MAR-2-05 CO:R:C:V 733604 RSD
John Politis, Esq.
Politis, Pollack & Doram
660 Wilshire Place, Suite 404
Los Angeles, California 90005
RE: Reconsideration of HRL 731506, Country of origin marking
of imported automotive glass; 19 CFR 134.35
Dear Mr. Politis:
This is in response to your letter dated June 15, 1990,
requesting reconsideration of Headquarters Ruling Letter 731506,
dated May 1, 1990, submitted on behalf of Mitsubishi
International Corporation, concerning the country of origin
marking requirements of automotive replacement glass. In
addition to your request, we have received other submissions from
glass manufacturers and importers, as well as several
associations. All of these submissions were carefully analyzed
and considered in making our determination.
FACTS:
On May 1, 1990, Customs advised the District Director of
Customs in Los Angeles, California, that automotive glass
imported by Mitsubishi from Japan for the replacement automotive
market must be marked with its country of origin. In that ruling
Customs determined that when imported, the glass was already cut
to shape and dedicated to use as either a windshield, rear
window, or side window and made to fit a particular automobile
type and model. It was imported in a finished condition and
merely had to be installed. For these reasons, we determined
that the glass was not substantially transformed when it was
installed into an auto and the ultimate purchaser is the auto
owner and not the installer. Because the auto owner who
purchases the glass is the last person in the U.S. to receive it
in its imported form, we found that it must be marked with its
country of origin. Although the ruling indicated that the
marking requirements were best met by marking worked into the
glass at the time of manufacture, it was not mandated. The
marking only had to be sufficiently permanent to insure that in
any reasonably foreseeable circumstance it would remain on the
glass until it reaches the ultimate purchaser.
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Various arguments have been raised to support the contention
that replacement glass should be excepted from country of origin
marking. It is contended that the installation is complex and
requires special expertise. In this regard, specific information
was provided which indicates that it takes skill and special
tools and equipment, that it may take a professional installer
from one to 7 1/2 hours to replace damaged glass, and that it is
not done by "do-it-yourselfers." Because of this, it is
maintained that the ultimate purchaser is the installer and not
the auto owner. It is also pointed out that the auto owner will
not see a marking on the glass until after it is installed.
Therefore, it is argued that the purpose of the marking statute
of advising the ultimate purchaser of the country of origin of
the imported article before its purchase, will not be served. It
is also contended that before HRL 731506 was issued, Customs had
a long-standing established practice to allow the container in
which replacement glass is packaged to be marked with the country
of origin, rather than marking the glass itself.
ISSUE:
Does imported replacement automotive glass have to be marked
with its country of origin?
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 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. 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. Friedlaender & Co. 27
C.C.P.A. 297 at 302; C.A.D. 104 (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
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manufacture, production or growth of any article of foreign
origin entering the U.S.
Your submission, and others, agree that the purpose of the
marking statute is to advise the ultimate purchaser of the
country of origin of the imported article before its purchase so
that a person can make a conscious choice if country of origin is
an important consideration. It is explained however, that as a
practical matter, vehicle owners never see the replacement glass
until after it is installed by professional glass installers.
This is because replacement glass is not sold in retail outlets
such as automotive part stores. Rather it is imported and sold
through distributors to body shops and glass installers. The
installation is extremely complicated and must be done with care
and specialized equipment and tools. Accordingly, it is done by
professional installers, not "do-it-yourselfers."
As noted in our ruling of May 1, 1990, no evidence had been
submitted that the installation of automotive glass was
particularly complex or required a great deal of skill. Based on
the considerable evidence now submitted concerning the
installation process, it is asserted that the installation makes
the glass installer the ultimate purchaser of the glass. This
assertion seeks to separate the question of who is the ultimate
purchaser from whether the installation of the glass constitutes
a substantial transformation. However, the concepts of ultimate
purchaser and substantial transformation are intertwined, and a
determination of whether there is a substantial transformation
must be made to determine who is the ultimate purchaser.
