MAR-2-05 CO:R:C:V 734374 AT
Mr. James Rashid
Vice President
British-American Corporation
10480 Little Patuxent Parkway
Suite 1010
Columbia, Maryland 21044
RE: Country of origin marking of vinyl shell to be assembled
with U.S. manufactured foam and fiber into a completed water
bed; substantial transformation; HQ 731433
Dear Mr. Rashid:
This is in response to your letter of September 25, 1991,
requesting a country of origin ruling regarding imported vinyl
shells which are to be combined with U.S. manufactured foam and
fiber in the production of water bed mattresses. An illustration
depicting what the finished water bed looks like when completed
with the component parts and a itemized list of each component's
cost was submitted with your letter for review.
FACTS:
Your company intends to import vinyl shells from either
Taiwan or China to be further assembled with domestic foam and
fiber into completed water bed mattresses. The water bed
mattresses are to be sold in the U.S. to retailers and
distributors and will also be exported to European retailers and
distributors. You state that once imported the following
processing steps will be performed in the U.S. to make the
completed water bed mattresses:
1. The imported vinyl shell and domestic foam, fiber
and packaging materials are unloaded and unpackaged.
2. The foam and fiber are rolled out onto a cutting table
and cut with a commercial grade electric knife.
3. The foam and fiber pieces are sewn together for
performance purposes and to facilitate assembly with
the vinyl component. (Five layers of 2" fiber a layer
of convoluted foam and a layer of closed cell foam are
use).
4. The foam and fiber assembly is inserted into the vinyl
cavity and staged for heat sealing.
5. The vinyl cavity is permanently closed, through use
of an A.R.F. high frequency radio wave machine that
permanently bonds the vinyl shell encapsulating the
fiber and foam components inside.
6. The mattress is boxed.
ISSUE:
Whether the imported vinyl shells are substantially
transformed in the U.S. when they are processed in the manner set
forth above?
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 134.35, 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 19 U.S.C. 1304 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 HQ 731433, December 15, 1990, Customs ruled that in
virtually identical circumstances as the present case, that
imported vinyl shells which were stuffed after importation with
four layers of U.S. origin polyester fiber and one layer of U.S.
origin foam into water bed mattresses were substantially
transformed and were not required to be individually marked with
their country origin. Customs stated that once combined the
vinyl shells lose their separate identity and become an integral
part of a new and different article of commerce namely, a water
bed. became a new and different article of commerce, namely a
water bed mattress.
HOLDING:
For the reasons set forth in HQ 731433, we find that when
the vinyl shells are processed in the manner described above they
are substantially transformed and that the domestic processor is
the ultimate purchaser. Accordingly, pursuant to 19 CFR 134.35,
the individual vinyl shells are excepted form country of origin
marking and only the container in which the vinyl shells are
imported must be marked with the country of origin of the vinyl
shells.
However, for this marking exception to apply, the district
director at the port of entry must be satisfied that you, the
U.S. manufacturer of the water bed mattresses, will receive the
vinyl shells in their original unopened properly marked container
and that the vinyl shells will be used only as described in this
ruling and not otherwise sold.
Sincerely,
John Durant, Director
Commercial Rulings Division