CLA-2-22:OT:RR:NC:N2:N232
Robert D. Stang Husch Blackwell LLP 750 17th Street N.W., Suite 900 Washington, D.C. 20006-4675
RE: The Country of Origin of Kahlua Espresso Style Martini Cans
Dear Mr. Stang:
This is in response to your letter dated February 6, 2020, requesting a country of origin determination on behalf of Pernod Ricard USA, LLC. You submitted flow charts depicting the various stages of operation and pictorial representations of the products.
The subject merchandise is described as Kahlua Espresso Style Martini Cans (Kahlua Espresso Martini). The product consists of Kahlua concentrate, Coffee extract, Sugar, Neutral grain spirits, and Water. In your request, you state that Pernod Ricard blends Kahlua concentrate (product of Mexico) with coffee extract, sugar, and neutral grain spirits (products of USA) in their facility in Arkansas to produce a bulk concentrate with an alcohol by volume content of 18 percent. The bulk concentrate is exported to the Netherlands where it is diluted with water to form a bulk finished product with an alcohol by volume content of 4.5 percent. The bulk finished product undergoes a canning process whereby it is charged with nitrogen and sealed in a 200 ml ready-to-drink can. The sealed can is heated and sterilized to form the finished product ready for export to the United States.
The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in 19 CFR Part 102, Customs Regulations. For a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. Since the USA is a NAFTA country, the NAFTA Marking Rules must be applied in determining the country of origin of the subject Kahulua Espresso Martini for marking purposes. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which:
(a)(1) The good is wholly obtained or produced; (a)(2) The good is produced exclusively from domestic materials; or (a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the Espresso Martini is neither wholly obtained nor produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in 19 C.F.R. § 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.” The applicable tariff shift requirement in § 102.20 for the products at issue is:
“A change to subheading 2208.20 through 2208.70 from any other subheading, outside that group, except from subheading 2106.90; or A change to liqueurs or cordials of subheading 2208.70 from any other product.”
Because the foreign material (Kahlua concentrate) is classified in a subheading outside of 2208.20 through 2208.70, the tariff shift rule in 19 C.F.R. § 102.20 is met. Therefore, the product qualifies to be marked as products of the USA in accordance with 19 C.F.R. § 102.20. However, if a good is determined to be an article of U.S. origin, it is not subject to the country of origin marking requirements of 19 U.S.C. §1304.
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.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
As defined in 19 CFR 134.1(b), "country of origin" means 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 change the country of origin of the article. A substantial transformation is said to occur when, after further processing or manufacture, an article emerges having a new name, character, or use different from that possessed by the article prior to processing. See Texas Instruments, Inc. v. United States, 69 CCPA 152, 681 F. 2d 778 (1982).19 CFR 134.35.
Based upon the facts presented, it is the opinion of this office that the blending process that occurs in the USA results in a in a substantial transformation of the raw ingredients (Kahlua concentrate, coffee extract, sugar, neutral grain spirits ) into Kahlua Espresso Martini, a product with a new name, character, and use. The process that occurs in the Netherlands, where the bulk concentrate is diluted with water and then canned with nitrogen-infused, does not alter the fundamental character of the product. Accordingly, the Kahlua Espresso Martini is considered a product of the USA for country of origin purposes.
Whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the propriety of proposed markings indicating that an article is made in the USA.
This merchandise is subject to The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (The Bioterrorism Act), which is regulated by the Food and Drug Administration (FDA). Information on the Bioterrorism Act can be obtained by calling FDA at 301-575-0156, or at the Web site www.fda.gov/oc/bioterrorism/bioact.html.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Frank Troise at frank.l.troise.cbp.dhs.gov.
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division