MAR-2-05 CO:R:C:V 734653 RSD
Mr. Charles Johnson
Vice President
W.A. Phelps & Co., Inc.
One World Trade Center
Suite 2109
New York, N.Y. 10048
RE: Country of origin marking requirements for pieces of cut
crystal; cutting of crystal; glass; blanks; substantial
transformation; 19 CFR 134.1(b); 19 CFR 134.35; HQ 734387; HQ
734283
Dear Mr. Johnson:
This is in response to your letter dated April 8, 1992, on
behalf of your client, Donegal Crystal U.S.A., Inc., requesting a
ruling on the country of origin marking requirements for crystal
pieces blown in Germany and hand-cut entirely in the U.S. You
have submitted samples of the two uncut crystal blank bowls and
the two finished cut crystal bowls for our consideration.
FACTS:
Donegal Crystal U.S.A. imports plain rough crystal blanks
manufactured in Germany. The imported crystal blanks will be cut
off or broken off from a glass blowers blow pipe or a mold. The
crystal blanks will usually have defects such as bubbles. The
imported crystal blanks are plain and rough.
After importing the crystal blanks, Donegal employs skilled
craftsmen who cut it to size and shape it. The skilled craftsmen
then hand-cut a design into the crystal blank. After the hand-
cuts are completed, the crystal is smoothed and put into an acid
bath for finishing. It is then polished.
It takes Donegal about 3 and 1/2 hours to complete its
processing of a piece of crystal. Donegal purchases the plain
sample crystal blank for $11.81. After the processing, Donegal
claims that the value of the piece of crystal is $87.00 and it
sells at wholesale for $105.
The two sample crystal pieces are bowls. The sample blanks
are clear, but contain numerous imperfections such as bubbles and
chips. The edges are rough and sharp. Both of the finished
crystal bowls contain numerous intricate hand-cuts. In fact,
most of the outer surface area of the finished bowls contain
hand-cuts. One of the sample bowls has several different designs
cut into its outer surface. The other sample bowl has had three
curved sections sliced out of it so that it comes to three
points. The shape and size of both finished bowls are different
than that of the blanks. The edges of the finished pieces are
smooth. It is our understanding that all the cutting is done in
the U.S. by hand.
ISSUE:
Does the extensive hand-cutting of the imported uncut
crystal blank bowls in the U.S. constitute a substantial
transformation?
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. Congressional intent in
enacting 19 U.S.C. 1304 was 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." United States v. Friedlaender & Co., 27
C.C.P.A. 297 at 302 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 134.1(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 U.S. v. Gibson-Thomsen Co., Inc., 27
C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in
manufacture which results in an article having a name, character,
or use differing from that of the constituent article will be
considered substantially transformed. In such circumstances, the
imported article is excepted from marking. The outermost
containers of the imported article shall be marked. (See 19 CFR
134.35).
Customs has previously considered the cutting of crystal, as
in this case, when the cutting was extensive and intricate. In
HQ 734387, June 8, 1992, Customs ruled that crystal glassware
"blanks" were substantially transformed into formal, elegant
stemware suitable for indoor decoration by the extensive hand-
cutting operations performed in Ireland. We based this
determination on the fact that the hand-cutting operation was a
substantial and intricate processing operation performed by
highly skilled craftsmen. The hand-cutting significantly changed
the appearance and the shape of the stemware imparting a
decorative use to the glassware. In addition, the cutting added
significant value. We also noted that the glassware lost its
identity as mere glassware and became a new article bought
primarily for its appearance, rather than for its utilitarian
use.
Similarly, in HQ 734283, June 16, 1992, Customs found that a
crystal blank bowl, vase, and basket were substantially
transformed as a result of extensive and intricate hand-cutting
done in Ireland. In that ruling, we noted that these items were
largely bought for their appearance and that the hand-cuts were
the key factor which made the crystal blanks into fine pieces of
crystal which could be displayed.
The important factors in the two cases cited above which led
Customs to conclude that the cutting of the crystal blanks was a
substantial transformation are also present in this case. The
cutting of the crystal is all done in one country, the U.S. The
hand-cutting is extensive, intricate and performed by highly
skilled craftsmen. The shape and the appearance of the crystal
pieces was changed considerably. The crystal blanks were crude
and not capable of use. Finally, the cutting added considerable
value to the crystal pieces. Therefore, in accordance with the
analysis of HQ 734387 and HQ 734283, we find that the crystal
blanks are substantially transformed by the extensive hand-
cutting done in the U.S. In accordance with 19 CFR 134.35, the
imported crystal blanks are excepted from marking and only the
outermost containers in which the blanks are delivered to Donegal
Crystal USA, Inc. must be marked with the country of origin of
the crystal blanks.
You also inquire as to whether the finished crystal bowls
can be marked "Made In the U.S.A." The Federal Trade Commission
("FTC") has jurisdiction concerning the use of such a phrase;
consequently, any inquiries regarding its use should be directed
to the FTC in the future. The address is: The Federal Trade
Commission, Division of Enforcement, 6th and Pennsylvania Avenue,
N.W., Washington, D.C. 20508. HOLDING:
The extensive and intricate hand-cutting of the uncut
crystal glass blank bowls entirely in the U.S. substantially
transforms the blank bowls. In accordance with 19 CFR 134.35,
the imported crystal blanks are excepted from marking and only
the outer most containers must be marked.
Sincerely,
John Durant, Director
Commercial Rulings Division
cc: Area Director
New York Seaport
NIS Division