HQ 085216: Classification and country of origin of certain sugars

Native CBP ruling rendition. Applicability is fact-specific; modification/revocation relationships and original publisher date are retained. Publisher sentinel year0001 means unknown date, not a historical legal adoption.

                                      HQ 085216


                                   October 27,1989


          CLA-2 CO:R:C:G 085216 SS

          CATEGORY: Classification, Country of Origin

          TARIFF NO.: 9802.00.50

          Mr. Paul G. Saam
          Wessex Corporation
          P.O. Box 307
          Flint, Michigan  48501

          RE:   Classification and country of origin of certain sugars

          Dear Mr. Saam:

                We are in receipt of your letter dated June 19, 1989, and
          your additional submission dated August 10, 1989, concerning the
          country of origin of certain sugars, and the applicability of
          Section 22 fees.  This ruling letter, as set forth below, is in
          response to submissions 1(a), 2(a), 3(a), 4(a) of your request.
          Due to insufficient information, we are unable to issue a ruling
          for the syrups (1(b-d), 2(b-d), 3(b-d), 4(b-d) of your
          submissions) which are produced in Canada from the imported
          sugars.

                If you are still interested in obtaining a ruling for the
          remaining products, please submit the following information:

                1. All steps, from beginning to end, involved in the
                processing of the dry sugar into syrup.

                2. The cost, time involved, condition and use  of the sugar
                at each step of the process.

                3.  The total cost and time needed for the processing.

          FACTS:

           The merchandise in issue is stated to consist of the following:

                1.(a)  Raw cane sugar in solid form, wholly the growth,
                product, and manufacture of India, and having a polarity of
                99.3, is transhipped to Windsor, Ontario, Canada, in 100
                kilogram bags.  The bags are subsequently opened and the














                                        - 2 -

                sugar is sifted and magnetically treated to remove tramp
                iron, then repacked in various sized paper bags.  This
                sugar is not further refined or improved in quality after
                importation into the United States.

                This process converts the sugar from a non-food grade to
          food grade by U.S. Food and Drug Administration (USFDA)
          standards.

                2.(a)  Sugar in solid form, wholly the growth and product
                of India, and having a polarity above 99.5, i.e., refined,
                is transshipped to Windsor, Ontario, Canada, where it is
                sifted and magnetically treated to remove tramp iron, then
                repacked into paper bags of various sizes.  This sugar is
                not further refined or improved in quality after
                importation into the United States.

                3.(a)  Raw cane sugar in solid form, wholly the growth,
                product and manufacture of the United States, and having a
                polarity less than 99.5,  is transshipped to Windsor,
                Ontario, Canada, in 100 kilogram bags, where it is sifted
                and magnetically treated to remove tramp iron, then
                repacked in various sized paper bags.  This sugar in not
                refined or improved in quality after importation into the
                United States.

                This process converts the sugar from a non-food grade to
          food grade by USFDA standards.

                4.(a)  Sugar in solid form, wholly the growth and product
                of the United States, and having a polarity of above 99.5,
                i.e., refined, is transshipped to Windsor, Ontario, Canada,
                where it is sifted and magnetically treated to remove tramp
                iron, then repacked into paper bags of various sizes.  This
                sugar is not further refined or improved in quality after
                importation into the United States.

          ISSUE:

                What is the country of origin for marking and quota
          purposes of the sugars described above?

          LAW AND ANALYSIS:

                Section 134.1(b), Customs Regulations (19 CFR 134.1(b))
          provides that the "Country of origin" means the country of
          manufacture, production, or growth of any article of foreign
          origin entering the United States.  Further work or material














                                        - 3 -

          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, Customs Regulations
          (19 CFR Part 134).

                Substantial transformation requires that there must be a
          transformation; a new and different article must emerge, having a
          distinctive name, character, or use as a result of the
          processing.  See, United States v. Gibson-Thomsen Co., Inc., 27
          C.C.P.A. 267, C.A.D. 98 (1940).  This test remains the
          fundamental test for substantial transformation, and has been
          applied to cases involving a variety of issues including marking
          issues.

                In the four situations described above, raw and refined
          sugar grown in and a product of India and raw and refined sugar
          grown in and a product of the United States, are shipped to
          Canada where they undergo sifting, magnetic removal of tramp
          iron, and repackaging, then exported to the United States where
          they are not further refined or improved in quality.

                Therefore, the question presented in the instant case is
          whether the sifting, magnetic removal of tramp iron, and
          repackaging, is of such a nature to justify the conclusion that
          the resulting product has undergone a substantial transformation.

                The sifting, magnetic removal of tramp iron and the
          repackaging do not result in a new and different article having a
          distinctive name, character, or use.  The sugar, whether raw or
          refined, remains raw or refined.  It retains its crystalline form
          and polarity, and has not undergone any changed characteristics.
          Although the processes performed in Canada result in converting
          the sugars in the above situations 1(a) and 3(a) from non-food
          grade sugar to food grade sugar under USFDA standards, it is the
          same article except that impurities have been removed by the
          sifting and the magnetic process.

                Further, in a recent ruling, Headquarters Ruling Letter
          082033, dated September 5, 1989, we ruled that the refining of
          raw sugar was not a substantial transformation for quota
          purposes.  In the instant case, the processes involved are less
          than refining; they are merely "cleanup".

                In view of the foregoing, the subject sugars have not
          undergone a substantial transformation.

















                                        - 4 -

                Subheading 9802.00.50 HTSUS, provides for a partial duty
          exemption for articles returned to the United Stated after having
          been exported for alterations.  The product must be completely
          finished when exported from the United States, and not undergo
          any intermediate processing operations to finish them while
          abroad.  This provision allows the duty to be assessed only on
          the cost of the foreign processing.  However, its application is
          precluded where the processing results in commercially different
          articles.  Dolliff & Company, Inc. v. U.S., 66 CCPA 77, C.A.D.
          1225, 599 F.2d 1015 (1979).

                The cleaning process performed on the exported U.S. raw and
          refined sugar in Canada merely removes impurities by mechanical
          means.  The subject sugars remain the same chemically and
          physically.  The removal of unwanted substances by a mechanical
          process which does not physically or chemically change the
          exported product is an operation within the scope of an
          alteration.  Wilbur G. Hallauer v. U.S., 40 CCPA 197, C.A.D. 518
          (1953).

                Accordingly, the sifting, magnetic removal of tramp iron
          and repackaging in Canada of the U.S. exported sugar in above
          situations 3(a) and 4(a), constitutes an alteration under the
          provision of subheading 9802.00.50, HTSUS, upon compliance of
          section 10.8, Customs Regulations (19 CFR 10.8).

                The solid sugar which is imported from Canada, and is a
          product of India, is subject to Section 22 fees under subheading
          9904.40.20, HTSUS.  This subheading requires a 2.2 cents per
          kilogram fee on sugar principally of crystalline structure or in
          dry amorphous form, not to be further refined or improved in
          quality as defined in Chapter 99, U.S. Note 4(b).

                The solid sugar which remains a product of the United
          States is also subject to Section 22 fees when imported into the
          United States.  However, the applicability of Section 22 fees and
          the quota status of the subject sugar are questions which should
          be addressed to the Foreign Agricultural Service Sugar Group.

          HOLDING:

                For marking and quota purposes:

                The sugar grown in India and transhipped to Canada where it
                is sifted, magnetically treated to remove the tramp iron,
                and repackaged, is a product of India.
















                                        - 5 -

                The sugar grown in the United States and transhipped to
                Canada where it is sifted, magnetically treated to remove
                the tramp iron, and repackaged, is a product of the United
                States.

                The process of sifting, magnetic removal of tramp iron, and
          repackaging in Canada on U.S. exported raw and refined sugar
          constitutes an alteration within the scope of subheading
          9802.00.50, HTSUS.

                                       Sincerely,




                                       John Durant, Director
                                       Commercial Rulings Division







































          singh library 085216
          6cc:  Area Director, New York Seaport
          SSingh:jaj:10/27/89