CLA-2 OT:RR:CTF:FTM H290682 GaK

M. Peter Thomson
New England Country Foods, LLC
P.O. Box 2010
Manchester Village, VT 05254

RE: Country of Origin and Marking of beef chili and beef entrées; NAFTA Marking Rules; Special Marking Requirements

Dear Mr. Thomson:

This letter is in response to your letter dated September 8, 2017, requesting a prospective ruling pursuant to 19 C.F.R. § 177.1(a)(1) regarding the country of origin marking requirements for prepared meal products. You also submitted samples of the pouch packaging with photos of the proposed position of the marking on the packaging. Samples of the prepared meals were not provided.

FACTS:

According to your submission, New England Country Foods, LLC. (“NECF”), is planning to import three different prepared meal products: Beef & Bean Chili, Beef Chili/No Beans, and Taco Seasoned Beef Crumble (“products”). NECF states that the products are classifiable in subheading 1602.50.90, Harmonized Tariff Schedule of the United States (“HTSUS”), which provides for “[o]ther prepared or preserved meat, meat offal or blood: Of bovine animals: Other: Other.” All ingredients and packaging components are said to be sourced from suppliers in the U.S., although they are not all of U.S. origin. The ingredients will be exported to Mexico to be assembled to specifications, packaged, and reimported into the U.S. for distribution. The product is said to be rendered shelf stable through “thermal processing.”

One ingredient of the products is the beef crumble, which accounts for less than 20 percent of the Beef & Bean Chili and the Beef Chili/No Beans meals, and more than 20 percent of the Taco Seasoned Beef Crumble meal. The beef crumble is said to be classified in subheading 1602.50.99, HTSUS. You also provided a table of ingredients with their respective country of origin and tariff classification under the HTSUS.

You propose to permanently mark the products with the following statement on the back of the plastic pouch, above the nutrition facts:

Cooked in Mexico with Beef Crumble made in Texas & Select Ingredients from around the World

ISSUE:

Whether the products may be marked as a product of Mexico.

Whether the proposed marking satisfies the requirements of 19 U.S.C. § 1304 and the special marking rules of 19 C.F.R. § 134.46.

LAW AND ANALYSIS:

1. 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. By enacting 19 U.S.C. § 1304, Congress intended to ensure that the ultimate purchaser would be able to know by inspecting the marking on the imported goods the country of which the goods are 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, 302 C.A.D. 104 (1940).

Section 134.1(b), CBP Regulations (19 C.F.R. § 134.1(b)), defines “country of origin” as:

the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin

Section 134.1(j) provides that the “NAFTA Marking Rules” are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. The NAFTA Marking Rules are contained in 19 C.F.R. Part 102 of the CBP Regulations. Section 102.11 sets forth the required hierarchy for determining country of origin for marking purposes, which provides, in pertinent part:

The following rules shall apply for purposes of determining the country of origin of imported goods other than textile and apparel products covered by § 102.21.

(a) The 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 § 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

Since the products at issue contain ingredients that are from multiple countries, including the United States, the origin of the merchandise cannot be determined by application of 19 C.F.R. § 102.11(a)(1) or (2). Therefore, under 19 C.F.R. § 102.11(a)(3), the tariff shift rule set forth in 19 C.F.R. § 102.20 is considered. “Foreign material” in 19 C.F.R. § 102.11(a)(3) is defined in § 102.1(e) 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 102.13 provides for a de minimis exception for foreign materials that do not undergo the applicable change in tariff classification required in § 102.20. Section 102.13(a) provides:

Except as otherwise provided in paragraphs (b) and (c) of this section, foreign materials that do not undergo the applicable change in tariff classification set out in § 102.20 or satisfy the other applicable requirements of that section when incorporated into a good shall be disregarded in determining the country of origin of the good if the value of those materials is no more than 7 percent of the value of the good or 10 percent of the value of a good of Chapter 22, Harmonized System.

Regarding the tariff classification of the Beef & Bean Chili and Beef Chili/No Beans meals, Note 2 to Chapter 16, HTSUS, provides in pertinent part:

[f]ood preparations fall in this chapter provided that they contain more than 20 percent by weight of sausage, meat, meat offal, blood, fish or crustaceans, molluscs or other aquatic invertebrates, or any combination thereof…

The three products are said to be classified under subheading 1602.50, HTSUS, which provides for “[o]ther prepared or preserved meat, meat offal or blood: Of bovine animals.” However, based on the information provided, the Beef & Bean Chili and Beef Chili/No Beans cannot be classified under heading 1602.50, HTSUS, because they contain less than 20 percent by weight of meat. Based on the information provided, the Beef & Bean Chili is classified under subheading 2005.51, HTSUS, which provides for “[o]ther vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006: Beans (Vigna spp., Phaseolus spp.): Beans, shelled.” The Beef Chili/No Beans is classified under subheading 2005.99, HTSUS, which provides for “[o]ther vegetables prepared or preserved otherwise than by vinegar or acetic acid, not frozen, other than products of heading 2006: Other vegetables and mixtures of vegetables: Other.”

The tariff shift rule for subheading 2005.51 and 2005.99, HTSUS, set forth in 19 C.F.R. § 102.20(d) states:

A change to heading 2001 through 2007 from any other chapter.

Based on the information provided, all foreign materials undergo the applicable change in tariff classification. Therefore, the country of origin of the Beef & Bean Chili and Beef Chili/No Beans is Mexico.

Regarding the Taco Seasoned Beef Crumble, it is classified under subheading 1602.50, HTSUS. The tariff shift rule for subheading 1602.50, HTSUS, set forth in 19 C.F.R. § 102.20(d) states:

A change to heading 1601 through 1605 from any other chapter, except from smoked products of heading 0306 through 0308.

Based on the information provided, all foreign materials undergo the applicable change in tariff classification, except for the beef crumble, which is said to be classified under subheading 1602.50.99, HTSUS. The beef crumble exceeds the de minimis exception for foreign materials and we must continue the application of the NAFTA Marking Rules as the products do not meet the applicable alternative rule in § 102.20.

Section 102.11(b) provides, in relevant part:

Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a) of this section:

(1) The country of origin of the good is the country or countries of origin of the single material that imparts the essential character to the good[.]

* * *

With regard to “essential character,” § 102.18(b) provides:

(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):

(i) The materials to be considered must be classified in a tariff provision from which a change in tariff classification is not allowed under the specific rule or other requirements applicable to the good under consideration. . .

As the rule in § 102.20, which is applicable to the products at issue, does not allow a change in tariff classification from headings 0306 through 0308, HTSUS, and headings 1601 through 1605, HTSUS, the beef crumble is the ingredient that imparts the essential character to the products. Therefore, in accordance with § 102.11(b)(1), the country of origin of the Taco Seasoned Beef Crumble is the country of origin of the beef crumble, which is the United States. Therefore, it is not required to be marked.

2. Special Marking Requirements

As an initial matter, whether an article may be marked with the phrase “Made in the USA” or similar words denoting U.S. origin, such as “made in Texas”, is an issue under the authority of the Federal Trade Commission (“FTC”). We suggest that you contact the FTC Division of Enforcement, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580, on the propriety of proposed marking indicating that an article is made in the U.S. or Texas. Therefore, this ruling does not address whether the marking of “Made in Texas” or the reference “Select ingredients from around the World” is acceptable for the Taco Seasoned Beef Crumble meal.

For purposes of the marking of the Beef & Bean Chili and Beef Chili/No Beans meals, the country of origin is Mexico. Part 134, Customs Regulations (19 C.F.R. § 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Under section 134.41(b), Customs Regulations, the country of origin is considered to be conspicuous if the ultimate purchaser in the United States is able to find the marking easily and read it without strain. While the submitted picture of the proposed marking satisfies the general requirements for permanency, legibility and conspicuousness, the particular language utilized necessitates a discussion of the special marking requirements set forth in Section 134.46 of the Customs Regulations (19 C.F.R. § 134.46).

Specifically, 19 C.F.R. § 134.46 requires that, in instances where 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, and those words or name may mislead or deceive the ultimate purchaser as to the actual country of origin of the article, 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. Customs has ruled that in order to satisfy the close proximity requirement, the country of origin marking must appear on the same side(s) or surface(s) in which the name of the locality other than the country of origin appears. See Headquarters Ruling Letter (“HQ”) 708994, dated April 24, 1978. The more restrictive requirements of 19 C.F.R. § 134.46 are designed to alleviate the possibility of any misleading of an ultimate purchaser with regard to the country or origin of an imported article, if such article or its container includes language which may suggest a U.S. origin (or other foreign locality not the correct country of origin).

You propose the marking “Cooked in Mexico with Beef Crumble made in Texas & Select Ingredients from around the World.” As required by 19 C.F.R. § 134.46, however, the origin of the good must be preceded by “Made in,” “Product of,” or other words of similar meaning. Therefore, as the country of origin is Mexico, we suggest using the marking “Product of Mexico with Beef Crumble from Texas and select ingredients from around the World.” Provided the country of origin is preceded by “Made in” or “Product of”, the additional reference to other locations will be acceptable as long as they are truthful statements.

From the CBP perspective, we can only approve the languages “Product of Mexico with Beef Crumble” and “select ingredients from around the World.” To the extent that you choose to make a U.S.-origin claim about the ingredients or inputs in the product, that claim would be subject to Section 5 of the FTC Act (15 U.S.C. § 45(a)), as interpreted by the FTC’s enforcement Policy Statement on U.S.-Origin Claims (https://www.ftc.gov/public-statements/1997/12/enforcement-policy-statement-us-origin-claims).

HOLDING:

The country of origin of the Taco Seasoned Beef Crumble is the United States and no country of origin marking is required. The country of origin of the Beef & Bean Chili and Beef Chili/No Beans is Mexico for marking purposes.

The proposed marking “Cooked in Mexico with Beef Crumble made in Texas & Select Ingredients from around the World” is not acceptable for purposes of 19 U.S.C. § 1304 and 19 C.F.R. § 134.46. However, for the Beef & Bean Chili and Beef Chili/No Beans, the marking “Product of Mexico with Beef Crumble from Texas and select ingredients from around the World” is acceptable provided that the country of origin (Mexico) is printed in letters of at least comparable size to the non-origin geographical reference.

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,

Ieva K. O’Rourke, Chief
Food, Textiles and Marking Branch