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HQ 563154

February 3, 2005

MAR-2-05 RR:CR:SM 563154 EAC


Mr. Peter W. Klestadt
Mr. Harold I. Loring
Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP 399 Park Avenue
25th Floor
New York, NY 10022-4877

RE: Country of origin of shrimp; shrimp processing operations; substantial transformation

Dear Messrs. Klestadt and Loring:

This is in response to your letter, dated November 15, 2004, requesting a ruling on behalf of Standard Seafood de Venezuela C.A. (hereinafter “Standard Seafood”), pertaining to the country of origin marking requirements applicable to shrimp that is grown and processed in two countries.


We note that many of the facts in the instant case are similar to those which were considered in Headquarters Ruling Letter (“HRL”) 562998 dated May 21, 2004, which was also provided to your firm on behalf of Standard Seafood. Therefore, the facts of that case have been incorporated into this ruling and supplemented with the additional information regarding processing that was provided in your more recent submission.

It is stated that Standard Seafood performs shrimp hatching, “grow-out”, and processing operations in two foreign countries. In the first country (hereinafter referred to as “Country A”), shrimp eggs are fertilized and deposited into a hatchery by adult shrimp. The eggs hatch into larva referred to as “Nauplii” which are visually similar to aquatic spiders. During the second larval stage, the larvae are referred to as “Zoeae” and contain feather-like appendages and elongated bodies. In the third larval stage, the larvae are referred to as “Myses” and contain some of the characteristics of adult shrimp. It is the Myses that develop into post-larval shrimp.

We are informed that the post-larval shrimp are approximately one quarter of an inch in size. The post-larval shrimp are able to swim right side up and otherwise possess the characteristics of mature shrimp. At this point in the organism’s life cycle, only a grow-out stage remains before the shrimp reach a commercially suitable size. Regarding such grow-out operations, you advise that when the gills of the post-larval shrimp become branched (which occurs approximately 25 days from the date of hatching), the shrimp are packed into airtight bags filled with seawater and shipped to a second country (hereinafter referred to as “Country B”) where the grow-out operations will take place.

After arrival in Country B, the post-larval shrimp are unpacked and acclimated in tanks for several hours before they are transferred to grow-out ponds. The grow-out ponds are located within estuaries and contain brackish, low-salinity water. After growing within the ponds for approximately three months, the shrimp attain a commercially suitable size. Upon reaching such a size, some of the shrimp are harvested, processed, and packed for shipment to the United States. The remaining shrimp that are not harvested are shipped back to Country A to further mature and reproduce.

A specific description of the processes undertaken to hatch, grow, and process the shrimp follows.

Country A

The first step in the larval rearing process is to permit sub-adult organisms to sexually mature in order to create the necessary broodstock. This maturation is induced by placing sub-adult organisms into “maturation tanks” which are described as concrete tanks that are painted black inside and out. The tanks are located within a room containing black curtains that are designed to regulate the amount of natural light entering the room. Fluorescent lights are used to supplement the natural light which does enter the room. Water is mechanically filtered, heated, and cooled in order to create oceanic quality seawater which is pumped into the tanks. A 50 percent rate of water exchange is maintained in the tanks for every 24 hour period. The shrimp are placed into the maturation tanks at a very low density, which is described as less than one shrimp per square meter.

Shrimp are selectively chosen for their reproduction potential. As the shrimp mature, selected animals are marked with an eyestalk numbered band that allows technicians to monitor reproductive performance and yields. Shrimp not meeting certain standards are weaned out of the tanks. While in the tanks, the shrimp receive food that is designed to facilitate the development of their sexual organs. Examples of such food are Artemia Biomass (adult enriched brine shrimp), Polychaete Worms (bloodworms), squid, and dry concentrated feed (vitamins, minerals, algae, etc.).

Sexually mature female shrimp either mate or are artificially inseminated. After testing to ensure that they have been impregnated, the female shrimp are transferred to spawning tanks where their tag numbers are recorded. The water in the spawning tanks undergoes further filtration and is treated with ethylenediamine tetra-acetic acid. The water is also heated and the salinity reduced from 37 ppt, which is the salinity of normal seawater, to 32 ppt. The spawning room is then darkened and the females are removed four hours later, having spawned.

