MAR-05 RR:CR:SM 560660 BLS
Frederick L. Ikenson, Esq.
1621 New Hampshire Avenue, N.W.
Washington, D.C. 20009
RE: Country of origin marking of glass preforms; substantial transformation
Dear Mr. Ikenson:
This is in reference to your letters dated September 16, 1997 and March 6, 1998, on behalf of Corning Inc. (“Corning”), requesting a prospective ruling concerning the country of origin marking requirements of certain glass “preforms” manufactured abroad and drawn into glass optical fiber in the United States.
Corning is described as a major manufacturer of optical fiber in the U.S. and the world and a 50 percent owner of Siecor Corporation, the largest manufacturer of optical fiber cable in the U.S. and the world. Corning is seeking a ruling concerning the country of origin marking requirements of certain glass preforms imported from abroad (from non-NAFTA countries) and drawn or intended to be drawn into optical fiber in the U.S.
Background - Optical Fiber
Optical fiber may be described generally as “[a] long thin strand of transparent glass, plastic, or other material usually consisting of a fiber optical core and a fiber
optical cladding capable of conducting light along its axial length by internal reflection.” (See U.S. International Trade Commission (USITC) Publication 2851, February 1995 , Industry & Trade Summary, Optical Fiber Cable, and Bundles, B-2). General information about optical fiber -- how it is used, how it is constructed, and its performance characteristics, is relevant to an understanding and analysis of the
country of origin issue framed by the request. We have drawn generally upon the information contained in the publication, “Just The Facts” (1995), issued by Corning, which provides in essentially non-technical terms a basic overview of fiber optics.
In a typical fiber optic system, a light source (optical transmitter), which is either a light transmitting diode (“LED”) or a laser, converts incoming
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electrical signals into optical signals. In the “on” state, the LED or laser emits light into optical fiber, which serves as a transmission medium through which the light travels. A light detector, or receiver, then converts the light back into an electrical signal for processing.
The fiber itself consists of two different types of glass -- one making up the “core” and the other making up the “cladding” -- surrounded by a protective acrylate coating. The core is the light-guiding region of the fiber, while the cladding, which has a different index of refraction than the core, ensures that the light signal remains within the core as it is carried along the fiber’s length.
The international standard for the cladding diameter of telecommunication optical fiber is 125 microns. The diameter of the core depends on which of two main types of fiber is being made. In multimode fiber, which is commonly used for premise networks where transmission distances are less than two kilometers, the diameter of the core is most frequently 50 or 62.5 microns and is large enough to permit hundreds of rays (or modes) of light to travel through the core simultaneously. Multimode fibers are available in many different designs to optimize their information capacity at different wavelengths and operate with a variety of different light sources. In single-mode fiber, which is commonly used for
telephony and data communications, the core diameter is considerably smaller -- typically 7 to 9 microns. Single-mode fiber permits only one mode of light to travel through the core. There are many different types of single-mode fiber optimized for different operating wavelengths and operating conditions ranging from short terrestrial all the way up to long distance submarine applications. The proliferation of fiber designs has
allowed fiber to significantly add value in optical communications by
tailoring the attributes of the fiber to the application.
Two of the more important attributes of optical fiber are the properties known as “attenuation” and “bandwidth.” Attenuation refers to the reduction of signal strength, or loss of light power, that occurs as light
travels through a length of fiber; bandwidth refers to the fiber’s information-carrying capacity. The desired (low) attenuation permits the
transmittal of light over long distances without the need to use repeaters; the desired (high) bandwidth permits the transmission of huge amounts of information over the line. It is the ability of fiber to handle very high amounts of information over very long distances, as measured by
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bandwidth and attenuation respectively, that separates it from other transmission media like copper wire or coaxial cable.
As noted, in single-mode fibers, light is most intense at the core, but some of the light propagating down the fiber is carried in the cladding region of the fiber. The mode field diameter is the measurement of the diameter of the spot of light. For single-mode fiber, mode-field diameter rather than core diameter is the functional diameter that determines the optical performance of a fiber when it is coupled with a light source, connectorized, spliced, and bent. Mode-field diameter is also a function of wavelength, core diameter and the refractive-index difference between the core and the cladding.
The minimum wavelength at which an optical fiber will support only one propagating mode of light is referred to as the cutoff wavelength. If the system operating wavelength is below the cutoff wavelength, multimode operations may take place and introduce an additional source of bandwidth reduction, i.e., limit the fiber’s information-carrying capacity.
