MAR-2-05 RR:CR:SM 561614 MLR
George R. Tuttle, Esq.
Three Embarcadero Center
Suite 1160
San Francisco, CA 94111
RE: Country of Origin Marking of picture frames
Dear Mr. Tuttle:
This is in reference to your letter of December 16, 1999, requesting a ruling on behalf of Elsa L, concerning the country of origin marking of certain picture frames. Photographs were submitted with your request. We regret the delay in responding.
FACTS:
It is stated that rough frame castings are manufactured in Taiwan. The rough castings are shipped to China for a series of manufacturing and assembly operations to make a finished picture frame. Two frame models are at issue. The first is a “leaves and vines frame”, measuring 8.5 x. 7.5 inches with matte silver, bordered by gold leaves on vines and separated into four picture display windows. The second frame is a “chain of boxes frame”, measuring 7.25 x 6 inches with a matte silver frame, bordered with a chain of boxes and black enamel detail.
In Taiwan, rough frame casting borders are produced from either a zinc alloy or another alloy. The rough castings are made using steel molds, whereby an operator adds raw metal material to a machine. In the raw form, it is stated that the rough castings consist of a thin, rectangular slate of raw material that possess the same general dimensions as the finished border.
In China, the machining operations consist of deburring, drill threading, and plating operations. In the deburring process, the edges of the center viewing window are cleared of burrs of metal. Three dimensional designs unique to the frame model are created from the metal of the rough frame casting. In the drill threading process, a specialized drill is used to thread holes into the metal of the frames into which the screws will later be inserted. Next, a tumbling process and grindstone polishing creates a shiny, smooth surface. In the plating process, the castings are inserted into a machine that produces a coating of silver on the alloy surface. Next, either individual leaf-halves are painted or black enamel is applied.
Next, the assembly operations are performed. The glass is cut to dimension. The frame easel back and stand components are cut to shape from cardboard sheets using a stamping process. These components are then assembled together with the hinges. The glass is inserted into the frame and a sample picture is secured between the glass plate and easel back-stand. Holding clips (of U.S. origin) and screws secure the picture, the easel back stand and the glass plate. The frames are then packaged for shipment to the U.S.
ISSUE:
Whether the raw frame castings undergo a substantial transformation in China.
LAW AND ANALYSIS:
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. 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 U.S. the English name of the country of origin of the article. 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(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 U.S. 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.
For country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the imported article. On the other hand, if the manufacturing or combining process is merely a minor one which leaves the identity of the imported article intact, a substantial transformation has not occurred and an appropriate marking must appear on the imported article so that the consumer can know the country of origin. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).
As support that the Taiwanese rough castings are substantially transformed in China, numerous cases are cited, categorized by subject matter: plating and assembly of eyeglasses, coating of gloves, deburring rough forgings, coating of valve castings, assembly of metal housing, and textile assemblies.
For example, under the category of the plating and assembly of eyeglasses, one ruling cited is Headquarters Ruling Letter (HRL) 558732 dated May 5, 1995. In HRL 558732, the bridge, brace, temple, and endpiece of eyeglasses were formed in Japan, and the temple and endpiece were pressed in Japan. The materials were sent to Malaysia, where the bridge and brace were bent, pressed, and cut. The temple and endpiece were also cut, soldered and electroplated in Malaysia. A memory treatment was also applied to allow the bridge, brace, and temple to resume its normal shape after bending. Next, the bridge, brace and front eyewire were welded together. Customs found that taking into account the totality of the operations occurring in Malaysia, the frame components were substantially transformed into a product of Malaysia.
Also cited is HRL 959337 dated July 3, 1996, which held that coating gloves with PVC resulted in a change in origin under the country of origin rules of 19 CFR 12.130. In addition, numerous other textile rulings are cited. However, as pointed out in HRL 959337, the new textile rules of origin, found at 19 CFR 102.21, became effective in 1996, such that the processing described in HRL 959337 and the textile rulings cited are of questionable precedential value for the situation considered here.
Also cited are various rulings that hold that the processing of rough forgings into finished or semi-finished metal articles by means of grinding and deburring constitutes a substantial transformation. For example, HRL 732487 dated September 20, 1989, is cited where Customs held a substantial transformation occurred to an imported rough forging made into a wrench in the U.S. The U.S. processes included: coining, shot blasting, polishing, grinding, stamping, tempering, chrome plating and calibrating both ends of the wrench. Similarly, it is claimed that the finished frame borders do not have their basic characteristics and completed character until the unique designs are revealed by deburring the rough forgings. As support that the assembly operations constitute a substantial transformation, HRL 558008 dated November 16, 1994, is cited where the assembly of valve body castings with other U.S. components constituted a substantial transformation.