The definition of ultimate purchaser is set forth in section
134.1(d), Customs Regulations (19 CFR 134.1(d)), as generally the
last person in the U.S. who will receive the article in the form
in which it was imported. The first example of an ultimate
purchaser provided in 19 CFR 134.1(d) indicates that if an
imported article is used in manufacture, the manufacturer may be
the "ultimate purchaser" if he subjects the imported article to a
process which results in a substantial transformation of the
article, even though the process may not result in a new or
different article. However, if the manufacturing process is
merely a minor one which leaves the identity of the imported
article intact, the consumer or user of the article who obtains
the article after the processing, will be regarded as the
"ultimate purchaser."
The case of U.S. 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
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or use differing from that of the constituent article will be
considered substantially transformed. Section 134.35, Customs
Regulations (19 CFR 134.35), indicates that under the principle
of U.S. v. Gibson-Thomsen Co., supra, the manufacturer or
processor in the U.S. who converts or combines the imported
article into a different article will be considered the "ultimate
purchaser" of the imported article within the contemplation of 19
U.S.C. 1304(a), and the article shall be excepted from marking.
Only the outermost containers of the imported articles shall be
marked.
Therefore, to determine who is the ultimate purchaser of the
imported automobile glass, it is necessary to determine if the
glass is substantially transformed in the U.S. In HRL 731506, we
noted that the glass is imported in a finished condition already
cut to size and is merely installed into the auto. Furthermore,
it is imported already cut to shape and dedicated to use as
either a windshield, rear window, or side window and made to fit
a particular automobile type and model. Evidence has now been
presented in an effort to establish that installation of
replacement glass is a complex undertaking. Although the
complexity of the processing is a factor to consider in
determining whether a substantial transformation has occurred, it
is not determinative. To have a substantial transformation, the
U.S. processor must subject the imported article to a process
which results in an article with a name, character, or use
differing from that of the imported article. In this case,
because the imported replacement glass is already cut to the
exact dimensions to fit a specific model of auto and the
installer in no way changes the glass itself when he installs it
into an auto, after installation, the glass still has the same
name, character, and use. In other words, the identity of the
glass is left intact after installation. Consequently, the
installer does not substantially transform the glass and cannot
be considered the ultimate purchaser of the glass within the
meaning of 19 CFR 134.35. In support of the position that the
glass installer is the ultimate purchaser, a ruling regarding
imported unmarked transmission gears and other transmission and
differential parts, was cited (HQ 732063, January 18, 1988).
However, that ruling never addressed the question of who was the
ultimate purchaser, and therefore it is not helpful in this case.
Based on the above considerations, we affirm our previous
finding that the auto owner, who has replacement glass installed
in his/her auto is the ultimate purchaser. As the ultimate
purchaser of the glass, the auto owner is entitled to know the
country of origin of the glass. Although it is possible that the
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auto owner may not have an opportunity to see the country of
origin marking until after the glass is installed, 19 U.S.C. 1304
requires that all articles of foreign origin be marked with the
country of origin unless otherwise excepted. Neither the statute
nor the implementing regulations provide an exception from
country of origin marking for the reason that the ultimate
purchaser may not see the marking until after installation or
purchase. Moreover, the ultimate purchaser still may want to be
informed of the country of origin of the glass after
installation, in the event he/she needs to make a future purchase
of auto glass or if he/she wants to refer other individuals to a
particular glass installer.
It is also claimed that Customs has a long-standing
established practice to permit marking of the container in which
replacement glass is packaged in lieu of the glass itself.
However, no information has been presented to demonstrate this
position. Moreover, HQ 731506 was the first time the question
regarding the marking of replacement auto glass was addressed.
We find marking only the glass packaging would not be sufficient
to inform the ultimate purchaser of the country of origin because
the ultimate purchaser will probably never see the marking on the
packaging.
Several submissions noted that an auto owner purchases not
only the glass, but also the installation of the glass. They
sell their skills as installers and derive the majority of their
profit from installation. Further, they will not sell
uninstalled glass to an auto owner. It was also noted that in
many instances the auto owner has no choice in purchasing the
glass because insurance companies are paying for the glass and
tell the auto owner where to take it for the replacement glass to
be installed. Since all auto glass must meet federal safefy and
quality standards, it is contended that the insurance company
selection is ordinarily based on price alone.
While all of this may be true, it does not affect the basic
intent of the country of origin marking law. None of these
factors is considered sufficient reason for not giving an auto
owner the opportunity to ascertain the source of the glass to be
installed in his/her auto.
