the necessary implementation period for HQ 731472, covering the marking of imported shrimp which is peeled and deveined in the U.S., we have determined that a similar implementation period (approximately 6 months) would be appropriate in the present case. Accordingly, the ruling will be effective as to shrimp imported on or after January 1, 1990.


Harvey B. Fox
Office of Regulations and Rulings