It is also claimed that where a major component is sourced in the country of manufacture, such as the glass, easel back stand, screws and sample picture from China, a substantial transformation results. As support HRL 561258 dated April 15, 1999 is cited, where Customs determined that the assembly of numerous imported workstation components in the U.S. constituted a substantial transformation, especially considering that the essential and largest component of the workstation was the work surface which was of U.S.-origin. See also HRL 560693 dated March 6, 1998 (where one of the major components of the golf clubs (i.e. the shaft or head) is of the same origin as the country where the assembly of the clubs occurs, the country of origin of the clubs is the country where the assembly is performed).
It is also claimed that there is a change in name from “rough frame castings” into “finished frame borders” and then into assembled “finished picture frames.” A change in character is claimed since the essential character of the frame borders is imparted by the plating operations, and that before the deburring and plating operations, the castings are merely rectangles of metal. It is also claimed that there is a change in use, since without the designs which are unique to each model of picture frame, and the plating, the rough frame castings are not useful, marketable, or functional as borders, much less as picture frames.
It is claimed that HRL 734671 dated October 8, 1992, is not applicable, because the rough frame castings in this case do not possess the physical appearance of a frame border or a finished picture frame. In HRL 734671, Customs held that a substantial transformation did not result from the processing involved in the forming of brass and silver-plated picture frames. The metal portions of Hong Kong origin, in various sizes, were shipped to China where they were polished, the brass frames were lacquered and the silverplate frames were plated. No deburring or drill threading operations took place, and there was no painting. The metal frames were combined with a piece of glass, plastic backs, velvet easels, hinges and face paper to make finished picture frames. Customs stated that the imported metal picture frames possessed all of the essential qualities of the finished picture frame, and that the physical appearance of the final product was determined by the imported metal frames. In this case, it is stated that the metal is raw and only cast, the surfaces are uneven and gritty, and the edges contain burrs of metal. Therefore, it is claimed that the Taiwanese frame castings are not functionally usable for the purposes of a decorative border in a frame, and possess no aesthetic shape, design, color, or appeal.
In National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993), the court considered sockets and flex handles which were either cold formed or hot forged into their final shape prior to importation, speeder handles which were reshaped by a power press after importation, and the grip of flex handles which were knurled in the U.S. The imported articles were heat treated, cleaned by sandblasting, tumbling, and/or chemical vibration before being electroplated. In certain instances, various components were assembled together which the court stated required some skill and dexterity. The court determined that the imported articles were not substantially transformed and that they remained products of Taiwan. In making its determination, the court focused on the fact that the components had been cold formed or hot forged “into their final shape before importation”, and that “the form of the components remained the same” after the assembly and heat treatment processes performed in the U.S.
In HRL 559847 dated January 2, 1997, Customs considered forceps and scissors which were hot forged into their final shape in the U.S. and exported to Pakistan. In Pakistan, the forgings underwent milling operations in which the box, rachet and jaw serrations were cut into the forceps. The milled forgings were assembled and the assembled instruments underwent grinding, filing, inspection and heat treatment, including tempering and testing for hardness. The instruments were also subjected to an acid pickling process, polishing, and chemical cleaning, final setting and adjustment operations, buffing and ultrasonic cleaning. Relying on National Hand Tool, it was held that inasmuch as the forgings resembled the shape and size of the completed instruments upon importation into Pakistan, the operations performed in Pakistan did not substantially transform the forgings into a new and different article of Pakistani origin. Therefore, the country of origin of the finished forceps and scissors was the U.S. See also HRL 558747, dated January 20, 1995.
In this case, while some of the metal must be removed in order to finish the design of the picture frame, such operations, even in conjunction with other operations, such as assembly and electroplating, were not deemed to be a substantial transformation in National Hand Tool. We also note that in HRL 558008, supra, the assembly involved more components than are involved here. In addition, some of the assembly steps in this case are very simple that are performed by the user of the frame to replace the sample picture with the picture of the user’s choice. We also note that what makes up the essence and style of the frame, are not the Chinese components such as the glass and easel back stand, but the frame castings which are of Taiwanese origin.
Therefore, we find that the Taiwanese-origin frame castings do not undergo a substantial transformation by the operations performed in China. As imported into China, the articles may be referred to and are recognizable as “frame components”, and, when completed, they are referred to as “frames.” Furthermore, other than some assembly, the frame castings are imported in their final shape, and that form remains the same after assembly with the glass and easel to form the finished frame. The intended purpose of the Taiwanese-origin frame components is to make a frame, such that the use is not changed by the Chinese processing. Accordingly, pursuant to National Hand Tool, we fnd that there is no substantial transformation of the frame components in China. Therefore, we find that the country of origin of the frames is Taiwan.
HOLDING:
Based upon the information provided, the frame components do not undergo a substantial transformation by the processing performed in China. Therefore, the country of origin of the finished frames is Taiwan.
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