HQ 732964
August 3,1990
MAR-2-05 CO:R:C:V 732964 NL
District Director
U.S. Customs Service
International Street and Terrace Ave.
Nogales, Arizona 85621
RE: Country of Origin Marking - Hand Painted Ceramic Bells;
Decoration; Substantial Transformation; Madison Galleries
Dear Sir:
This is in response to your request for internal advice of
December 4, 1989, concerning the country of origin marking of
certain ceramic ware which is to be painted after importation.
FACTS:
The articles in question are ceramic bell shapes made of
material known in the trade as "bisque ware", imported from
Taiwan in a cast and fired condition. Also imported are the
ceramic clappers or chimes. After importation the bisque ware is
sanded and filled, sprayed with base paint, hand painted with a
Southwestern U.S. motif, and sprayed with a fixative. Three
types of bell are made from the bisque ware: a wind bell, a
dinner bell, and a chime. The wind bell is completed by the
addition of a string which enables it to be suspended and which
also secures the ceramic clapper, and a piece of copper which
functions as a "wind catcher". The dinner bell is completed by
the addition of a wooden handle and a clapper made from a metal
washer. The chime has a string for suspending it, while
monofilament is used to connect the chimes and clappers to the
bell. Other than the bisque ware and the clappers all the parts
are of U.S. origin. Samples were submitted.
There is presently no country of origin marking on the
articles themselves. However, two of the samples have hang tags
attached which describe the products as "Hand Painted
Southwestern Originals". On one tag the name and city of the
importer is given, while on another, in addition, the words "Hand
Painted in USA/Cast in Taiwan" are visible.
It is stated that, averaging the three types of bells and
their various sizes, the cost of the ceramic materials is $6.95
per dozen. The importer's cost to paint, assemble and package
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the bells is stated to average $18.48 per dozen.
Counsel for the importer contends that the imported articles
are substantially transformed after importation into finished
ceramic bells, and accordingly, within the meaning of 19 U.S.C.
1304 the importer is the ultimate purchaser of the unpainted
bisque ware. Thus, it is argued, the finished articles are not
required to be marked "Made in Taiwan". It is the district's
position that the U.S. painting and processing does not effect a
substantial transformation; the finished bells must be marked as
products of Taiwan both at the time of importation as bisque
ware and when they reach the ultimate purchaser as complete,
painted bells.
ISSUE:
Does the U.S. processing substantially transform the bisque
ware?
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.
Section 134.1(d), Customs Regulations (19 CFR 134.1(d))
provides that the "ultimate purchaser" of an imported article is
generally the last person in the U.S. to receive the article in
the form in which it was imported. That section provides further
that a manufacturer may be the ultimate purchaser of an article
if he subjects it to a process which results in a substantial
transformation of the article. However, if the manufacturing
process is merely a minor one which leaves the identity of the
imported article intact, the consumer or user of the article who
obtains it after processing will be regarded as the ultimate
purchaser. Section 134.35, Customs Regulations (19 U.S.C.
134.35), provides that an article which is substantially
transformed after importation shall be excepted from country of
origin marking.
A substantial transformation is said to occur when an
article emerges from a manufacturing process with a name,
character, or use which differs from the original material
subjected to the process. Torrington Company v. United States,
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764 F. 2d 1563, 1568 (Fed. Cir. 1985), citing Texas Instruments,
Inc. v. United States, 631 F. 2d 778, 782 (CCPA 1982), and
Anheuser-Busch Brewing Ass'n v. United States, 207 U.S. 556
(1908).
In this case, the only issue for consideration is whether
the painting of the bisque ware effects a substantial
transformation. We have examined the samples submitted and
determined that the small quantity and value of the parts added
in the U.S. cannot be considered significant.
Counsel for the importer submits that the instant situation
is governed by the decision of the Court of International Trade
in Madison Galleries, Ltd., v. United States, 688 F. Supp. 1544
(CIT 1988), aff'd, 870 F. 2d 627 (Fed. Cir. 1989). In that
case, which concerned the interpretation of the statute
implementing the Generalized System of Preferences (GSP), the
Court of International Trade found that a Taiwanese porcelain
article decorated by painting and firing had been substantially
transformed into an article of Hong Kong origin. Despite the
Court of International Trade's finding with respect to that
particular porcelain article, Customs does not regard Madison
Galleries as establishing a rule of law on this point. In T.D.
89-21 Customs stated:
[t]he court's conclusion that the mere decoration of
porcelainware constitutes substantial transformation
runs counter to a substantial line of administrative
rulings...because this secondary determination was
unnecessary to an adjudication of the essential issue
of the case [eligibility for GSP] it is considered
dicta... The Customs Service continues to adhere to
its position that the mere decoration of porcelainware
does not constitute a substantial transformation.
23 Cust. B. & Dec. No. 7 (February 15, 1989). In view of T.D.
89-21, the finding of the Court of International Trade in Madison
Galleries does not govern the facts at hand. To the contrary,
the distict director has correctly applied the existing
precedents which uniformly lead to a finding that the "bisque
ware" is not substantially transformed by processing in the U.S.
See, HQ 707057 (December 10, 1976)(decoration of ceramic coffee
mugs by decalcomania and kiln firing not a substantial
transformation); HQ 058996 (June 21, 1979)(painting, glazing, and
firing of porcelain ware not a substantial transformation); HQ
724978 (July 13, 1984)(hand painting and firing of vase not a
substantial transformation).
With respect to the hang tags, the importer is required
pursuant to 19 CFR 134.46 to indicate the origin of the article
by use of the words "made in", "product of", or words to similar
effect at any time the the hang tag bears the name of a place in
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the U.S. Thus, as given in the sample bells, the hang tags are
deficient in that one of them has no indication of the bell's
Taiwan origin, and the other does not clearly indicate the bell
was made in or a product of Taiwan. The words "cast in Taiwan"
are not sufficient, in our opinion to clearly indicate that the
bell is a product of Taiwan. Wording on the hang tag such as,
"Hand painted in USA, made in Taiwan" would satisfy the
requirements of 19 CFR 134.46.
HOLDING:
The imported ceramic "bisque ware" is not substantially
transformed by processing in the U.S. Therefore, the ultimate
purchaser is the consumer that purchases the "bisque ware" after
processing and not the importer who further processes it. The
"bisque ware" must be marked so as to clearly indicate its
country of origin, Taiwan, to the ultimate purchaser.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch