MAR05 CO:R:C:V 734479 NL
Mr. Stephen J. Katzner, President Fine Foods International (New York) Inc. 55 John Street New York, NY 10038
RE: Country of Origin Marking - Blended, Agglomerated Coffee; Subheading 2201.10.20, HTSUS; Subheading 9903.23.20, HTSUS; Substantial Transformation; Presidential Proclamation 5759.
Dear Mr. Katzner:
This is in response to your letters of December 3, 1991, and January 27, 1992, in which you request a ruling as to the country of origin and rate of duty applicable to certain instant coffees which are to be processed in several countries prior to importation into the United States.
From Europe you plan to import blended, agglomerated coffee (instant coffee). This product will have been prepared in Europe by blending and agglomerating coffees which were delivered to Europe in spray-dried condition from the countries in which they were grown, i.e., Central and South American countries.
Spray drying is the process by which concentrated liquid coffee extract is rendered into solid particles of dried coffee having a water content of about five percent. Agglomeration of spray dried coffee is the process of fusing fine granular materials through wetting, agglutinating, and drying. The agglomerated coffee product is darker than spray dried coffee, and more closely resembles ground, roasted coffee. Your submission advises that the overwhelming majority of spray dried coffee extracts are offered for final consumption in the form of agglomerated coffee.
Both spray dried and agglomerated instant coffees are classified at subheading 2101.10.20, Harmonized Tariff Schedule of the United States (HTSUS), which provides for extracts, essences and concentrates of coffee, soluble or instant. However, if such articles are products of the European Community, then as provided at subheading 9903.23.20, HTSUS, they are subject to a duty of 100 percent ad valorem when imported into the United States. This temporary duty modification affecting products of the European Community (EC) was implemented pursuant to Presidential Proclamation 5759 (December 24, 1987), and remains in effect.
You request a ruling that spray dried coffees which are not products of the EC do not become EC products by reason of blending and agglomeration performed on the products in the EC, and that as non-EC products they are not subject to the President's temporary duty modification.
Does the process of agglomeration of spray dried coffee change the country of origin of the spray dried product for duty and marking purposes?
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 U.S. shall be marked to indicate the English name of the country of origin of the article to the ultimate purchaser in the U.S.
Part 134, Customs Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. As provided at 19 C.F.R. §134.1(b), the "country of origin" of an article is the country of manufacture, production, or growth. Further work or material added in a second country must effect a substantial transformation in order to render the second country the country of origin. A substantial transformation is generally said to occur if, after processing, an article emerges having a new name, character or use. See 19 C.F.R. §134.35.
In this instance the only question is whether the process of blending and agglomerating spray dried coffee effects a substantial transformation. It is our opinion that this processing, while requiring sophisticated machinery and expertise, does not change the fundamental character or use of spray dried coffee, but rather is in the nature of a refinement or finishing process. The product is improved in the commercial and marketing senses by agglomeration and blending, but it remains instant coffee. This conclusion is supported by the fact that after the processing the agglomerated coffee product remains classified at subheading 2101.10.20, HTSUS.
Accordingly, it is our finding that spray dried coffee, which enters the EC as a product of Central and South American countries, does not become a product of the EC by reason of blending and agglomerating which is performed there. For purposes of subheading 9903.23.20, HTSUS, and country of origin marking, such agglomerated coffee is not considered a product of the EC.
Upon importation into the U.S. the importer must satisfy Customs officials that the agglomerated coffee entered was processed in the manner described above using spray-dried coffee of non-EC origin. We leave it to the discretion of local officials to determine the nature of the demonstration to be made. In addition, the countries of origin of the coffee must be indicated on the containers in which the agglomerated coffee reaches the ultimate purchaser in the U.S., in accordance with the requirements of 19 U.S.C. 1304 and Part 134, Customs Regulations.
Spray dried coffee of Central and South American origin is not substantially transformed in the EC by blending and agglomeration, and does not become a product of the EC for purposes of the temporary duty modification set forth in subheading 9903.23.20, HTSUS or for purposes of country of origin marking.
John Durant Director,Commercial Rulings Division