Also important is the fiber geometry -- specifically the extent to which the fiber manufacturer succeeds in achieving circularity and concentricity of the core. When fibers are spliced, it is desirable to have the cores of
each fiber form a perfect connection; If one core is more oval (less circular) in cross-section than the other, or if one is “off-center”, light signals will be lost.
See "Just the Facts, A basic overview of fiber optics," 1995 Corning Incorporated,
Opto-Electronics Group, 35 West Market Street, Corning, NY 14831.
Corning states that when optical fiber is purchased, customers typically specify the type (single-mode or multimode), modified diameter/core diameter, attenuation
parameters, dispersion/bandwidth parameters, single-mode cutoff wavelength, and
Optical Fiber Production
The optical fiber in this case is formed from ultra-pure vapor deposited chemicals
during a process called “Outside Vapor Deposition.” The process involves three primary steps, i.e., (1) laydown, (2) consolidation, and (3) draw. The first two steps result in production of the preform, and the “drawing” process (third step) results in the
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production of the optical fiber.
(1) Laydown Phase - Core and cladding glasses are vapor-deposited around a rotating
target rod to form a “soot” preform. The core material is deposited first, followed by the cladding. You state that since the core and cladding are vapor-deposited, the entire
preform is extremely pure and thus is unlike bulk glass, which contains impurities which can create flaws and thus limit fiber strength.
(2) Consolidation Phase - The target rod is removed, the preform is placed in a furnace where it is consolidated into solid clear glass, and then the center hole is closed. During the consolidation process, gas flows through the preform to remove residual moisture. You state that it is during this phase that the fiber’s attenuation properties are determined.
(3) Drawing Phase - The consolidated preform is placed in a draw tower where it is drawn into a continuous strand of fiber. First, the preform is lowered into the top of a draw furnace. The tip of the preform is heated and a piece of molten glass -- called a gob -- begins to fall from the preform. The fiber is pulled down to a diameter of 125 microns. During the draw, the fiber goes through an on-line diameter monitor to ensure the fiber conforms to the specific cladding diameter. Protective coatings also are applied and cured, using ultraviolet lamps. At the bottom of the draw, the fiber is wound onto reels. The drawn optical fiber is “hair-thin” (Fiber Optic Reference Guide, David B. Goff (1996), 11). A single preform can yield more than 30 miles of fiber (See Collier’s Encyclopedia (1996); Vol. 9, Fiber optics, “[a] two-foot (60-cm) tube can yield more than 30 miles (50 km) of fiber”).
What are the country of origin marking requirements for the optical fiber produced in the U.S. from imported glass preforms?
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 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. Congressional intent in enacting 19 U.S.C. 1304 was "that the ultimate purchaser should be able to know by
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an inspection of the marking on the imported article 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." United States v. Friedlaender & Co., 27 CCPA 297 at 302; C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b),
Customs Regulations (19 CFR 134.1(b)), defines "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 the marking laws and regulations. The case of United States v. GibsonThomsen Co., Inc., 27 CCPA 267, C.A.D. 98 (1940), provides that an article used in manufacture in the U.S. which results in an article having a name, character or use differing from that of the imported constituent article will be considered substantially transformed. In such circumstances, the U.S. manufacturer will be considered the ultimate purchaser. The imported article will be excepted from the marking requirements and only the outermost container is required to be marked. (See 19 CFR 134.35.)
You state that the preforms are dedicated for use as optical fiber, and that the
critical attributes of the fiber, including attenuation, mode-field diameter/core diameter, and dispersion/bandwidth characteristics, are imparted at the preform manufacturing stage. You advise that once the preform is made, these attributes cannot be enhanced. Thus, you point out that the value of the optical fiber is dependent upon these attributes as obtained during the production of the preform, as the drawing
process itself only serves to reduce the diameter of the preform and provide a protective layer so that the fiber may be handled without breaking.
As a consequence, based on judicial and administrative precedent, you contend that the drawing process in the U.S. does not result in a substantial transformation of the glass preform, and that accordingly, the ultimate purchaser in the U.S. is the person who purchases the optical fiber, and not the processor who “draws” the glass preform into optical fiber. Therefore, you believe that the optical fiber must be marked with the country of origin of the preform.
