HQ 0734771 - Country of Origin Marking for Eyeglass Frames; Substantial Transformation; Assembly; Part 134, Customs Regulations (19 CFR part 134); Section 134.35; C.S.D. 80-43. - 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 > 1993 HQ Rulings > HQ 0734688 - HQ 0734856 > HQ 0734771

HQ 734771

December 17, 1992

MAR-2-05 CO:R:C:V 734771 RC

CATEGORY: MARKING

Area Director of Customs
National Import Specialist Division, Branch 1 Six World Trade Center
New York, New York 10048

RE: Country of Origin Marking for Eyeglass Frames; Substantial Transformation; Assembly; Part 134, Customs Regulations (19 CFR part 134); Section 134.35; C.S.D. 80-43.

Dear Sir:

This is in response to your memorandum requesting internal advice on the country of origin marking requirements for imported eyeglass frames which undergo further processing in the United States.

FACTS:

Your office received a letter from Mr. James E. Anderson of Howe, Anderson and Steyer, on behalf of Liberty Optical Manufacturing Company (Liberty Optical) requesting a ruling on the country of origin marking of certain eyeglass frame components imported from Hong Kong. The imported fronts and temples are assembled in the U.S. These components are used to make the NLI-215 and the NLI-211 series eyeglass frames. According to the inquirer's letter, Liberty Optical receives the plastic fronts and temples in an "unfinished and unusable" condition. The frame fronts and temples undergo processes such as machining, insertion, mitering, assembling and polishing. Briefly, the hinges are mounted on the fronts by step drilling the fronts and inserting the hinges. The fronts are milled to fit the temple and cut or mitered to match the temple so that the temple and front align properly. The fronts for the NLI-215 are sent out for hand decorating; the NLI-211 are undecorated. The temples are also mitered. The temples are bent in two places, the mastoid bend and the temple bend. The bends in the temples are made by using a press. Four demonstrative exhibits were submitted showing the imported components at various stages of processing in the U.S.

In a memorandum dated July 30, 1992, your office recommended a finding that the post-importation processing amounted to a substantial transformation of the imported components, such that Liberty Optical was to be considered the ultimate purchaser of the components within the meaning of 19 U.S.C. 1304.

ISSUE:

Whether the imported eyeglass components are substantially transformed and excepted from marking because of the U.S. processing.

LAW AND ANALYSIS:

The marking statute, section 304, 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 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.

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 articles into articles having a new name, character or use will be considered the ultimate purchaser of the imported article within the scope of 19 U.S.C. 1304 and the article will be excepted from marking.

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); Koru North America v. United States, 12 CIT 1120, 701 F.Supp. 229 (1988). 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 determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 1368 (1984). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See, In Uniroyal, Inc., v. U.S., 542 F.Supp. 1026, 3 CIT 220 (CIT 1982), imported shoe uppers combined with domestic soles in the U.S. were held to be the "essence of the completed shoe" and therefore, not substantially transformed.

However, if the manufacturing process is merely a minor one which leaves the identity of the imported article intact, the consumer or user of the article after the processing, will be regarded as the "ultimate purchaser." 19 CFR 134.1(d)(2).

In HQ 728504 (October 15, 1985), Customs pointed out that the assembly of imported frames does not constitute a substantial transformation of the item sufficient to make the importer the ultimate purchaser and that in such a case, country of origin marking would be required on the imported fronts and temples. (See also, HQ 709266 (July 11, 1978) assembly of eyeglass frames does not constitute a substantial transformation.) However, Customs also indicated that where there is additional processing performed (i.e. more than mere assembly of the fronts and temples) a substantial transformation may occur, depending on the circumstances.

In C.S.D. 80-43 (July 17, 1979), Customs ruled that a substantial transformation occurred where the importer subjected eyeglass fronts and temples to further processing before assembly and color-dying. There, the processing consisted of the following operations:

1. Temple hinges removed and temples ultrasonically cleaned and sorted.
2. Temples trimmed according to style specifications. 3. Temples machined to accommodate the attachment of trim.
4. Temples cleaned prior to assembly with front. 5. Temples engraved.
6. Temples trimmed further.
7. Temples subjected to five-part milling process. 8. Seven-piece hinge assembled and fixed on temple. 9. Lictite injected into hinge screws.
10. Hinge holes drilled, frame composition tested, and hinges attached.
11. Frame front heated, reformed, and reshaped to assure proper meniscus curve for the lens. 12. Frame front inspected and ultrasonically cleaned. 13. Frame front and temples assembled.
14. Pantoscopic angle for frame determined. 15. Frame sterilized and dye base applied in a 10- step process.
16. Frame immersed in Freon bath.
17. Frame dyed.
18. Protective gloss coating applied to frame. 19. Frame adjusted and set in accordance with fitting requirements.
20. Frame stamped with requisite optical specifications.

