H315291

HQ H315291 March 9, 2021 OT:RR:CTF:VS H315291 AP CATEGORY: Origin Maureen A. Celmer Welke Customs Brokers 36 Delaware St. Tonawanda, NY 14150 RE: Ground Date Sugar Powder; Country of Origin; Substantial Transformation; GSP; Subheading 9802.00.50 Dear Ms. Celmer: This is in response to your October 6, 2020 ruling request, filed on behalf of Liva Foods, Inc. (the “importer”), regarding: (1) the country of origin of ground date sugar powder produced from raw dates; (2) the eligibility of the merchandise for duty exemption under the Generalized System of Preferences (“GSP”) when imported into the United States from Tunisia; and (3) the applicability of subheading 9802.00.50, Harmonized Tariff Schedule of the United States (“HTSUS”) to the ground sugar powder repackaged in Canada and reimported into the United States. FACTS: The merchandise at issue is ground date sugar powder used as a general sweetener or as a sugar substitute for baking, sauces, marinades, ice cream, and dessert toppings. It is light brown in color, with a very fine granular texture, comprised of 100 percent certified organic dates, with no additives or fillers. The ground sugar powder is made from raw dates grown in Tunisia classifiable in subheading 0804.10.40, HTSUS. The ground sugar powder itself is classified in subheading 1106.30.40,  HTSUS. You present two scenarios. In scenario 1, the raw dates are grown, inspected, de-pitted, washed, and sundried or dehydrated in Tunisia. They are imported into the U.S. under subheading 0804.10.40 to be ground into a fine powder, sieved through a micron sieve, passed through a metal detector, and packaged into bulk polypropylene 22 kg bags. Then, the ground date sugar is sent to Canada to be repackaged using Canadian materials for retail sale in Canada and the U.S. Some of the repackaged sugar powder is reimported into the U.S. from Canada. In scenario 2, the dates are grown and fully processed into ground sugar powder in Tunisia. The sugar powder is imported into the U.S. under subheading 1106.30.40 packed in bulk polypropylene 22 kg bags. The ground date sugar is sent to Canada where it is repackaged using Canadian materials for retail sale in Canada and the U.S. Some of the repackaged ground sugar powder is reimported into the U.S. from Canada. ISSUES: What is the country of origin of the ground date sugar powder processed in Tunisia and the U.S.? Do the raw dates and the ground date sugar powder qualify for duty exemption under the GSP when imported from Tunisia into the U.S.? Once repackaged in Canada, will the returned ground date sugar powder qualify for tariff treatment pursuant to subheading 9802.00.50, HTSUS? LAW AND ANALYSIS: Country of Origin of the Ground Sugar Powder Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides, in relevant part: (a) Marking of articles Except as hereinafter provided, 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 container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article. Part 134 of the CBP Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements of 19 U.S.C. § 1304. Title 19, Section 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; ….” A substantial transformation occurs “when as a result of a process an article emerges, having a distinctive name, character or use” from the original material subjected to the process. Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). A substantial transformation will not result from a minor manufacturing or combining process that leaves the identity of the article intact. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d per curiam, 702 F.2d 1022 (Fed. Cir. 1983) (adding a finished shoe upper to the outer sole of a shoe did not result in a substantial transformation of the upper); see also Nat’l Juice Prods. Ass’n v. United States, 10 CIT 48, 628 F. Supp. 978 (1986) (imported orange juice concentrate was not substantially transformed by post-importation processing that created frozen orange juice concentrate and reconstituted orange juice). In Koru North Am. v. United States, 12 CIT 1120, 701 F. Supp. 229 (1988), the court held that headed and gutted New Zealand fish underwent a substantial transformation into processed frozen quick-frozen fish fillet in South Korea. The processing in South Korea consisted of thawing, skinning, boning, trimming, glazing, refreezing, and packaging. The court noted that while the fish arrived in South Korea with the look of a whole fish, when it left South Korea it no longer possessed the essential shape of the fish and was transformed into a new article of commerce. The whole fish was trimmed of fat lines and impurities, glazed to preserve its moisture and enhance its shelf life, and frozen to protect it from spoilage. These changes went “to the fundamental nature and character of the fish; the fish ha[d] been transformed, both in name and character.” Koru North Am., 12 CIT at 1127, 701 F. Supp. at 235. In Headquarters Ruling Letter (“HQ”) 733814, dated June 24, 1991, Customs concluded that the manufacture of instant or soluble coffee from green coffee beans effected a substantial transformation of the beans because the processing changed the essential shape and character of the green coffee beans and resulted in a new product, instant coffee. The ruling noted that if in Nat’l Juice Prods. Ass’n, supra, the imported product was “fresh oranges, which were then processed into concentrate, the result would likely be the one reached in Koru and here.” Under scenario 1, the raw dates are grown, inspected, de-pitted, washed, and sundried/dehydrated in Tunisia. In the U.S., the dates will be ground into a fine powder, sieved through a micron sieve, passed through a metal detector, and packaged into bulk bags. We find that a substantial transformation occurs in the U.S. As in Koru North Am. and HQ 733814, the Tunisian raw dates are substantially transformed into a processed retail product (ground sugar powder) in the U.S. These changes go to the “fundamental nature and character” of the dates. Koru North Am., 12 CIT at 1127, 701 F. Supp. at 235. Accordingly, the ground sugar powder will be considered a product of the U.S. Furthermore, repackaging in Canada will not change the origin. Similarly, under scenario 2, the processing of the dates into ground sugar powder will occur in Tunisia, and the final product will be considered a product of Tunisia. GSP Eligibility of the Raw Dates and Sugar Powder Imported from Tunisia Under the GSP, eligible articles, which are the growth, product, or manufacture of a designated beneficiary developing country (“BDC”) and are imported directly into the customs territory of the U.S. from a BDC, may receive duty-free treatment if the sum of: (1) the cost or value of materials produced in the BDC, plus (2) the direct costs of the processing operations performed in the BDC, is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. See 19 U.S.C. § 2463(a)(2)(A). Pursuant to General Note (“GN”) 4(a), HTSUS, Tunisia is a designated BDC for GSP purposes and may be afforded preferential tariff treatment if the imported raw dates or ground sugar powder are classified in a GSP-eligible provision containing SPI Code A. The raw dates imported from Tunisia are classified under subheading 0804.10.40, which is a GSP eligible provision. The groun

Country of Origin of the Ground Sugar PowderSection 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides, in relevant part:(a) Marking of articles Except as hereinafter provided, 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 container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article.Part 134 of the CBP Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements of 19 U.S.C. § 1304. Title 19, Section 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; ….”A substantial transformation occurs “when as a result of a process an article emerges, having a distinctive name, character or use” from the original material subjected to the process. Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). A substantial transformation will not result from a minor manufacturing or combining process that leaves the identity of the article intact. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d per curiam, 702 F.2d 1022 (Fed. Cir. 1983) (adding a finished shoe upper to the outer sole of a shoe did not result in a substantial transformation of the upper); see also Nat’l Juice Prods. Ass’n v. United States, 10 CIT 48, 628 F. Supp. 978 (1986) (imported orange juice concentrate was not substantially transformed by post-importation processing that created frozen orange juice concentrate and reconstituted orange juice).In Koru North Am. v. United States, 12 CIT 1120, 701 F. Supp. 2