In determining whether the processing in the U.S. or in a foreign country results in a substantial transformation, Customs has frequently relied on the reasoning formulated
in certain principal court decisions. In Superior Wire v. United States, 669 F. Supp.
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472 (1987), aff'd, 867 F.2d 1409 (1989), a case frequently cited in Customs administrative decisions, wire rod in coils was shipped to Canada where it was drawn into wire. The resulting product had various applications, but was primarily used for
concrete sewer pipe reinforcement. The tensile strength of the final product was increased by approximately 30 to 40 percent as the rod was reduced in cross-sectional area by about 30 percent and was elongated. The evidence indicated that the final product was also “cleaner, smoother, less springy, less ductile, and cross-sectionally more uniform.”
The Court of International Trade determined that the drawing operation did not result in a substantial transformation, pointing out that the properties of the wire rod and its uses were determined by the chemical content of the rod and the cooling processes used in its manufacture, and that the “wire rod dictates the final form of the finished wire.” While noting that the commercial names of the product were different, the court stated that this factor “has rarely been dispositive”, and viewed the wire rod and wire as “different stages of the same product.”
In affirming the lower court’s decision, the U.S. Court of Appeals for the Federal Circuit dismissed Superior’s argument that because wire is “cleaner, smoother ... and cross-sectionally more uniform” than the wire rod, it had a different character, and found these changes to be primarily cosmetic “in the light of the predetermined qualities and specifications of the wire rod.” (Emphasis added.) The court further pointed out that the end use of the wire rod is generally known before the rolling stage and the specifications are frequently determined by reference to the end product for which the drawn wire will be used, and that it appeared that if the rod was improperly produced for its intended application, the wire drawing process was incapable of making the product suitable for such use.
While not necessarily dispositive of a substantial transformation, other cases have focused on the fact that where the use of the product is predetermined, it may be considered merely a different stage of the same product. See National Hand Tool Corp. v. United States, 16 CIT 308, 312 (1992), aff’d, 989 F.2d 1201 (Fed. Cir. 1993),
and National Juice Products v. United States, 628 F. Supp. 978, 10 CIT 48 (CIT 1986).
In Uniroyal, Inc., v. U.S., 3 CIT 220 (CIT 1982), aff'd, 702 F.2d. 1022 (Fed. Cir. 1983) imported shoe uppers were determined to be the "essence of the completed shoe" and therefore, not substantially transformed. See also National Juice Products, supra, where the court stated that the "very essence" of the retail orange juice products was
imparted by the imported frozen concentrated orange juice. In that case, the court found that the change in name from "concentrated orange juice for manufacturing" to "frozen concentrated orange juice" and "orange juice from concentrate" is not
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significant to a finding of substantial transformation. Instead, the court stated that these names "merely refer to the same product, orange juice, at different stages of production." Id. at 989.
In this case, the literature establishes that glass preforms such as the preforms under consideration are “....a magnified version of the fiber to be drawn from it” (USITC Publication 2851, supra, B-2). That is, the optical characteristics (including attenuation, dispersion, single or multi-mode, and wave-length) of the optical fiber which will be drawn from the preform are determined by the preform. Fiber Optic Reference Guide, supra, at 20-30; Just The Facts, A basic overview of fiber optics, supra, at 15-19; McGraw-Hill Encyclopedia of Science & Technology (6th ed.1987), vol. 12, 414-415, Optical fibers).
Therefore, as in Superior Wire and National Juice Products, the specifications and qualities of the optical fiber are predetermined by the chemical and other critical attributes of the glass preform. These attributes of the preform, including any defects, will be transmitted to the optical fiber through the drawing process. Thus, the “very essence” of the optical fiber is imparted by the preform. National Juice Products. Accordingly, we find that the character of the glass preform will not change as a result of the drawing process.
Furthermore, as the use of the glass preform is predetermined, we find, as in Superior Wire, that it may be considered merely a stage in the production of the optical fiber. We note that while the name and form of the completed product are different than the name and form of the product from which it is made, these factors are not necessarily dispositive of a substantial transformation. See National Juice Products and Uniroyal, where the court held that a change in the name of the product (in that case shoe upper to “shoe”) is the weakest evidence of a substantial transformation.
Accordingly, we find that the “drawing” of the glass preform in the U.S. into optical fiber does not result in a substantial transformation of the preform. Therefore, the optical fiber must be marked to indicate that the country of origin is the country where
the preform was produced.
