MAR-2-05 CO:R:C:V 733945 NL
John C. Lindsey, Esq.
Morgan, Lewis & Bockius
1800 M Street, N.W.,
Washington, D.C. 20036
RE: Country of Origin Marking - Cream Haircolor Product;
Dye; Substantial Transformation.
Dear Mr. Lindsey:
This is in response to your submission dated November 16,
1990, in which you request, on behalf of your client, a ruling
concerning the country of origin marking requirements applicable
to an imported cream haircolor preparation.
FACTS:
As set forth in your submission, your client proposes to
import from [A ] to the U.S. a haircolor product which is
manufactured for his account in [A ]. The constituents of
the product are partly of [A ] origin, but several,
including the [ ], are imported to [A ] from [B
]. After importation to the U.S. in disposable tubes, the hair
color is combined for retail sale in a carton with developing
lotion, an applicator cap, gloves, and instructions, all of which
are manufactured in the U.S.
It is your position that for country of origin marking
purposes the country of origin of the cream haircolor product is
[A ], as that country is the country of production.
Production of the cream haircolor consists of blending and
heating two separate groups of ingredients which are then mixed
to form an emulsion. Other ingredients, including [
] are then blended into the emulsion. This blending is
done under a [ ]. You state that the [ ] and
the finished product are separate commercial goods sold in
separate markets, and that before production in [A ] the [
] is neither used by nor capable of being used by the consumer as
a hair color product. You argue that the [ ] undergoes a
change in name, character, and use in becoming part of the cream
hair color product which is a product of [A ].
As set forth in your submission there are at least ten
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ingredients used to produce the cream haircolor. Four
ingredients, including the [ ] are not of [ ] origin,
accounting for [ ] percent, on average, of the total direct
costs of manufacturing the article. The [ ] alone accounts for
[ ] percent of the total manufacturing costs. You submit that
this processing effects a substantial transformation of the
ingredients, such that the resulting hair color preparation is a
product of [A ] for country of origin marking purposes.
ISSUES:
1. What is the country of origin of the cream hair color?
2. What country of origin marking requirements apply to its
tube and other packaging?
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.
For purposes of 19 U.S.C. 1304, the country of origin of an
article is considered to be the country where it was
manufactured, produced, or grown, unless thereafter in another
country the article undergoes processing which results in a
substantial transformation, in which case the latter country
becomes the country of origin. 19 CFR 134.1(b). A substantial
transformation is said to occur when, within the principle of the
case of United States v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267
(C.A.D. 98)(1940), processing results in an article having a new
name, character, or use. 19 CFR 134.35.
Here, it is our opinion that production of the cream hair
color in [A ] effects a substantial transformation of the
ingredients, including the ingredients of [B ] origin, such
that the hair color is a product of [ A ] for country of origin
marking purposes. The relatively large number of ingredients (10
or more), together with the complexity of the production process,
indicate that the constituents lose their separate identities
when combined into the new article. Customs has held recently
that even the blending of relatively similar products - flowers
and plant materials - to produce a potpourri, was sufficient to
effect substantial transformation of the constituents.
Headquarters Ruling (HQ) 733207 (November 21, 1990). The
production process described in your submission combines articles
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of greater diversity in a process which appears to be more
complex than that considered in the potpourri ruling.
Customs has also considered specifically whether the [ ]
originating in [B ] loses its separate identity as a product
of [B ] when incorporated into the cream hair color.
Despite the undoubted critical importance of this ingredient to
the final product, we find a substantial transformation of the [
]. Its cost accounts for only [ ] percent of the total direct
cost of manufacturing the cream hair color. Only after
processing is the [ ] usable as a hair coloring product, or
does it have the fundamental character of such a cosmetic
product. We agree that the instant processing is similar to the
manufacture of perfume, which was considered in a ruling cited in
your submission. In HQ 723312 (November 22, 1983), Customs found
that the blending of French essential oil with U.S. origin
denatured alcohol, stabilizer, coloring matter,and water,
effected a substantial transformation. As with the [ ], the
essential oil was critical to the manufacture of the perfume, but
became part of a new article.
This type of combining or blending is to be distinguished
from the cases, for example, like that of frozen orange juice
concentrate, in which Customs has ruled, and the Court of
International Trade has held, that merely blending water, oils
and essences, pasteurization, and freezing (adding ingredients of
significantly less cost than the concentrate itself), is not
sufficient to effect a substantial transformation. See, National
Juice Products Ass'n v. United States, 628 F. Supp. 978 (CIT
1986). To similar effect were Headquarters Rulings 729519 (May
18, 1988)(wine cooler liquid flavor base not substantially
transformed by adding carbonated water and bottling); and 733248
(August 22, 1990)(human immune serum globulin not substantially
transformed by filtering and adding reagents which convert the
product from one injectable intramuscularly into one capable of
being administered intravenously). By contrast, the [ ]
constitutes only a small portion of the cost of the final hair
color product, and the manufacturing process yields a product of
fundamentally different character.
The submission indicates that the product will be packed at
the time of importation in individual disposable tubes which will
be marked with the country of origin of the product. This
marking will, at the time of importation, satisfy the country of
origin marking requirments. Thereafter, when packaged in a box
containing U.S. origin components of the hair coloring kit, the
origin of the cream hair color will be indicated by a marking on
the outside of the box which will indicate that the hair color is
a product of [ ]. This marking conforms with the
requirements of 19 CFR 134.14, which provides that if an imported
article is combined with other articles prior to delivery to the
ultimate purchaser, the imported article must be marked to
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indicate that the designation of origin refers to the imported
article only. Because the imported product will be repacked
after importation, the importer is subject to the certification
requirements of 19 CFR 134.26.
HOLDING:
The ingredients of the cream hair color are substantially
transformed by manufacture and for country of origin marking
purposes are products of the country of manufacture. The marking
of the tube and the box containing the hair coloring kit
satisfies the requirements of 19 U.S.C. 1304 and Part 134,
Customs Regulations. The certification requirements of 19 CFR
134.26 are applicable.
Sincerely,
John Durant
Director, Commercial
Rulings Division