OT:RR:CTF:VS H306091 AP
Mr. David Newman
Attorney-at-Law
45 Village Gate Way
Nyack, NY 10960
RE: Country of origin of Sticky Notes
Dear Mr. Newman:
This is in response to your September 20, 2019 ruling request, filed on behalf of Staples, Inc., regarding the country of origin of adhesive note pads, known as Sticky Notes, made from jumbo rolls from China, Japan, and/or Indonesia. On January 21, 2020, a conference call was held with counsel to discuss this matter. The information obtained in the call and submitted after the call were taken into consideration.
FACTS:
The Sticky Notes at issue are used in offices, homes, and schools to add notes to books, documents, and other articles. You state that the process of manufacturing the Sticky Notes begins with 36.5-inch width jumbo paper rolls from China, Japan, and Indonesia, depending on the color of the notes. In Taiwan, the paper rolls are loaded onto a giant apparatus, the paper is unspooled, and Taiwanese origin chemical primer and glue are applied to the back side of the paper. Chemical release coating of Taiwanese origin is applied to the front of the paper. The resulting product from this process is paper with an adhesive pattern. The paper is re-rolled and cut into large sheets. The resultant jumbo pads are jogged and collated into the page counts that apply to the finished product. The jumbo pads are then cut into smaller units by a large guillotine cutter, bundled, and wrapped with film of Taiwanese origin. Some of the product packs are multi-packs consisting of Sticky Note pads of varying colors originating from Japan, Indonesia and China. Others are single color product packs of the same color originating from Japan, Indonesia, or China. The Sticky Notes are exported to the United States from the Port of Kaohsiung in Taiwan.
ISSUE:
What is the country of origin of the Sticky Notes?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), provides, in relevant part:
(a) Marking of articles Except as hereinafter provided, every article of foreign origin … imported into the United States shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit in such manner as to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article.
Part 134, U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R.
Part 134), implements the country of origin marking requirements of 19 U.S.C. § 1304. Title 19, Section 134.1(b) defines “country of origin” as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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; ….”
A substantial transformation occurs “when as a result of a process an article emerges, having a distinctive name, character or use” from the original material subjected to the process. Belcrest Linens v. United States, 741 F.2d 1368, 1372 (Fed. Cir. 1984). If the manufacturing process is a minor one, which leaves the identity of the imported article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff’d per curiam, 702 F.2d 1022 (Fed. Cir. 1983).
CBP looks at the totality of the circumstances and makes decisions on substantial transformation on a case-by-case basis. The country of origin of the article’s components, the extent of the processing that occurs within a given country, and whether such processing renders a product with a new name, character, and use are primary considerations. In addition, facts such as resources expended on product design and development, extent and nature of post-assembly inspection procedures, and worker skill required during the actual manufacturing process are considered when analyzing whether a substantial transformation has occurred and no one factor is determinative.
You assert that the jumbo rolls of Japanese, Indonesian, and Chinese origin paper are not merely cut in Taiwan but are substantially transformed into another article, with a new name, character, and use. As support, you cite to Headquarters’ Ruling Letter (“HQ”) H066155, dated Oct. 27, 2009, a matter involving lined paper notebook products produced from paper rolls sourced from Taiwan where the processing operations performed in Mexico imparted the essential character to the finished lined paper notebook products. You explain that the jumbo rolls of paper undergo treatment that “fundamentally and permanently alter[s] the paper” and that the glue performs “the essential function” that is the reason consumers purchase the Sticky Notes. You claim that the change of tariff heading from heading 4802, Harmonized Tariff Schedule of the United States (“HTSUS”) (jumbo rolls) to heading 4820, HTSUS (Sticky Notes) manifests a substantial transformation. You state that in the case of the multi-packs, if the majority of the Sticky Notes are made with non-China origin paper then Section 301 duties should not apply.
CBP has previously found that cutting rolls of paper to size is a finishing operation and does not constitute a substantial transformation. In HQ 557408, dated
Jan. 14, 1994, CBP concluded that U.S. sheets of paper with printed bingo faces dedicated for use as bingo face sheets that were sent to Mexico for cutting, collating, and gluing did not undergo a substantial transformation. The use remained unchanged through the completion of the bingo booklets because the material was “essentially the same product at different stages of manufacture.” In HQ 563306, dated Sept. 20, 2005, CBP held that jumbo rolls of tissue paper that were cut, folded and packaged into gift tissue paper were not substantially transformed because the jumbo rolls did not have a different use or character than the finished packaged tissue paper. The processing was considered “mere finishing operations.” In HQ W967997, dated Oct. 5, 2006, master rolls of tissue paper from China were not substantially transformed when printed with colors and designs, and cut to size to form gift tissue sheets. In New York Ruling Letter (“NY”) N307942, dated Dec. 19, 2019, bulk rolls of tissue paper printed with a design were not considered to be substantially transformed as a result of being hot-stamped with foil film, cut to size, and folded.
As in the above-cited cases, the operations in Taiwan constitute “mere finishing operations.” The Sticky Notes are “essentially the same product at different stages of manufacture.” The jumbo rolls are unspooled, Taiwanese chemical primer and glue are applied to the back side of the paper and chemical release coating is applied to the front. The paper is re-rolled and cut into large sheets, which are jogged and collated into the page counts, and cut into smaller units by a large guillotine cutter, bundled, and wrapped with Taiwanese origin film. The final product is essentially a smaller size paper with chemical release coating applied to the front and chemical primer and glue on the back that is not changed into a new separate and distinct article of commerce. While the glue applied to the back allows the paper to be stuck on a surface, the operation of gluing paper together at the top is essentially the same, and the paper still remains paper.
We note that HQ H066155, supra, that you cite is distinguishable because the rolls of paper sourced from Taiwan were transformed into finished lined paper notebook products unlike the instant Sticky Notes, which do not have lines and margin rulings. In addition, the spiral notebooks were spiral hole punched and bound with wire. Finally, the change of tariff heading is irrelevant here because the paper rolls do not originate from Canada or Mexico.
Accordingly, the origin of the jumbo paper roll dictates the origin of the Sticky Note. In the case of a multi-pack produced from paper rolls from China, Indonesia and Japan, the countries of origin of the Sticky Note are China, Indonesia, and Japan, and the Sticky Notes from China will be subject to Section 301 duties.
HOLDING:
We find that no substantial transformation occurs in Taiwan and the country of origin of the paper roll determines the country of origin of the Sticky Note. If the paper roll is produced in a single country – China, Indonesia, or Japan – then the country of origin of the Sticky Note is respectively, China, Indonesia, or Japan. The countries of origin of a multi-pack produced from paper rolls from multiple countries – China, Indonesia and Japan – are China, Indonesia, and Japan.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a Customs Service field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch