MAR-2-05 CO:R:C:V 735085 RC/NL
Mr. Robert F. Ruyak
Howrey & Simon
1299 Pennsylvania Ave., N.W.
Washington, D.C. 20004-2402
RE: Country of Origin Marking of Imported Frozen Produce;
Substantial Transformation; Conspicuous Location;
19 CFR 134.47; 19 CFR 134.46.
Dear Mr. Ruyak:
This is in response to your letter of April 5, 1993, on
behalf of Pillsbury, requesting a ruling on the country of origin
marking requirements for a line of products containing both
domestic and foreign frozen vegetables. The request was prompted
by a letter to you from this office dated March 2, 1993, in which
it was stated that the marking of the products was in apparent
violation of Customs requirements.
FACTS:
Pillsbury markets a line of frozen vegetable products under
its "Green Giant" "American Mixtures" brand. The five products
in the "American Mixtures" line which contain foreign as well as
domestically grown produce are the subject of this ruling. Each
of the five products consists of a different vegetable
combination sold under one of the following recipe names:
(1) Manhattan Style tm;
(2) San Francisco Style tm;
(3) California Style tm;
(4) Seattle Style tm;
(5) Heartland Style tm.
For purposes of this ruling, we have examined principally the
sample packaging for the "San Francisco Style" "American
Mixtures" recipe.
Broccoli and cauliflower are imported in bulk from Green
Giant's facility in Irapuato, Mexico, already cut and frozen.
Water chestnuts and peas are imported from China and Guatemala,
respectively, raw in bulk. They are cleaned, cut, peeled and
frozen domestically. Carrots, yellow peppers, and asparagus are
grown domestically and sized, cleaned, peeled or trimmed, cut and
frozen at domestic plants. Green Giant combines the foreign and
domestic bulk vegetables in the U.S. with unspecified non-
vegetable ingredients from an unknown source and packages them in
16 oz. polyurethane bags for retail sale under the five names
indicated above as part of the "American Mixtures" line. Beyond
bagging, there is no processing of the combined frozen
vegetables, such as cooking or adding sauces.
In total, we have counted at least 20 references to America
or a U.S. location on the "San Francisco Style" product
packaging. Most prominently, each bag bears the words "American
Mixtures" in approximately 63 points printed across the top front
side. (A point is a unit of type measurement equal to 0.01384
inch or nearly 1/72 inch, and all type sizes are multiples of
this unit.) These words are followed by a registered trademark
symbol, the letter "R" in a circle. The same words and trademark
appear again near the bottom of the front side, in approximately
36 points. Under the words "American Mixtures", depending upon
the contents, the names "MANHATTAN" or "SAN FRANCISCO" or
"CALIFORNIA" or "SEATTLE" or "HEARTLAND" appear in approximately
27 points, followed by the word "STYLE" in approximately 9
points. These location references appear twice on the front side
of the packaging, both in 27 points. The second location is
adjacent to a second reference to "American Mixtures".
On the back side of the package, the name "San Francisco"
appears in lettering of approximately 18 points in one location
and approximately 6 points in four locations. The name "American
Mixtures" appears again on the back side in lettering of
approximately 6 points in three additional locations. A country
of origin marking stating "PRODUCT OF MEXICO" appears also on the
back side in lettering of approximately 6 points. It appears as
the fifth out of six lines in a block of text indicating
ingredients, distribution information, and dietary fiber content,
in black ink on a dark green background.
Your submission argues, in reply to the position stated in
this office's letter to you of March 2, 1993, that the foreign
origin constituents of the mixed vegetables recipes are not
subject to marking under section 304 of the Tariff Act, as mixing
them into the retail product effects a substantial transformation
of the foreign articles. Second, you contend that even if
marking is required, the existing marking, or that marking with
some modifications, would be sufficient to satisfy Customs
requirements.
ISSUES:
(1) Whether the foreign-grown produce undergoes a
substantial transformation in the U.S. as a result of the
domestic mixing and processing;
(2) Whether the country of origin marking on the packaging
is in a conspicuous place and otherwise satisfies the marking
requirements.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended
(19 U.S.C. 1304), requires that articles of foreign origin or
their containers be marked in a conspicuous place legibly,
indelibly, and permanently to indicate to the ultimate purchaser
the English name of the country of origin of the article. Part
134, Customs Regulations (19 CFR Part 134) implements the country
of origin marking requirements and exceptions of 19 U.S.C. 1304.