Thereafter, the spawning tanks are stirred with a special instrument every four hours during a twelve hour period. Stirring prevents clumping while ensuring that the hatching envelope is properly formed and that individual eggs receive adequate oxygen. Approximately 24 hours after spawning, the eggs hatch into larvae (referred to as “Nauplii 1”) which are harvested. Harvesting is accomplished by allowing a small stream of water to enter the tank thereby creating an overflow. The overflow is released through an opening where a light attracts the Nauplii and a fine screen collects the microscopic animals.

In approximately 24 to 36 hours, the Nauplii 1 will advance through four life stages, becoming “Nauplii 5.” The Nauplii 5 are disinfected with an iodine solution and transported to larval rearing tanks. Approximately 12 hours after the transfer, the larval rearing tanks are filled to 25 percent of their capacity with live micro-algae. The Nauplii 5 thereafter develop to the next larval stage and are called “Protozoea 1” (also referred to as “Zoeae” above) or “Z1.” In approximately 72 hours, the Z1 advance to a “Z3” larval stage. At this time, the live micro-algae sustenance is supplemented with freeze dried algae and other dried feeds.

The Z3 proceed to the next larval stage at which time they are referred to as “Mysis 1.” The larvae will progress through three mysis stages, each lasting approximately 24 hours. It is stated that, after the mysis stages, the final and most important metamorphosis occurs during which the larvae become shrimp. Depending on shrimp species and hatchery conditions, the shrimp will remain in the hatchery for 10 to 25 days prior to shipment to the grow-out farms in Country B. During this time, the shrimp’s gills become more fully branched and the shrimp further develop to a stage where they are better able to withstand changes in water temperature and salinity as well as the stress associated with shipping and introduction into a new pond environment. For purposes of delivery from the hatchery in Country A to the grow-out farms in Country B, the shrimp will be packed in airtight bags filled with cold, oxygen-saturated water, put into plastic crates, and air-shipped.

Country B

Upon arrival at the grow-out farms, a worker will unpack the bags and transfer the shrimp to 500-liter tanks that are filled with water from the ponds where the shrimp will eventually be stocked. Under normal circumstances, the shrimp are acclimated in such tanks for approximately 2 to 4 hours prior to transfer to the ponds.

After introduction into the ponds, the shrimp will be fed concentrated dry feed in accordance with a graduated feed table that tracks their weight for 90 to 100 days. After 30 days have passed, water in the ponds will be exchanged at a daily rate of 3 to 12 percent. Throughout the entire period, weight samples will be taken and recorded and the shrimp’s health will otherwise be monitored.

The ponds are drained with a harvest pump and dewatering device after the shrimp reach a commercially suitable weight, which is stated to be between 12 and 20 grams. The shrimp are thereafter harvested, iced and transported to a packing plant where they are washed and graded. At the packing plant, the shrimp will also undergo manual “heading”, “peeling”, “de-veining”, “butterfly cutting”, and/or “skewering” operations. After such operations, the processed shrimp will be frozen for shipment. We note that the shrimp under consideration in HRL 562998 were only washed, graded by size, and frozen prior to export to the United States.

Heading involves detaching the head of the shrimp from the body, thereby leaving the tail. When performing the heading operation, the worker holds the shrimp between the head and tail and squeezes. Workers performing this operation are not technologically skilled but are able to achieve high yields through experience and repetition. Peeling is an operation during which the shell is cut and peeled away from the tissue of the shrimp. During the peeling operation, the worker holds the shrimp tail in one hand while making a cut across the back with a small non-serrated knife. After this particular cut is made, the shell is pulled aside from the cut towards the outside and separated from the meat. De-veining is performed at approximately the same time as peeling. When cutting the shell in order to peel, the worker cuts to a depth sufficient to reveal the vein. After pulling off the shell, the worker inserts the tip of the knife and pulls out the vein. Butterfly cutting requires the worker to make the cut used to extract the vein even deeper such that the tail can be spread into two pieces which are held together by a narrow band of tissue. Skewering consists of sliding the shrimp onto a wood skewer prior to freezing. Vegetables or other ingredients are not added to the skewers. Upon completion of the forgoing, the shrimp are prepared for export to the United States.


For marking purposes, what is the country of origin of the shrimp when imported into the United States?


Section 304 of the Tariff Act of 1930 (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. Congressional intent in enacting 19 U.S.C. §1304 was that the ultimate purchaser should be able to know by an inspection of the marking on the imported goods the country of which the goods is 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. Friedlander & Co., 27 C.C.P.A. 297 at 302 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. §1304. Section 134.1(b), Customs Regulations (19 CFR 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 the marking laws and regulations. The case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98)(1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed and, as a result, the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35(a).

In Koru North America v. United States, 12 CIT 1120, 701 F.Supp. 229 (CIT 1988), a country of origin marking case, the court held that the country of origin of fish caught on the high seas is determined by the flag of the catching vessel. However, if the fish is later substantially transformed in another country, then the other country will be the country of origin of the fish, within the meaning of the marking statute. Koru at 1125. In Koru, fish beheaded, de-tailed, eviscerated and frozen on board the capturing vessel was later substantially transformed into a product of Korea by the operations undertaken in that country to process such fish into individually quick frozen fillets.

Specifically, in Korea, the fish was "thawed, skinned, boned, trimmed, glazed, refrozen and packaged for exportation to the United States." In finding that a substantial transformation had occurred, the court noted that when the fish arrived in Korea, it had the look of whole fish, "albeit without heads, tails or viscera" whereas the fish exported from Korea no longer possessed "the essential shape of the fish" having been "trimmed of jagged edges, fat lines and impurities, glazed to preserve [its] moisture ... frozen ... and finally, packaged." Also significant was the fact that the fillets were considered discrete commercial goods and were sold in separate areas and markets. The court found that such changes went to the fundamental nature and character of the fish, transforming the fish and creating a new article of commerce.

In HRL 562998, shrimp eggs were fertilized, deposited into a hatchery by adult shrimp, hatched, and “grown-out” to a post-larval state within a certain country (referred to as “Country A”). The shrimp were thereafter exported to a second country (referred to as “Country B”) where they were raised to a commercially suitable size, washed, graded, and frozen prior to exportation to the United States. In finding that the shrimp were not substantially transformed within Country B, U.S. Customs and Border Protection (“CBP”) noted that the grow-out operations were only a natural biological consequence of that which occurred in Country A, that the essential character of the shrimp was imparted by the activities which occurred in Country A, and that the operations performed in Country B did not effect a substantial transformation in the shrimp.

For purposes of the present case, we must determine whether the additional processing which occurs in Country B in this case, as set forth above, coupled with the grow-out, washing, grading, and freezing operations discussed in HRL 562998, effects a substantial transformation in shrimp processed in this manner. In this regard, we note that CBP has considered a number of other cases pertaining to the country of origin marking requirements applicable to various seafood products processed within the United States and abroad. See, for example, 563063 dated July 26, 2004 (shrimp harvested by U.S.-flagged vessels were not substantially transformed when thawed, sorted, beheaded, shelled, de-veined, repackaged, refrozen, occasionally butterfly cut, and occasionally elongated within China); HRL 560904 dated June 22, 1998 (frozen, cooked crawfish from China were not substantially transformed when re-cooked, beheaded, peeled and de-veined within the United States); HRL 560322 dated March 19, 1997 (processing foreign-origin crab by cleaning to remove marine growth and gills, glazing with ice, and sorting by size and color, does not substantially transform the crab); HRL 731763 dated May 17, 1989 (peeling, de-veining, cooking, freezing, and repackaging imported shrimp does not substantially transform the shrimp into a product of the United States); and HRL 731472 dated June 23, 1988 (peeling, de-veining and repackaging foreign-origin shrimp does not substantially transform the shrimp into a product of the United States).

As applied, it is our opinion that the shrimp in the instant case are not substantially transformed into a product of Country B when raised to a commercially suitable size, harvested, and processed in the manner set forth above. In making this determination, we note that the grow-out operations in HRL 562998 did not constitute a substantial transformation. Furthermore, we have consistently held that operations such as heading, peeling, de-veining, butterfly cutting, and skewering do not effect a substantial transformation in shrimp processed in this manner. See, for example, HRL’s 563063, 560904, 560322, 731763, and 731472. Therefore, as the character of the shrimp is not changed by the processing which occurs in Country B, we find that the country of origin of the imported shrimp for marking purposes will be Country A.


Based upon the specific facts of this case, we find that the shrimp are not substantially transformed within Country B when grown-out, harvested, and processed in the manner set forth above. Therefore, when imported into the United States, the country of origin of the shrimp for marking purposes will be Country A.

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 CBP officer handling the transaction.


Myles B. Harmon, Director

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