HQ W967997 - � Modification of Headquarters Ruling Letter (HQ) 563262, dated July 15, 2005; Country of origin marking requirements applicable to certain gift tissue products; substantial transformation; 19 U.S.C. §1304 - United States International Trade Commision Rulings

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HQ W967997

October 5, 2006

CLA–2 RR:CTF:TCM W967997 KSH

CATEGORY: MARKING

Ms. Marcela B. Stras, Esq.
Baker & Hostetler LLP
Washington Square, Suite 1100
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5304

RE: Modification of Headquarters Ruling Letter (HQ) 563262, dated July 15, 2005; Country of origin marking requirements applicable to certain gift tissue products; substantial transformation; 19 U.S.C. §1304

Dear Ms. Stras:

This letter is to inform you that the Bureau of Customs and Border Protection (CBP) has reconsidered Headquarters Ruling Letter (HQ) 563262, issued to you on July 15, 2005, on behalf of your client, Plus Mark, Inc., concerning the country of origin of certain gift tissue products. In HQ 563262, we determined that master rolls of tissue paper from China are substantially transformed when printed with colors and designs and cut to size to form gift tissue sheets within Country A. However, we also determined that a substantial transformation does not occur in instances where master rolls of tissue paper from Vietnam are cut and folded, but not printed, in Country A. We have reviewed that ruling and found it to be in error as it pertains to the country of origin of the printed and cut gift tissue sheets. Therefore, this ruling modifies HQ 563262.

Pursuant to section 625(c), Tariff Act of 1930, (19 U.S.C. 1625(c)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103–182, 107 Stat. 2057, 2186 (1993), notice of the proposed modification of HQ 563262 was published in the Customs Bulletin, Vol. 40, No. 32, on August 2, 2006. Five comments in support of the modification were received in response to the notice.

FACTS:

Master rolls of tissue paper are imported into Country A from China. The tissue paper is printed (with either designs or colors) on a six-color gravure printing press with ink that is a product of Country A. The printed tissue paper is thereafter cut to size on a computer controlled automatic cutter/slitter. Various printed designs are collated and folded to size by hand. The folded tissue is either banded or placed into plastic polybags that are packed into master cartons by hand.

We note that you advised that prior to the processing operations performed in Country A, the master rolls of tissue paper could be used to produce products such as crepe paper, crepe paper streamers, toilet seat covers, and other articles.

ISSUE:

Whether the processing operations described above substantially transform the master rolls of tissue paper from China into a product of Country A.

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 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." United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302 (1940).

Part 134 of the Customs and Border Protection (CBP) Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. §1304. Section 134.1(b) of the CBP Regulations (19 CFR 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. The case of U.S. v. Gibson -Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98)(1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed and, as a result, the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35(a).

CBP has generally held that adding a name or decorative mark, whether by painting, printing or engraving, will not be considered to result in a substantial transformation. In HQ 731779, dated December 9, 1988, we determined that the printing of advertising information on wooden pens did not constitute a substantial transformation. We noted:

First, the printing does not materially alter the name, character or use of the imported articles. At the time of importation, the articles in question would properly be referred to as pens and more specifically characterized as wooden pens in the shape of baseball bats, hockey sticks and rulers.

The use of the pens is as writing implements. After the printing of the advertising information, they remain articles properly referred to as pens, characterized as wooden pens in the shape of baseball bats, hockey sticks and rulers, and used as writing implements. The fact that the pens may also be used for advertising purposes, does not, in our opinion, materially change their underlying use as writing implements.

Similarly, in HQ 734152, dated August 26, 1991, CBP found that the printing of U.S.-origin balloons in Canada did not materially alter the name, character, or use of the balloons, and therefore the balloons were not substantially transformed into products of Canada.

By General Notice, dated August 11, 1995, and published August 30, 1995, in the Customs Bulletin, Volume 29, Number 35 (which modified HQ 557034/557072, dated July 14, 1993), CBP concluded that the printing of paper rollstock or plastic film used in the production of shopping bags with colors, designs, and/or customer graphics, changes the character of paper or plastic film from a raw material with numerous uses to a material with limited uses to a degree sufficient to constitute a substantial transformation. However, CBP maintained that a substantial transformation does not occur when printing operations do not alter the use of an article. For example, printing roll stock with only labeling information (such as a UPC label, company logo, or country of origin marking) does not substantially transform the rollstock.

In HQ 560155, dated April 10, 1997, pallets of uncut sheets of trading cards were imported into the United States from the United Kingdom for finishing and combination with U.S.-origin cards. In the United Kingdom, images were printed onto specialized sheets of paper stock, the sheets were laminated with film, and the laminated sheets were thereafter packaged for shipment to the United States. In the United States, the uncut sheets were slit into individual cards (in cases where only one side of the sheets were printed, two halves were glued together and then cut). The individual cards were thereafter combined with cards produced entirely within the United States to form completed packages of trading cards, with the majority of the cards being of U.S. origin. CBP held that such processing did not substantially transform the imported sheets into products of the United States and that the finished card packages were required to be marked so as to inform the ultimate purchaser in the United States of the origin of the imported cards, the United Kingdom. Citing, HQ 734706, dated January 15, 1993 (cutting paper board sheets of baseball cards and sorting and packaging the cut cards are minor finishing operations) and HQ 555241, dated July 3, 1989 (cutting sheets of self-adhesive office labels on backing paper was not a substantial transformation).

We issued HQ 563262 based on a belief that the master rolls of tissue paper were susceptible to multiple uses prior to the printing and cutting in Country A. However, we have learned that tissue paper suitable for use as decorative wrapping tissue whether in white, color, printed or unprinted must exhibit specific characteristics that are established at the time the master rolls are manufactured and cannot be altered or imparted by further processing. Decorative or wrapping tissue paper must be light weight, usually between 10 and 30 grams per square meter (GSM). We note that the tissue paper at issue weighs between 17 and 19 GSM. It must also be free of surface imperfections and have a smooth finish.

Tissue paper generally has a low tensile strength and has an open porous surface making it undesirable to print. Thus, tissue paper which will be printed must meet a minimal tensile strength to withstand printing, be smooth to allow even printing and contain sizing to hold but not absorb the ink. The tissue paper may also have “wet strength” additives to retain its structural integrity when wet.

As indicated above, tissue paper that will be printed for use as decorative gift wrap has a fixed identity imparted by specific characteristics present at the time the master rolls of tissue paper are manufactured. Tissue paper for use as printed decorative gift wrap cannot be further processed, after the master rolls are produced, into articles with any number of end uses. Decorative tissue paper manufactured to be printed is an article with limited use. It is not further limited by the printing to a degree sufficient to constitute a substantial transformation. The printing does not materially alter the name, character or use of the tissue paper. At the time of importation into Country A, the articles in question would properly be referred to as tissue paper. After the printing of the tissue paper, it remains an article properly referred to as tissue paper.

Printing and cutting the plain tissue paper in Country A will not effect a substantial transformation in the Chinese-origin product. Accordingly, the country of origin of tissue paper sheets produced under these circumstances will be China.

HOLDING:

The master rolls of tissue paper from China are not substantially transformed when printed with colors and designs and cut to size to form gift tissue sheets in Country A. When imported into the United States, the country of origin of these products for marking purposes will be China.

EFFECT ON OTHER RULINGS:

HQ 563262, dated July 15, 2005, is hereby modified. In accordance with 19 U.S.C. 1625(c), this ruling will become effective 60 days after publication in the Customs Bulletin.

Sincerely,

Myles B. Harmon, Director

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