HQ 557996 - Domestic interested party petition; 19 U.S.C. 1516; 19 CFR 175.22(b); Country of origin of marking requirements for frames for safety glasses with prescription lenses, eyeglasses, substantial transformation, hangtags, stickers; HRL 734258; HRL 734733; HRL 730963; HRL 729649; HRL 729451; HRL 734304; HRL 732793; HRL 715640; HRL 723745; HRL 730840 - United States International Trade Commision Rulings

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HQ 557996

October 8, 1997

MAR-2-05 RR:C:SM 557996 DEC

CATEGORY: MARKING

Mr. Arthur L. Herold
Webster, Chamberlain & Bean
Suite 1000
1747 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

Mr. James E. Anderson
Howe, Anderson & Steyer
Suite 1050
1747 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

RE: Domestic interested party petition; 19 U.S.C. 1516; 19 CFR 175.22(b); Country of origin of marking requirements for frames for safety glasses with prescription lenses, eyeglasses, substantial transformation, hangtags, stickers; HRL 734258; HRL 734733; HRL 730963; HRL 729649; HRL 729451; HRL 734304; HRL 732793; HRL 715640; HRL 723745; HRL 730840

Dear Messrs. Herold and Anderson:

This document is in response to your domestic interested party petition challenging Headquarters Ruling Letter (HRL) 734258, dated January 7, 1992, concerning the country of origin marking requirements for prescription safety glasses.

FACTS:

Under current practice, imported safety glass frames are excepted from country of origin marking requirements if an employer purchases the completed prescription safety glasses despite the fact that the wearer of the safety glasses may have some choice in selecting the frames or contributes, in part, to the purchase price. Customs has ruled that the insertion of the prescription lenses into the frames in the United States to make safety glasses substantially transforms the frames into a new article of commerce. You have requested through your petition that Customs adopt the position
that imported prescription safety glass frames should be required to be marked with their country of origin regardless of whether an employee may have some choice of frames or contributes to the purchase price. A Notice of Receipt of Domestic Interested Party Petition; Solicitation of Comments was published in the Federal Register pursuant to section 175.21(a), Customs Regulations (19 CFR 175.21(a)), on July 11, 1995 (60 FR 35792).

Pursuant to section 516, Tariff Act of 1930, as amended (19 U.S.C. 1516) and Part 175, Customs Regulations (19 CFR Part 175), a domestic interested party may challenge certain decisions made by Customs regarding imported merchandise which is claimed to be similar to the class or kind of merchandise manufactured, produced or wholesaled by the domestic interested party. Your clients, The Industrial Safety Equipment Association (ISEA) and the Optical Industry Association (OIA) (trade associations who represent their members who are domestic manufacturers of safety glasses and qualify as domestic interested parties within the meaning of 19 U.S.C. 1516(a)(2)), filed a domestic interested parties' petition challenging HRL 734258, dated January 7, 1992, concerning the country of origin marking requirements of frames for safety glasses with prescriptive lenses. The Court of International Trade has recognized the rights of domestic parties to file a 19 U.S.C. 1516 petition to challenge a Customs Service country of origin determination. Norcal/Crosetti Foods, Inc. v. U.S. Customs Service, 15 Ct. Int'l Trade 60, 758 F. Supp. 729 (1991).

HRL 734258 was issued to counsel for the Hudson Optical Corporation (Hudson Optical), a manufacturer and importer of safety eyewear. In that case, the safety frames were sold by Hudson to independent optical laboratories, which produced lenses for particular individuals in the U.S. with vision impairments. The importer proposed to mark the safety frames by affixing a hangtag or an adhesive sticker to the safety frames with the name of the country of origin printed thereon. This method of marking would inform the optical laboratory of the country of origin of the safety frames. The optical laboratories would remove the hangtag/sticker when they installed the prescription safety lenses. While the manufacturer of the safety frames produced a variety of frames, the employer of the safety glass wearer provided a very limited selection of safety frames from which the employees could select. In limited circumstances, employers would set a cap for the amount that they would spend on the safety glass frames. The employees could elect to supplement this amount with their own funds to acquire a particular style of safety frames. Based on these facts, Customs concluded that the optical laboratories that insert the safety lenses into the safety frames are the ultimate purchasers of the eyeglass safety frames and that the use of the hangtags or stickers to mark the safety frames which the laboratories remove when the lenses are attached is acceptable, provided the marking of the hangtags or stickers is conspicuous, legible, and permanent.

