MAR-2-05 CO:R:C:V 734301 ER

Marguerite Trossevin, Esq.
Johnson & Gibbs
1301 K Street, NW
Washington, DC 20005-3307

RE: Country of Origin Marking Requirements for Natural Tropical Driftwood; Substantial Transformation; Ultimate Purchaser; Hartranft v. Wiegmann, 121 U.S. 609 30; 30 L.Ed. 1012; 7 S.Ct. 1240 (1887); C.S.D. 89-3; C.S.D. 85-25; HQ 555881; HQ 734143; HQ 081888; HQ 733693; 19 CFR 134.32(g); 19 134.35.

Dear Ms. Trossevin:

This is in response to your letters of August 12, 1991 and March 17, 1992, on behalf of your client Fritz Chemical Co. Corp., ("Fritz"), 230 Sam Houston Rd., Mesquite, Texas 75149, in which you request a ruling concerning the country of origin marking requirements for various pieces of tropical driftwood imported from Malaysia.


In your submissions you state that Fritz imports tropical driftwood in its natural state. The driftwood is picked from the riverbanks and from a swamp-type area close to the river. The imported driftwood ranges in size from approximately six inches to two feet in length. Once in the U.S., the pieces are sorted according to size -- small, medium and large -- and country of origin stickers are placed on each piece. The pieces are processed by Fritz in such a way so as to make them suitable for use in aquariums.

The processing consists of dipping each piece of driftwood into an epoxy resin to seal the pores and block the release of tannic acid, a toxin harmful to aquarium life. When released into water, tannic acid emits a heavy yellow vapor that clouds the water and changes the aquarium water chemistry thereby rendering the aquarium unfit for most tropical fish. The small pieces are imported with a plastic rectangular bases already attached, and are subjected in this condition to the sealing process. The medium and large sizes are not treated in any way before entry. Before dipping, a molded base that serves to anchor the driftwood to the bottom of the aquarium is affixed by hand to these larger and medium pieces. A Fritz technician creates the base out of natural rock epoxy that is designed to be artistically appropriate for each piece. Without the base, the wood would float. You state that molding the base to fit the size and shape of each piece of wood is a technique requiring care and craftsmanship. The epoxy and all other materials used to process the driftwood are of U.S. origin.

You state that during the molding and sealing process, all country-of-origin stickers are either obliterated or lost. After the manufacturing process, the pieces are marked again with country-of-origin labels and are packaged according to size -- a package of small pieces contains six; a package of medium pieces contains three; and a package of large pieces contains two.

It is your position that the natural tropical driftwood is substantially transformed within the meaning of section 134.35, Customs Regulations (19 CFR 134.35), and is, therefore, excepted from the country of origin marking requirements. Alternatively, you maintain that if a substantial transformation is not found, the driftwood is excepted from marking pursuant to section 134.32(g) Customs Regulations (19 CFR 134.32(g)) because the processing performed in the U.S. would necessarily obliterate any country of origin marking.


Whether the imported driftwood is excepted from country of origin marking pursuant to 19 CFR 134.35 and if not, whether it is excepted from marking at the time of importation pursuant to 19 CFR 134.32(g).


Section 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 United States 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 the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR 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 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 C.C.P.A. 297, 302 C.A.D. 104 (1940).

Part 134.1(d) defines the "ultimate purchaser" generally as the last person in the United States who will receive the article in the form in which it was imported. If an imported article will be used in domestic manufacture, the manufacturer may be the "ultimate purchaser" if 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)).

A substantial transformation, for country of origin marking purposes, occurs when an imported article is used in the United States in manufacture, which results in an article having a name, character, or use differing from that of the imported article. Under this principle, the manufacturer or processor in the United States who converts or combines the imported article into the different article will be considered the "ultimate purchaser" of the imported article, and the article shall be excepted from marking. However, the outermost containers of the imported articles must be marked (19 CFR 134.35). The issue of whether a substantial transformation occurs is determined on a case-by-case basis.

In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 1368 (1984). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See, C.S.D. 85-25 (September 25, 1984).

"The well-established test for determining whether a substantial transformation has occurred is derived from language enunciated in Anheuser-Busch Brewing Association v. United States, 207 U.S. 556, 562 (1908), ..." C.S.D. 89-3 (September 23, 1988). There, the court defined the word "manufacture", as follows:

Manufacture implies a change, but every change is not a manufacture and yet every change in an article is the result of treatment, labor and manipulation. But something more is necessary, as is set forth and illustrated in Hartranft v. Wiegmann, 121 U.S. 609. There must be transformation; a new and different article must emerge, having a distinctive name, character or use.

"Simply stated, a substantial transformation occurs when an article emerges from a process with a distinctive name, character or use, different from that possessed by the original material that was processed. See, Torrington Co. v. United States, 764 F.2d 1563, 1568 (1985) (citing Texas Instruments, Inc. v. United States, 681 F.2d 778 at 782)." C.S.D. 89-3.

