HQ 734474

April 13, 1992

MAR-2-05 CO:R:C:V 734474 ER

CATEGORY: MARKING

Mr. Joel Switsky

President

Archer Freight Systems, Inc.

P.O.Box 460067

San Antonio, Texas 78246-0067

RE: Country of Origin Marking Requirements for Frame Front

Substrates and Side Temple Substrates for Eyeglasses

Imported from Japan, Korea, Hong Kong and Germany;

Ultimate Purchaser; Substantial Transformation; Federal

Trade Commission; 19 CFR 134.1(d); 19 CFR 134.32(g);

19 CFR 134.35; C.S.D. 80-43; HQ 709266; HQ 709551;

HQ 728504; HQ 733693.

Dear Mr. Switsky:

This is in response to your letter of January 16, 1992, on

behalf of Optique Marquis, P.O. Box 2078, San Antonio, Texas

78297, in which you ask for a ruling concerning the country of

origin marking requirements for frame front substrates and side

temple substrates for eyeglasses imported from Japan, Korea,

Hong Kong and Germany.

FACTS:

In your submission and by telephone conversations with you

on March 5, 1992 and with Optique Marquis on March 9, 1992 the

facts set forth below were established. Optique Marquis imports

in unfinished condition, frame front substrates and side temple

substrates from Japan, Korea, Hong Kong and Germany and further

processes them as set forth below. You state that these

components are not usable in the form in which they are imported

due to the fact that the un-plated frames offer no protection

against corrosion, may cause skin reactions on users and have no

functional use or decorative appeal. The components of U.S.

origin include the nosepads, screws, bolts, paints, lacquers and

lenses. You provided samples of the imported components and the

finished product complete with demo lenses.

The first stage of the processing, designed to alter the

function, form and appearance of the components, is described in

your submission as follows: (1) components are tumbled and

polished; (2) components are cleaned and hand polished prior to

initial plating; (3) copper plating is applied as primer

coating; (4) nickel/silver is applied as a secondary coating;

\(5\) substrate with primer and secondary plating are removed and

selected areas are masked by hand for plating; (6) gold or silver

is applied to secondary plating and reviewed, where necessary,

for final gold or silver plating; (7) plated components are

cleaned and selected areas are masked for epoxy decorating;

\(8\) epoxy paints are applied by hand and temperature cured

(where multi-color processes are used (three or four colors), all

steps involved in single-color application must be repeated); and

\(9\) components with gold and/or silver plating and epoxy

decorations are coated with a clear lacquer before assembly.

In your submission you describe the next stage of

processing, involving the assembly of the frame and temple

components with other components, as follows: (10) nosepads are

assembled to the bridge of the frame fronts that have been

measured and identified for size; (11) temples are measured for

size and temple ear tips are applied to provide comfort to the

wearer; (12) measured temple with ear tip are formed with two

curves so as to hold the complete frame to the patient\'s head;

\(13\) temples and fronts are assembled; (14) lenses for sunglasses

or demo lenses are ground to specification and assembled; and

\(15\) assembled frames with lenses are hand adjusted and

individually packaged.

An electroplating system with monitored controls is used

and OSHA and EPA standards are observed. Equipment for applying

and curing protective coatings and epoxy decorations includes

mixing systems, dispensing machinery and thermal controls. You

state that 60 percent of the value of the imported merchandise is

added in the U.S. after importation.

It is your opinion that these operations substantially

transform the imported articles from an unfinished state to a

finished state. You have requested a general marking waiver for

the articles, as imported, pursuant to 19 CFR 134.32(g) because

you state that the processing in the U.S. will necessarily

obliterate the original markings. Additionally, you have also

requested that you be allowed to mark the finished product as

originating in the U.S.

ISSUE:

Whether the imported frame front substrates and side temple

substrates for eyeglasses may be excepted from country of origin

marking?

Whether the finished product may be marked with a U.S.

country of origin?

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 (or its container) 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 U.S. the English name of the country 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.

The primary purpose of the country of origin marking statute

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. Friedlaender & Co., 27

C.C.P.A. 297, C.A.D. 104 (1940). Section 134.1(d), Customs

Regulations (19 CFR 134.1(d)) defines the \"ultimate purchaser\"

generally as the last person in the U.S. who will receive the

article in the form in which it was imported.

You assert that the processes performed on the components in

the U.S. will destroy or obliterate any country of origin

marking, and therefore request an exemption from the country of

origin marking requirements pursuant to 19 U.S.C. 1304(a)(3)(G)

and 19 CFR 134.32(g). These sections of the Tariff Act and the

Customs regulations except from marking those articles to be

processed in the U.S. by the importer in such a manner that any

mark would necessarily be obliterated.

In HQ 709266 (July 11, 1978), Customs found that there are

methods of marking eyeglass frames which will withstand such

processes, e.g. die-sinking. Therefore, in the instant case,

because the marking will not necessarily be obliterated by the

process, the eyeglass frames do not fall within the exception

provided for by 19 U.S.C. 1304(a)(3)(G). However, the articles

may be eligible for another exception to marking as is discussed

below.

Section 134.35, Customs Regulations (19 CFR 134.35),

provides that an article 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 will be within the principle of

the decision of U.S. v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267

(C.A.D. 98) (1940). Under this principle, the manufacturer or

processor in the U.S. who substantially transforms the imported

article into an article with a new name, character, or use will

be considered the \"ultimate purchaser\" of the imported article

within the contemplation of section 304(a) of the Tariff Act of

1930, as amended (19 U.S.C. 1304(a)), and the article shall be

excepted from marking. The outermost containers of the imported

articles shall be marked in accordance with this part.

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; consequently, the importer was found to be the

ultimate purchaser of the imported merchandise within the meaning

of section 304 of the Tariff Act of 1930, as amended (19 U.S.C.

1304). (But cf., HQ 733693 (October 17, 1990), 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; i.e. 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.

Accordingly, we are of the opinion that as a

result of the above processes the imported items

acquire a new character and use. This circumstance in

addition to the extent of the manufacturing involved,

leads us to conclude that the physical alterations

suffered by the eyeglass fronts and temples

constitutes \[sic\] a substantial transformation.

We note that such substantial transformation of

the imported fronts and temples occurs as a result of

the totality of the manufacturing involved rather than

by the effect of any particular process.

In the present case, as in the above cases, the imported

merchandise must undergo various processing before it is suitable

for use and wear. Such processing is virtually the same as that

involved in C.S.D. 80-43 and HQ 709551. Moreover, in this case,

screws, bolts, nosepads, temple ear tips, paints and lacquers of

U.S. origin are used in these processes to finish the frame.

Accordingly, based on these rulings, we find that the imported

frame front substrates and side temple substrates are

substantially transformed as a result of the domestic processing

and that Optique Marquis is the ultimate purchaser.

The Federal Trade Commission has jurisdiction over whether

or not goods can be marked \"Made in the U.S.A.\" and should be

contacted in regard to that question.

HOLDING:

The manufacturer in the U.S. is the ultimate purchaser of

the imported frame front substrates and side temple substrates

for eyeglasses within the meaning of section 304 of the Tariff

Act of 1930, as amended (19 U.S.C. 1304). Accordingly, the

imported merchandise may be excepted from individual country of

origin marking pursuant to 19 CFR 134.35 providing the

merchandise undergoes the manufacturing processes described above

and that Customs officers at the port of entry are satisfied

that the manufacturer will receive the merchandise in properly

marked containers.

Sincerely,

John Durant, Director

Commercial Rulings Division