MAR-2 OT:RR:NC:N4:433
Kay Morrell
Customs Analyst
JCPenney Purchasing Corporation
6501 Legacy Drive, MS 2316
Plano, TX 75024
RE: THE COUNTRY OF ORIGIN MARKING OF UPHOLSTERED SOFAS
Dear Ms. Morrell:
This is in response to your letter dated August 7, 2009, requesting a ruling on country of origin marking requirements for sofas assembled in the United States of foreign and/or domestic materials. Photos were submitted with your letter for review.
Your letter requests the country of origin for five different manufacturing scenarios. Your description of these five manufacturing processes is as follows:
Scenario A: involves an upholstered, fixed cushion sofa. The frame is produced in China of all foreign components (wood, slats, springs or coils, foam, padding, etc.). The frame is shipped to a U.S. factory. Foreign textile fabric is then cut and sewn in the U.S. and stretched over the frame.
Scenario B: involves an upholstered, fixed cushion sofa. The frame is produced in China of all foreign components (wood, slats, foam, padding, etc.). The frame is shipped to a U.S. Factory. Springs/coils of foreign origin are installed in the U.S. factory and then foreign textile fabric is cut/sewn and stretched over the frame in the U.S. factory.
Scenario C: involves an upholstered, fixed cushion sofa. The frame is produced in China of all foreign components (wood, slats, foam, padding, etc.). The foreign frame is shipped to a U.S. Factory, where springs and coils of foreign origin are installed in the U.S. factory. Then U.S. formed textile fabric is cut and sewn and stretched over the frame in the U.S. factory.
Scenario D: involves an upholstered, fixed cushion sofa. The frame is built in the U.S. of all foreign components, and the upholstery is cut and sewn to shape in China. The upholstery would then be shipped to the U.S. and stretched over the frame in the U.S. factory.
Scenario E: involves an upholstered, fixed cushion sofa. The frame is built in China of foreign components. The upholstery is cut and sewn to shape in China. The component parts are shipped to the U.S. where the upholstery is stretched over the frame.
The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), 19 C.F.R. §134, provides that, unless excepted, every article of foreign origin (or its container) 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 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 CCPA 297 at 302; C.A.D. 104 (1940).
Part 134, U.S. Customs and Border Protection (CBP) Regulations (19 C.F.R. §134) implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304. Section 134.1(b), CBP Regulations (19 C.F.R. §134.1(b)), defines “country of origin” as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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].” For country of origin making purposes, a substantial transformation of an article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the article before the processing. However, if the manufacturing or combining process is merely a minor one that leaves the identity of the article intact, a substantial transformation has not occurred, and an appropriate marking must appear on the imported article so that the consumer can know the country of origin. See, Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff’d, 702 F.2d 1022 (Fed. Cir. 1983).
According to the information and chart that you submitted, the sofa frame for four out of the five Scenarios is China, with the exception of Scenario D – where the frame is assembled from foreign components in the United States. Scenario B indicates the frame for the sofa is of Chinese origin with foreign origin springs and coils installed in the United States. Scenarios A, B, D and E indicate foreign textile fabric of Chinese origin; Scenario A and B indicates that foreign fabric is cut and sewn to shape in the United States, while Scenario D and E indicates that the foreign fabric of Chinese origin is cut and sewn to shape in China. Scenario C indicates United States formed textile fabric, cut and sewn to shape in the United States.
CBP (formerly Customs) in various holdings has stated that the mere assembly of parts will not necessarily constitute a substantial transformation. See C.S.D. 80-111 (see HQ 560817 dated August 6, 1998 and HQ H006417 dated August 20, 2008) in which the U.S. Customs Service (now, CBP) found that the U.S. assembly of imported ceiling fan components on an assembly line did not constitute a substantial transformation. For Scenario B, the assembling of foreign made springs and coils in the United States to a foreign made frame of Chinese origin does not constitute a substantial transformation of the frame.
