MAR-2 RR:CR:SM 563306 KSG
Frederick L. Ikenson, Esq.
Blank Rome LLP
600 New Hampshire Avenue, NW
Washington, D.C. 20037
RE: Country of origin marking of gift tissue paper; substantial transformation
Dear Mr. Ikenson:
This is in response to your letter dated July 5, 2005, on behalf of Cleo Inc., requesting a ruling regarding the country of origin of gift tissue paper. At your request, a conference was held on this matter at Headquarters.
FACTS:
Cleo Inc. imports gift tissue products. Jumbo rolls of tissue paper are produced in various foreign countries (not Mexico or Canada) or the United States. In the U.S., the jumbo rolls are cut to a standard length and width and folded and packaged together with two or more different colors and/or patterns of sheets. There are usually between 8 and 25 sheets in a package.
The jumbo rolls of paper and the processed paper of the same weight per square meter are classified in the same HTSUS provision. A videotape shows that the sheeting, folding and packaging of the tissue paper is capital-intensive and is principally done by large machines with little labor involved. The imported jumbo rolls are stated to be specifically designed for use as gift tissue and will not contain the wet strength or sizing required for use in other applications. Particularly, printed jumbo rolls containing specific designs and patterns would be limited in use to decorative gift tissue.
ISSUE:
What is the country of origin for imported jumbo rolls of tissue paper processed as described above.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304), as amended, 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 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.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements of 19 U.S.C. 1304. Pursuant to 19 CFR 134.1(b), 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; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 134.35, Customs Regulations (19 CFR 134.35), implementing the principle of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98), provides that an article 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 will be considered substantially transformed, and therefore 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 within the contemplation of 19 U.S.C. §1304(a).
In a recent decision, Customs & Border Protection (CBP) ruled in Headquarters Ruling Letter (HRL) 563262, dated July 15, 2005, that master rolls of tissue paper from China were substantially transformed when printed with colors and designs and cut to size within a second country. However, master rolls of tissue paper that were sent to a second country to be cut and folded but not printed were not substantially transformed in the second country. CBP characterized the cutting and folding as “mere finishing operations.” We concur with this ruling and see no distinction with the instant case.
In HRL 557462, dated September 13, 1994, Customs held that two-roll and 3-roll gift wrap ensembles were not substantially transformed in Mexico when the gift wrap paper was cut to length and rolled on a cardboard tube. Customs stated in this ruling that “in general, Customs has held that cutting or shaping materials to defined shapes or patterns suitable for use in making finished articles, as opposed to mere cutting to length or width which does not render the article suitable for a particular use constitutes a substantial transformation.”
You contend that the tissue paper is substantially transformed in the U.S. when it is cut to width and length, folded, and packaged by machine. You state that the U.S. processing is highly capital intensive. You cited HRL 559964, dated November 14, 1996, in support of your position.
Headquarters Ruling Letter 559964 involved cutting cardboard to width and length and sometimes to shape to form gift bags. Customs ruled that such processing in China constituted a substantial transformation. We think that HRL 559964 is distinguishable from the instant case because cardboard could be used for a number of purposes. The cardboard was used in that instance to make a gift bag, a new article with a new name, character and use.
Based on HRL 563262, we find that the imported jumbo rolls of tissue paper that are cut and folded and packaged but not printed are not substantially transformed in the second country. The cutting, folding and packaging are mere finishing operations. The jumbo rolls and finished gift tissue paper are classified in the same tariff provision. The jumbo rolls do not have a different use or character than the finished packaged tissue paper. Therefore, the country of origin of the jumbo rolls of tissue paper would not change in the instant case and must be marked with its country of origin pursuant to 19 U.S.C. 1304.
You ask what the acceptable country of origin marking would be under five different scenarios. In the first scenario, jumbo rolls are produced in foreign non-NAFTA Country X and further processed in foreign non-NAFTA Country Y. You propose that the marking “Made in X,” “Made in X, converted in Y” or “Made in X, sheeted and packaged in Y” would be acceptable country of origin markings. We find that any of these markings clearly states the accurate country of origin marking and would be acceptable under 19 U.S.C. 1304 and 19 CFR 134.46.
The second scenario assumes that jumbo rolls are produced in Countries X and Y and further processed in Country Y. You propose that the markings “Made in X and Y,” “Made in X and Y; converted in Y,” or “Made in X and Y; sheeted and packaged in Y” would be acceptable country of origin markings. We find that any of these markings clearly states the accurate country of origin marking and would be acceptable under
19 U.S.C. 1304, and 19 CFR 134.46. We find that “converted,” “sheeted,” and “packaged” are not country of origin indicators but only describe further processing that is occurring.
The third scenario assumes that jumbo rolls are produced in Country X and the U.S. and further processed in Country Y. You propose that the markings “Made in X and in U.S.; converted in Y,” or “Made in X and in U.S.; sheeted and packaged in Y” would be acceptable country of origin markings. We find that any of these markings clearly states the accurate country of origin marking and would be acceptable under
19 U.S.C. 1304 and 19 CFR 134.46 for Customs purposes. We note that the determination of whether it is acceptable to label a good as a product of the U.S. is not within our jurisdiction; you should contact the Federal Trade Commission (FTC) for their permission with regard to the references to the U.S.
The fourth scenario assumes that jumbo rolls are produced in Country Y and the U.S. and further processed in Country Y. You propose that the markings “Made in Y and in U.S.; converted in Y,” or “Made in Y and in U.S.; sheeted and packaged in Y” would be acceptable country of origin markings. We find that any of these markings clearly states the accurate country of origin marking and would be acceptable under 19 U.S.C. 1304, and 19 CFR 134.46 for Customs purposes. As discussed above, the determination of whether it is acceptable to label a good as a product of the U.S. is made by the FTC.
The final scenario assumes that jumbo rolls are produced in Country Y and the U.S. and further processed in the U.S. You propose that the markings “Made in Y and in U.S.; converted in the U.S.,” or “Made in Y and in U.S.; sheeted and packaged in the U.S.” would be acceptable country of origin markings. We find that any of these markings clearly states the accurate country of origin marking and would be acceptable under 19 U.S.C. 1304 and 19 CFR 134.46 for Customs purposes. As discussed above, the determination of whether it is acceptable to label a good as a product of the U.S. is made by the FTC.
HOLDING:
Imported jumbo tissue paper rolls that are cut to width and length, folded and packaged with other gift tissue paper do not undergo a substantial transformation. Pursuant to 19 CFR 134.1, the country of origin of the gift tissue paper would remain the country where the jumbo rolls are produced.
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 Customs officer handling the transaction.
Sincerely,
Monika R. Brenner
Chief, Valuation & Special Programs Branch