HQ 0733945 - Country of Origin Marking - Cream Haircolor Product; Dye; Substantial Transformation. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0733776 - HQ 0733963 > HQ 0733945

HQ 733945
March 26, 1991

MAR-2-05 CO:R:C:V 733945 NL

CATEGORY: MARKING

John C. Lindsey, Esq.
Morgan, Lewis & Bockius
1800 M Street, N.W.,
Washington, D.C. 20036

RE: Country of Origin Marking - Cream Haircolor Product; Dye; Substantial Transformation.

Dear Mr. Lindsey:

This is in response to your submission dated November 16, 1990, in which you request, on behalf of your client, a ruling concerning the country of origin marking requirements applicable to an imported cream haircolor preparation.

FACTS:

As set forth in your submission, your client proposes to import from [A ] to the U.S. a haircolor product which is manufactured for his account in [A ]. The constituents of the product are partly of [A ] origin, but several, including the [ ], are imported to [A ] from [B ]. After importation to the U.S. in disposable tubes, the hair color is combined for retail sale in a carton with developing lotion, an applicator cap, gloves, and instructions, all of which are manufactured in the U.S.

It is your position that for country of origin marking purposes the country of origin of the cream haircolor product is [A ], as that country is the country of production. Production of the cream haircolor consists of blending and heating two separate groups of ingredients which are then mixed to form an emulsion. Other ingredients, including [ ] are then blended into the emulsion. This blending is done under a [ ]. You state that the [ ] and the finished product are separate commercial goods sold in separate markets, and that before production in [A ] the [ ] is neither used by nor capable of being used by the consumer as a hair color product. You argue that the [ ] undergoes a change in name, character, and use in becoming part of the cream hair color product which is a product of [A ]. As set forth in your submission there are at least ten
ingredients used to produce the cream haircolor. Four ingredients, including the [ ] are not of [ ] origin, accounting for [ ] percent, on average, of the total direct costs of manufacturing the article. The [ ] alone accounts for [ ] percent of the total manufacturing costs. You submit that this processing effects a substantial transformation of the ingredients, such that the resulting hair color preparation is a product of [A ] for country of origin marking purposes.

ISSUES:

1. What is the country of origin of the cream hair color?

2. What country of origin marking requirements apply to its tube and other packaging?

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.

For purposes of 19 U.S.C. 1304, the country of origin of an article is considered to be the country where it was manufactured, produced, or grown, unless thereafter in another country the article undergoes processing which results in a substantial transformation, in which case the latter country becomes the country of origin. 19 CFR 134.1(b). A substantial transformation is said to occur when, within the principle of the case of United States v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267 (C.A.D. 98)(1940), processing results in an article having a new name, character, or use. 19 CFR 134.35.

Here, it is our opinion that production of the cream hair color in [A ] effects a substantial transformation of the ingredients, including the ingredients of [B ] origin, such that the hair color is a product of [ A ] for country of origin marking purposes. The relatively large number of ingredients (10 or more), together with the complexity of the production process, indicate that the constituents lose their separate identities when combined into the new article. Customs has held recently that even the blending of relatively similar products - flowers and plant materials - to produce a potpourri, was sufficient to effect substantial transformation of the constituents. Headquarters Ruling (HQ) 733207 (November 21, 1990). The production process described in your submission combines articles
of greater diversity in a process which appears to be more complex than that considered in the potpourri ruling.

Customs has also considered specifically whether the [ ] originating in [B ] loses its separate identity as a product of [B ] when incorporated into the cream hair color. Despite the undoubted critical importance of this ingredient to the final product, we find a substantial transformation of the [ ]. Its cost accounts for only [ ] percent of the total direct cost of manufacturing the cream hair color. Only after processing is the [ ] usable as a hair coloring product, or does it have the fundamental character of such a cosmetic product. We agree that the instant processing is similar to the manufacture of perfume, which was considered in a ruling cited in your submission. In HQ 723312 (November 22, 1983), Customs found that the blending of French essential oil with U.S. origin denatured alcohol, stabilizer, coloring matter,and water, effected a substantial transformation. As with the [ ], the essential oil was critical to the manufacture of the perfume, but became part of a new article.

This type of combining or blending is to be distinguished from the cases, for example, like that of frozen orange juice concentrate, in which Customs has ruled, and the Court of International Trade has held, that merely blending water, oils and essences, pasteurization, and freezing (adding ingredients of significantly less cost than the concentrate itself), is not sufficient to effect a substantial transformation. See, National Juice Products Ass'n v. United States, 628 F. Supp. 978 (CIT 1986). To similar effect were Headquarters Rulings 729519 (May 18, 1988)(wine cooler liquid flavor base not substantially transformed by adding carbonated water and bottling); and 733248 (August 22, 1990)(human immune serum globulin not substantially transformed by filtering and adding reagents which convert the product from one injectable intramuscularly into one capable of being administered intravenously). By contrast, the [ ] constitutes only a small portion of the cost of the final hair color product, and the manufacturing process yields a product of fundamentally different character.

The submission indicates that the product will be packed at the time of importation in individual disposable tubes which will be marked with the country of origin of the product. This marking will, at the time of importation, satisfy the country of origin marking requirments. Thereafter, when packaged in a box containing U.S. origin components of the hair coloring kit, the origin of the cream hair color will be indicated by a marking on the outside of the box which will indicate that the hair color is a product of [ ]. This marking conforms with the requirements of 19 CFR 134.14, which provides that if an imported article is combined with other articles prior to delivery to the ultimate purchaser, the imported article must be marked to
indicate that the designation of origin refers to the imported article only. Because the imported product will be repacked after importation, the importer is subject to the certification requirements of 19 CFR 134.26.

HOLDING:

The ingredients of the cream hair color are substantially transformed by manufacture and for country of origin marking purposes are products of the country of manufacture. The marking of the tube and the box containing the hair coloring kit satisfies the requirements of 19 U.S.C. 1304 and Part 134, Customs Regulations. The certification requirements of 19 CFR 134.26 are applicable.

Sincerely,

John Durant
Director, Commercial

Previous Ruling Next Ruling