Customs ruled that these operations amounted to a substantial transformation. (But cf., HQ 733693 (October 17, 1990), merely applying epoxy and paint to sunglasses frames did not constitute a substantial transformation.)

In HQ 709551 (November 13, 1978), Customs determined that imported eyeglass fronts and temples were substantially transformed when they were cleaned, shaped, electroplated, polished, subjected to acid baths, and joined with other components such as nose pads and plastic ear tips. The following excerpt is relevant:

[We] are of the opinion that the mere addition of nose pads and plastic ear tips by itself does not alter the character of the imported merchandise.

Nevertheless, we are of the opinion that the physical alteration which the imported eyeglass fronts and temples undergo as a result of the manufacturing process performed by petitioner constitutes a substantial transformation within the meaning of 19 U.S.C. 1304.

In so determining, we have considered the fact that the manufacturing process performed by petitioner on the subject fronts and temples is a relatively major one which involves significant expenditure of costs, time and materials and which requires machining and the use of special tools and skills.

We have also considered the fact that the plating processes involved are relatively complex involving several distinct procedures and materials which have the effect of altering the characteristics of the metal parts in such a manner as to make them resistant to the tarnishing from perspiration.

In addition, as a result of the further manufacturing processes, the eyeglass fronts and temples acquire the proper shape to be worn and to be capable of holding lenses. Neither the fronts or temples have the proper shape to be worn over the ears and nose, nor to hold lenses when imported, attributes we consider essential to eyeglass frames.

In HQ 734474 (April 13, 1992), the following processes performed in the U.S. on imported eyewear components were found to effect a substantial transformation:

1. Components were tumbled and polished.
2. Components were cleaned and hand polished prior to initial plating.
3. Copper plating was applied as primer coating. 4. Nickel/silver was applied as a secondary coating. 5. Substrate with primer and secondary plating were removed and selected areas were masked by hand for plating.
6. Gold or silver was applied to secondary plating and reviewed, where necessary, for final gold or silver plating.
7. Plated components were cleaned and selected areas were masked for epoxy decorating.
8. Epoxy paints were applied by hand and temperature cured (where multi-color processes were used (three or four colors), all steps involved in single-color application had to be repeated).
9. Components with gold and/or silver plating and epoxy decorations were coated with a clear lacquer before assembly.
10. Nosepads were assembled to the bridge of the frame fronts that have been measured and identified for size. 11. Temples were measured for size and temple ear tips were applied to provide comfort to the wearer. 12. Measured temple with ear tip were formed with two curves so as to hold the complete frame to the patient's head.
13. Temples and fronts were assembled.
14. Lenses for sunglasses or demo lenses were ground to specification and assembled.
15. Assembled frames with lenses were hand adjusted and individually packaged.

In HQ 734663 (September 4, 1992) eyewear fronts and temples were imported in a partially finished condition from various suppliers worldwide. Upon arrival in the U.S., the components were colored and assembled into frames. Other minor pieces were also added. There, Customs decided that the color treatment and subsequent assembly of the partially finished frames did not amount to a substantial transformation of the product. See, HQ 728504 (October 15, 1985) (the mere assembly of imported frames did not constitute a substantial transformation and the country of origin marking was required on the imported fronts and temples. HQ 709266 (July 11, 1978) (assembly of eyeglass frames did not constitute a substantial transformation.) Cf., C.S.D. 80-43 (July 17, 1979) (substantial transformation occurred where the importer subjected eyeglass fronts and temples to further processing before assembly and color-dying). Also cf., HQ 734474 (April 13, 1992) and HQ 709551 (November 13, 1978). C.S.D. 92-10 (October 17, 1990) (merely applying epoxy and paint to sunglasses frames did not constitute a substantial transformation.) C.S.D. 88-12 (August 12, 1988), (U.S.-made earrings merely painted a solid color in Canada were not substantially transformed; the painting was characterized as a "minor finishing operation which left the fundamental identity of the earrings intact rather than creating a highly decorative article with artistic qualities.)

The instant case is analogous to all of the above-cited cases. We note that a substantial transformation of imported fronts and temples occurs as a result of the totality of the manufacturing involved rather than by the effect of any particular process. Here, a significant amount of processing is performed on the imported components. Therefore, we agree with the National Import Specialist in finding that the domestic processing effects a substantial transformation.

HOLDING:

The imported eyewear fronts and temples undergo processing in the U.S. effecting a substantial transformation. Accordingly, the finished eyeglasses are excepted from the country of origin marking requirements within the meaning of section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304).

Sincerely,

John Durant, Director

Previous Ruling Next Ruling