In the instant case, the only manufacturing performed on the driftwood is a protective dipping process and the attachment of a base. Before the dipping, bases of U.S. origin are added to the medium and larger pieces of driftwood. The smaller pieces are imported with bases already attached and are dipped, in this condition, in the protective epoxy-resin coating.

In your submission you argue that the driftwood "is in no way similar to the essential character or use of the 'substantially transformed' product [meaning the driftwood after dipping and the attachment of the base]; it is, in fact, the antithesis of the ultimate product. Any attempt to use the imported article before processing would obstruct and could endanger the ultimate product's purposes -- preserving and enhancing an aquarium environment." Assuming the driftwood has enough residual tannin in it to prove harmful to fish in the enclosed environment of an aquarium, it is understandable that a protective coating is requisite. However, it is difficult to imagine how the driftwood, once processed, could have any purpose other than as a decorative piece. Only in the aesthetic sense is it possible that the aquarium environment is "enhanced" by the driftwood; we can conceive of no other manner by which the aquarium environment is actually benefitted by the presence of the coated driftwood. Likewise, no protective or preservative property is imaginable aside from the fact that the protective coating may "preserve" the aquarium environment from the potentially harmful toxins emitted from the driftwood itself. Therefore, the essential character and use of the driftwood remain the same before and after processing -- the driftwood is still driftwood.

You state that while the driftwood can be used in a variety of ways before processing, it is not ready for any specific use in its natural state -- especially for use as aquarium pieces. Customs disagrees. In its natural state, driftwood is perfectly suited for the use to which it is being put in the instant case - - namely a decorative use to simulate a naturally occurring aquatic environment. The atmosphere that is being sought to recreate is the kind of aquatic environment that is associated with driftwood. The only difference between the article in its natural state and article after the processing is the protective coating and the addition of a base, a minor assembly. In HQ 555881 (May 18, 1991), Customs found that adding a protective coating to knee pads and floats was not a substantial transformation even though without the protective coating the articles could not be used in the manner intended. There protestant argued that the floats and pads were not dedicated in name, character or use as pool floats or knee pads and could be used in a number of different ways before the protective coating was added. Customs discounted the argument and found that prior to the dipping process, the pads and floats had the essential character as pads and floats. Furthermore, Customs found that even though the undipped floats and pads may be suitable as articles of commerce was not dispositive of whether the vinyl dipping resulted in a new or different article of commerce. Customs concluded by stating that it was not persuaded that the floats and pads which underwent the dipping process were new or different articles when compared to the articles before the dipping process. Similarly here, Customs is not persuaded that the processes performed on the driftwood amount to a substantial transformation of the article. With or without the protective coating, the essential character of the driftwood remains the same.

Hartranft v. Wiegmann, 121 U.S. 609; 30 L.Ed. 1012; 7 S.Ct. 1240 (1887), involved the interpretation of "manufacturing" for purposes of determining the classificaton and duty for certain shells. Nonetheless, the case is frequently looked to for guidance in matters involving substantial transformation. There, London merchants obtained shells from all parts of the world. In England the shells were cleaned and prepared for market. The epidermis was removed, the shells were ground or polished, cleaned by acid, and ground on an emery wheel to expose the interior. The shells were sold as ornaments, buttons, handles for penknives, etc... There, the Supreme Court found that the shells were not manufactured into new and different articles, having a distinctive name, character or use from that of a shell. They were still shells. Hartranft at 615. Like the seashells, the driftwood is collected in its natural state to be used in a decorative manner and even though it is subject to some processing, the processing does not amount to a substantial transformation resulting in a new and different article.

Customs agrees that the imported driftwood qualifies for the marking exception set forth in 19 U.S.C. 1304(a)(3)(G) and section 134.32(g), which excepts "articles to be processed in the U.S. for his account otherwise than for the purpose of concealing the origin of such articles and in such a manner that any mark ... would necessarily be obliterated, destroyed, or permanently concealed." The driftwood surface is uneven, cracked, knobby and the wood is often twisted. Marking a surface such as this is extremely difficult. You state that efforts have been made, unsuccessfully, to find a reasonable marking method that will survive the dipping process. So long as country of origin marking is performed in a satisfactory manner after the processing and in a sufficiently permanent manner so as to reach the ultimate purchaser, the driftwood is not required to be marked at the time of importation. Appropriate arrangements should be made with Customs officials at the port of entry to ensure that the processed driftwood is properly marked.


The driftwood imported from Malaysia is not substantially transformed into a new and different article by the processing operation performed in the U.S. Accordingly, Fritz is not the ultimate purchaser of the driftwood and it does not qualify for an exception from country of origin marking pursuant to section 134.35, Customs Regulations (19 CFR 134.35).

However, pursuant to section 134.32(g), Customs Regulations (19 CFR 134.32(g)), the driftwood is not required to be marked with its country of origin at the time of its importation, as any marking would be necessarily obliterated by the U.S. processing. Nonetheless, the articles must be marked after processing in the U.S. in a manner acceptable to Customs.


John Durant, Director
Commercial Rulings Division