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HQ 732964

August 3,1990

MAR-2-05 CO:R:C:V 732964 NL


District Director
U.S. Customs Service
International Street and Terrace Ave.
Nogales, Arizona 85621

RE: Country of Origin Marking - Hand Painted Ceramic Bells; Decoration; Substantial Transformation; Madison Galleries

Dear Sir:

This is in response to your request for internal advice of December 4, 1989, concerning the country of origin marking of certain ceramic ware which is to be painted after importation.


The articles in question are ceramic bell shapes made of material known in the trade as "bisque ware", imported from Taiwan in a cast and fired condition. Also imported are the ceramic clappers or chimes. After importation the bisque ware is sanded and filled, sprayed with base paint, hand painted with a Southwestern U.S. motif, and sprayed with a fixative. Three types of bell are made from the bisque ware: a wind bell, a dinner bell, and a chime. The wind bell is completed by the addition of a string which enables it to be suspended and which also secures the ceramic clapper, and a piece of copper which functions as a "wind catcher". The dinner bell is completed by the addition of a wooden handle and a clapper made from a metal washer. The chime has a string for suspending it, while monofilament is used to connect the chimes and clappers to the bell. Other than the bisque ware and the clappers all the parts are of U.S. origin. Samples were submitted.

There is presently no country of origin marking on the articles themselves. However, two of the samples have hang tags attached which describe the products as "Hand Painted Southwestern Originals". On one tag the name and city of the importer is given, while on another, in addition, the words "Hand Painted in USA/Cast in Taiwan" are visible.

It is stated that, averaging the three types of bells and their various sizes, the cost of the ceramic materials is $6.95 per dozen. The importer's cost to paint, assemble and package
the bells is stated to average $18.48 per dozen.

Counsel for the importer contends that the imported articles are substantially transformed after importation into finished ceramic bells, and accordingly, within the meaning of 19 U.S.C. 1304 the importer is the ultimate purchaser of the unpainted bisque ware. Thus, it is argued, the finished articles are not required to be marked "Made in Taiwan". It is the district's position that the U.S. painting and processing does not effect a substantial transformation; the finished bells must be marked as products of Taiwan both at the time of importation as bisque ware and when they reach the ultimate purchaser as complete, painted bells.


Does the U.S. processing substantially transform the bisque ware?


Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or 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 134.1(d), Customs Regulations (19 CFR 134.1(d)) provides that the "ultimate purchaser" of an imported article is generally the last person in the U.S. to receive the article in the form in which it was imported. That section provides further that a manufacturer may be the ultimate purchaser of an article if he subjects it to a process which results in a substantial transformation of the article. 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 who obtains it after processing will be regarded as the ultimate purchaser. Section 134.35, Customs Regulations (19 U.S.C. 134.35), provides that an article which is substantially transformed after importation shall be excepted from country of origin marking.

A substantial transformation is said to occur when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. Torrington Company v. United States,

764 F. 2d 1563, 1568 (Fed. Cir. 1985), citing Texas Instruments, Inc. v. United States, 631 F. 2d 778, 782 (CCPA 1982), and Anheuser-Busch Brewing Ass'n v. United States, 207 U.S. 556 (1908).

In this case, the only issue for consideration is whether the painting of the bisque ware effects a substantial transformation. We have examined the samples submitted and determined that the small quantity and value of the parts added in the U.S. cannot be considered significant.

Counsel for the importer submits that the instant situation is governed by the decision of the Court of International Trade in Madison Galleries, Ltd., v. United States, 688 F. Supp. 1544 (CIT 1988), aff'd, 870 F. 2d 627 (Fed. Cir. 1989). In that case, which concerned the interpretation of the statute implementing the Generalized System of Preferences (GSP), the Court of International Trade found that a Taiwanese porcelain article decorated by painting and firing had been substantially transformed into an article of Hong Kong origin. Despite the Court of International Trade's finding with respect to that particular porcelain article, Customs does not regard Madison Galleries as establishing a rule of law on this point. In T.D. 89-21 Customs stated:

[t]he court's conclusion that the mere decoration of porcelainware constitutes substantial transformation runs counter to a substantial line of administrative rulings...because this secondary determination was unnecessary to an adjudication of the essential issue of the case [eligibility for GSP] it is considered dicta... The Customs Service continues to adhere to its position that the mere decoration of porcelainware does not constitute a substantial transformation.

23 Cust. B. & Dec. No. 7 (February 15, 1989). In view of T.D. 89-21, the finding of the Court of International Trade in Madison Galleries does not govern the facts at hand. To the contrary, the distict director has correctly applied the existing precedents which uniformly lead to a finding that the "bisque ware" is not substantially transformed by processing in the U.S. See, HQ 707057 (December 10, 1976)(decoration of ceramic coffee mugs by decalcomania and kiln firing not a substantial transformation); HQ 058996 (June 21, 1979)(painting, glazing, and firing of porcelain ware not a substantial transformation); HQ 724978 (July 13, 1984)(hand painting and firing of vase not a substantial transformation).

With respect to the hang tags, the importer is required pursuant to 19 CFR 134.46 to indicate the origin of the article by use of the words "made in", "product of", or words to similar effect at any time the the hang tag bears the name of a place in
the U.S. Thus, as given in the sample bells, the hang tags are deficient in that one of them has no indication of the bell's Taiwan origin, and the other does not clearly indicate the bell was made in or a product of Taiwan. The words "cast in Taiwan" are not sufficient, in our opinion to clearly indicate that the bell is a product of Taiwan. Wording on the hang tag such as, "Hand painted in USA, made in Taiwan" would satisfy the requirements of 19 CFR 134.46.


The imported ceramic "bisque ware" is not substantially transformed by processing in the U.S. Therefore, the ultimate purchaser is the consumer that purchases the "bisque ware" after processing and not the importer who further processes it. The "bisque ware" must be marked so as to clearly indicate its country of origin, Taiwan, to the ultimate purchaser.


Marvin M. Amernick
Chief, Value, Special Programs

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