MAR-2-05 CO:R:C:V 733654 KG
Anthony D. Padgett, Esq.
Thelen, Marrin, Johnson & Bridges
805 15th Street, N.W.
Washington, D.C. 20005-3000
RE: Country of origin marking of imported non-prescription
sunglasses; eyeglasses; substantial transformation
Dear Mr. Padgett:
This is in response to your letters of November 30, 1989,
February 5, June 12, and August 3, 1990, requesting a country of
origin ruling on behalf of your client regarding imported
sunglasses. In HQ 555595 (May 21, 1990), addressed to Mr. John
Mayo McKeown, Customs ruled on the applicability of subheading
9802.00.80 of the Harmonized Tariff Schedule of the United States
("HTSUS") to these items. You also requested a ruling on two
other styles of sunglasses which will be addressed in separate
letters. We regret the delay in responding to your inquiry.
FACTS:
You have submitted samples of sunglass components for which
some of the processing is done in Mexico. Your client is in the
process of entering into a contractual relationship with a
Mexican company to perform the Mexican processing according to
your client's specifications. Your client will have direct
contact with the Mexican processor.
The submitted components are black nylon temples, fronts, and
metal hinge pins all made in the U.S. which are shipped to Mexico
for further processing. The term "front" refers to the component
which holds the lenses and sits on the wearer's face. The
"temples" are the side pieces which attach to the front and fit
around the wearer's ears.
You presented two different scenarios in which processing
for this style is done in Mexico. In the first scenario, the
following operations are performed in Mexico on the temples: (1)
the mold closure mark is removed by tracing the periphery of the
temples with a hand grinder; (2) the temples are polished; (3)
the registered trademark is printed on the end of the temples;
and (4) the hinge pins are inserted into the first half of the
temples. The temples are then attached to the fronts by
inserting the metal hinge pin with pliers. The temples are then
folded to check for the proper fit. The completed sunglass frame
is visually inspected for defects and then packed and shipped to
the U.S. for the insertion of non-prescription U.S.-made lenses.
The second scenario is the same, except that the fronts are
attached to the temples in the U.S. rather than in Mexico.
ISSUE:
What is the proper country of origin marking of the imported
non-prescription sunglass frames under either scenario?
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.
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 this part.
Section 134.35, Customs Regulations (19 CFR 134.35), states
that the manufacturer or processor in the U.S. who converts or
combines the 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. The outermost
containers of the imported articles shall 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).
Section 10.22, Customs Regulations (19 CFR 10.22), states
that assembled articles entitled to the duty exemption under
HTSUS subheading 9802.00.80 are considered products of the
country of assembly for the purposes of country of origin
marking. If an imported assembled article is made entirely of
American-made materials, the United States origin of the material
may be disclosed by using a legend such as "Assembled in ____
from material of U.S. origin," or a similar phrase.
Treasury Decision 74-38, dated January 14, 1974, addressed
the issue of what method should be used to mark sunglass frames
but did not describe the factual settings in which marking would
be required.
I. Nylon sunglass frames processed as described in the first
scenario
The nylon sunglass components involve U.S.-made components
assembled in Mexico into finished sunglass frames which will be
combined with non-prescription U.S.-made lenses in the U.S.
Customs ruled in HQ 555595 (May 21, 1990), that the nylon
sunglass frames were entitled to a partial duty exemption under
HTSUS subheading 9802.00.80. Therefore, in accordance with 19
CFR 10.22, Mexico would be considered the country of origin of
the assembled sunglass frames which are imported into the U.S.
without lenses.
The question then presented is whether the insertion of the
U.S.-made non-prescription lenses and other subsequent processing
done in the U.S. constitutes a superceding substantial
transformation. Customs ruled in HQ 731757 (February 23, 1990),
that the insertion of lenses into frames to make "over-the-
counter" sunglasses in Japan was a substantial transformation and
the sunglasses were considered products of Japan for country of
origin marking purposes. The ruling stated that: "Unlike
prescription eyewear where ultimate purchasers make a separate
purchasing decision regarding the frames alone, purchasers of
over-the-counter sunglasses make their decision while inspecting
frames and lenses already combined."
We find that the insertion of non-prescription lenses into
black nylon sunglass frames in the U.S. constitutes a
substantial transformation. The nylon frames, once combined with
the lenses in the U.S., are known as sunglasses. This finished
article is a new article of commerce with a different name, a
very specific use and a change in character from the frames
alone. The frames alone could be used to make prescription
sunglasses, gag or costume items, or clear eyeglasses. Once the
non-prescription U.S.-made sunglass lenses are added, the
finished item is a pair of sunglasses. Sunglasses are used to
protect the wearer's eyes from the sun. The type of lens used
determines the value and appropriate use of a particular pair of
sunglasses for a particular activity or particular lighting
conditions.
Since the nylon frames are substantially transformed in the
U.S., pursuant to 19 CFR 134.35, the U.S. manufacturer that
inserts the non-prescription lenses into the frames is the
ultimate purchaser of the frames.
An exception from marking is provided in 19 U.S.C.
1304(a)(3)(H) and 19 CFR 134.32(h) where an ultimate purchaser,
by reason of the character of the article or by reason of the
circumstances of its importation, must necessarily know the
country of origin of the article even though it is not marked to
indicate its origin. In ruling HQ 730243 (March 5, 1987),
Customs required that the importer must be the ultimate purchaser
of the imported article and have direct contact with the foreign
supplier to qualify for the 19 U.S.C. 1304 (a)(3)(H) exemption.
In this case, the U.S. manufacturer has a contractual
relationship directly with the Mexican supplier whereby the U.S.
manufacturer sends the nylon temples and fronts to Mexico for
processing under its supervision according to its specifications
and re-imports the sunglass components. The U.S. manufacturer in
this case deals directly with the Mexican company that is
processing the sunglass components. Therefore, the sunglass
components are entitled to the exemption from marking set forth
at 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h).
II. Nylon sunglass frames processed as described in the second
scenario
Section 134.32(m), Customs Regulations (19 CFR 134.32(m)),
excepts from country of origin marking requirements products of
the U.S. exported and returned. Customs has interpreted this
provision to mean that American goods exported which are not
substantially transformed in a foreign country or not entitled to
the partial duty exemption under HTSUS subheading 9802.00.80 are
excepted from country of origin marking requirements upon their
return to the U.S. See HQ 729316 (April 20, 1989).
The minor processing done in Mexico to the fronts and
temples would not create a new article of commerce with a new
name, character or use. No new article of commerce is created;
the fronts and temples merely undergo minor finishing. The
fronts and temples exist as such when exported to Mexico and have
the same name, character and use when re-imported. In short, the
Mexican processing does not constitute a substantial
transformation. Because in this scenario, assembly of the frames
occurs in the U.S., these imported fronts and temples would not
appear to be entitled to the partial duty exemption set forth
under HTSUS subheading 9802.00.80. Since the imported fronts and
temples are not substantially transformed in a foreign country
and assuming that neither the fronts nor the temples would be
entitled to the partial duty exemption set forth under HTSUS
subheading 9802.00.80, the imported fronts and temples would be
excepted from country of origin marking under 19 CFR 134.32(m).
HOLDING:
The nylon fronts and temples processed as described in
scenario one are excepted from country of origin marking pursuant
to 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h).
The nylon frames processed as described in scenario two are
excepted from country of origin marking pursuant to 19 CFR
134.32(m). No country of origin marking is required on the non-
prescription nylon sunglasses under either scenario.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch
cc: District Director
Laredo, Texas