Country of origin of sucrose imported for processing into fructans; substantial transformation; inulin; raftilose; neosugar; linear fructans; alteration in chemical structure; multiple units of fructose result in different synergistic effect

HQ 561034 May 13, 1999 MAR-05 RR:CR:SM 561034 KKV CATEGORY: Marking Robert J. Leo, Esq. Meeks & Sheppard 330 Madison Avenue 39th Floor New York, NY 10017 RE: Country of origin of sucrose imported for processing into fructans; substantial transformation; inulin; raftilose; neosugar; linear fructans; alteration in chemical structure; multiple units of fructose result in different synergistic effect Dear Mr. Leo: This is in response to your letter dated June 9, 1998 (and additional submission dated August 20, 1998), on behalf of McNeil Specialty Products Company, which requests a binding determination regarding the country of origin of fructans processed in one country from sucrose imported from another. FACTS: You indicate that sucrose from Country A will be imported into Country B for additional processing into “fructans,” naturally occurring chains of fructose linked in a particular manner. It is stated that the nature of the chemical link between the individual fructose units in the chains is such that most human digestive enzymes do not recognize them; consequently, unlike sucrose, the fructose chains are not digested in the human upper gastrointestinal tract, contributing to a reduced caloric contribution to the host organism. As such, they are used in processing foods and beverages as bulking agents or replacements for fat in products for those who must restrict their caloric intake. It is stated that fructans may be produced by the action of certain enzymes on sucrose. In particular, we are informed that:  Sucrose is introduced into a reactor with the appropriate level of suitable enzyme prep, and the reaction is allowed to proceed under temperature control for a time sufficient to maximize both total Fructan content and average chain length. The by-product of the reaction is dextrose which is a competitive inhibitor for the desired reaction and which must be removed to drive the reaction to completion...The resulting dextrose stream is isolated as a solid product. Once the average chain length and total yield have been optimized, the enzyme is removed. This stream may then be treated with appropriate ion-exchange resins...and activated carbon...The final product stream, contained in water, is subjected to a drying process...depending [upon] the desired final solid specifications desired. You state that the fructans produced will be Inulin, Raftilose, Neosugar and five other linear fructans which are described only by their Chemical Abstract Service (CAS) numbers : CAS 470-69-9, CAS 13133-0708, CAS 59342-60-9, CAS 62512-19-0 and CAS 62512-20-3. For purposes of this ruling, we presume that neither Country A nor Country B is a NAFTA country. ISSUE: Whether sucrose from Country A is substantially transformed into a new and different article by processing in Country B which results in the creation of fructans. LAW AND ANALYSIS: 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).  Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(d), Customs Regulations (19 CFR 134.1(d)) provides that: The ‘ultimate purchaser’ is generally the last person in the United States who will receive the article in the form in which it was imported; however, for a good of a NAFTA country, the ‘ultimate purchaser’ is the last person in the United States who purchases the good in the form in which it was imported.” “Country of origin” is defined in section 134.1(b), Customs Regulations (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. Simply stated, 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.” See Texas Instruments, Inc. v. United States, 69 CCPA 152, 681 F.2d 778 (1982). The issue of whether a substantial transformation occurs is determined on a casebycase basis. It is alleged that the conversion of sucrose into fructans constitutes a substantial transformation, resulting in the creation of a new and different article. It is also suggested that the resulting fructans are classifiable under subheading 3913.90.20, HTSUS, Harmonized Tariff Schedule of the United States (HTSUS). As you correctly point out, the rules of origin based upon a shift in tariff classification (i.e., the NAFTA Marking Rules and the proposed World Trade Organization harmonized rules) are not relevant to the matter at hand; therefore, we decline to address the tariff classification of fructans here. However, inasmuch as the classification you suggest appears to be incorrect, we recommend that you confirm this information with the General Classification Branch, Office of Regulations and Rulings or the National Commodity Specialist Division, New York, before proceeding. Upon receipt of your request for a binding ruling and supporting documentation, the technical data received was forwarded to the Customs Service Office of Laboratories and Scientific Services for analysis and comments. In a report issued by that office, we are informed that the sucrose, a disaccharide (twomolecule substance) consisting of one molecule of dextrose and one molecule of fructose, is reacted with an enzyme. The resulting end products, which may still contain some residual unreacted sucrose, are one of several types of fructooligosaccharides or fructooligosaccharide mixtures (i.e., fructans) and dextrose. Dextrose is subsequently removed from the fructans and is considered a byproduct. The amounts of sucrose and dextrose resulting from this process is dependent upon several factors such as the duration of the reaction, the type of fructanpolymerizing enzyme used and the reaction temperature. Modification of these variables will affect the end product, resulting in different types of fructans, each with a different use and application. The resulting fructans are a type of polysaccharides (starch), which are high molecular mass carbohydrates formed by linking several saccharides together. In particular, fructans are composed of several molecules of fructose units, which can vary from three to three hundred or more, as opposed to sucrose, which has but one unit of fructose. Thus, based on the information you have submitted, we are of the opinion that the processing of the sucrose into fructans constitutes a substantial transformation. In making this determination, we conclude that the sucrose is substantially different from the processed fructans. In the former, dextrose is present and only a single unit of fructose exists in its structure. In the latter, however, dextrose has been isolated and removed and multiple units of fructose have been formed. This alteration in chemical structure, which prevents the fructans from being recognized or absorbed by the human digestive tract, results in the creation of a distinct commercial commodity whose synergistic effect renders it suitable for use in an entirely different range of products than those in which sucrose has been used as a nutritional supplement, bulking agent or sweetener. Therefore, it is our determination that the sucrose of Country A is substantially transformed into a new and different product when processed into fructans in Country B. Accordingly, under the facts presented, the country of origin of the processed fructans is Country B. HOLDING: Based upon the information provided, sucrose (a disaccharide) from Country A is substantially transformed into a new and different product when imported into Country B and processed into fructans, (a type of polysaccharides), a substance with a different chemical structure and industrial application. Accordingly, the country of origin of the processed fructans is Country B. 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. Sincerely, John Durant Director Commercial Rulings Division