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HQ 733655

November 1, 1990

MAR-2-05 CO:R:C:V 733655 KG

CATEGORY: MARKING

Anthony D. Padgett, Esq.
Thelen, Marrin, Johnson & Bridges
805 15th Street, N.W.
Washington, D.C. 20005-3000

RE: Country of origin marking of imported non-prescription sunglasses; eyeglasses; substantial transformation

Dear Mr. Padgett:

This is in response to your letters of November 30, 1989, February 5, June 12, and August 3, 1990, requesting a country of origin ruling on behalf of your client regarding imported sunglasses. In HQ 555595 (May 21, 1990), addressed to Mr. John Mayo McKeown, Customs ruled on the applicability of subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States ("HTSUS") to these items. You also requested a ruling on two other styles of sunglasses which will be addressed in separate letters. We regret the delay in responding to your inquiry.

FACTS:

You have submitted samples of sunglass components. The components are leather-wrapped wire frame temples and fronts which are made in the U.S. The leather which is wrapped around the components originates in Canada. The leather, the temples, the fronts and acetone are shipped from the U.S. to Mexico for further processing.

Your client has contracted with a Mexican company to perform processing according to your client's specifications. Your client is in direct contact with the Mexican company. The following operations will be performed in Mexico: the leather, which is already folded and stitched on one end when exported to Mexico on rolls, is cut to length and width; glue is placed on the reverse side of the leather and activated with acetone; the leather is glued onto the plastic portion of the temple and any excess is removed by cutting. The fronts are also covered with leather in a similar manner. Finally, the lower part of the leather-wrapped temple is bent to fit around the wearer's ear.

In a second scenario, this bending is done in the U.S. rather than in Mexico. The leather-wrapped temples and frames are then shipped back to the U.S. for assembly and insertion of non-prescription U.S.-made lenses.

ISSUE:

What is the proper country of origin marking of the imported non-prescription sunglass frames under either scenario?

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.

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 this part.

Section 134.35, Customs Regulations (19 CFR 134.35), states that the manufacturer or processor in the U.S. who converts or combines the 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. The outermost containers of the imported articles shall 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).

Section 10.22, Customs Regulations (19 CFR 10.22), states that assembled articles entitled to the duty exemption under HTSUS subheading 9802.00.80 are considered products of the country of assembly for the purposes of country of origin marking. If an imported assembled article is made entirely of American-made materials, the United States origin of the material may be disclosed by using a legend such as "Assembled in ____ from material of U.S. origin," or a similar phrase.

Treasury Decision 74-38, dated January 14, 1974, addressed the issue of what method should be used to mark sunglass frames but did not describe the factual settings in which marking would be required.

I. Leather-wrapped temples which are bent to fit the wearer's ear in Mexico

Customs ruled in HQ 555595 (May 21, 1990), that the leather- wrapped temples which are bent to fit around the wearer's ear are not entitled to the partial duty exemption under HTSUS subheading 9802.00.80. Therefore, 19 CFR 10.22 is not applicable to these components.

In this scenario, the wire temples which are exported to Mexico already have their final shape and would be useable sunglass components except for the bending. Samples of bent and unbent temples were submitted; the physical appearance of the bent and unbent temples is not significantly different. Further, no evidence was submitted that the bending is a complex, costly or time-consuming procedure which requires any great deal of skill. The bending appears to be a very simple processing which could be done at a rapid pace by unskilled laborers. Essentially, the bending operation appears to be a mere finishing operation. The temples do not undergo a change in name or use as a result of the bending. The only change in character that occurs is the bending, which is not a fundamental change in character. The bending of the temples does not constitute a substantial transformation.

The leather-wrapping process performed in Mexico is merely decorative and does not change the name, character or use of the sunglass components. In HQ 729308 (August 12, 1988), Customs ruled that U.S.-made earrings exported to Canada to be painted a solid color were not substantially transformed. This ruling was based in part, on the fact that the painting was a minor finishing operation which leaves the fundamental identity of the earrings intact. In this case, the components are not even assembled into sunglass frames; assembly occurs in the U.S. These sunglass components are not substantially transformed in Mexico. Since these sunglass components are neither entitled to the partial duty exemption under HTSUS subheading 9802.00.80 nor substantially transformed in Mexico, they would be excepted from marking in accordance with 19 CFR 134.32(m).

II. Leather-wrapped wire fronts and temples which are bent to fit the wearer's ear in the U.S.

HQ 555595 suggests that the process of applying the leather to the wire temples and fronts would be an acceptable assembly operation under 19 CFR 10.16(a). Although the leather is a product of Canada, the wire fronts and temples are products of the U.S. Therefore, the wire-wrapped temples which are bent to fit the wearer's ear in the U.S. and the fronts may be entitled to the partial duty exemption under HTSUS subheading 9802.00.80. If the wire-wrapped temples which are bent to fit the wearer's ear in the U.S. and the fronts are entitled to the partial duty exemption under HTSUS subheading 9802.00.80, pursuant to 19 CFR 10.22, Mexico would be considered the country of origin of these temples and fronts.

In HQ 733654 (October 29, 1990), Customs concluded that non- prescription sunglass components which were shipped to the U.S. for assembly of the frame and the insertion of U.S.-made lenses, were substantially transformed when assembled into sunglasses in the U.S. This fact pattern is identical to that case and we conclude that the wire-wrapped temples which are bent in the U.S. and the fronts are considered substantially transformed in the U.S. In accordance with 19 CFR 134.35, the U.S. manufacturer is the ultimate purchaser of the imported sunglass components.

An exception from marking is provided in 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h) where an ultimate purchaser, by reason of the character of the article or by reason of the circumstances of its importation, must necessarily know the country of origin of the article even though it is not marked to indicate its origin. In ruling HQ 730243 (March 5, 1987), Customs required that the importer must be the ultimate purchaser of the imported article and have direct contact with the foreign supplier to qualify for the 19 U.S.C. 1304 (a)(3)(H) exemption. In this case, the U.S. manufacturer has a contractual relationship directly with the Mexican supplier whereby the U.S. manufacturer sends the temples and fronts to Mexico for processing under its supervision according to its specifications and re-imports the sunglass components. The U.S. manufacturer in this case deals directly with the Mexican company that is processing the sunglass components. Therefore, the sunglass components are entitled to the exemption from marking set forth at 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h).

HOLDING:

The leather-wrapped temples which are bent to fit the wearer's ear in Mexico are exempt from country of origin marking pursuant to 19 CFR 134.32(m).

The leather-wrapped fronts and temples which are bent to fit the wearer's ear in the U.S. are excepted from country of origin marking requirements under 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h).

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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