HQ 0734374 - Country of origin marking of vinyl shell to be assembled with U.S. manufactured foam and fiber into a completed water bed; substantial transformation; HQ 731433 - United States International Trade Commision Rulings

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HQ 734374

April 3, 1992

MAR-2-05 CO:R:C:V 734374 AT

CATEGORY: MARKING

Mr. James Rashid
Vice President
British-American Corporation
10480 Little Patuxent Parkway
Suite 1010
Columbia, Maryland 21044

RE: Country of origin marking of vinyl shell to be assembled with U.S. manufactured foam and fiber into a completed water bed; substantial transformation; HQ 731433

Dear Mr. Rashid:

This is in response to your letter of September 25, 1991, requesting a country of origin ruling regarding imported vinyl shells which are to be combined with U.S. manufactured foam and fiber in the production of water bed mattresses. An illustration depicting what the finished water bed looks like when completed with the component parts and a itemized list of each component's cost was submitted with your letter for review.

FACTS:

Your company intends to import vinyl shells from either Taiwan or China to be further assembled with domestic foam and fiber into completed water bed mattresses. The water bed mattresses are to be sold in the U.S. to retailers and distributors and will also be exported to European retailers and distributors. You state that once imported the following processing steps will be performed in the U.S. to make the completed water bed mattresses:

1. The imported vinyl shell and domestic foam, fiber and packaging materials are unloaded and unpackaged.

2. The foam and fiber are rolled out onto a cutting table and cut with a commercial grade electric knife. 3. The foam and fiber pieces are sewn together for performance purposes and to facilitate assembly with the vinyl component. (Five layers of 2" fiber a layer of convoluted foam and a layer of closed cell foam are use).

4. The foam and fiber assembly is inserted into the vinyl cavity and staged for heat sealing.

5. The vinyl cavity is permanently closed, through use of an A.R.F. high frequency radio wave machine that permanently bonds the vinyl shell encapsulating the fiber and foam components inside.

6. The mattress is boxed.

ISSUE:

Whether the imported vinyl shells are substantially transformed in the U.S. when they are processed in the manner set forth above?

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).

In HQ 731433, December 15, 1990, Customs ruled that in virtually identical circumstances as the present case, that imported vinyl shells which were stuffed after importation with four layers of U.S. origin polyester fiber and one layer of U.S. origin foam into water bed mattresses were substantially transformed and were not required to be individually marked with their country origin. Customs stated that once combined the vinyl shells lose their separate identity and become an integral part of a new and different article of commerce namely, a water bed. became a new and different article of commerce, namely a water bed mattress.

HOLDING:

For the reasons set forth in HQ 731433, we find that when the vinyl shells are processed in the manner described above they are substantially transformed and that the domestic processor is the ultimate purchaser. Accordingly, pursuant to 19 CFR 134.35, the individual vinyl shells are excepted form country of origin marking and only the container in which the vinyl shells are imported must be marked with the country of origin of the vinyl shells.

However, for this marking exception to apply, the district director at the port of entry must be satisfied that you, the U.S. manufacturer of the water bed mattresses, will receive the vinyl shells in their original unopened properly marked container and that the vinyl shells will be used only as described in this ruling and not otherwise sold.

Sincerely,

John Durant, Director
Commercial Rulings Division

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