On the other hand, the United States Customs Court held in Carlson Furniture Industries v. United States, 65 Cust. Ct 474 (1970), that imported finished and unfinished chair parts
assembled in the U.S. into finished chairs was a substantial transformation. A description of the assembly process after importation included: (1) fitting and gluing the wooden parts together, (2) placing steel pins in the key joints, (3) cutting to length and leveling the legs, (4) upholstering the chair – in some instances, and (5) fitting the legs with glides and casters. It was determined that more than mere assembly of parts together was required, in that the importer had to perform additional work on the imported components and that materials would have to be added to those components to create a functional article of commerce – see HQ 734050 dated June 17, 1991.
Customs has repeatedly held that the cutting of fabric into specific patterns and shapes suitable for use in an assembly operation constitutes a substantial transformation. It has long been held that the cutting of materials to defined shapes and patterns suitable for use in the assembly of a finished article, as opposed to mere cutting to length and/or width, which does not render the article suitable for a particular use, constitutes a substantial transformation. See Headquarters Ruling Letters: 555189 (June 12, 1989) and 734539 (June 8, 1992).
One must look at the whole assembly process in the manufacture of a sofa to determine whether or not a substantial transformation has occurred in the United States. This includes the cutting to pattern and shape of the textile fabric into defined sofa chair parts, the stretching of those fabric components onto the sofa frame, and the assembling of other parts and components in the manufacture of a complete sofa.
For Scenario D: in the U.S factory, significant assembling of foreign parts of furniture (wood, slats, springs and coils, foam, padding, etc.) in the manufacture of the sofa frame results in a substantial transformation, with the frame being of United States origin. At the U.S. plant, the adding of the cut to shape upholstery of foreign origin and the stretching of the fabric parts over the frame of U.S. origin, along with assembling of other parts and components in the manufacture of the finished sofa constitutes a substantial transformation, resulting in country of origin United States.
For Scenarios A and B: in the U.S. factory, foreign fabric cut and sewn to shape into recognizable sofa parts constitutes a substantial transformation, with country of origin of the United States. The stretching of cut to shape upholstery of U.S. origin over the frame of Chinese origin, along with “similar assembly processes” as detailed in Carlson Furniture versus the United States is a substantial transformation into a complete sofa, resulting in country of origin United States.
For Scenario C, in the U.S. factory, United States formed textile fabric, cut and sewn to shape in the U.S., stretched over a foreign frame of Chinese origin, and “similar assembly processes” as detailed in Carlson Furniture versus the United States is a substantial transformation into a complete sofa, resulting in country of origin United States.
For Scenario E, in the U.S. factory, foreign fabric is cut and sewn to shape in China into sofa parts, which is stretched over a foreign frame of Chinese origin, and then other parts are added in the mere assembly of the sofa. These processes do not constitute a substantial transformation of the sofa, resulting in the country of origin China.
Section 134.35, CBP Regulations (19 C.F.R. 134.35), implementing the principle of Gibson-Thomsen in addition to the principle stated previously, provides that 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 within the contemplation of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article shall be excepted from marking; only the outermost containers of the imported articles shall be marked in accord with this part. Under the conditions set forth by means of Scenarios A,B, C and D, the imported sofa frames and fabrics need not be individually marked. Only the outermost container need be marked with the country of origin of the foreign components.
Furthermore county of origin rules are not applicable to goods of U.S. origin, therefore under Scenarios A, B, C and D it is not necessary to mark the assembled sofas. The use of the phrase "Made in U.S.A." or any marking similar to "Made in" when followed by the United States is within the jurisdiction of the Federal Trade Commission (“FTC”). Therefore, you should contact the FTC regarding the appropriateness of the use of this phrase. The FTC address is: Federal Trade Commission, Bureau of Consumer Protection, Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20580.
For Scenario E, Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. § 1304), 19 C.F.R. 134.11 is applicable, in that, unless excepted, every article of foreign origin 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 United States the English name of the country of origin of the article. Under the conditions set forth in Scenario E, the sofa should be marked “Product of China” or other words of similar meaning.
This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Neil H. Levy at (646) 733-3036.
Sincerely,
Robert B. Swierupski
Director
National Commodity Specialist Division