In HQ 731506, we indicated that section 134.41(a), Customs
Regulations (19 CFR 134.41(a)), states that as a general rule,
marking requirements are best met by marking worked into the
article at the time of manufacture. We stated that the marking
requirements of 19 CFR 134.41 are best met by marking worked into
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the glass at the time of manufacture which would be visible to
the auto owner purchasing the glass. However, we did not mandate
that the country of origin marking had to be worked into the
glass. The marking only had to be sufficiently permanent to
insure that in any reasonably foreseeable circumstance, it would
remain on the glass until it reaches the ultimate purchaser
unless it is deliberately removed. While one submission urges
that sandblasting the country of origin onto glass is the only
way to insure that the marking is permanent and that it will be
seen, others point out that they now use an adhesive label
applied directly to the glass and that it has significant
permanence to insure that it will remain on the glass throughout
normal handling in distribution, storage, and installation unless
it is deliberately removed. Customs believes the industry can
best decide on the method of marking. However, we also affirm
that the requirements would be best satisfied by marking into the
glass at the time of manufacture, be it by sandblasting, etching,
painting or any other method. But it is not required. Alternate
methods of country of origin marking, such as placing adhesive
stickers on the glass would comply with 19 U.S.C. 1304 and 19 CFR
134.41 as long as the importer satisfies the district director at
the port of entry that the marking will remain on the glass
throughout distribution until it reaches the ultimate purchaser.
If the district director has grounds to believe that the marking
is being removed before it reaches the ultimate purchaser, it
might be necessary to require that the glass be permanently
marked.
Another suggested alternative to marking was that the glass
installer be required to display the country of origin on the
invoice issued to the consumer. Customs does not have the
authority to require this nor do we think it could serve as an
alternative to marking. However, a glass installer that wanted
to ensure that the ultimate purchaser was aware of the country of
origin could certainly do this in addition to marking the glass.
Another positive step that an importer could take would be to
issue instructions to installers not to remove the adhesive label
until the ultimate purchaser has had an opportunity to see it.
These and other methods could be used to satisfy the district
director that the marking will not be removed until it reaches
the ultimate purchaser.
Several associations noted that requiring country of origin
to be worked into the glass at the time of manufacture would
result in a major economic burden on glass manufacturers and, as
a consequence, this would be passed on to the auto owner. The
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reason given is the need for changing hundreds of dies for
production of replacement glass for older model vehicles. In
addition, they contend that large existing stocks of unmarked
glass are maintained and that the marking requirement is only for
glass to be imported for sale in the U.S. Manufacturers sell the
same glass in other countries that do not require marking.
Although not specific, they seem to infer that this could cause
problems.
To lessen any economic burden, Customs is not requiring that
the marking be worked into the glass. In fact, no specific
method of marking is being mandated. Any method of marking that
will comply with the law and regulations will be acceptable to
Customs as long as it remains on the glass until the ultimate
purchaser has had an opportunity to see it. No dies need be
changed and the cost of labeling existing stocks should be
minimal. Customs will however, discuss any particular problem an
importer may have on a case-by-case basis.
To allow affected persons an opportunity to use existing
stocks and to make appropriate changes needed to comply with this
ruling, we are delaying the effective date until April 1, 1991.
During the interim period, Customs will allow imported automotive
replacement glass to be marked with its country of origin either
on the glass or its container.
HOLDING:
We affirm our findings in HQ 731506 that imported
replacement automotive glass is not substantially transformed
when it is installed into an auto and that the auto owner is the
ultimate purchaser. Accordingly, the replacement glass must be
marked with its country of origin. The country of origin marking
requirement is best met by marking worked into the glass at the
time of manufacture. However, the marking may be accomplished by
alternative methods, such as stickers on the glass if the
district director at the port of entry is satisfied that the
marking will remain on the glass until it reaches the ultimate
purchaser.
The ruling will be effective with regard to automotive glass
entered or withdrawn from warehouse for consumption on or after
April 1, 1991.
Customs emphasizes that this ruling applies only to
replacement glass that is imported in a finished condition
already cut to shape and size for a particular auto. The ruling
does not apply to glass imported as original equipment to be
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installed in new vehicles by automobile manufacturers. Likewise,
it does not apply to imported glass which must be further
processed in the U.S. before it can be installed.
Sincerely,
Harvey B. Fox, Director
Office of Regulation and Rulings