MAR-05 RR:TC:SM 560223 KKV
Mr. Dan Gluck
Serko & Simon LLP
One World Trade Center
Suite 3371
New York, NY 10048
RE: Country of origin of imported "ceramic colors
image" decals, bone china; substantial
transformation; decalcomania; organic materials
burned away during domestic processing;
modification of HRL 734052; C.S.D. 93-1; imported
chinaware exempt from marking where certification
executed; 19 CFR 134.32(d); 19 CFR 134.26
Dear Mr. Gluck:
This is in response to your letter dated December 2,
1996, on behalf on Waterford Wedgwood USA, Inc.
("Wedgwood"), which requests a binding ruling regarding the
country of origin of certain articles of china imported into
the United States from England for further processing.
Samples of a decal and a china plate at two stages of the
production process have been submitted for our examination.
FACTS:
We are informed that Wedgwood intends to import into
the U.S. glazed, bone china tableware, accessories and
giftware of English origin. Wedgwood also intends to import
decals of various designs of Japanese, English and other
sources of foreign origin into the United States. In the
United States, Wedgwood will transfer the designs to the
glazed, bone china via application of the decals and kiln
firing, a process referred to as "decalcomania." In
addition to the decal of the design pattern, Wedgwood
intends to simultaneously apply a decal of the backstamp,
which will indicate the country of origin of the finished
plate, in addition to other information.
With regard to the sample plate submitted for our
examination, we are informed that, as a part of the
processing performed in the U.S., the decal is removed from
the paper backing and placed onto a glazed, but undecorated
plate. Additionally, the plate is placed into a kiln and
baked, during which:
1. the thousands of granules that make
up the design will undergo a
metamorphosis by melting and coagulating
into one mass;
2. the melted and coagulated paint will
adhere to the article of china;
3. the adhesive will melt;
4. the clear plastic film will burn
away; and
5. a gold band will be applied to the
rim, and the plate will be refired.
The Customs Service Office of Laboratories and
Scientific Services was consulted with regard to the request
for a binding ruling. In a report issued by that office, we
are informed that the type of decal in question, a "ceramic
colors image" which is suitable for the decoration of
pottery and porcelain only, consists of a paper backing, an
organic temporary adhesive or water-soluble adhering agent,
plastic film, inorganic pigments in a given design and, in
some cases, an inorganic adhesive (usually silicate).
To prepare the decal for firing, the decal is dampened,
placed on the pottery or porcelain material (such as a
plate) and dried. The paper backing is removed. Although
the backing has been removed, the presence of a temporary
adhesive or water-soluble adhering agent keeps the image
affixed to the plate until heat is applied. Once the plate
has reached a given temperature in the kiln, the organic
materials (adhering agent, plastic film and carrier resins
(if present)) are burned away. The plate is then raised to
a higher "service" temperature, at which point the pigments
will partially vitrify. Under partial vitrification, the
pigment does not completely melt but the particles become
soft and stick together without totally losing their shape.
There is no chemical change in the pigment, but the applied
heat results in a change in the crystallinity of the
pigmentatious materials. Having undergone partial
vitrification in the firing process, the design is
transferred to the plate, where it has permanently fused
with the porcelain or pottery surface.
You inquire whether the decals themselves or the
finished articles must be marked with the country of origin
of the imported decals and whether the finished china
articles may be marked, "Fine English China" or "Made in
England" or similar wording. In your comment on Customs
proposed modification of Headquarters Ruling Letter (HRL)
734052, dated October 17, 1991, you state that Wedgwood
wishes to import the china with the country of origin
affixed to the containers but not to the china itself. As
part of the subsequent decalcomania process in the U.S., a
back stamp decal will be applied individually to the
chinaware articles which will indicate their country of
origin.
ISSUE:
Whether imported "ceramic colors image" decals are
substantially transformed when applied to porcelain or
ceramic articles for purposes of the country of origin
marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.
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).
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 this part;
however for a good of a NAFTA country,
the NAFTA Marking Rules will determine
the country of origin.
It is a well established policy, and it is not disputed
here, that the decoration of imported ceramic or china
articles by means of painting or decalcomania does not
substantially transform these imported articles (See
Treasury Decision (T.D.) 89-21, 23 Cust.Bull. 157 (1989);
See also HRL 707057, dated December 10, 1976; HRL 058996,
dated June 21, 1979; HRL 724978, dated July 13, 1984 (also
published as Customs Service Decision (C.S.D.) 84-113, 18
Cust. Bull. 1111 (1984); HRL 732964, dated August 3, 1990);
HRL 735595, dated August 2, 1994 and HRL 558734, dated
November 4, 1994).
While agreeing that the plate is not substantially
transformed by means of decoration, you assert that the
imported decal is substantially transformed as a result of
becoming affixed to the china plate. Customs has previously
discussed the substantial transformation of decals. In HRL
734052, dated October 17, 1991 (also published as C.S.D. 93-1, 27 Cust. Bull. 10 (1991)), Customs considered porcelain
dinnerware and decals imported into the U.S. for domestic
assembly into finished signed, numbered collectable (non-food use) plates. Customs determined that neither the
plates nor the decals were substantially transformed by the
domestic application of the decals to the plates, as the
decalcomania process left the identity of both the plates
and decals intact. Upon review, however, we note that while
the issue of substantial transformation was discussed in
great detail with regard to the imported plates, the
imported decals were not addressed with particularity.
Therefore, we revisit this issue here.
The well-established test for determining whether a
substantial transformation has occurred is derived from
language enunciated by the court in Anheuser-Busch Brewing
Association v. United States, 207 U.S. 556, 562 (1908),
which defined the term "manufacture" as follows:
Manufacture implies a change, but every
change is not manufacture and yet
every change in an article is the result
of treatment, labor and manipulation.
But something more is necessary, as set
forth and illustrated in Hartranft v.
Wiegmann, 121 U.S. 609. There must be
transformation; a new and different
article must emerge, having a distinctive
name, character or use.
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) (cited with approval in Torrington Co. v.
United States, 764 F. 2d 1563, 1568 (1985)).
In C.S.D. 93-1, supra, Customs determined that no
substantial transformation of the decals had taken place
because "the decalcomania process left the identity of both
the plates and decals intact." However, in the matter
before us, while the pigment design of the "ceramic colors
image" is, indeed, transferred intact, the "decal" itself
undergoes significant changes as a result of domestic
processing. The article at issue, a "ceramic colors image"
decal, is, by its very nature, a temporary article which
serves as an instrumentality of transference of ceramic
colors. In the vitrification process, organic agents
present in the original decal (temporary adhesive or water-soluble adhering agent plastic film and carrier resins) are
burned away and the transferred pigment undergoes a change
in crystallinity. Once partially vitrified, it permanently
fuses to the surface of the chinaware. It is no longer a
"decal" but is a permanent part of the plate (or other
chinaware article). Inasmuch as the organic agents present
in the original decal are no longer present to assist in a
second transfer, what remains is not a "decal" but the
pigment image whose revitrification (if possible) would ruin
both the pigment design and the plate or other china article
upon which it rests. Consequently, as a result of
processing, the original decal has undergone a change in
name, character and use -- prerequisites for a finding of a
substantial transformation. Therefore, the U.S. processor
is the "ultimate purchaser" of the imported decals. See 19
CFR 134.1(d) and 134.35. Accordingly, neither the porcelain
articles nor the decals themselves must be marked with the
country of origin of the decals. However, the outermost
containers in which the decals are imported must be marked
with the country of origin of the decals.
In regard to your request that Wedgwood be permitted to
import the chinaware articles with the country of origin
marked on the containers rather than on the chinaware
itself, section 134.32(d), Customs Regulations (19 CFR
134.32(d)), exempts from the marking requirements those
articles for which the container will reasonably indicate
the origin of the articles. Therefore, provided the china
is imported in properly marked containers, the certification
set forth in section 134.26, Customs Regulations (19 CFR
134.26), is executed, the plates are not required to be
individually marked at the time of importation. After
processing in the U.S., however, the china must be
individually marked prior to reaching the ultimate
purchaser. With regard to the marking of porcelain plates,
Customs has held that the plates must be individually marked
with a more permanent means than adhesive stickers in order
to satisfy the country of origin marking requirements of 19
U.S.C. 1304. See HRL 734052, supra, and C.S.D. 84-113,
supra. The proposed markings, "Fine English China" or "Made
in England" or similar words meet the requirements of 19
U.S.C. 1304 and 19 CFR Part 134.
HOLDING:
Based upon the described facts, the application of a
"ceramic colors image" decal to finished porcelain articles
results in a substantial transformation of the imported
decals and the U.S. processor is the ultimate purchaser of
the imported decals. Thus, neither the finished porcelain
articles nor the decals themselves must be marked with the
country of origin of the decals. Accordingly, the holding
in HRL 734052, dated October 17, 1991, also published as
C.S.D. 93-1, 27 Cust. Bull. 10 (1991) is hereby modified as
it pertains to imported decals. The imported chinaware
articles are excepted from individual marking at the time of
importation pursuant to 19 CFR 134.32(d), provided they are
imported in properly marked containers and the 19 CFR 134.26
repacking certification is executed. After processing in
the U.S., however, the chinaware articles must be
individually marked with their own country of origin
legibly, indelibly, and by a more permanent means than
adhesive stickers. In addition, the outermost containers in
which the decals are imported must be marked with their
country of origin.
A copy of this ruling letter should be attached to the
entry documents filed at the time the goods are entered. If
the documents have been filed without a copy, this ruling
should be brought to the attention of the Customs officer
handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division