The country of origin for marking purposes is defined at
section 134.1(b), Customs Regulations (19 CFR 134.1(b)), to mean
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 Part 134. Section 134.35,
Customs Regulations (19 CFR 134.35), provides, in relevant part,
that:
[a]n article 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, will be within the
principle of the decision in the case of United States v.
Gibson-Thomsen Co., Inc., 27 CCPA 267 (1940). Under this
principle, 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 within the contemplation of [the marking
statute], and the article shall be excepted from marking.
The "ultimate purchaser" is generally defined, in section
134.1(d), (19 CFR 134.1(d)), as the last person in the United
States who will receive the article in the form in which it was
imported. The question of when a substantial transformation
occurs for marking purposes is a question of fact, to be
addressed on a case by case basis. Uniroyal Inc. v. United
States, 3 CIT 220, 542 F.Supp. 1026 (1982), aff'd, 1 Fed.Cir. 21,
702 F.2d 1022 (1983).
Substantial Transformation
It is your position as set forth in your submission that
mixing foreign-grown produce in the U.S. with U.S. grown produce
effects a substantial transformation, such that the foreign
constituents of the resulting "American Mixtures" product would
be excepted from marking pursuant to 19 CFR 134.35. We do not
agree.
As a preliminary matter, we note that in C.S.D. 86-28
(June 25, 1986), Customs ruled that fresh broccoli imported from
Mexico in bulk form and cut, blanched, frozen, and packaged in
the U.S. is not substantially transformed in the U.S. into a new
and different article. Foreign origin broccoli processed in this
manner must be marked with the name of the country in which the
fresh broccoli is produced. Moreover, in HRL 731722 (September
28, 1988), Customs advised that if vegetables are imported frozen
in bulk containers and commingled with U.S. frozen vegetables of
the same type (i.e. imported frozen broccoli is mixed with U.S.
broccoli), the imported product is not substantially transformed
and is subject to the requirements of 19 CFR 134.25 that the
importer certify to Customs that repacked material will be marked
in accordance with section 304 and Part 134, Customs Regulations.
This office has not ruled previously whether a substantial
transformation of foreign produce of one type results when it is
combined or mixed with domestic produce of another type to yield
a mixed vegetable product.
To support your claim of substantial transformation, you
cite T.D. 89-29, a duty drawback case. You state that the test
for "manufacturing" in duty drawback cases is basically the same
as the test for "substantial transformation" and that as a matter
of consistency and fairness, Customs should, because of
similarities of these tests, rule that no origin marking is
required on "American Mixtures" products. The test is not,
however, the same. In construing substantial transformation for
purposes of country of origin marking, the key question is who is
the ultimate purchaser, i.e., the last person in the U.S. to
receive the article in the form in which is was imported. We do
not believe, therefore, that following the result in a drawback
case is a guarantee of consistency or fairness, or that the kind
of marking envisaged by Congress in enacting section 304 would be
the likely result.
You cite HRL 555519 (March 12, 1990), a classification
ruling. There, U.S. long grain white rice, wild rice, dehydrated
vegetables, and seasonings were specially packaged in Canada.
Only approximately .67 percent of the seasonings mix was of
Canadian origin to be combined with the U.S. components. The
rice dish underwent three processing operations in Canada.
Firstly, two types of rices were combined and packaged in
pouches. Secondly, dehydrated vegetables and seasonings were
blended and likewise packaged. Thirdly, the two pouches were
together packaged in a retail box. The basis for the Customs
ruling was that the ingredients were "advanced in value and
improved in condition". This is not the test for "substantial
transformation". It is true Customs did not allow the rice
product to be classified as "American Goods Returned" for duty
purposes. However, Customs did not make a determination in that
ruling that the goods needed to indicate "Product of Canada" for
country of origin marking purposes. In the cited ruling, the
importer appears to have been doing more extensive processing
than that done by Green Giant, yet there was no finding of
substantial transformation. Thus, we do not believe that the
cited ruling is persuasive authority for your position.
Another classification ruling you cite is HRL 555524
(April 11, 1990). There, Customs found that the mixing of eleven
different ingredients with water, boiling the mixture until the
desired consistency was achieved, packaging the soup for retail
sale, and quickly freezing the product resulted in a substantial
transformation of those ingredients into a new and different
article of commerce which is different in name, character, and
use from the separate ingredients: soup. You believe the
combining of broccoli with two or three other frozen vegetables
is analogous to the soup in that a new and different article of
commerce results: salad. We are not convinced. Manufacturing
the soup required boiling all eleven ingredients to blend the
flavors. The resulting product was clearly a new article in
which the constituents had lost their separate identities. With
regard to the Green Giant vegetable mixtures, the individual
vegetables retain their identities. The manufacturing of soup is
clearly distinguishable from the mixing process which creates the
Green Giant product.
