Country of origin marking of marking of Luran® S; blending; Germany; 19 CFR 134.35(a)

HQ 561282 April 22, 1999 MAR-02 RR:CR:SM 561282 RSD CATEGORY: MARKING Richard J. Salamone Manager, Customs & Int’l Reg. Compliance BASF Corporation 3000 Continental Drive-North Mount Olive, New Jersey 07828-1234 RE: Country of origin marking of marking of Luran® S; blending; Germany; 19 CFR 134.35(a) Dear Mr. Salamone: This is in response to your letter dated February 2, 1999, requesting a ruling regarding the country of origin marking requirements for a chemical product sold by BASF Corp. under the trade name “Luran® S” which is made in the U.S. from two chemicals imported from Germany. You have also submitted a supplemental letter dated March 30, 1999, which further describes Luran® S. As you have requested, information regarding the chemical composition of Luran® S will be accorded confidential treatment. FACTS: BASF imports two chemical products, styrene-acrylonitrile (SAN) copolymers and styrene-acrylonitrile rubber concentrates into the United States in bags marked “Made in Germany” for further processing. In the United States, the two products are blended together in predefined ratios to form variations of the final product, which is sold under the trade name of Luran® S. The Luran® S family of products falls under the common chemical name acrylate modified styrene-acrylonitrile copolymers. You state that the Luran® S family of products has multiple applications in the following industries: consumer (e.g., pool steps, recreation vehicle roofs); automotive (e.g., cowl vent grills, sail panels, side view mirror shells); electronic (e.g., manufacture of telecommunications equipment); and marine (e.g., sailboat hulls, vents, marine equipment, housings, and hatch covers). The Luran® S is produced by a blending operation in which the two imported products are fed into a compounding extruder, where: (a) they are melted, (b) other components, such as lubricants and colorants, are added and (c) the material is re-solidified into the final product. The SAN copolymer is used to dilute the SAN-acrylic rubber concentrate through blending in predefined rations, resulting in the new product Luran® S. You explain in the second submission that the SAN-acrylic rubber concentrate is chemically the same as Luran® S. You have provided the chemical composition of basic Luran® S. ISSUE: What is the country of origin marking requirements for the Luran® S? LAW AND ANALYSIS: The marking statute, section 304, 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 U.S. 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 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 good 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. Friedlaender & Co. 27 C.C. P. A. 297 at 302; C.A.D. 104 (1940). Part 134, Customs 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), Customs 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 U.S. 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 determining whether a substantial transformation occurs in the manufacture of products from chemicals, Customs has consistently examined whether a chemical reaction occurs when two chemicals are mixed in the production of the final article. See Headquarter Ruling Letters (HRL's) 555248 dated April 9, 1990; 556064 dated March 29, 1990; 555403 dated June 6, 1990. When chemical compounds are mixed together to form a different substance and the individual properties of each ingredient are no longer discernable, they have undergone a substantial transformation. See HRL 555989 dated June 24, 1991, in which we held that raw materials used to produce three varieties of antioxidants undergo a double substantial transformation in the Bahamas. The Condensed Chemical Dictionary defines “Luran S” as a trademark for acrylic ester-modified styrene-acrylonitrile terpolymer, which is a “thermoplastic” material claimed to be excellent for outdoor use as it is highly resistant to sunlight and weathering. In another entry, the Condensed Chemical Dictionary describes the term “thermoplastic” as a high polymer that softens when exposed to heat and returns to its original condition when cooled to room temperature. In order to better understand the chemical products involved and processing used to make the Luran® S, we also consulted with the Customs Service Office of Laboratory and Scientific Services Division. After reviewing the submissions made in this case, that office has advised that the production of the Luran® S in the United States is basically simple blending or mixing of the ingredients, styrene-acrylonitrile (SAN) copolymers and styrene-acrylonitrile rubber concentrates and that no chemical reaction takes place. The information that you have provided does not conflict with this analysis. In fact, the submissions indicate that the SAN-acrylic rubber concentrate is chemically the same as Luran® S. Accordingly, it is our understanding that the basic underlying chemical properties of the SAN-acrylic rubber concentrate remain essentially unchanged and that the blending process performed in the United States does not create a substantially different substance. Therefore, we conclude that the two German products, styrene-acrylonitrile (SAN) copolymers and styrene-acrylonitrile rubber concentrates, are not substantially transformed when they are mixed together in the United States to make the Luran® S. Because both of the basic ingredients in the Luran® S are made in Germany, we find that the country of origin of Luran® S is also Germany. Thus, in accordance with 19 U.S.C. 1304, the container in which Luran® S reach the ultimate purchaser must be marked to indicate its country of origin is Germany. HOLDING: The two German chemical products are not substantially transformed when they are blended together in the United States to produce the Luran®S. The country of origin of the Luran® S is Germany and it must be marked as such. A copy of this 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, John Durant, Director Commercial Rulings Division