MAR-2-05 RR:CR:SM 561258 MLR
Mr. Michael Gimm
Haworth Inc.
One Haworth Center
Holland, Michigan 49423-9576
RE: Country of origin marking for workstation furniture; 19 CFR 134.35(a); 19 CFR 134.32(d)
Dear Mr. Gimm:
This is in reference to your letter of December 28, 1998, requesting a ruling concerning the country of origin marking requirements for certain workstation office furniture. Diagrams were submitted with your request.
FACTS:
It is stated that Haworth Inc. manufactures office workstation furniture in the U.S. using various components that are manufactured by its subsidiary in Italy. The Italian components include most components, such as metal brackets, legs, and metal file cabinets. However, the work surfaces are made in the U.S. The Italian components are combined with the U.S. work surfaces, shipped to the customer’s site, and assembled by Haworth’s installers into finished workstations. Additionally, it is stated that some of the Italian components will be shipped to Haworth and kept in stock to replace damaged or lost material. These replacement parts will be kept in their original individual packing (generally a plastic wrap) until they are required to be shipped to a customer.
ISSUE:
Whether Haworth is the ultimate purchaser of the imported Italian components and only their outermost container needs to be marked.
LAW AND ANALYSIS:
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its 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. Congressional intent in enacting 19 U.S.C. 1304 was “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.” United States v. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).
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 the marking laws and regulations.
For country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in the U.S. in manufacture, which results in an article having a name, character, or use differing from that of the imported article. In such circumstances, the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the “ultimate purchaser” of the imported article, and the article is excepted from marking, although the outermost container of the imported article is required to be marked. See 19 CFR 134.35(a).
In this case, Haworth only wishes to mark the outermost shipping crate in which the Italian components are imported because the components will be assembled by its installers with U.S.-origin work surfaces into complete workstations in the U.S.
In Carlson Furniture Industries v. United States, 65 Cust. Ct 474 (1970), it was held that the assembly of imported finished and unfinished chair parts into finished chairs in the U.S. was a substantial transformation. After importation, the importer assembled, fitted and glued the wooden parts together, inserted steel pins into the key joints, cut the legs and leveled them to length, and in some instances, upholstered the chair and fitted the legs with glides and casters. The court determined that the importer had to perform additional work on the imported materials, upholstery was added, and more was required than the mere assembly of parts. In T.D. 71 77 (March 8, 1971), Customs agreed with the Carlson court that “the company which assembles imported wood chair parts into chairs is the ‘ultimate purchaser’ of such parts,” but limited the decision to situations where the parts were imported in an unfinished condition. See also Headquarters Ruling Letter (HRL) 731676 dated June 22, 1989, (the importer of carved and unfinished mahogany table legs and rails was the ultimate purchaser, as the imported articles underwent a substantial transformation by assembly into a U.S.-origin table base and wood veneer top, and only the outermost container of the legs and rails had to be marked). But see HRL 733188 dated July 5, 1990, (exercise benches made from Venezuelan-origin metal frames and boards and cushions did not undergo a substantial transformation in the U.S. since the metal frames were essentially complete and the U.S. assembly primarily only involved attaching the cushions).
In HRL 734451 dated April 13, 1992, Customs determined that the installers of Canadian-origin roof tiles were the ultimate purchasers of the imported tiles. However, since the imported tiles were not sold directly to the installers, it was not acceptable to only mark the container of the tiles pursuant to 19 U.S.C. 1304(a)(3)(D) and each tile had to be marked individually. However, in HRL 734625 dated September 17, 1992, Customs determined that the sale of the imported tiles to six specified installers with a requirement that all shipments shall be in minimum pallet quantities, containing the proper country of origin marking, was sufficient basis to allow the container marking exception.
In this case, you state that the workstation components will be assembled together at the customer’s site by your installers. Based on the diagram of the finished workstation, we find that while the assembly itself does not appear to be exceedingly complex, the imported components lose their identity as leg brackets, drawer units, panels, etc. when they are assembled together to form a workstation. Furthermore, we note that the essential and largest component of the workstation is the work surface which is of U.S.-origin. Therefore, we find that the imported components undergo a substantial transformation when they are assembled together. Furthermore, as in HRL 734625, since your installers substantially transform the work station components, albeit at the customer’s site, Haworth will be the ultimate purchaser. Accordingly, it will be acceptable only to mark the outside shipping crate in which the goods are imported and transported to Haworth. With regard to the stock replacement parts, provided they are also installed by your company, only the outside original individual packing needs to be marked. However, if the customer itself will be supplied with the replacement parts and will perform the installation, they must receive these stock components in properly marked packing.
HOLDING:
Based on the facts and diagrams submitted, the assembly of the imported workstation components with the U.S.-origin work surface into finished workstations will result in a substantial transformation. Therefore, provided Haworth installs and assembles the components together, Haworth will be the ultimate purchaser and it will be acceptable to only mark the outer shipping crate in which the foreign components are imported.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division