In HRL 734733, dated November 25, 1992, Customs ruled on a modified factual pattern which involved the marking of prescription safety glasses that were imported as unassembled parts. In HRL 734733, Customs held that the affixing of a sticker to a resealable plastic bag indicating the country of origin is an acceptable method of marking frames for prescription safety lenses where an optical laboratory is the ultimate purchaser of the frames and parts.

ISSUE:

What are the country of origin marking requirements for prescription safety glasses and their frames as described 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 shall be marked in a conspicuous place with the English name of the country of origin. The country of origin marking requirements and exceptions of 19 U.S.C. 1304 are implemented by Part 134, Customs Regulations (19 CFR Part 134).

The instant petition requests that Customs reconsider and reject the position stated in HRL 734258, and essentially adopt the position that prescription safety frames are no different from ordinary prescription eyeglass frames, provided the employee exercises some degree of choice in selecting safety frames. Accordingly, you seek to have Customs treat an employee's selection of prescription safety spectacle frames as a purchasing decision which is separate from the subsequent process of inserting the safety prescription lenses into the safety frames. Should Customs adopt your position, safety glass frames would be required to be marked with their country of origin at the time of receipt by the employee who uses the safety frames in the workplace.

In response to the solicitation of comments published in the Federal Register, eight comments were submitted. Three comments were submitted in support of the position stated in HRL 734258. All of the commenters in support of upholding HRL 734258 focused on one or more of the following arguments: (1) the purchase of the frames and lenses are not two purchasing decisions, (2) the employers limit the employees' choice, and (3) the lenses and frames are purchased as a single unit. Another commenter noted that the combination of the lenses and frames results in a substantial transformation and suggests that legislative relief may be the proper route for the petitioners because they are effectively requesting that the employees be deemed the ultimate purchasers of the safety frames.

Four comments were submitted in support of the petition challenging HRL 734258. These comments all argued that the employees are the ultimate purchasers because they have some choice in selecting their prescription safety frames whether they contribute to the purchase price or not. Even in situations where the employee does not pay for the safety eyewear and the employee is given a choice, the commenters contend that the employee is the ultimate purchaser.

In HRL 730963, dated April 21, 1988, Customs stated that personal prescriptive eyewear consists of frames and lenses, neither of which lose their separate identity when they are combined. When an individual selects prescription eyewear, the frames are a separate and subjective purchasing decision. In addition, the wearer is the ultimate purchaser of the frames and is entitled to all relevant product information including the country of origin information. Notwithstanding the possibility that the ultimate purchaser cannot buy just the frames alone, but can only purchase the completed frame and lenses combination, the country of origin information must be available during the purchasing decision. While the acquisition of eyeglasses usually involves the tendering of payment once the completed glasses are delivered, Customs considers this a formality following an earlier commitment to the selected frames. Customers acquiring eyewear make a decision to purchase frames and lenses after which the laboratory provides the service of inserting the lenses into the frames.

In reaching the conclusion set forth in HRL 734258, Customs relied on HRL 729649, dated October 27, 1986, which was a ruling in response to a request to reconsider HRL 729451, dated May 27, 1986. In HRL 729451, Customs determined that the consumer is the ultimate purchaser of prescription eyeglass frames rather than the lab that places the lenses into the frames. In that ruling, Customs noted:

[o]nly after the initial decision is made on the frame is it sent to the lab for the addition of the particular lens. The decision to purchase a particular frame is made separate and apart from the processing involved in the addition of the prescription lens. In view of these circumstances, we find that the consumer is the ultimate purchaser of the frames and is entitled to be informed of its country of origin.

