HQ 0733956 - Country of origin marking of eyeglass lens cleaning cloths from Japan that are individually packaged in disposable, unsealed vinyl pouches from Canada. 19 CFR 134.1(b); textile products; 19 CFR 12.130; T.D. 85-38; T.D. 90-17; 19 CFR 12.130(e)(2)(ii); 733180; 088321; 087950; 087482; 086779; 19 CFR 134.24(a); 19 CFR 134.24(d)(3); C.S.D. 88-28; C.S.D. 90- 60; C.S.D. 90-90 - United States International Trade Commision Rulings

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HQ 733956

November 1, 1991

MAR-2-05 CO:R:C:V 733956 GRV

CATEGORY: MARKING

Mr. Mike Burwell
P.B.B. USA, Inc.
Customs Brokers
P.O. Box 1218
Champlain, NY 12919-1218

RE: Country of origin marking of eyeglass lens cleaning cloths from Japan that are individually packaged in disposable, unsealed vinyl pouches from Canada. 19 CFR 134.1(b); textile products; 19 CFR 12.130; T.D. 85-38; T.D. 90-17; 19 CFR 12.130(e)(2)(ii); 733180; 088321; 087950; 087482; 086779; 19 CFR 134.24(a); 19 CFR 134.24(d)(3); C.S.D. 88-28; C.S.D. 90- 60; C.S.D. 90-90

Dear Mr. Burwell:

This is in response to a November 20, 1990, letter sent by your predecessor company, F.H. Fenderson Inc., on behalf of C. Itoh & Cie (Canada) Ltee., requesting a ruling on the country of origin marking requirements applicable to lens cleaning cloths from one country that are individually packaged in disposable, vinyl pouches from another country. A sample of the merchandise imported was submitted for examination.

Correspondence from your client dated March 25, 1991, and a clarifying telephone conversation with a member of my staff on October 16, 1991, were also considered in this ruling.

FACTS:

Bolts of finished cloth (in 5 different solid colors) from Japan, measuring 50 meters in length by 115 cm. in width and not pre-marked with lines of demarcation or cutting marks, are imported into Canada. In Canada, the cloth is hand and die cut into pieces measuring 17 cm. by 20 cm. and the edges are over- locked stitched all around. A satin tag, conspicuously indicat- ing that the textile fabric was "MADE IN JAPAN," is sewn into one of the edges. You state that the cost of processing the lens cleaning cloths from the imported fabric bolts represents 70% of the total cost of the merchandise and that it takes 8 days to process one bolt of fabric. The finished lens cleaning cloths are then individually packaged in small plastic carrying pouches, made in Canada from vinyl of U.S. origin. These pouches are cold stamped "MADE IN CANADA" on the inside of the flap which folds over and tucks into the pouch. Forty-eight lens cleaning cloths are packaged in a display box for export to the U.S.

You state that different Customs ports require different markings on the imported merchandise and request that we address the exact wording that should appear on each item.

ISSUES:

I. Does the Canadian-processing operation substantially trans- form the foreign-origin finished fabric for purposes of 19 U.S.C. 1304.

II. Does the plastic pouch, used to carry the lens cleaning cloth, have to be marked with its country of origin for purposes of 19 U.S.C. 1304.

LAW AND ANALYSIS:

The Country of Origin Criteria for Textiles and Textile Products

The country of origin rules for textiles and textile prod- ucts are found at 19 CFR 12.130. For purposes of 12.130, where a textile or textile product, subject to 204 of the Agricultural Act of 1956, as amended (7 U.S.C. 1854), consists of materials produced or derived from, or processed in, more than one foreign territory or country, or insular possession of the U.S., the country of origin is defined as that foreign territory or coun- try, or insular possession where it last underwent a substantial transformation. A textile or textile product will be considered to have undergone a substantial transformation if it has been transformed by means of substantial manufacturing or processing into a new and different article of commerce. 19 CFR 12.130(b). Thus, the substantial transformation test for textiles embraces two separate findings: (1) whether there has been a new and different article of commerce created, and (2) whether the new article was created by means of a substantial manufacturing or processing operation. See, Headquarters Ruling Letter (HRL) 733180. Section 12.130(d)(2) provides that in determining whether merchandise has been subjected to substantial manufacturing or processing operations, the physical change to the material/ article, the relative time involved in the foreign operation and the value added to the material/article, the complexity of the foreign operation, and the level/degree of skill/technology required for the foreign operation will be considered.

As the merchandise imported is classifiable in HTSUS section XI and was processed in more than one foreign country, the coun- try of origin rules of 12.130(b) are applicable, and Customs has stated that the principles of origin contained in 12.130 are applicable to such merchandise for all purposes, including duty and marking. T.D. 85-38, 19 Cust.Bull. 58, 68 (1985), and T.D. 90-17, 24 Cust. Bull. ___ (1990). Further, regarding the sub- stantial transformation criteria and examples found at 12.130, Customs has stated that "[a]ny factual situations not squarely within those examples will be decided by Customs in accordance with the provisions of section 12.130(b) and (d)." T.D. 85-38, at p. 72.

