OT:RR:NC:N2:231
Mr. David Short
Flegenheimer International
227 W Grand Avenue
El Segundo, CA 90248
RE: The country of origin of Salmon Smolt
Dear Mr. Short:
In your letter dated May 25, 2021, you requested a country of origin ruling determination on Salmon Smolt.
The merchandise under consideration is Salmon Smolt. You have presented a scenario whereby salmon smolt and feed is received from a U.S.-based hatchery onto a Chilean-flagged aquaculture farming vessel operating in international body of waters. You state that the smolt will be raised in copper mesh cages aboard the aforementioned vessel until maturity at which time the salmon will be harvested and struck upon the head, a slit made near the gill and the fish allowed to bleed out naturally. The salmon will be packed in bins, placed onto U.S.-flagged vessels and transported to a U.S.-based processing plant where the fish will be deheaded and eviscerated. The salmon will be sold either fresh or frozen in the form of fish fillets with skin or skinned, or as a whole, gutted fish. The finished product is not exported outside of the United States, rather it is sold to U.S.-based clients.
You seek a determination on the country of origin of the above-described product for marking purposes.
The "country of origin" is defined in 19 CFR 134.1(b) 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.
The courts have held that a substantial transformation occurs when an article emerges from a process with a new name, character or use different from that possessed by the article prior to processing. United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940); National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F. 2d 1201 (Fed. Cir. 1993); Anheuser Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).
However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983). Substantial transformation determinations are based on the totality of the evidence. See Headquarters Ruling (HQ) W968434, date January 17, 2007, citing Ferrostaal Metals Corp. v. United States, 11 CIT 470, 478, 664 F. Supp. 535, 541 (1987).
In Koru North America v. United States, 701 F. Supp. 229 (CIT 1988), the court considered whether the processing of headed and gutted fish in South Korea by thawing, skinning, boning, trimming, freezing, and packaging constituted a substantial transformation. The court concluded that the processing performed in South Korea into “quick- frozen” fillets substantially transformed the headed fish because there was a change in name and character. The court noted that while the fish arrived in South Korea with the look of a whole fish, when they left they no longer possessed the essential shape of a fish. The fillets were considered discrete commercial goods and had a different tariff classification.
A specialized rule governs seafood articles such that, unless the animal was caught or harvested within the territorial waters of a country, the country of origin follows the flag of the catching vessel. This rule of origin, the “Law of the Flag,” was affirmed by the Court of International Trade in Koru North America v. United States, 701 F. Supp. 229 (CIT 1988). The court noted that “in international law, a ship on the high seas is considered foreign territory, functionally, ‘a floating island of the country to which [it] belongs’.”
In the present case, the salmon smolt of U.S.-origin is raised to maturity and fed with U.S.-origin feed aboard a Chilean-flagged vessel while it is in international waters. The fish is subsequently transferred onto U.S.-flagged vessels and taken to a processing plant within the latter country where it is beheaded and gutted. Smolt is a stage of a salmon life cycle pegged at two years at which time it is prepared to migrate out to sea. Upon arriving on the Chilean-flagged aquaculture vessel, the smolt resembles and performs like fully-developed salmon. We find that the actual grow-out operations performed within the copper mesh cages aboard the vessel in international waters are only a natural biological consequence of that which usually occurs in the United States. Based upon the foregoing, we find that the fish are not substantially transformed within the aquaculture vessel in international waters when subjected to grow-out operations aboard the vessel. Therefore, when placed onto the U.S.-flagged vessel then processed in the processing plant in the United States, the country of origin of the salmon for marking purposes will be United States.
Please note that the question of whether the goods may be marked with a phrase such as “Product of U.S.A.” is under the jurisdiction of the U.S. Federal Trade Commission, Bureau of Consumer Protection, Division of Enforcement, which may be contacted for advice at 600 Pennsylvania Avenue N.W., Washington, D.C. 20580, or through the FTC’s website at http://www.ftc.gov.
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 the 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 Ekeng Manczuk at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division