MAR-2-05 CO:R:C:V 734474 ER
Mr. Joel Switsky
President
Archer Freight Systems, Inc.
P.O.Box 460067
San Antonio, Texas 78246-0067
RE: Country of Origin Marking Requirements for Frame Front
Substrates and Side Temple Substrates for Eyeglasses
Imported from Japan, Korea, Hong Kong and Germany;
Ultimate Purchaser; Substantial Transformation; Federal
Trade Commission; 19 CFR 134.1(d); 19 CFR 134.32(g);
19 CFR 134.35; C.S.D. 80-43; HQ 709266; HQ 709551;
HQ 728504; HQ 733693.
Dear Mr. Switsky:
This is in response to your letter of January 16, 1992, on
behalf of Optique Marquis, P.O. Box 2078, San Antonio, Texas
78297, in which you ask for a ruling concerning the country of
origin marking requirements for frame front substrates and side
temple substrates for eyeglasses imported from Japan, Korea,
Hong Kong and Germany.
FACTS:
In your submission and by telephone conversations with you
on March 5, 1992 and with Optique Marquis on March 9, 1992 the
facts set forth below were established. Optique Marquis imports
in unfinished condition, frame front substrates and side temple
substrates from Japan, Korea, Hong Kong and Germany and further
processes them as set forth below. You state that these
components are not usable in the form in which they are imported
due to the fact that the un-plated frames offer no protection
against corrosion, may cause skin reactions on users and have no
functional use or decorative appeal. The components of U.S.
origin include the nosepads, screws, bolts, paints, lacquers and
lenses. You provided samples of the imported components and the
finished product complete with demo lenses.
The first stage of the processing, designed to alter the
function, form and appearance of the components, is described in
your submission as follows: (1) components are tumbled and
polished; (2) components are cleaned and hand polished prior to
initial plating; (3) copper plating is applied as primer
coating; (4) nickel/silver is applied as a secondary coating;
(5) substrate with primer and secondary plating are removed and
selected areas are masked by hand for plating; (6) gold or silver
is applied to secondary plating and reviewed, where necessary,
for final gold or silver plating; (7) plated components are
cleaned and selected areas are masked for epoxy decorating;
(8) epoxy paints are applied by hand and temperature cured
(where multi-color processes are used (three or four colors), all
steps involved in single-color application must be repeated); and
(9) components with gold and/or silver plating and epoxy
decorations are coated with a clear lacquer before assembly.
In your submission you describe the next stage of
processing, involving the assembly of the frame and temple
components with other components, as follows: (10) nosepads are
assembled to the bridge of the frame fronts that have been
measured and identified for size; (11) temples are measured for
size and temple ear tips are applied to provide comfort to the
wearer; (12) measured temple with ear tip are formed with two
curves so as to hold the complete frame to the patient's head;
(13) temples and fronts are assembled; (14) lenses for sunglasses
or demo lenses are ground to specification and assembled; and
(15) assembled frames with lenses are hand adjusted and
individually packaged.
An electroplating system with monitored controls is used
and OSHA and EPA standards are observed. Equipment for applying
and curing protective coatings and epoxy decorations includes
mixing systems, dispensing machinery and thermal controls. You
state that 60 percent of the value of the imported merchandise is
added in the U.S. after importation.
It is your opinion that these operations substantially
transform the imported articles from an unfinished state to a
finished state. You have requested a general marking waiver for
the articles, as imported, pursuant to 19 CFR 134.32(g) because
you state that the processing in the U.S. will necessarily
obliterate the original markings. Additionally, you have also
requested that you be allowed to mark the finished product as
originating in the U.S.
ISSUE:
Whether the imported frame front substrates and side temple
substrates for eyeglasses may be excepted from country of origin
marking?
Whether the finished product may be marked with a U.S.
country of origin?
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 (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 in the U.S. the English name of the country 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
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, C.A.D. 104 (1940). Section 134.1(d), Customs
Regulations (19 CFR 134.1(d)) defines the "ultimate purchaser"
generally as the last person in the U.S. who will receive the
article in the form in which it was imported.
You assert that the processes performed on the components in
the U.S. will destroy or obliterate any country of origin
marking, and therefore request an exemption from the country of
origin marking requirements pursuant to 19 U.S.C. 1304(a)(3)(G)
and 19 CFR 134.32(g). These sections of the Tariff Act and the
Customs regulations except from marking those articles to be
processed in the U.S. by the importer in such a manner that any
mark would necessarily be obliterated.
In HQ 709266 (July 11, 1978), Customs found that there are
methods of marking eyeglass frames which will withstand such
processes, e.g. die-sinking. Therefore, in the instant case,
because the marking will not necessarily be obliterated by the
process, the eyeglass frames do not fall within the exception
provided for by 19 U.S.C. 1304(a)(3)(G). However, the articles
may be eligible for another exception to marking as is discussed
below.
Section 134.35, Customs Regulations (19 CFR 134.35),
provides that an article 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 will be within the principle of
the decision of U.S. v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267
(C.A.D. 98) (1940). Under this principle, the manufacturer or
processor in the U.S. who substantially transforms the imported
article into an article with a new name, character, or use will
be considered the "ultimate purchaser" of the imported article
within the contemplation of section 304(a) of the Tariff Act of
1930, as amended (19 U.S.C. 1304(a)), and the article shall be
excepted from marking. The outermost containers of the imported
articles shall be marked in accordance with this part.
However, if the manufacturing process is merely a minor one
which leaves the identity of the imported article intact, the
consumer or user of the article after the processing, will be
regarded as the "ultimate purchaser." 19 CFR 134.1(d)(2).
In HQ 728504 (October 15, 1985), Customs pointed out that
the assembly of imported frames does not constitute a substantial
transformation of the item sufficient to make the importer the
ultimate purchaser and that in such a case, country of origin
marking would be required on the imported fronts and temples.
(See also, HQ 709266 (July 11, 1978) assembly of eyeglass frames
does not constitute a substantial transformation.) However,
Customs also indicated that where there is additional processing
performed (i.e. more than mere assembly of the fronts and
temples) a substantial transformation may occur, depending on
the circumstances.
In C.S.D. 80-43 (July 17, 1979), Customs ruled that a
substantial transformation occurred where the importer subjected
eyeglass fronts and temples to further processing before assembly
and color-dying. There, the processing consisted of the
following operations:
1. Temple hinges removed and temples ultrasonically
cleaned and sorted.
2. Temples trimmed according to style specifications.
3. Temples machined to accommodate the attachment of
trim.
4. Temples cleaned prior to assembly with front.
5. Temples engraved.
6. Temples trimmed further.
7. Temples subjected to five-part milling process.
8. Seven-piece hinge assembled and fixed on temple.
9. Lictite injected into hinge screws.
10. Hinge holes drilled, frame composition tested, and
hinges attached.
11. Frame front heated, reformed, and reshaped to
assure proper meniscus curve for the lens.
12. Frame front inspected and ultrasonically cleaned.
13. Frame front and temples assembled.
14. Pantoscopic angle for frame determined.
15. Frame sterilized and dye base applied in a 10-step
process.
16. Frame immersed in Freon bath.
17. Frame dyed.
18. Protective gloss coating applied to frame.
19. Frame adjusted and set in accordance with fitting
requirements.
20. Frame stamped with requisite optical specifications.
Customs ruled that these operations amounted to a substantial
transformation; consequently, the importer was found to be the
ultimate purchaser of the imported merchandise within the meaning
of section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304). (But cf., HQ 733693 (October 17, 1990), applying epoxy
and paint to sunglasses frames did not constitute a substantial
transformation.)
In HQ 709551 (November 13, 1978), Customs determined that
imported eyeglass fronts and temples were substantially
transformed when they were cleaned, shaped, electroplated,
polished, subjected to acid baths, and joined with other
components; i.e. nose pads and plastic ear tips. The following
excerpt is relevant:
[We] are of the opinion that the mere addition of
nose pads and plastic ear tips by itself does not alter
the character of the imported merchandise.
Nevertheless, we are of the opinion that the
physical alteration which the imported eyeglass fronts
and temples undergo as a result of the manufacturing
process performed by petitioner constitutes a
substantial transformation within the meaning of 19
U.S.C. 1304.
In so determining we have considered the fact that
the manufacturing process performed by petitioner on
the subject fronts and temples is a relatively major
one which involves significant expenditure of costs,
time and materials and which requires machining and the
use of special tools and skills.
We have also considered the fact that the plating
processes involved are relatively complex involving
several distinct procedures and materials which have
the effect of altering the characteristics of the metal
parts in such a manner as to make them resistant to the
tarnishing from perspiration.
In addition, as a result of the further
manufacturing processes, the eyeglass fronts and
temples acquire the proper shape to be worn and to be
capable of holding lenses. Neither the fronts or
temples have the proper shape to be worn over the ears
and nose, nor to hold lenses when imported, attributes
we consider essential to eyeglass frames.
Accordingly, we are of the opinion that as a
result of the above processes the imported items
acquire a new character and use. This circumstance in
addition to the extent of the manufacturing involved,
leads us to conclude that the physical alterations
suffered by the eyeglass fronts and temples
constitutes [sic] a substantial transformation.
We note that such substantial transformation of
the imported fronts and temples occurs as a result of
the totality of the manufacturing involved rather than
by the effect of any particular process.
In the present case, as in the above cases, the imported
merchandise must undergo various processing before it is suitable
for use and wear. Such processing is virtually the same as that
involved in C.S.D. 80-43 and HQ 709551. Moreover, in this case,
screws, bolts, nosepads, temple ear tips, paints and lacquers of
U.S. origin are used in these processes to finish the frame.
Accordingly, based on these rulings, we find that the imported
frame front substrates and side temple substrates are
substantially transformed as a result of the domestic processing
and that Optique Marquis is the ultimate purchaser.
The Federal Trade Commission has jurisdiction over whether
or not goods can be marked "Made in the U.S.A." and should be
contacted in regard to that question.
HOLDING:
The manufacturer in the U.S. is the ultimate purchaser of
the imported frame front substrates and side temple substrates
for eyeglasses within the meaning of section 304 of the Tariff
Act of 1930, as amended (19 U.S.C. 1304). Accordingly, the
imported merchandise may be excepted from individual country of
origin marking pursuant to 19 CFR 134.35 providing the
merchandise undergoes the manufacturing processes described above
and that Customs officers at the port of entry are satisfied
that the manufacturer will receive the merchandise in properly
marked containers.
Sincerely,
John Durant, Director
Commercial Rulings Division