We have previously held that mere cutting to length and width and sewing of finished fabric material does not constitute substantial manufacturing or processing operations. Therefore, such operations performed in one country do not effect a substan- tial transformation of rolls of finished fabric manufactured in another. See HRLs 088321 dated March 7, 1991; 087950 dated January 9, 1991; 087482 dated October 5, 1990; and, 733180 dated December 13, 1990. Cf., 086665 dated March 23, 1990; and, 086779 dated April 25, 1990.

In this case, the fabric imported from Japan is merely cut into squares and the edges hemmed. While significant time and value are added to the finished lens cleaning cloths, and the finished material is physically changed, i.e., made smaller, the complexity of the Canadian operation and degree of skill required to perform the operations appear to be minimal. We do not consider the cutting and sewing operations performed in Canada to be substantial for purposes of 12.130(b). Accordingly, the Canadian processed fabric remains a product of Japan and the imported textile product must be marked as such.

The Marking Requirement

The next question to be addressed concerns the country of origin marking requirements applicable to the vinyl pouches. The marking statute, 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 perma- nently as the nature of the article (or its container) will permit in such manner as to indicate to an ultimate purchaser 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.

The purpose of the marking laws is to permit the "ultimate purchaser" in the U.S. to choose between domestic and foreign- made products, or between the products of different foreign countries. See, United States v. Friedlaender & Co., C.A.D. 104, 27 CCPA (1940); National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (1986). The "ultimate purchaser" is defined generally as the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d). If an article is to be sold at retail in its imported form, the purchaser is the "ultimate purchaser." 19 CFR 134.1(d)(3).

The marking requirements applicable to imported containers distinguish, in part, between containers designed for or capable of reuse after their contents have been consumed, and those that are the usual ordinary types of containers which are ordinarily discarded after the contents have been consumed. 19 CFR Part 134, Subpart C. Where disposable containers are imported filled with their contents and in an unsealed condition, if the contain- er is of a type normally opened by the ultimate purchaser prior to purchase, only the article contained therein need be marked. 19 U.S.C. 1304(b) and 19 CFR 134.24(d)(3).

Whether particular containers are reusable or disposable for country of origin marking purposes, considerations regarding the construction of the container, its function, and the nature of its contents should be inquired into. See, C.S.D. 90-90. Regarding the construction of vinyl containers, in C.S.D. 88-28 we considered whether vinyl cases, imported to be filled with packets of pills, constituted reusable or disposable containers for purposes of 19 U.S.C. 1304. Finding the vinyl cases to be of a flimsy construction, with no lasting value or decorative use, and that they where the ordinary type of packaging which in most cases would be discarded after the pills had been consumed, we determined that the vinyl cases constituted disposable containers within the meaning of 19 CFR 134.24 and conditionally did not have to be individually marked. See also C.S.D.90-60 (plastic cosmetic compact constituted disposable containers).

Regarding the circumstance of disposable containers being imported full and the article therein being marked with its coun- try of origin, in C.S.D. 90-90 we considered whether unsealed retail cartons for crystal giftware had to be marked if the articles inside were marked with their country of origin. Taking numerous factors into consideration, we determined that the cartons did not have to marked to indicate the country of origin of their contents because the nature of the contents were such that ultimate purchasers would remove the enclosed crystal glassware to inspect it before electing to purchase it.

Applying these considerations to the vinyl pouches in this case, we find that (1) the vinyl pouches are the usual ordinary types of containers for the cleaning cloth merchandise contained in them and are in use as such at the time of importation, (2) their construction is substantially as that found in C.S.D. 88-28 above, and (3) their small capacity does not lend itself for anything other than a convenience to carry the textile mer- chandise it encloses, thus, in all probability it would ordin- arily be discarded after the textile contents have been consumed. Accordingly, we consider the vinyl pouches to be disposable containers within the meaning of 19 CFR 134.24. Further, as these disposable containers are imported unsealed and packaged in display boxes, and because the lens cleaning clothes are available in different colors, we believe that the pouches will normally be opened by the ultimate consumer prior to purchase in order to select the color cleaning cloth desired. Therefore, pursuant to 19 CFR 134.24(d)(3), the disposable vinyl pouches do not have to be marked to indicate their own country of origin or the country of origin of their contents. However, if you choose to mark the cases with their own country of origin, then a phrase such as "Case Made in Canada" should be used to prevent confusion regarding the country of origin of the textile cloths inside.

HOLDING:

The Canadian-processing operation, consisting of merely cutting to length and width and sewing finished fabric material into individual lens cleaning cloths, does not constitute a substantial manufacturing or processing operation for purposes of 19 CFR 12.130. Thus, the country of origin of the lens cleaning clothes remains Japan and the imported textile products must be marked as such, for purposes of 19 U.S.C. 1304.

The unsealed plastic pouches used to carry the lens cleaning cloths do not have to be marked with their own country of origin or with the country of origin of their cloth contents for purposes of 19 U.S.C. 1304, because these containers are disposable and will normally be opened by ultimate purchasers prior to their purchase and the textile products contained therein are marked to indicate their country of origin, as required by 19 CFR 134.24(d)(3).

Sincerely,

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