You also cite HQ 733207 (November 21, 1990), a marking case.
There, Customs ruled that imported potpourri components underwent
a substantial transformation when blended in the U.S. and were
not required to indicate their countries of origin. Customs
emphasized in the ruling that the process involved more than mere
blending or chopping and that the mere packaging of an article
does not result in a change in the country of origin. The
manufacture of the potpourri resulted in a new and different
article. Despite the fact that botanical items remained
recognizable as parts of flowers and plants, their character and
use became entirely different. They were blended to achieve a
single pleasant aroma. We do not believe that the combining of
the vegetables achieves the creation of a new article in the same
sense or to the same degree as in the potpourri ruling.
The authorities you cite do not, therefore, persuade us that
a finding of substantial transformation is indicated here.
Having considered these precedents, we find that the ultimate
purchaser of the Mexican broccoli and cauliflower is the retail
purchaser in the U.S. of the "American Mixtures" mixed vegetable
recipes. That purchaser receives the foreign produce in
virtually the same form in which it was imported, albeit
accompanied by other vegetables. It is evident that the Mexican
processing of the broccoli and cauliflower is more extensive than
the post-importation combining operation. The post-importation
processing of the broccoli and cauliflower does not result in
notable changes in the name, character, or use of the imported
produce. They remain clearly identifiable within the mixtures
and is evidently the largest (or among the largest) constituents
by volume. The character of the resulting mixtures does not
suggest a different kind of food article, or one which would be
used differently from the broccoli or cauliflower alone.
In sum, we are satisfied that the processing of the imported
broccoli and cauliflower to make "American Mixtures" recipes does
not relieve Green Giant of the obligation under section 304 of
the Tariff Act to indicate to the ultimate purchaser in the U.S.
that the mixtures contain produce of foreign origin. The extent
of the marking obligation is addressed in T.D. 91-7, which
provides that materials of foreign origin which comprise mixtures
must be marked unless substantially transformed. To the extent
such foreign materials are insignificant, or would have no
influence on the purchasing decision, Customs applies a "common
sense" approach to require marking only of those articles which
are of more than de minimis significance. Here, however, the
Mexican broccoli and cauliflower are sufficiently important
constituents of the mixtures to be subject to marking. At this
time, we also shall require, in the absence of more precise
information, that the packaging indicate the Guatemalan origin of
the peas and the Chinese origin of the water chestnuts to the
extent either is included in a particular recipe.
Required Placement of Marking
Section 134.46, Customs Regulations (19 CFR 134.46),
provides in relevant part that when letters or words indicating
the name of a country or locality other than the country of
origin appear on an article, the name of the country of origin
must appear "in at least comparable size" and "in close
proximity" to such letters or words. emphasis added.
Under section 134.47, Customs Regulations (19 CFR 134.47),
when a trademark or trade name marking indicates the name of a
country or locality other than the country of origin, the country
of origin shall be indicated either "in close proximity or in
some other conspicuous location" preceded by "Made in", "Product
of", or similar words. emphases added.
As you have acknowledged, the appearance of the "American
Mixtures" trademark on the front of the frozen produce packaging
triggers the requirements of 19 CFR 134.47. Thus, the marking of
country of origin must appear in "close proximity" to the name
"American Mixtures" or at least in some other conspicuous
location.
In our letter to you of March 2, 1993, we stated that the
existing marking (on the back side of the package, in the context
described above) was not in a conspicuous location. Upon review
of your submission we adhere to that conclusion, and find that in
this instance 19 CFR 134.47 requires the marking to appear on the
front side of the packaging. The prominence of the "American
Mixtures" name is such that country of origin marking on this
packaging is not in a conspicuous location unless it appears on
the front side of the retail package. This requirement is
consistent with previous determinations in which we have found
that marking which might otherwise have been in a conspicuous
place is inadequate because of the appearance of words and
symbols which might, in their context, suggest to the ultimate
purchaser a country of origin other than the actual country of
origin of the foreign article.
This office has stated previously that the back side of a
package of frozen produce can be an acceptable location for
country of origin marking. See HRL 731830 (November 21, 1988)
(marking appearing on the back of a retail box of frozen imported
produce in close proximity to nutritional data is acceptable).
See also Norcal/Crosetti Foods, Inc. v. United States, 790
F.Supp. 302, reversed and remanded, 963 F.2nd 356 (Cir. 1992).