Customs reconsidered HRL 729451 due to the addition of material facts that had been omitted from the ruling request upon which HRL 729451 was based. The omitted fact was that the importer was a manufacturer of safety spectacle frames, which unlike ordinary prescription spectacle frames, consist of special frames and lenses that are manufactured to meet certain safety guidelines. In addition, the employee was given a few choices of safety frames, but it was the employer who determined the type of safety glasses that were required for its employees. The Occupational Safety and Health Act
of 1970, and regulations promulgated thereunder, required that these employers provide safety eyewear for their employees.

As a result of these additional facts, Customs ruled in HRL 729649 that the purchaser of the prescription safety glasses was not making two purchasing decisions (safety frames and lenses). Rather, Customs concluded that the employer was actually purchasing one item (safety glasses). Customs also concluded that the optical laboratory was the ultimate purchaser of the safety frames because the assembly of the safety frames and lenses by the optical laboratory substantially transformed the safety frames and lenses into a new and different article of commerce (safety glasses).

Those commenters in support of maintaining the position articulated in HRL 734258 contend that the purchase of prescription safety glasses is actually one purchase rather than two separate purchases as in the context of non-safety prescription glasses. Customs has ruled in numerous cases that where an employer provides a particular item at the employer's full expense for use exclusively at work by its employees, the employee is not the ultimate purchaser of the item so provided. In these cases, the imported merchandise has been found to be excepted from individual country of origin marking if the containers in which it reaches the ultimate purchasers (i.e. employers or a U.S.-manufacturer which substantially transforms the imported article) are properly marked. See HRL 734304, dated January 28, 1992 (disposable industrial work coveralls distributed free of charge to employees at an industrial plant for use on the job are excepted from individual marking); and HRL 732793, dated December 20, 1989 (employers are the ultimate purchasers of industrial work gloves distributed free of charge to employees for use at work; such gloves are excepted from individual marking); HRL 715640, dated June 16, 1981 (hospitals are the ultimate purchasers of imported disposable paper shoe covers, head covers, drape sheets, gowns, towels and other similar products, none of which have to be individually marked to indicate country of origin); HRL 723745, dated February 6, 1984 (hospitals are the ultimate purchasers of imported surgical masks; such items do not have to be individually marked); and HRL 730840, dated January 12, 1988 (hospitals are the ultimate purchasers of imported surgical gloves; such gloves are excepted from individual marking).

At issue in this petition is whether a different result follows when the employee contributes his/her own funds towards the purchase price. Commenters in favor of the position articulated in HRL 734258 noted that the insertion of lenses into frames results in a substantial transformation of the imported safety frames. We agree. Customs has consistently held that optical laboratories that insert the prescription lenses into the safety frames are substantially transforming the safety frames. See HRL 729649, dated October 27, 1986.

The further critical inquiry is whether the employer is providing a service through which an employee will obtain required prescription safety glasses or whether the safety frames are purchased independently by the employer before being substantially transformed by the optical laboratories. If the employees obtain the safety frames as part of such an employer-provided service for required safety glasses, they will not be deemed to be the ultimate purchasers of the safety frames whether or not the employer covers all or part of the expense. Since the employer is arranging for the service to be provided to their employees by the optical laboratory and since the optical laboratory substantially transforms the safety frames by inserting the prescription lenses into the safety frames, pursuant to the long-established principle of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), in such instances, it is the optical laboratory that is the ultimate purchaser of the safety frames for purposes of 19 U.S.C. 1304. See 19 CFR 134.35. Since these were the circumstances presented in HRL 734258, we affirm our decision that the optical laboratories were the ultimate purchasers of the imported frames in that case.

HOLDING:

In the context of an employer-provided arrangement with an optical laboratory, the employer is purchasing a service (the furnishing of prescription safety glasses either at no cost or a discounted cost to its employees). Since in such circumstances the optical laboratory which substantially transforms the imported safety frames is the ultimate purchaser, only the outermost container in which the imported safety frames reach the optical laboratory must be properly marked with their country of origin. Accordingly, the petition is denied and HRL 734258 is affirmed. Alternatively, the frames may be individually marked by hang tags or stickers as provided for in HRL 734258.

Sincerely,

John Durant, Director
Commercial Rulings Division

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