Country of Origin of a wooden dresser, television chest, and headboard

HQ H209466 October 10, 2012 OT:RR:CTF:TCM H209466 LWF CATEGORY: Marking Kristen S. Smith Sandler, Travis & Rosenberg, P.A. 1300 Pennsylvania Ave., NW, Suite 400 Washington, D.C. 20004 RE: Country of Origin of a wooden dresser, television chest, and headboard Dear Ms. Smith: This is in reply to your letter, dated March 6, 2012, requesting a ruling on behalf of your client, Fairmont Designs (“Fairmont”), concerning the country of origin of a wooden dresser, television chest, and headboard. In reaching our decision, we have considered the information contained in Fairmont’s supplemental submission, dated May 10, 2012. FACTS: Fairmont imports and sells furniture manufactured by a factory located in Taiwan. You state that the three products at issue, a dresser, television chest, and headboard, are manufactured in Taiwan using materials from the United States, Malaysia, Taiwan, China, and New Zealand. The production process for each of the three models is substantially similar to one another and is described below. Dresser The dresser consists of a particleboard frame with three drawer units. The dresser’s side panels, back panel, bottom panel, back frame and rear lower rail are made of particleboard of Malaysian origin which is shipped to China where veneer of U.S. or Chinese origin is laminated onto the boards. The veneered particleboards are cut to size in China and are then sent to Taiwan where they are precision cut, shaped, sanded, edged sealed, drilled and used to assemble the dresser. The dresser’s drawer units are constructed in Taiwan and consist of two components per drawer unit: a drawer box and a face panel. The drawer boxes are constructed in China from Malaysian-origin medium density fiberboard (“MDF”) bottom panels and solid wood front, back, and side panels from New Zealand. Face panels of Malaysian-origin particleboard are cut to size and laminated with veneer in China. The drawer box and veneered face panels are shipped to Taiwan, where the face panels are precision cut, edge sealed, shaped, drilled, and sanded. The drawer box and drawer face panel are then manually assembled, forming a complete drawer unit. In addition to the panels and drawer units described above, certain solid wood for the front bottom line, rail frame, upper rail, rear upper rail, and triangular articles is imported from the U.S. to China where it is cut to material size. These parts are then sent to Taiwan where they are precision cut, sanded, and drilled. After the dresser parts are processed in Taiwan, they are manually assembled and finished in the same factory. The side panels, bottom panel and associated parts are affixed to the frame using glue and nails. The dresser is then sanded and certain hardware is installed. After sanding, the dresser is cleaned to remove debris and sawdust, and several layers of paint and varnish are applied. The drawer’s sliding rail and associated parts are set into the frame. The drawer units are inserted, and the back panel is screwed into the frame. Drawer pulls are added, and the finished dresser is inspected and packed for shipment from Taiwan to the U.S. Television chest The television chest is a bow-front chest that consists of a shelf and two drawer units. The chest’s top panel is made of particleboard of Malaysian origin which is shipped to China where it is cut to size. In China, U.S.-origin lumber, U.S.-origin fire-resistant laminate, and Chinese-origin secondary fire-resistant laminate are cut to size and combined with the particleboard top panel, which is then shipped to Taiwan to be further shaped and sanded. The chest’s side panels, back panel, bottom panel, shelf panel, partitions, and rear lower rail are made of particleboard or fiberboard of Malaysian origin which is cut to size in China. Hardwood, paper, and PVC veneers purchased in China, as well as other wood veneers from the U.S., are cut to size and laminated onto the cut boards in China, and the veneered boards are then shipped to Taiwan where they are shaped, precision cut, edge sealed, sanded, drilled and used to build the chest. The chest’s drawer units are constructed in Taiwan and consist of two components per drawer unit: a drawer box and a face panel. The drawer boxes are constructed in China from Malaysian-origin medium density fiberboard (“MDF”) bottom panels and solid wood front, back, and side panels from New Zealand. Face panels of Malaysian-origin particleboard are cut to size and laminated with veneer in China. The drawer box and veneered face panels are shipped to Taiwan, where the face panels are precision cut, edge sealed, shaped, drilled, and sanded. The drawer box and drawer face panel are then manually assembled, forming a complete drawer unit. As with the dresser, other solid wood articles for the chest’s top rail, lower rail, connective wood, and decorative articles for the bottom line are imported from the U.S. to China where they are cut to material size. These parts are then sent to Taiwan where they are precision cut, sanded, and drilled. The finished chest parts are assembled in Taiwan using glue and hardware. The side panels, bottom panel, shelf partitions, and associate parts are assembled by gluing and nailing them into the frame. The chest is then sanded and undergoes a painting and varnishing process identical to that of the dresser. The drawer units are then inserted, and the back panel is screwed into the frame. Drawer pulls are added, and the finished chest is inspected and packed for shipment from Taiwan to the U.S. Headboard The headboard consists of several veneered fiberboard panels and solid wood molding strips that are connected by hardware along a bed board hang strip. Upon final assembly, the finished headboard is designed to be hung on a wall by setting the bed board hang strip atop wall hang strips which are secured to the wall by screws. Certain headboard components, such as the bed panel and two molding strips, are processed in China before being shipped to Taiwan to be used to construct the headboard. The bed panel is made of particleboard imported from Malaysia to China, where it is cut to material size. Hardwood, paper, and PVC veneers purchased in China, as well as other wood veneers from the U.S., are cut to size and laminated onto the cut boards, and the bed panel is then cut to precise size and sealed before being shipped to Taiwan. Upon arrival in Taiwan, the bed boards are further sanded and painted, and a trench for electrical wires is dug into the back of the bed boards. Molding strips for the headboard are made of solid wood imported from the U.S. to China, where they are cut to material size. The wooden strips are then shipped to Taiwan for further sanding and angle cutting prior to assembly. Other headboard components, such as the molding panel, bed panel hang strip, and wall hang strips, are made of particleboard imported from Malaysia directly to Taiwan. In Taiwan, these components are cut to size, laminated with veneers, and undergo a number of further processing steps, including, precision cutting, fine sanding, edge fixing, and painting. The finished headboard components are manually assembled in Taiwan and are combined using horizontal buckles. Each headboard is then sanded and undergoes a painting and varnishing process identical to that of the dresser and chest described supra. After the painting process is complete, the headboard is inspected and packed for shipment from Taiwan to the U.S. You submitted photos and schematics of the wooden dresser, television chest, and headboard. You also submitted information detailing the production processes and summary of processing costs and labor hours for each article.  