CLA-2 OT:RR:CTF:VS H088695 KSG
Steven W. Baker, Esq.
448 Ignacio Boulevard #323
Novato, CA 94949-9802
RE: Eligibility of prescription eyeglasses for duty-free treatment under the GSP
Dear Mr. Baker:
This is in reply to your request for a binding ruling dated December 8, 2009, on behalf of Hoya Lens of America, Inc. concerning the eligibility of certain imported prescription eyeglasses from Thailand for duty-free treatment under the Generalized System of Preferences (“GSP”).
FACTS:
You state that certain prescription lens blanks are produced in Thailand. Lens blanks produced in China, Vietnam, Japan, the U.S. and other countries will also be imported into Thailand. Eyeglass frames produced in Japan, China or other countries will also be imported into Thailand. In Thailand, the lenses (either of Thai origin or not) will undergo grinding, possibly coating, and then will be installed into the eyeglass frames. The imported eyeglasses will then be imported into the U.S.
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ISSUE:
Whether the imported eyeglasses are eligible for preferential tariff treatment under the GSP.
LAW AND ANALYSIS:
Title V of the Trade Act of 1974, as amended (19 U.S.C.A. 2461-65), authorizes the President to establish a Generalized System of Preferences to provide duty-free treatment for eligible articles from beneficiary developing countries (“BDCs”). Articles produced in a BDC may qualify for duty-free treatment under the GSP if the good are imported directly into the customs territory of the U.S. from the BDC and the sum or value of materials produced in the BDC plus the direct costs of the processing operations performed in the BDC is equivalent to at least 35 percent of the appraised value of the article at the time of entry into the U.S. See 19 U.S.C. 2463(a)(2) and (3).
Thailand has been designated as a BDC for purposes of the GSP and may be afforded preferential treatment under the HTSUS. See GN 4(a), HTSUS. We assume for the purposes of this ruling that the imported eyeglasses are classified in a GSP-eligible provision.
A good is considered to be a “product of” a BDC if it is wholly the growth, product or manufacture of the BDC, or if made of materials imported into the BDC, those materials are substantially transformed in the BDC into a new and different article of commerce. See 19 CFR 10.176(a). A substantial transformation occurs “when an article emerges from a manufacturing process with a name, character, or use which differs from those of the original material subjected to the process.” Texas Instruments Inc. v. United States, 681 F.2d 778 (1982).
We assume for the purposes of this ruling that the goods will satisfy the “imported directly” requirement.
The first issue involved in this case is whether the imported eyeglasses are a “product of” Thailand. The “product of” requirement means that to receive duty-free treatment under GSP, an article either must be made entirely of materials originating in the BDC, or if made of materials imported into the BDC, those materials must be substantially transformed in the BDC into a new and different article of commerce.
In the facts presented, the imported eyeglasses are not wholly the growth, product or manufacture of Thailand. Since both Thai-origin and non Thai-origin lenses are used in the scenario and the eyeglass frames are of non Thai-origin, the question presented is whether the processing in Thailand of the lenses and their insertion into the eyeglass frames is a substantial transformation.
You cited to Headquarters Ruling Letter (“HRL”) 733654, dated October 29, 1990, which held that the insertion of lenses into frames to make over-the-counter sunglasses was a substantial transformation. This ruling stated that over-the-counter sunglasses were distinguishable from prescription eyeglasses where the lenses and frames are purchased separately. Customs has previously held that the insertion of prescription lenses into frames is not considered a substantial transformation. See HRL 730963, dated April 21, 1988. The eyeglass frames and the lenses retain a separate country of origin and the frames are marked to reflect the origin of the frames. CBP has also held that the grinding and coating of lenses are finishing operations of the lenses and do not constitute a substantial transformation. See HRL 555923, dated June 17, 1991. Accordingly, we find that the finishing operations performed on the prescription lenses and the insertion of the prescription lenses into the frames in Thailand does not create a new article with a new name, character or use. The eyeglass frames and lenses have only one use prior to processing and that use does not change as a result of the processing in Thailand.
We note that the prescription lenses manufactured in Thailand, finished by undergoing grinding and possibly, coating and then insertion into foreign-origin eyeglass frames would also not be substantially transformed. They would not become a new article with a new name, character or use.
Based on the analysis in the above rulings, we find that the grinding and possible coating of the prescription lens blanks and the insertion of the prescription lenses into the frames does not constitute a substantial transformation. Since the prescription lenses and eyeglass frames are not substantially transformed in Thailand, the imported prescription eyeglasses are not considered a product of Thailand for purposes of the GSP. Therefore, the imported eyeglasses will not be eligible for preference under the GSP.
HOLDING:
Grinding and coating prescription lenses and inserting the prescription lenses into the frames is not a substantial transformation. Therefore, the imported prescription eyeglasses will not be considered a product of Thailand for the purposes of the GSP.
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 official handling the transaction.
Sincerely,
Monika R. Brenner
Chief, Valuation & Special Programs Branch