MAR-2-05 CO:R:C:V 731433 EAB
Michael O'Rourke, Esquire
Rode & Qualey, Attorneys at Law
295 Madison Avenue
New York, NY 10017
Re: Country of origin marking requirements for vinyl shells
Dear Mr. O'Rourke:
This is in response to Ms. Diane L. Weinberg's letter dated
May 10, 1988, submitted on behalf of Royal Waterbeds Internation-
al, Ltd. and requesting a ruling on country of origin marking re-
quirements for imported vinyl shells used in the manufacture of
waterbed mattresses distributed for retail sale in containers.
We regret the delay in responding.
FACTS:
Vinyl fabric is cut and partially seamed to form a shell in
Taiwan, then imported to the U.S. for further manufacturing. In
the U.S., four layers of polyester fiber and one layer of foam,
all products of the U.S., are attached together and inserted into
the vinyl shell, which is seamed closed by the importer to form a
waterbed mattress. You indicate that the vinyl shell costs the
importer $11.34, while the U.S. components used in the manufac-
turing process cost $23.51 per mattress. The U.S. operations,
which include inspecting and boxing, add $10.08 to the cost of
each mattress.
ISSUE:
For purposes of country of origin marking, whether a U.S.
manufacturer substantially transforms imported vinyl shells by
further processing and combining them with U.S. components to
make waterbed mattresses.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), provides that every article of foreign origin (or its con-
tainer) imported into the U.S. shall be marked in a conspicuous
place as legibly, indelibly and permanently as the nature of the
article (or container) will permit, in such a manner as to indi-
cate to the ultimate purchaser in the U.S. the English name of
the country of origin of the article. The primary purpose of
the country of origin marking statute is to "mark the goods so
that at the time of purchase the ultimate purchaser may, by know-
ing where the goods were produced, be able to buy or refuse to
buy the product, if such marking should influence his will."
United States v. Friedlaender & Co., 27 C.C.P.A. 297, 302, C.A.D.
104 (1940); National Juice Products Association v. United States,
10 CIT 48, 628 F. Supp. 978 (1986).
Part 134, Customs Regulations (19 CFR Part 134) implements
the country of origin marking requirements of and exceptions to
19 U.S.C. 1304. The ultimate purchaser is generally the last
person in the U.S. who will receive the article in the form in
which it was imported," 19 CFR 134.1(d). However, a manufactur-
er may be the ultimate purchaser if he converts or combines an
imported article into an article with a new name, character or
use; in such case, "the article shall be excepted from marking.
The outermost containers of the imported articles shall be marked
in accord with this part," 19 CFR 134.35.
It is a well settled principle of customs law that in order
for a substantial transformation to be found, an article having a
new name, character or use must emerge from the processing. See
United States v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267
Customs finds that the manufacturing process that includes
combining the imported vinyl shell with articles of U.S. origin
is a substantial transformation of the vinyl shell into a new
and different article of commerce having a new name, character or
use, namely a waterbed mattress, and that your client is the ul-
timate purchaser of the imported vinyl shell. The vinyl shell
loses its separate identity and becomes an integral component of
the waterbed mattress.
HOLDING:
The vinyl shell(s) that are imported by your client are sub-
stantially transformed by your client, thus making your client
the ultimate purchaser of the imported shells. The vinyl shells
are excepted from marking, provided the containers in which they
are imported are marked to indicate the country of origin and
customs officials at the port of entry are satisfied that the
vinyl shell(s) will be used only in the manner described above
and will not be otherwise sold. Statements to this effect may be
required at the time of entry.
Sincerely,
Marvin M. Amernick, Chief
Value, Special Programs and
Admissibility Branch