ISSUE: What is the country of origin of the wooden dresser, television chest, and headboard? 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 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.” See United States v. Friedlander & Co., 27 C.C.P.A. 297, 302 (1940). Part 134 of the U.S. Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Section 134.1(b), CBP 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].” A substantial transformation occurs when, as a result of manufacturing process, a new and different article emerges, having a distinct name, character or use, which is different from that originally possessed by the article or material before being subjected to the manufacturing process. See Texas Instruments, Inc. v. United States, 69 C.C.P.A. 142, 681 F.2d 778 (1982). In Carlson Furniture Industries v. United States, 65 Cust. Ct. 474 (1970), the U.S. Customs Court ruled that U.S. operations on imported chair parts constituted a substantial transformation, resulting in the creation of a new article of commerce. The court determined that because the importer had to perform additional work on the imported chair parts and add materials to create a functional article of commerce, the imported parts were not chairs in an unassembled or knocked-down condition. Id. at 478. After importation, the importer assembled, fitted, and glued the wooden parts together, inserted steel pins into the key joints, cut the legs to length and leveled them, and in some instances, upholstered the chairs and fitted the legs with glides and casters. Consequently, the court found that the operations were substantial in nature, and that the processing performed in the United States constituted more than the mere assembly of finished parts. Id. In Headquarters Ruling Letter (“HQ”) W563456, dated July 31, 2006, CBP held that certain office chairs assembled in the U.S. were products of the United States for purposes of U.S. government procurement. The office chairs were assembled from seventy domestic and foreign components. The imported components alone were insufficient to create the finished chairs and substantial additional work and materials were added to the imported components in the U.S. to produce the finished chairs. In finding that the imported parts were substantially transformed in the U.S., CBP stated that the components lost their individual identities when they became part of the chair as a result of the U.S. assembly operations and combination with U.S. components. Similarly, in HQ 561258, dated April 15, 1999, CBP determined that the assembly of numerous imported workstation components, such as leg brackets, drawer units, and panels, with a U.S.-origin work surface constituted a substantial transformation of the parts into a finished workstation. CBP held that the imported components lost their identity when they were assembled together to form a workstation and classified the finished piece of furniture as U.S.-origin merchandise. In the instant case, particleboard and fiberboard of Malaysian origin is shipped to China where it is cut-to-size and laminated with veneer. The cut-to-size parts are then shipped to Taiwan where they are further processed via precision cutting, sanding, shaping, drilling, assembling, and painting. Alternatively, other pieces of particleboard from Malaysia are shipped directly to Taiwan where they are cut-to-size, precision cut, finished, and laminated. In your supplemental submission, dated May 10, 2012, you supply demonstrative photographs of the manufacturing processes performed on the furniture parts in Taiwan. In Taiwan, the parts are precision cut using a bandsaw, and wood veneer is glued to the edges of the panels to edge seal the panels. The shaping and drilling operations that you describe involve the careful placement of holes and grooves in the various parts which allow them to be fitted together, and later assembled. Furthermore, the parts are both edge sanded and fine sanded in preparation for final assembly. After the precision cutting, sanding, shaping, and drilling processes are complete, the parts are integrated with the solid wood components, assembled, fitted with hardware, and painted to make a finished piece of furniture. Your description and photographs of the processes performed in Taiwan clearly indicate that the furniture parts are not in knocked-down condition when they arrive in Taiwan. Therefore, as assembly of the furniture parts is impossible prior to the precision cutting, sanding, shaping, and drilling performed in Taiwan, the parts do not constitute unassembled furniture because significant operations must be performed on the parts in Taiwan to create a functional article of furniture. Consequently, we find that the manufacturing operations performed in Taiwan substantially transform the wooden components into new articles of merchandise – the dresser, the television chest, and the headboard – each possessing a new name, character and use. We note that our conclusion is consistent with HQ H185121, dated December 13, 2011, in which CBP responded to a ruling request by Fairmont concerning the country of origin of wooden furniture produced by a manufacturing process substantially similar to that of the instant merchandise. Based upon the information before us, we find that the components that are used to manufacture the dresser, the television chest, and the headboard are substantially transformed as a result of the processing and assembly operations performed in Taiwan, and that the country of origin of the three products for marking purposes is Taiwan. HOLDING: The imported components that are used to manufacture the dresser, the television chest, and the headboard are substantially transformed as a result of the processing and assembly operations performed in Taiwan. As a result, we find that the country of origin of the wooden dresser, television chest, and headboard for marking purposes is Taiwan. A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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, Monika R. Brenner, Chief Valuation & Special Programs Branch