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 > 1992 HQ Rulings > HQ 0734162 - HQ 0734277 > HQ 0734270

Previous Ruling Next Ruling



HQ 734270


December 11, 1991

MAR-2-05 CO:R:C:V 734270 GRV

CATEGORY: MARKING

Mr. Gregg A. Anderson, President
Gamatech
Sales and Consulting, Inc.
3260 Keller Street, Suite 8
Santa Clara, CA 95054

RE: Country of origin marking of grill racks imported to be coated with a porcelain coating. 19 CFR 134.1(d) (ultimate purchaser); 19 CFR 134.1(d)(1); domestic processing; 19 CFR 134.35 (coating operation); 733579; 732652; 731652

Dear Mr. Anderson:

This is in response to your letter of July 15, 1991, requesting a ruling regarding the country of origin marking requirements applicable to "Griffo Grills" used to cook on outdoor and indoor barbecues. Specifically, you request that Customs rule it permissible for you to label the finished/coated grill racks "Made in U.S.A." following the domestic processing of the imported grills. Although use of that legend is under the jurisdiction of the Federal Trade Commission (FTC), this ruling finds that the coated grills will not be products of the USA following their domestic processing. Samples of an unfinished/ uncoated--as imported--and finished/coated--after processing-- grill rack were submitted for examination.

FACTS:

Unfinished, i.e., uncoated, grill racks are manufactured in China and imported into the U.S. for further processing opera- tions. The unit cost of the imported grill racks is stated to represent 34.4% of the total cost of the grill racks. In the U.S., multiple layers of a porcelain coating are applied to the unfinished grill racks. The unit cost of this domestic coating operation is stated to represent 65.6% of the total cost of the grill racks. You request a favorable ruling holding that Griffo can designate their product as "Made in U.S.A."

ISSUE:

Does the domestic processing (a porcelain-coating operation) substantially transform the uncoated grill racks imported from China, such that the domestic manufacturer will be considered the "ultimate purchaser" of the imported article within the contem- plation of 19 CFR 134.35, and the article shall be excepted from marking.
LAW AND ANALYSIS:

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 permanently as the nature of the article (or its container) will permit in such a manner as to indicate to the ultimate pur- chaser 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 primary purpose of the country of origin marking statute is to "mark the goods so that at the time of purchase the ulti- mate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influ- ence his will." United States v. Friedlaender & Co., 27 CCPA 297, 302, C.A.D. 104 (1940).

The "Ultimate Purchaser" Consideration

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 imported article will be used in domestic manufacture, the manufacturer may be the "ultimate purchaser" if [s]he subjects the imported article to a process which results in a substantial transformation of the article. However, if the manufacturing process is a minor one which leaves the identity of the imported article intact, the consumer or user of the article, who obtains the article after the processing, will be regarded as the "ultimate purchaser." 19 CFR 134.1(d)(1) and (2).

Substantial Transformation and Domestic Processing Operations

For country of origin marking purposes, a substantial transformation occurs when an imported article is used in the U.S. in manufacture, which results in an article having a name, character, or use differing from that of the imported article. Under this principle, if the manufacturer or processor in the U.S. converts or combines the imported article into the different article [s]he is considered to be the "ultimate purchaser" of the imported article for marking purposes, and the article shall be excepted from marking. However, the outermost containers of the imported articles must be marked. 19 CFR 134.35. The question of when a substantial transformation occurs for marking purposes is a question of fact; to be determined on a case-by- case basis. Uniroyal Inc. v. United States, 3 CIT 220, 542 F.Supp. 1026 (1982), aff'd, 1 Fed.Cir. 21, 702 F.2d 1022 (1983). In Headquarters Ruling Letter (HRL) 733579 dated August 20, 1990, we considered whether formed pots and pans, imported from Venezuela to be further manufactured into finished pots and pans by operations consisting of deburring, polishing, painting, coating with a non-stick surface, and attaching handles, were substantially transformed within the meaning of 19 CFR 134.35, and found that they were not, as the U.S. manufacturing process constituted a minor operation which left the identity of the imported article intact. Finding that the only change in character that took place was the coating of the surface of the already formed pot or pan, and that while it may be more conven- ient to clean a non-stick pan, that it retains its use as a cooking implement, we determined that the domestic processing constituted merely finishing and coating operations, which did not create a new article with a new name, character or use. Accordingly, the imported aluminum pots and pans remained products of Venezuela. See also HRLs 732652 dated June 20, 1990 (bakeware manufactured in Canada and imported to be silicone coated not substantially transformed, as the coating operation constituted a minor finishing operation), and 731652 dated February 16, 1989 (finished forged components of lawn cutting tools were merely enhanced by having their handles plastic coated; no new article was created).

Given these prior rulings, and after viewing the grill samples submitted, we find that the porcelain coating operation does not substantially transform the imported uncoated grill racks into articles having a name, character or use different; both the uncoated and coated grill racks have the same use, character and name. Accordingly, the coated grill racks must be marked at the time they are imported to indicate that they are a product of China.

HOLDING:

The domestic processing (adding a porcelain-coating) does not substantially transform the uncoated grill racks imported from China. Accordingly, the country of origin of the imported merchandise remains China and the articles must be marked as such at the time they are imported to meet the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.

Sincerely,


Previous Ruling Next Ruling