MAR-2-05 CO:R:C:V 734143 AT
Mr. Mark Hazel
Swing
Endicott St. Bldg #32
Norwood, Massachusetts 02062
RE: Country of origin marking of imported acrylic picture frame
to be assembled with a metal stand; combining; substantial
transformation
Dear Mr. Hazel:
This is in response to your letter of April 12, 1991,
requesting a prospective and binding country of origin ruling
regarding imported acrylic picture frames which are to be
combined with steel stands manufactured in the U.S.
FACTS:
Your company which presently manufactures picture frames
using U.S. acrylic, intends to import acrylic picture frames from
Taiwan to be combined with steel stands manufactured in the U.S.
You state that after the imported acrylic frames are delivered to
your warehouse they are then taken out of their packaging, placed
into the metal stand with a piece of foam, slipped into marked
cardboard boxes manufactured in the U.S. and delivered to retail
stores where they are distributed to the ultimate purchaser.
Five samples as the product exists now with domestic acrylic and
five pieces of imported acrylic from Taiwan have also been
submitted with your ruling request.
The sample frames are all made out of 1.80 thick, folded
clear acrylic each in the approximate size of 4 x 6 inches. The
stands come in four different colors (black, white, red or blue)
and 3 different styles (straight, garland or wave). These five
samples represent a mixture of the different styles and colors
available to the ultimate purchaser. Each sample is packaged
into a cardboard box manufactured in the U.S. and which is marked
with the word "Swing" on all panels of the box and directly below
it is the word "fotoforms". On the front and back panels of the
box, the word "Swing" appears on the top left hand corner above
the word "fotoforms" and the words "Made in USA" appear on the
bottom right hand corner. An illustration of what the finished
picture frame looks like and the dimensions of the particular
frame size also appear on the front and back panels of the box.
On the left hand panel of the box both the color and style of the
steel stand is designated and the U.S. address also appears
"Norwood, MA 02062".
ISSUE:
Whether the imported acrylic picture frames are
substantially transformed when they are combined in the U.S. with
the steel stands and packaged for distribution to retail stores?
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 134.35, 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 19 U.S.C. 1304 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).
Two court cases have considered the issue of whether
imported parts combined in the U.S. with domestic parts were
substantially transformed for country of origin marking purposes.
In the first case, Gibson-Thomsen, the court held that imported
wood brush block and toothbrush handles which had bristles
inserted into them in the U.S. lost their identity as such and
became new articles having a new name, character and use. One of
the factors considered by the court in reaching its conclusion
was that the domestic bristles used were "by far the most
valuable element." Also, the court looked at whether the
imported article loses its identity as such when combined with
other articles. In that case, the court concluded that wood
handles were material to be used in the manufacture of
toothbrushes and hairbrushes. The court was also concerned that
when an imported article was combined with a domestic material,
that the ultimate purchaser not be confused into thinking that
the domestic article was made in a foreign country. Therefore,
the court concluded that a mere material to be used in the
manufacture of a new article having a new name, character and use
and which, became an integral part of the new article would not
be required to be marked. In contrast to the imported handles in
Gibson-Thomsen, the imported acrylic frames involved here cannot
be considered to be "mere materials" used in the manufacture of
the finished articles. To the contrary, the most important
element in terms of appearance and use of the finished product is
the imported acrylic frame where the picture is placed in to be
displayed.
The second case involved imported shoe uppers which were
combined with domestic soles in the U.S. The imported uppers
were held in Uniroyal, Inc., v. U.S., 542 F.Supp. 1026, 3 CIT 220
(CIT 1982), to be the "essence of the completed shoe" and
therefore, not substantially transformed. The court described
the imported upper as "completed shoes except for an outersole."
The shoe had already "obtained its ultimate shape, form and
size." One process performed in the U.S., relasting, was
characterized as "convenient, not necessary." The processes
performed in the U.S. were significantly less costly and less
time consuming than the foreign manufacturing process. The cost
of the upper was significantly greater than the cost of the
outsole. Further, the manufacture of the upper required at
least five highly skilled operations. The court concluded that
the attachment of the outsole was a minor manufacturing or
combining process which leaves the identity of the upper intact.
This case is like Uniroyal because the imported acrylic picture
frames are not only important to the finished product, but also
are the very essence of the finished product. While the steel
stand is necessary for keeping the acrylic frame balanced and
stationary, otherwise it would fall over without it, the acrylic
frame is the essential element because it is where the photograph
is placed in to be displayed. Further, even though the steel
stand is to be displayed with the acrylic picture frame, the
stand is not permanently attached and the frame's appearance and
character still remains the same, as that of being a picture
frame.
In HQ 731432 (June 6, 1988), Customs set forth some factors
to be considered in determining whether imported goods combined
in the U.S. with domestic products were substantially transformed
for country of origin marking purposes. The following six
factors were considered:
1) whether the article is completely finished;
2) the extent of the manufacturing process of combining the
article with its counterparts as compared with the manufacturing
of the subject article;
3) whether the article is permanently attached to its
counterparts;
4)the overall importance of the article to the finished
product;
5) whether the article is functionally necessary to the
operation of the finished article, or whether it is an accessory
which retains its independent function; and
6) whether the article remains visible after the combining.
These factors are not exclusive and there may be other
factors relevant to a particular case and no one factor is
determinative. See HQ 728801 (February 26, 1986).
The five imported acrylic samples submitted all appear to be
completely finished pieces. The attachment of the steel stand
between a piece of foam appears to be a very minor operation
which is not complex, requires no skill and is not time-
consuming. The domestic steel stand is not permanently attached
to the imported acrylic frame and the frame is the most important
component to the finished article. There is no doubt that the
imported acrylic frame is functionally necessary to the use of
the finished picture frame and that it remains visible after the
combining. Based on our consideration of all these factors, we
conclude that these imported acrylic picture frames are not
substantially transformed in the U.S. as a result of combining
them with the steel stands. Therefore, your company would not be
considered the ultimate purchaser of the frames under 19 CFR
134.35.
Section 134.1(d), Customs Regulations (19 CFR 134.1(d)),
defines the ultimate purchaser as generally the last person in
the U.S. who will receive the article in the form in which it was
imported. The definition then gives examples of who might be the
ultimate purchaser if the imported article is used in
manufacture, if the imported article is sold at retail in its
imported form and if an imported article is distributed as a
gift. If an article is to be sold at retail in its imported
form, the purchaser at retail is the ultimate purchaser. Since
the imported acrylic frame is not substantially transformed, it
is not considered to undergo a change in its imported form.
Therefore, the retail purchaser of the frame is the ultimate
purchaser and the frame must be marked with its country of
origin.
We note that in view of the fact that the acrylic frame is
imported and repackaged with the steel stand into cardboard boxes
in the U.S., a marking exception may exist under 19 CFR
134.34(a). This provision provides that:
an exception under section 134.32(d) may be authorized in
the discretion of the district director for imported
articles which are to be repacked after release from
Customs custody under the following conditions:
(1) The container in which the articles are repacked will
indicate the origin of the articles to an ultimate
purchaser in the U.S.
(2) 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 liquidation
of the entry.
HOLDING
The acrylic picture frames which you intend to import from
Taiwan are not substantially transformed in the U.S. by the
addition of a steel stand. Therefore, the retail purchaser is
the ultimate purchaser of the imported acrylic frames and they
must be marked to indicate their country of origin, i.e., Taiwan.
Sincerely,
John Durant, Director
Commercial Rulings Division