Reconsideration of NY B85983
As you know, at your request, we reconsidered New York Ruling (NY) B85983 (June 18, 1997), which held that glass preforms used to produce optical fiber were classifiable under subheading 7002.20.10, Harmonized Tariff Schedule of the United States (HTSUS), as unworked glass in rods, of fused quartz or other fused silica. In a
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notice published in the CUSTOMS BULLETIN, Customs revoked NY B85983 with the issuance of Headquarters Ruling Letter (HRL) 960948 (September 11, 1998) and held that the glass preforms are properly classifiable under subheading 7020.00.60,
HTSUS, other articles of glass, other. (See Customs Bulletin, Vol. 32, No. 39, dated September 30, 1998.)
In HRL 960948, we addressed a comment received in response to the notice of proposed revocation of NY B85983 which maintained that the preform was properly classifiable under subheading 9001.10.00, HTSUS, as incomplete or unfinished optical fiber, on the basis of General Rule of Interpretation (GRI) 2(a), HTSUS. Under GRI 2(a), an incomplete or unfinished article will be classified as a complete or finished article provided it has the "essential character" of the complete or finished article.
In our analysis of whether the preform had the "essential character" of the optical fiber, we cited to court cases which looked to the function or use of the article in determining essential character for classification purposes. We noted that although the preform is a magnified version of the fiber to be drawn from it, and accordingly both have the same critical fiber optic attributes, the preform does not have the essential physical characteristics (i.e., thinness and flexibility) necessary for practical use as optical fiber. We further noted that, pursuant to a Harmonized Commodity Description and Coding System Explanatory Note (EN) for GRI 2(a) (i.e., EN GRI Rule 2(a)(II)), the preforms may not be classified as incomplete or unfinished optical fiber (as "blanks") because they did not have "the approximate shape or outline" of the finished article. Thus, we found that, as the glass preform does not have the "essential character" of the optical fiber, it is not classifiable as incomplete or unfinished optical fiber under subheading 9001.10.00.
In the course of our decision, we also addressed the same commenter’s contention that certain court decisions (principally Superior Wire, supra) on substantial transformation supported classification of the preforms as incomplete or unfinished optical fiber. In this regard, we stated initially that such decisions on substantial transformation are not necessarily relevant to a determination of whether the preforms have the essential character of the optical fiber for classification purposes. To underscore the point, we then discussed certain factual differences between Superior
Wire and this case, focusing primarily on a comparison of the reduction in cross-sectional area achieved by the drawing of the wire rod in Superior Wire (approximately 30%) with the reduction in diameter achieved by the drawing of the preform in this case (from 62 millimeters to a "hair-thin strand").
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Customs believes that the determination in HRL 960948 that the glass preforms are classifiable as other articles of glass, other, rather than as unfinished optical fiber, is not inconsistent with our determination in this case that the glass preforms do not undergo a substantial transformation when processed into optical fiber. As indicated above, HRL 960948 held that the glass preform does not have the essential character of the finished optical fiber for classification purposes under GRI 2(a). This conclusion was based upon a finding that the glass preform neither has the "approximate shape or outline" of the finished fiber nor the requisite thinness and flexibility necessary for practical use as optical fiber. In contrast to these relatively specific considerations, a substantial transformation analysis usually involves a broader analysis of whether certain processing results in a change in the name, character and use of the article.
Although the glass preform does not have the approximate shape or outline of the finished optical fiber, there is no dispute that all of the critical optical fiber properties (except width) are obtained during the production of the glass preform. Therefore, while the drawing process dramatically reduces the diameter of the product and gives it the flexibility to be used as optical fiber, we believe that the drawing does not effect a substantial change in the character of the article for substantial transformation purposes. Moreover, because the glass preform has a single predetermined use, the drawing process clearly results in no change in use. We view this as persuasive evidence that the drawing operation does not result in a substantial transformation, even though we recognize that, for classification purposes, the relatively thick and inflexible preform obviously could not be used as optical fiber in that condition. With respect to the change in name, as we noted previously, the courts have held that this is the weakest evidence of a substantial transformation.
The “drawing” of an imported glass preform in the U.S. into optical fiber does not result in a substantial transformation. Therefore, the country of origin of the optical fiber is the foreign country where the preform was produced, and the fiber must be marked accordingly.
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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.
John Durant, Director
Commercial Rulings Division