MAR-2-05 CO:R:C:V 734270 GRV
Mr. Gregg A. Anderson, President
Gamatech
Sales and Consulting, Inc.
3260 Keller Street, Suite 8
Santa Clara, CA 95054
RE: Country of origin marking of grill racks imported to be
coated with a porcelain coating. 19 CFR 134.1(d) (ultimate
purchaser); 19 CFR 134.1(d)(1); domestic processing; 19 CFR
134.35 (coating operation); 733579; 732652; 731652
Dear Mr. Anderson:
This is in response to your letter of July 15, 1991,
requesting a ruling regarding the country of origin marking
requirements applicable to "Griffo Grills" used to cook on
outdoor and indoor barbecues. Specifically, you request that
Customs rule it permissible for you to label the finished/coated
grill racks "Made in U.S.A." following the domestic processing of
the imported grills. Although use of that legend is under the
jurisdiction of the Federal Trade Commission (FTC), this ruling
finds that the coated grills will not be products of the USA
following their domestic processing. Samples of an unfinished/
uncoated--as imported--and finished/coated--after processing--
grill rack were submitted for examination.
FACTS:
Unfinished, i.e., uncoated, grill racks are manufactured in
China and imported into the U.S. for further processing opera-
tions. The unit cost of the imported grill racks is stated to
represent 34.4% of the total cost of the grill racks. In the
U.S., multiple layers of a porcelain coating are applied to the
unfinished grill racks. The unit cost of this domestic coating
operation is stated to represent 65.6% of the total cost of the
grill racks. You request a favorable ruling holding that Griffo
can designate their product as "Made in U.S.A."
ISSUE:
Does the domestic processing (a porcelain-coating operation)
substantially transform the uncoated grill racks imported from
China, such that the domestic manufacturer will be considered the
"ultimate purchaser" of the imported article within the contem-
plation of 19 CFR 134.35, and the article shall be excepted from
marking.
LAW AND ANALYSIS:
The marking statute, 304 of the 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 pur-
chaser 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.
The primary purpose of the country of origin marking statute
is to "mark the goods so that at the time of purchase the ulti-
mate purchaser may, by knowing where the goods were produced, be
able to buy or refuse to buy them, if such marking should influ-
ence his will." United States v. Friedlaender & Co., 27 CCPA
297, 302, C.A.D. 104 (1940).
The "Ultimate Purchaser" Consideration
The "ultimate purchaser" is defined generally as the last
person in the U.S. who will receive the article in the form in
which it was imported. 19 CFR 134.1(d). If an imported article
will be used in domestic manufacture, the manufacturer may be the
"ultimate purchaser" if [s]he subjects the imported article to a
process which results in a substantial transformation of the
article. However, if the manufacturing process is a minor one
which leaves the identity of the imported article intact, the
consumer or user of the article, who obtains the article after
the processing, will be regarded as the "ultimate purchaser."
19 CFR 134.1(d)(1) and (2).
Substantial Transformation and Domestic Processing Operations
For country of origin marking purposes, a substantial
transformation occurs when an imported article 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.
Under this principle, if the manufacturer or processor in the
U.S. converts or combines the imported article into the different
article [s]he is considered to be the "ultimate purchaser" of
the imported article for marking purposes, and the article shall
be excepted from marking. However, the outermost containers of
the imported articles must be marked. 19 CFR 134.35. The
question of when a substantial transformation occurs for marking
purposes is a question of fact; to be determined on a case-by-
case basis. Uniroyal Inc. v. United States, 3 CIT 220, 542
F.Supp. 1026 (1982), aff'd, 1 Fed.Cir. 21, 702 F.2d 1022 (1983).
In Headquarters Ruling Letter (HRL) 733579 dated August 20,
1990, we considered whether formed pots and pans, imported from
Venezuela to be further manufactured into finished pots and pans
by operations consisting of deburring, polishing, painting,
coating with a non-stick surface, and attaching handles, were
substantially transformed within the meaning of 19 CFR 134.35,
and found that they were not, as the U.S. manufacturing process
constituted a minor operation which left the identity of the
imported article intact. Finding that the only change in
character that took place was the coating of the surface of the
already formed pot or pan, and that while it may be more conven-
ient to clean a non-stick pan, that it retains its use as a
cooking implement, we determined that the domestic processing
constituted merely finishing and coating operations, which did
not create a new article with a new name, character or use.
Accordingly, the imported aluminum pots and pans remained
products of Venezuela. See also HRLs 732652 dated June 20, 1990
(bakeware manufactured in Canada and imported to be silicone
coated not substantially transformed, as the coating operation
constituted a minor finishing operation), and 731652 dated
February 16, 1989 (finished forged components of lawn cutting
tools were merely enhanced by having their handles plastic
coated; no new article was created).
Given these prior rulings, and after viewing the grill
samples submitted, we find that the porcelain coating operation
does not substantially transform the imported uncoated grill
racks into articles having a name, character or use different;
both the uncoated and coated grill racks have the same use,
character and name. Accordingly, the coated grill racks must be
marked at the time they are imported to indicate that they are a
product of China.
HOLDING:
The domestic processing (adding a porcelain-coating) does
not substantially transform the uncoated grill racks imported
from China. Accordingly, the country of origin of the imported
merchandise remains China and the articles must be marked as
such at the time they are imported to meet the marking
requirements of 19 U.S.C. 1304 and 19 CFR Part 134.
Sincerely,
John Durant, Director
Commercial Rulings Division