However, our rulings also have followed the principle that in
determining what is a conspicuous location for country of origin
marking, it is necessary to consider the context in which it
appears. This, indeed, is the basis for the additional, more
comprehensive specifications for marking set forth in sections
134.46 and 134.47.
Thus, for instance, in HRL 729096 (January 2, 1986), Customs
ruled that although athletic shoes made in Korea would normally
have been considered acceptably marked, the presence of prominent
words and symbols referring to the U.S. and the U.K. dictated
that additional marking appear on the box and on the size labels.
The references to the U.S. and the U.K. had rendered the existing
marking on the tongue and heel of the shoe inconspicuous, such
that "...it would take a very determined consumer to ascertain
...the country of origin..." Under these circumstances a more
expansive construction of the term "conspicuous" was considered
necessary to give effect to the purposes for which section 304
was enacted.
Another instructive ruling was issued as HQ 734245
(February 18, 1992), and concerned the required marking for toy
cars sold under the trademark "American Muscle". The New York
Seaport had ruled that marking on the bottom side of the box
alone was insufficient and further, that in each instance where
the name "American Muscle" appeared, the country of origin was
required to be indicated. This office concurred that the marking
on the bottom of the box was insufficient. However, instead of
requiring repetitive marking of the country of origin (in "close
proximity" pursuant to 19 CFR 134.46), we applied 19 CFR 134.47
and found to be conspicuous a marking appearing on the front side
of the box in 1/2" white lettering against a black background.
We considered this location sufficient to eliminate any question
which might have been created whether the "American Muscle"
product was of U.S. or Chinese origin. See also HQ 733046
(May 4, 1990)(marking is conspicuous under 19 CFR 134.47 if it
appears on two of the four box panels upon which appear the name
"TCA Toy Corporation of America".)
We find that the same considerations apply here to require
that the marking appear on the front side of the package of the
"American Mixtures" product in order to be in a conspicuous
place. The "American Mixtures" product, which contains
significant quantities of foreign produce, is not adequately
marked by placing the marking in the "usual" location, i.e., the
back side of the bag as authorized under HRL 731830. The
circumstances and context dictate that the marking appear on the
front side of the packaging, rendered in such a manner as to
satisfy the standard requirements of permanence and legibility.
This location is necessary to give effect to the purpose of
19 CFR 134.47 to assure that the ultimate purchaser is not misled
or deceived as to the origin of the products which he purchases.
Our determination regarding what is required under
19 CFR 134.47 makes it unnecessary to address in detail the
considerations arising under 19 CFR 134.46 with respect to the
recipe names "San Francisco", "Manhattan", etc. If the packages
are marked on the front as required above, and the marking on the
back side remains, with some enhancement of its contrast, the
requirements of 19 CFR 134.46 will have been satisfied, as the
marking of origin will be visible on the same surface or side of
the package as the triggering references.
With respect to your claim that the recipe names are not
triggering names for purposes of 19 CFR 134.46, because they have
appended to them the word "Style", we disagree and find that as
used the names are potentially confusing. Their use differs from
the uses in the rulings cited, as they are not merely decorative
or fanciful. Nor could we agree that the recipe names are
generic, or have become so well known as a Green Giant Brand name
that they are generally understood by consumers to mean a product
of Green Giant in particular. It seems evident to us that the
names have been selected by Green Giant by reason of their
association with the U.S. As such, the marking regulations
require appropriate clarification. This consideration does not
apply, obviously, to the "Heartland" recipe, which does not refer
to a specific place. As to your proposal that the size of the
word "Style" be increased to match the size of geographic recipe
names, we respectfully decline to address it, as our disposition
of the other issues makes it unnecessary.
The submission concludes by presenting several proposals for
methods of marking. As stated above, marking which appears on
the front of the package is required. Changing the lettering on
both the front and the back to white so as to provide a contrast
with the green background is necessary to assure legibility. The
suggested new wording, "Product of Mexico and United
States/Prepared and Packaged by Green Giant in the United States"
is acceptable under section 304 of the Tariff Act, provided it is
accurate. However, the acceptability of the wording "prepared
and packaged ... in the United States" is a matter to be decided
under section 5 of the Federal Trade Commission Act (15 U.S.C.
45), and the Federal Trade Commission is the agency with the
primary responsibility for determining whether, for example, it
is accurate and non-deceptive to describe the product as
"prepared" in the U.S. Where included in a recipe, vegetables
which are products of other countries also must be indicated on
the packaging by the name(s) of their countries of origin.
HOLDING:
Packages of mixed frozen produce sold under the "American
Mixtures" trademark are required to be marked as set forth above
to show that they contain produce of foreign origin.
Sincerely,
John Durant, Director