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HQ 563113

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December 8, 2004

MAR-05 RR:CR:SM 563113 NL

CATEGORY: MARKING

Mr. Tom O’Leary
CCF International, Inc.
2512 S. IH-35, Suite 300
Austin, Texas 78704

RE: Laser Engraving; Country of Origin; Substantial Transformation

Dear Mr. O’Leary:

This is in reply to your letter dated August 30, 2004, in which you requested a ruling on behalf of Estex Trading (Estex) of Austin, TX concerning the country of origin marking requirements for a wooden spreader knife imported from Estonia. Samples were submitted with your letter.

FACTS:

Estex imports wooden spreader knives from Estonia. As shown by Sample No. 1, the knives are marked with their country of origin when delivered to Estex.

The company plans to market these knives to clients after having laser engraved the names of client companies on them in the U.S. The knives would be distributed by these client companies as promotional items. Samples Nos. 2 & 3 bear such engraved names, which cover approximately one-fifth of one side of each sample knife.

You propose that the laser engraving is expensive in relation to the cost of the knives and results in a product having a new character and use, such that no country of origin marking is required on the knives when they are delivered by Estex to its customers.

ISSUE:

Does laser engraving of a company name on the wooden knives result in substantial transformation?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930 (19 U.S.C. §1304), provides that, unless excepted, every article of foreign origin imported into the United States 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 United States the English name of the country of origin of the article. Congressional intent in enacting 19 U.S.C. §1304 was 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 are 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." United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302 (1940).

Part 134, Customs Regulations (19 C.F.R. Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. §1304. Section 134.1(b), Customs Regulations (19 C.F.R. §134.1(b)), defines "country of origin" as the country of manufacture, production or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of the marking laws and regulations. For country of origin marking purposes, a substantial transformation of an imported article occurs when it 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. In such circumstances, the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the "ultimate purchaser" of the imported article, and the article is excepted from marking, although the outermost container of the imported article is required to be marked. See 19 CFR 134.35(a).

In this instance the rulings of Customs and Border Protection do not support your position. The general rule in these cases is that adding a name or decorative mark, whether by painting, printing or engraving, will not be considered to result in substantial transformation. For example, in Headquarters Ruling 557771 (May 26, 1994), CBP found that engraving the head of a U.S.-made golf putter in Mexico with the manufacturer's name or logo did not substantially transform the putter into a product of Mexico, or in any way change the putter’s status as a product of the U.S. With regard to engraving generally, CBP’s position is that embellishing an undecorated article does not result in substantial transformation. For example, in Headquarters Ruling 556060 (August 27, 1991), extensive processing of jewelry blanks by engraving, decorative cutting, polishing and cleaning operations were found to be embellishments and finishing operations did not create new articles or alter the intended use of the articles. Therefore, the jewelry blanks were not substantially transformed.

In this case, the laser engraving does not change the article’s name, character or use as a wooden knife. Therefore, the ultimate purchaser in the U.S. is the recipient of the knife as a promotional item.

HOLDING:

The laser engraving of a name on a wooden spreader knife does not result in substantial transformation for purposes of the country of origin marking requirements of section 304 of the Tariff Act, as amended, and Part 134, CBP Regulations. The wooden implements may not be excepted from the country of origin marking requirements by reason of this processing, and must be marked with their country of origin so as to indicate such country origin to the ultimate purchaser in the U.S, who is the recipient of the promotionally marked wooden knife.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

Myles B. Harmon, Director,

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