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HQ 734143

June 18, 1991

MAR-2-05 CO:R:C:V 734143 AT

CATEGORY: MARKING

Mr. Mark Hazel
Swing
Endicott St. Bldg #32
Norwood, Massachusetts 02062

RE: Country of origin marking of imported acrylic picture frame to be assembled with a metal stand; combining; substantial transformation

Dear Mr. Hazel:

This is in response to your letter of April 12, 1991, requesting a prospective and binding country of origin ruling regarding imported acrylic picture frames which are to be combined with steel stands manufactured in the U.S.

FACTS:

Your company which presently manufactures picture frames using U.S. acrylic, intends to import acrylic picture frames from Taiwan to be combined with steel stands manufactured in the U.S. You state that after the imported acrylic frames are delivered to your warehouse they are then taken out of their packaging, placed into the metal stand with a piece of foam, slipped into marked cardboard boxes manufactured in the U.S. and delivered to retail stores where they are distributed to the ultimate purchaser. Five samples as the product exists now with domestic acrylic and five pieces of imported acrylic from Taiwan have also been submitted with your ruling request.

The sample frames are all made out of 1.80 thick, folded clear acrylic each in the approximate size of 4 x 6 inches. The stands come in four different colors (black, white, red or blue) and 3 different styles (straight, garland or wave). These five samples represent a mixture of the different styles and colors available to the ultimate purchaser. Each sample is packaged into a cardboard box manufactured in the U.S. and which is marked with the word "Swing" on all panels of the box and directly below it is the word "fotoforms". On the front and back panels of the box, the word "Swing" appears on the top left hand corner above the word "fotoforms" and the words "Made in USA" appear on the
bottom right hand corner. An illustration of what the finished picture frame looks like and the dimensions of the particular frame size also appear on the front and back panels of the box. On the left hand panel of the box both the color and style of the steel stand is designated and the U.S. address also appears "Norwood, MA 02062".

ISSUE:

Whether the imported acrylic picture frames are substantially transformed when they are combined in the U.S. with the steel stands and packaged for distribution to retail stores?

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, 701 F.Supp. 229, 12 CIT (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 134.35, 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 19 U.S.C. 1304 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).

Two court cases have considered the issue of whether imported parts combined in the U.S. with domestic parts were substantially transformed for country of origin marking purposes. In the first case, Gibson-Thomsen, the court held that imported wood brush block and toothbrush handles which had bristles inserted into them in the U.S. lost their identity as such and became new articles having a new name, character and use. One of the factors considered by the court in reaching its conclusion was that the domestic bristles used were "by far the most valuable element." Also, the court looked at whether the imported article loses its identity as such when combined with other articles. In that case, the court concluded that wood handles were material to be used in the manufacture of toothbrushes and hairbrushes. The court was also concerned that when an imported article was combined with a domestic material, that the ultimate purchaser not be confused into thinking that the domestic article was made in a foreign country. Therefore, the court concluded that a mere material to be used in the manufacture of a new article having a new name, character and use and which, became an integral part of the new article would not be required to be marked. In contrast to the imported handles in Gibson-Thomsen, the imported acrylic frames involved here cannot be considered to be "mere materials" used in the manufacture of the finished articles. To the contrary, the most important element in terms of appearance and use of the finished product is the imported acrylic frame where the picture is placed in to be displayed.

The second case involved imported shoe uppers which were combined with domestic soles in the U.S. The imported uppers were held in Uniroyal, Inc., v. U.S., 542 F.Supp. 1026, 3 CIT 220 (CIT 1982), to be the "essence of the completed shoe" and therefore, not substantially transformed. The court described the imported upper as "completed shoes except for an outersole." The shoe had already "obtained its ultimate shape, form and size." One process performed in the U.S., relasting, was characterized as "convenient, not necessary." The processes performed in the U.S. were significantly less costly and less time consuming than the foreign manufacturing process. The cost of the upper was significantly greater than the cost of the outsole. Further, the manufacture of the upper required at least five highly skilled operations. The court concluded that the attachment of the outsole was a minor manufacturing or combining process which leaves the identity of the upper intact.

This case is like Uniroyal because the imported acrylic picture frames are not only important to the finished product, but also are the very essence of the finished product. While the steel stand is necessary for keeping the acrylic frame balanced and stationary, otherwise it would fall over without it, the acrylic frame is the essential element because it is where the photograph is placed in to be displayed. Further, even though the steel stand is to be displayed with the acrylic picture frame, the stand is not permanently attached and the frame's appearance and character still remains the same, as that of being a picture frame.

In HQ 731432 (June 6, 1988), Customs set forth some factors to be considered in determining whether imported goods combined in the U.S. with domestic products were substantially transformed for country of origin marking purposes. The following six factors were considered:

1) whether the article is completely finished;

2) the extent of the manufacturing process of combining the article with its counterparts as compared with the manufacturing of the subject article;

3) whether the article is permanently attached to its counterparts;

4)the overall importance of the article to the finished product;

5) whether the article is functionally necessary to the operation of the finished article, or whether it is an accessory which retains its independent function; and

6) whether the article remains visible after the combining.

These factors are not exclusive and there may be other factors relevant to a particular case and no one factor is determinative. See HQ 728801 (February 26, 1986).

The five imported acrylic samples submitted all appear to be completely finished pieces. The attachment of the steel stand between a piece of foam appears to be a very minor operation which is not complex, requires no skill and is not time- consuming. The domestic steel stand is not permanently attached to the imported acrylic frame and the frame is the most important component to the finished article. There is no doubt that the imported acrylic frame is functionally necessary to the use of the finished picture frame and that it remains visible after the combining. Based on our consideration of all these factors, we conclude that these imported acrylic picture frames are not
substantially transformed in the U.S. as a result of combining them with the steel stands. Therefore, your company would not be considered the ultimate purchaser of the frames under 19 CFR 134.35.

Section 134.1(d), Customs Regulations (19 CFR 134.1(d)), defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. The definition then gives examples of who might be the ultimate purchaser if the imported article is used in manufacture, if the imported article is sold at retail in its imported form and if an imported article is distributed as a gift. If an article is to be sold at retail in its imported form, the purchaser at retail is the ultimate purchaser. Since the imported acrylic frame is not substantially transformed, it is not considered to undergo a change in its imported form. Therefore, the retail purchaser of the frame is the ultimate purchaser and the frame must be marked with its country of origin.

We note that in view of the fact that the acrylic frame is imported and repackaged with the steel stand into cardboard boxes in the U.S., a marking exception may exist under 19 CFR 134.34(a). This provision provides that:
an exception under section 134.32(d) may be authorized in the discretion of the district director for imported articles which are to be repacked after release from Customs custody under the following conditions:

(1) The container in which the articles are repacked will indicate the origin of the articles to an ultimate purchaser in the U.S.

(2) 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 liquidation of the entry.

HOLDING

The acrylic picture frames which you intend to import from Taiwan are not substantially transformed in the U.S. by the addition of a steel stand. Therefore, the retail purchaser is
the ultimate purchaser of the imported acrylic frames and they must be marked to indicate their country of origin, i.e., Taiwan.

Sincerely,

John Durant, Director
Commercial Rulings Division

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