HQ 0733188 - Country of origin marking of imported exercise benches and boards - United States International Trade Commision Rulings

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HQ 733188
July 5, 1990

MAR-2-05 CO:R:C:V 733188 KG

CATEGORY: MARKING

Mr. Rollins Snelling
Dadco Inc.
8000 Baymeadows Circle E. #60
Jacksonville, Florida 32256

RE: Country of origin marking of imported exercise benches and boards

Dear Mr. Snelling:

This is in response to your letter of March 9, 1990, requesting a country of origin ruling regarding imported exercise benches and boards.

FACTS:

You plan to import partially made exercise benches and boards from Venezuela. In Venezuela, the metal frames of the benches and boards will be cut and welded in several points. The cushions will also be made in Venezuela. The frames and cushions will then be boxed and shipped to the U.S.

The following operations will be performed in the U.S.: the cushions will be silk-screened with your logo; the cushions will be attached to the frame; the plastic end cups will be added; the bedding label will be attached; the foam sleeves will be attached; assembly instructions will be added and the completed benches and boards will be boxed and shipped to retailers.

Cost figures submitted show that the cost of completion in the U.S. for sit-up boards and two styles of benches is greater than the cost of the work done in Venezuela. No details as to how these figures were arrived at were submitted. Photographs of three styles of completed exercise benches were included in the submission. You inquired whether the completed exercise benches may be marked "Made in U.S.A."

ISSUE:

Whether the cushions and frames which are imported from Venezuela are substantially transformed in the U.S.

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. The Court of International Trade stated in Koru North America v. United States, 12 CIT , 701 F.Supp. 229, (CIT 1988), that: "In ascertaining what constitutes the country of origin under the marking statute, a court must look at the sense in which the term is used in the statute, giving reference to the purpose of the particular legislation involved. The purpose of the marking statute is outlined in United States v. Friedlaender & Co., 27 CCPA 297 at 302, C.A.D. 104 (1940), where the court stated that: "Congress intended 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."

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 the country of origin of an article 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 for country of origin marking purposes. Section 134.35, Customs Regulations (19 CFR 134.35), provides that a manufacturer or processor in the U.S. who converts or combines an imported article into a different article having 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, and the article shall be excepted from marking. If the article itself is excepted from marking, the outermost containers of the imported articles must be marked.

A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940), National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986), Koru North America v. United States, 12 CIT ___, 701 F.Supp. 229 (CIT 1988).

You assert that because the cost of the work done in the U.S. is greater than the cost of the work done in Venezuela, the exercise benches and boards should be considered substantially transformed. While relative cost is a factor to be considered, it is not determinative of the substantial transformation standard.

The conclusion as to whether or not a particular article is substantially transformed is determined on a case-by-case basis. For instance, Customs ruled in C.S.D. 80-111 (September 24, 1980), that the U.S. assembly of imported ceiling fan components on an assembly line did not constitute a substantial transformation. The ceiling fan motors are assembled in a 20- step assembly line procedure. The manufacture of the fan blades is a 5-step procedure. The assembly of the ceiling fans was not considered a substantial transformation because the manufacturing processes described were "basically assembly line procedures" not requiring large amounts of skilled labor or specialized equipment. The cost of the manufacturing processes relative to the cost of the components appeared to be low.

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. After importation, the importer assembles, fits and glues the wooden parts together, steel pins the key joints, cuts to length and levels the legs, and in some instances, upholsters the chair and fits the legs with glides and casters. The court determined that the imported articles required the importer to perform additional work on them and material would have to be added to them to create a functional article of commerce and that more than the mere assembly of parts together was required.

The assembly of the exercise benches and boards are not like the chair parts in Carlson Furniture but rather, are similar to the assembly of ceiling fan components. It appears from your description that the metal frames are imported essentially complete and that the U.S. assembly is primarily the attachment of the cushions and several minor parts. No machining is done in the U.S. and no specialized training, skill or equipment would be required to finish these exercise benches and boards. There is no change in name, character or use that takes place as a result of the simple assembly that occurs in the U.S. Therefore, there is no substantial transformation in the U.S. Since the exercise benches and boards are not substantially transformed in the U.S., the country of origin remains Venezuela. The exercise benches and boards must be marked to indicate that Venezuela is the country of origin. However, Customs will allow the benches and boards to be marked with the legend "Made in Venezuela, assembled in the U.S." or a similar phrase.

The ultimate purchaser of an imported article is defined in section 134.1(d), Customs Regulations (19 CFR 134.1(d)), as the last person in the U.S. to receive the article in the form in which it was imported. In this case, the person who purchases these exercise benches and/or boards in a retail store would be the last person in the U.S to receive it in its imported form and therefore, the purchaser would be the ultimate purchaser. The benches and boards must be marked to inform the retail purchaser of their country of origin.

Since the exercise benches and boards are sold in retail boxes, it may be possible to mark the boxes instead of the benches and boards. Pursuant to section 134.32(d), Customs Regulations (19 CFR 134.32), imported articles for which the marking of the containers will reasonably indicate the origin of the articles are excepted from individual marking. Section 134.34, Customs Regulations (19 CFR 134.34), provides that for imported article which will be repacked after release from Customs custody, the 19 CFR 134.32(d) exception may be granted in the discretion of the district director if the containers in which the articles are repacked will indicate the origin of the articles to the ultimate purchaser in the U.S. and the importer arranges for supervision of the marking of the containers by Customs officers at the importer's expense or secures such verification as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to the liquidation of the entry. The exercise benches and boards itself may be excepted from marking if the district director is satisfied that (1) the boxes in which they are shipped to retailers are sealed; (2) the boxes are the same boxes in which the purchaser would receive the exercise benches; (3) the boxes are clearly and conspicuously marked to indicate the country of origin and (4) the importer satisfies the requirements of 19 CFR 134.34.

You asked whether you could mark the completed article "Made in U.S.A." As stated above, for marking purposes, the country of origin is Venezuela and 19 U.S.C. 1304 would require that these benches and boards are marked to indicate that the country of origin is Venezuela.

HOLDING:

The exercise benches and boards are not substantially transformed in the U.S. The country of origin of the imported exercise benches and boards is Venezuela. The ultimate purchaser of the imported exercise boards and benches is the retail purchaser. Therefore, the exercise benches and boards must be marked to indicate to the retail purchaser that the country of origin is Venezuela. The exercise boards and benches may be excepted from marking on the benches and boards itself if the conditions of 19 CFR 134.34 are met.

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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