MAR-2-05 CO:R:C:V 733883 KG
Midas Optical Co. LT.
632-1 Deung Chon-Dong
Gang Seo-Gu
Seoul, Korea
Att: Mr. Young Il KIM
RE: Country of origin marking of imported eyeglass frames;
substantial transformation; 19 CFR 134.32(m); 19 CFR 10.22;
subheading 9802.00.80 HTSUS
Dear Mr. Young:
This is in response to the letter of October 11, 1990,
submitted by the Customs Attache in Korea on your behalf
requesting a country of origin ruling regarding imported
eyeglasses. Samples of the unfinished and finished eyeglass
frames were submitted for examination.
FACTS:
Your company proposes to make eyeglass frames. In the U.S.,
the front is cast in a mold with parts of the hinge imbedded and
the temples are injection molded without a hinge. The fronts
and temples are shipped to Indonesia where they are assembled
into eyeglass frames, deburred, colored with dies, coated with
lacquer, inspected and packaged. You ask whether it is
acceptable to stamp "Made in U.S.A." on the finished frames.
ISSUE:
What are the country of origin marking requirements for the
imported eyeglass frames?
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, 701 F.Supp. 229, 12 CIT (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. However, there
is a different definition of the country of origin for American
goods assembled abroad eligible for the partial duty exemption
set forth at subheading 9802.00.80 of the Harmonized Tariff
Schedule of the United States ("HTSUS").
I. Subheading 9802.00.80, HTSUS eligibility of these eyeglasses
Section 10.22, Customs Regulations (19 CFR 10.22), provides
that assembled articles entitled to the partial duty exemption
set forth at subheading 9802.00.80 of the HTSUS are considered
products of the country of assembly for the purposes of country
of origin marking. Because there is a different definition of
country of origin for goods assembled abroad with U.S. components
which are eligible for the partial duty exemption set forth at
subheading 9802.00.80 of the HTSUS, the threshold question
presented here is whether these eyeglasses meet these eligibility
requirements.
HTSUS subheading 9802.00.80 provides a partial duty
exemption for:
[a]rticles assembled abroad in whole or in part of
fabricated components, the product of the United
States, which (a) were exported in condition ready for
assembly without further fabrication, (b) have not lost
their physical identity in such articles by change in
form, shape or otherwise, and (c) have not been
advanced in value or improved in condition abroad
except by being assembled and except by operations
incidental to the assembly process such as cleaning,
lubrication, and painting.
All three requirements of HTSUS subheading 9802.00.80 must
be satisfied before a component may receive a duty allowance. An
article entered under this tariff provision is subject to duty
upon the full value of the imported assembled article, less the
cost or value of such U.S. components, upon compliance with the
documentary requirements of section 10.24, Customs Regulations
(19 CFR 10.24).
Section 10.16(c), Customs Regulations (19 CFR 10.16(c)),
which lists examples of operations not considered incidental to
the assembly process, includes painting primarily intended to
enhance the appearance of an article or to impart distinctive
features or characteristics, and dying. In this case, both the
fronts and temples are dyed abroad. Since this operation is not
considered to be incidental to the assembly process, the fronts
and temples would not be entitled to the partial duty exemption
set forth at subheading 9802.00.80 HTSUS and 19 CFR 10.22 would
not apply.
II. Substantial transformation analysis
Since it has been determined that the eyeglasses are not
eligible for the partial duty exemption under subheading
9802.00.80, HTSUS, the standard set forth at 19 CFR 134.1(b)
applies. For articles not wholly manufactured, produced or grown
in a single foreign country, this standard turns on the question
of substantial transformation. 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).
In this case, the manufacturer states that 90% of the
value of the frames is attributable to the processing and parts
made in the U.S. The temples and fronts made in the U.S. are
unfinished eyeglass pieces which determine the basic shape and
character of the finished eyeglass frames.
Customs ruled in HQ 709266 (July 11, 1978), that the
assembly of eyeglass frames does not constitute a substantial
transformation. With regard to the coloring and lacquering of
the frames, Customs ruled in HQ 733693 (October 17, 1990), that
applying epoxy and paint to sunglasses frames did not constitute
a substantial transformation. That ruling was in accordance with
C.S.D. 88-23 (August 12, 1988), in which Customs ruled that U.S.-
made earrings painted a solid color in Canada are not
substantially transformed. Painting the earrings was
characterized as a "minor finishing operation which leaves the
fundamental identity of the earrings intact" rather than the
creation of a highly decorative article with artistic qualities.
In this case no new article of commerce is created in Indonesia
and there is no change in name, character or use as a result of
the coloring, lacquering and assembly of the frame in Indonesia.
Therefore, no substantial transformation occurs in Indonesia.
Section 134.32(m), Customs Regulations (19 CFR 134.32(m)),
excepts from country of origin marking products of the U.S.
exported and returned. In applying this section, Customs has
ruled that products of the U.S. which are exported and returned
are generally not subject to country of origin marking unless
they are substantially transformed in a foreign country. See HQ
729519 (May 18, 1988). Since these fronts and temples are not
substantially transformed in Indonesia, they would be excepted
from marking in accordance with 19 CFR 134.32(m).
The Federal Trade Commission has jurisdiction over whether
or not goods can be marked "Made in the U.S.A." and should be
contacted in regard to that question.
HOLDING:
The eyeglass fronts and temples are not entitled to the
partial duty exemption set forth at subheading 9802.00.80 HTSUS
and therefore, the country of origin rule set forth at 19 CFR
10.22 is not applicable.
The fronts and temples are not substantially transformed in
Indonesia and therefore, are considered to be products of the
U.S. exported and returned pursuant to 19 CFR 134.32(m).
Therefore, the frames would not be required to be marked for the
purposes of 19 U.S.C. 1304.
Sincerely,
John Durant
Director,
Commercial Rulings Division
cc: Customs Attache
Seoul, Korea