HQ 0731860 - Country of origin marking requirements of brass articles exported and returned for use in the manufacture of brass lanterns - United States International Trade Commision Rulings

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HQ 731860

June 20, 1990

MAR-2-05 CO:R:C:V 731860 EAB

CATEGORY: MARKING

Leslie A. Glick, Esquire
Porter, Wright, Morris & Arthur
1223 20th Street, N.W.
Washington, DC 20036-2395

RE: Country of origin marking requirements of brass articles exported and returned for use in the manufacture of brass lanterns

Dear Mr. Glick:

This is in response to your letter of October 20, 1988, requesting a ruling on the country of origin marking requirements of brass articles made in the U.S., further processed in Mexico, then returned to the U.S. and used in the manufacture of brass lanterns. We regret the delay in responding.

FACTS:

In the U.S., your client, American Lantern Company, intends to punch press raw brass sheet stock into various unfinished parts of brass lanterns. The raw brass parts will be shipped to your client's wholly owned facility in Mexico, where they will be buffed to a polished brass finish. They will be degreased, painted with a clear lacquer to prevent oxidation, baked, then packaged and shipped back to the parent company in the U.S.

In the U.S., the polished brass parts will be rivetted, eyeletted or swedged for purposes of joining. On an assembly line, the brass parts will be made into various final lanterns. The lanterns will be shrink wrapped individually and boxed for shipment.

ISSUE:

Are U.S. products exported to Mexico for further processing and returned, excepted from the country of origin marking requirements of 19 U.S.C 1304?

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 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 CCPA 297, 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. As provided in {134.32(m), Customs Regulations (19 CFR 134.32(m)), U.S. articles that are exported and returned are specifically excepted from marking. As stated in HQ 729519, May 18, 1988, articles of U.S. origin are not subject to the requirements of 19 U.S.C. 1304 because they are not articles of foreign origin.

Customs has ruled that, except as provided in {10.22, Customs Regulations (19 CFR 10.22), products of the U.S. which are sent abroad for further processing are not subject to country of origin marking upon re-importation, provided that the further processing in the foreign country does not constitute a substantial transformation. see, e.g., HQ 731617, September 1, 1989; HQ 732480, July 31, 1989; HQ 731652, February 16, 1989; and C.S.D. 80-15, June 25, 1979.

In order for a substantial transformation to occur, an article having a new name, character or use must result from the processing, United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267 (1940); National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (1986); Koru North America v. United States, 12 CIT ____, 701 F.Supp. 229 (1988).

In general, changes in the surface finish of an article are not regarded as sufficient to change its essential character so as to result in a substantial transformation. For example, previous Customs rulings have held that polishing and grinding of a semi-finished aluminum bowl (C.S.D. 89-130), and glazing and painting of pottery and ceramics (C.S.D. 89-121) do not result in a substantial transformation. See also T.D. 74-12(3) (grinding, polishing and other processing of socket blanks not a substantial transformation) and C.S.D. 80-15 (polishing and other processing of forged stainless steel instruments not a substantial transfor- mation).

Applying the substantial transformation standard to the facts of this case, we find that the Mexican degreasing, polish- ing, lacquering, baking and packaging operations are surface finishing operations which do not substantially transform the brass articles into articles of Mexican origin. None of the processing that occurs in Mexico, individually or altogether, changes the fundamental character or use of the brass articles. It is the constituent material, brass, coupled with the shape and design of the article created by the U.S. punching that imparts the essential character and determines the ultimate use of the brass articles.

HOLDING:

Brass articles made in the U.S. by punching brass sheet stock which will be exported to Mexico for polishing, lacquering and baking are not subject to the requirements of 19 U.S.C. 1304 upon their return to the U.S. because the Mexican processing does not result in a substantial transformation.

Sincerely,

Marvin M. Amernick, Chief
Value, Special Programs and

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