MAR-2-05 CO:R:C:V 733579 KG
Mr. Dick Hartwig
Regal Ware
1675 Reigle Drive
Kewaskum, Wisconsin 53040
RE: Country of origin marking of imported aluminum pots and pans
Dear Mr. Hartwig:
This is in response to your letter of April 19, 1990, to the
U.S. Customs Service office in New York requesting a country of
origin ruling regarding imported aluminum pots and pans. Your
letter was referred to this office for response.
FACTS:
In Venezuela, an aluminum disc is cut from aluminum coil
and then stamped to form the part of a pot or pan into which food
is placed for cooking. The formed pot or pan is then shipped to
the U.S. where the pots and pans are de-burred, (the removal of
any rough edges and smoothing off the edges and surfaces of the
pot or pan), polished, painted, coated with a non-stick surface
and the handle is attached. The finished pots and pans are then
packaged for retail. You state that the "ratio of value (time
and materials) is 90/10, U.S. vis a vis Venezuela." No
supporting figures or data were submitted. A picture of a
finished set of pots and pan was submitted.
ISSUE:
What is the country of origin of the aluminum pots and pans
for country of origin marking purposes.
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 134.1(b), Customs Regulations (19 CFR
134.1(b)), defines the 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 this part."
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
section 304(a) of the Tariff Act of 1930, as amended, 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).
In National Juice the court upheld Customs ruling that
manufacturing concentrate used to make frozen concentrated orange
juice and reconstituted orange juice for manufacturing was not
substantially transformed. The manufacturing concentrate is the
"major part of the end product, when measured by cost, value or
quantity" and the further processing in the U.S. to make the
manufacturing concentrate into frozen concentrated orange juice
was considered a minor manufacturing process. The court noted
that the imported product was the very essence of the retail
product and that the addition of water, orange essences and oils
to the concentrate, while making it suitable for retail sale, did
not change the fundamental character of the product. In this
case, the imported formed pot/pan is the major part of the end
product and the U.S. processing is minor. The formed pot/pan is
the very essence of the finished product and the fundamental
character of the pot/pan is not changed in the U.S. Besides
finishing the pots/pans in the U.S., the only change in
character that takes place is the coating of the surface of the
formed pot/pan. This change is not fundamental; while it may
be more convenient to clean a non-stick pan, it retains its use
as a cooking implement.
In HQ 731572 (July 25, 1989), Customs held that imported
rough forgings made into sockets, socket wrench extensions and
adapters in the U.S. were substantially transformed. The
domestic processing included: lathing, drilling, centerless
grinding, marking, heat treatment, performing hardness and torque
strength testing, sand blasting, tumbling, chemical vibrating,
acid dipping, plating, painting and quality control testing. The
rough forgings were considered substantially transformed because
a significant amount of machining was done which included
machining to achieve the actual dimensions of the tools. Customs
ruled in HQ 732487 (September 20, 1989), that an imported rough
forging made into a wrench in the U.S. was substantially
transformed. The processes involved in the U.S. included:
coining, shot blasting, polishing, grinding, stamping, tempering,
chrome plating and calibrating both ends of the wrench. The U.S.
processing constituted 55-60% of the total cost of the finished
wrench. Further, it was pointed out that the processing
performed in the U.S. was similar to HQ 731572; machining is
required to drill a cavity for fastener and bolt clearance and
the rough forging which will be made into a wrench does not have
its basic characteristic until the box end of the rough forging
is bored out. This case is distinguishable from HQ 731572 and HQ
732487 because there is not a substantial amount of machining
being performed on the formed pots and pans.
The imported aluminum pot/pan is not substantially
transformed in the U.S. into a new article with a new name,
character or use. Although it is necessary to attach the handle
in order for the pot/pan to be functional, the imported article
could only be used to make a pot/pan to be used for cooking.
The name, character and use of the pot/pan would not change when
the handle is attached. The aluminum pot/pan is the very essence
of the finished product. A significant amount of work is not
done on the pot/pan itself; the processing done on the pot/pan in
the U.S. is merely finishing and coating the pot/pan. Since
specific prices were not submitted, it is not possible to compare
the cost of the foreign and domestic processing.
Since the pots/pans are considered products of Venezuela,
they must be marked in accordance with the requirements of 19 CFR
Part 134 to indicate that Venezuela is the country of origin.
HOLDING:
The country of origin of the imported aluminum pot/pan is
Venezuela. The imported pot/pan is not substantially transformed
in the U.S.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch
cc: Area Director of Customs
New York Seaport
(851932)