MAR-2-05 CO:R:C:V 733188 KG
Mr. Rollins Snelling
Dadco Inc.
8000 Baymeadows Circle E. #60
Jacksonville, Florida 32256
RE: Country of origin marking of imported exercise benches and
boards
Dear Mr. Snelling:
This is in response to your letter of March 9, 1990,
requesting a country of origin ruling regarding imported exercise
benches and boards.
FACTS:
You plan to import partially made exercise benches and
boards from Venezuela. In Venezuela, the metal frames of the
benches and boards will be cut and welded in several points. The
cushions will also be made in Venezuela. The frames and cushions
will then be boxed and shipped to the U.S.
The following operations will be performed in the U.S.: the
cushions will be silk-screened with your logo; the cushions will
be attached to the frame; the plastic end cups will be added; the
bedding label will be attached; the foam sleeves will be
attached; assembly instructions will be added and the completed
benches and boards will be boxed and shipped to retailers.
Cost figures submitted show that the cost of completion in
the U.S. for sit-up boards and two styles of benches is greater
than the cost of the work done in Venezuela. No details as to
how these figures were arrived at were submitted. Photographs of
three styles of completed exercise benches were included in the
submission. You inquired whether the completed exercise benches
may be marked "Made in U.S.A."
ISSUE:
Whether the cushions and frames which are imported from
Venezuela are substantially transformed in the U.S.
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 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
indicate to the ultimate purchaser in the U.S. the English name
of the country of origin of the article. The Court of
International Trade stated in Koru North America v. United
States, 12 CIT , 701 F.Supp. 229, (CIT 1988), that: "In
ascertaining what constitutes the country of origin under the
marking statute, a court must look at the sense in which the term
is used in the statute, giving reference to the purpose of the
particular legislation involved. The purpose of the marking
statute is outlined in United States v. Friedlaender & Co., 27
CCPA 297 at 302, C.A.D. 104 (1940), where the court stated that:
"Congress intended 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."
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 the country of origin of an article 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 for country of origin marking purposes. Section
134.35, Customs Regulations (19 CFR 134.35), provides that a
manufacturer or processor in the U.S. who converts or combines an
imported article into a different article having a new name,
character or use will be considered the ultimate purchaser of the
imported article within the contemplation of section 304(a) of
the Tariff Act of 1930, as amended, and the article shall be
excepted from marking. If the article itself is excepted from
marking, the outermost containers of the imported articles must
be marked.
A substantial transformation occurs when articles lose their
identity and become new articles having a new name, character or
use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270
(1940), National Juice Products Association v. United States, 10
CIT 48, 628 F.Supp. 978 (CIT 1986), Koru North America v. United
States, 12 CIT ___, 701 F.Supp. 229 (CIT 1988).
You assert that because the cost of the work done in the
U.S. is greater than the cost of the work done in Venezuela, the
exercise benches and boards should be considered substantially
transformed. While relative cost is a factor to be considered,
it is not determinative of the substantial transformation
standard.
The conclusion as to whether or not a particular article is
substantially transformed is determined on a case-by-case basis.
For instance, Customs ruled in C.S.D. 80-111 (September 24,
1980), that the U.S. assembly of imported ceiling fan components
on an assembly line did not constitute a substantial
transformation. The ceiling fan motors are assembled in a 20-
step assembly line procedure. The manufacture of the fan blades
is a 5-step procedure. The assembly of the ceiling fans was not
considered a substantial transformation because the manufacturing
processes described were "basically assembly line procedures" not
requiring large amounts of skilled labor or specialized
equipment. The cost of the manufacturing processes relative to
the cost of the components appeared to be low.
On the other hand, the United States Customs Court held in
Carlson Furniture Industries v. United States, 65 Cust. Ct 474
(1970), that imported finished and unfinished chair parts
assembled in the U.S. into finished chairs was a substantial
transformation. After importation, the importer assembles, fits
and glues the wooden parts together, steel pins the key joints,
cuts to length and levels the legs, and in some instances,
upholsters the chair and fits the legs with glides and casters.
The court determined that the imported articles required the
importer to perform additional work on them and material would
have to be added to them to create a functional article of
commerce and that more than the mere assembly of parts together
was required.
The assembly of the exercise benches and boards are not like
the chair parts in Carlson Furniture but rather, are similar to
the assembly of ceiling fan components. It appears from your
description that the metal frames are imported essentially
complete and that the U.S. assembly is primarily the attachment
of the cushions and several minor parts. No machining is done in
the U.S. and no specialized training, skill or equipment would be
required to finish these exercise benches and boards. There is
no change in name, character or use that takes place as a result
of the simple assembly that occurs in the U.S. Therefore, there
is no substantial transformation in the U.S. Since the exercise
benches and boards are not substantially transformed in the U.S.,
the country of origin remains Venezuela. The exercise benches
and boards must be marked to indicate that Venezuela is the
country of origin. However, Customs will allow the benches and
boards to be marked with the legend "Made in Venezuela, assembled
in the U.S." or a similar phrase.
The ultimate purchaser of an imported article is defined in
section 134.1(d), Customs Regulations (19 CFR 134.1(d)), as the
last person in the U.S. to receive the article in the form in
which it was imported. In this case, the person who purchases
these exercise benches and/or boards in a retail store would be
the last person in the U.S to receive it in its imported form and
therefore, the purchaser would be the ultimate purchaser. The
benches and boards must be marked to inform the retail purchaser
of their country of origin.
Since the exercise benches and boards are sold in retail
boxes, it may be possible to mark the boxes instead of the
benches and boards. Pursuant to section 134.32(d), Customs
Regulations (19 CFR 134.32), imported articles for which the
marking of the containers will reasonably indicate the origin of
the articles are excepted from individual marking. Section
134.34, Customs Regulations (19 CFR 134.34), provides that for
imported article which will be repacked after release from
Customs custody, the 19 CFR 134.32(d) exception may be granted in
the discretion of the district director if the containers in
which the articles are repacked will indicate the origin of the
articles to the ultimate purchaser in the U.S. and the importer
arranges for supervision of the marking of the containers by
Customs officers at the importer's expense or secures such
verification as may be necessary, by certification and the
submission of a sample or otherwise, of the marking prior to the
liquidation of the entry. The exercise benches and boards itself
may be excepted from marking if the district director is
satisfied that (1) the boxes in which they are shipped to
retailers are sealed; (2) the boxes are the same boxes in which
the purchaser would receive the exercise benches; (3) the boxes
are clearly and conspicuously marked to indicate the country of
origin and (4) the importer satisfies the requirements of 19 CFR
134.34.
You asked whether you could mark the completed article "Made
in U.S.A." As stated above, for marking purposes, the country of
origin is Venezuela and 19 U.S.C. 1304 would require that these
benches and boards are marked to indicate that the country of
origin is Venezuela.
HOLDING:
The exercise benches and boards are not substantially
transformed in the U.S. The country of origin of the imported
exercise benches and boards is Venezuela. The ultimate purchaser
of the imported exercise boards and benches is the retail
purchaser. Therefore, the exercise benches and boards must be
marked to indicate to the retail purchaser that the country of
origin is Venezuela. The exercise boards and benches may be
excepted from marking on the benches and boards itself if the
conditions of 19 CFR 134.34 are met.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch