[Federal Register Volume 65, Number 50 (Tuesday, March 14, 2000)]
[Notices]
[Pages 13827-13831]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-6115]
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DEPARTMENT OF THE TREASURY
Customs Service
[T.D. 00-15]
Application of Producers' Good Versus Consumers' Good Test in
Determining Country of Origin Marking
AGENCY: U.S. Customs Service, Department of the Treasury.
ACTION: Final interpretation.
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SUMMARY: This notice advises the public that Customs does not intend to
rely on the distinction between producers' goods and consumers' goods
in making country of origin marking determinations. It is Customs'
opinion that as demonstrated in a number of recent court decisions, the
consumer-good-versus-producer-good distinction is not determinative
that a substantial transformation, as it traditionally is defined, has
occurred.
EFFECTIVE DATE: June 12, 2000.
FOR FURTHER INFORMATION CONTACT: Monika Brenner, Attorney, Special
Classification and Marking Branch, Office of Regulations and Rulings
(202-927-1254).
SUPPLEMENTARY INFORMATION:
Background
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.
In Midwood Industries Inc. v. United States, 313 F. Supp. 951
(Cust. Ct. 1970), appeal dismissed 57 CCPA 141 (1970), the U.S. Customs
Court considered whether an importer of steel forgings was the ultimate
purchaser for purposes of the marking statute, 19 U.S.C. 1304. The
court cited the principles set forth in United States v. Gibson-Thomsen
Co., Inc., 27 CCPA 267 (1940), in determining that the importer's
manufacturing operations made it the ultimate purchaser, namely that
the importer may be considered the ultimate purchaser for marking
purposes if it subjects the article to further processing that results
in the manufacture of a ``new article with a new name, character and
use.'' Midwood, 313 F. Supp. at 956. However, the Midwood court also
found it relevant to that finding that the imported forgings at issue
were transformed from producers' goods to consumers' goods, stating:
While it may be true * * * that the imported forgings are made
as close to the dimensions of ultimate finished form as is possible,
they, nevertheless, remain forgings unless and until converted by
some manufacturer into consumers' goods, i.e., flanges and fittings.
And as producers' goods the forgings are a material of further
manufacture, having, as such, a special value and appeal only for
manufacturers of flanges and fittings. But, as consumers' goods and
flanges and fittings produced from these forgings are end use
products, having, as such, a special value and appeal for industrial
users and for distributors of industrial products. Id. at 957.
It is Customs opinion that based on subsequent court decisions
applying substantial transformation analysis, Midwood would be decided
differently today. Accordingly, Customs proposed in a notice published
in the Federal Register (63 FR 14751, March 26, 1998), to no longer
rely on the distinction between producers' and consumers' goods.
Analysis of Comments
A total of 14 entities responded to the proposal (one untimely).
Nine comments supported the proposal, three comments opposed the
proposal, and two comments neither supported nor opposed the proposal.
Comment: Three commenters supporting and three commenters opposing
the proposal provided detailed analyses of court decisions to support
their respective positions. One commenter supporting the proposal
states that recent court decisions, in particular Superior Wire v.
United States, 669 F. Supp. 472 (CIT 1987), aff'd, 867 F.2d 1409 (Fed.
Cir. 1989), did not use a producers' versus consumers' goods analysis.
The court in Superior Wire, according to this commenter, made its
decision based on an analysis of the effect on the metallurgical
properties of wire rod, the fact that the wire rod specification is
generally determined by reference to the end product for which the
drawn wire will be used, the value added, and the amount of labor and
capital investment. The commenter also claims that Superior Wire should
control because the Federal Circuit rendered the decision.
Another commenter supporting the proposal points out that the court
in Superior Wire noted that Uniroyal v. United States, 542 F. Supp.
1026 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983), did not find
the producers' to consumers' goods distinction as determinative whether
a substantial transformation occurred.
A commenter opposing the proposal states that the court in Superior
Wire did look at the shift from producers' to consumers' goods. Two of
the commenters opposing the proposal state that Midwood was cited with
approval in Superior Wire.
Response: Customs believes that both the lower court and appellate
court decisions in Superior Wire support the proposed interpretation.
In Superior Wire, the parties agreed that the U.S. Court of
International Trade (CIT) should make its determination of whether wire
was a product of Spain or Canada on the basis of the substantial
transformation test. Superior Wire, 669 F. Supp. at 478. The CIT in
Superior Wire noted that recent cases cite the test used in Anheuser-
Busch Brewing Ass'n v. United States, 207 U.S. 556, 568 (1908), but
apply it differently. Id. The court also noted that the courts have
concentrated on a change in use or character, along with certain cross-
checks, including value added, and the amount of processing. Id.
However, in making its decision, the court decided to examine cases, in
particular Torrington Co. v. United States, 596 F. Supp. 1083 (CIT
1984), aff'd, 764 F.2d 1563 (Fed. Cir. 1985), that involved the
processing of metal objects without combination or assembly operations.
Id. at 479. The court noted that Torrington cited Midwood with
approval, but also noted that the ``producer to consumer goods
distinction drawn in Midwood, * * * was found not determinative as to
substantial transformation'' in Uniroyal. Id. The court then stated
that ``there is no clear change from producers' to consumers' goods.''
Id. The Superior Wire court, however, did not analyze the facts of
Midwood, although Midwood also was a case involving the processing of
metal objects. In contrast to the decision in Midwood, this court found
that ``wire rod and wire may be viewed as different stages of the same
product.'' Id.
While the CIT in Superior Wire did state that there was a change in
name, the court also found that there was no transformation from
producers' to consumers' goods, no change from many uses to limited
uses, no complicated processing, and that only a small percentage of
value was added. The Federal Circuit held that the CIT's
[[Page 13828]]
conclusions were correct that the drawing of wire rod into wire was not
the manufacture of a new and different product as required by Anheuser-
Busch. Superior Wire, 867 F.2d at 1415. While the Federal Circuit in
Superior Wire did acknowledge, without further comment, that the CIT
cited other considerations, including no transformation from producers'
to consumers' goods, it did not include this as a basis for its
holding, and in its decision it only analyzed the changes in name,
character and use.
Comment: One supporting commenter states that in SDI Tech., Inc. v.
United States, 977 F. Supp. 1235 (CIT 1997), the court observed that
the Midwood test exempts from marking virtually any product that was
imported in unfinished form and finished prior to sale. Another
supporting commenter states that while consumer electronics products
changed from producers' to consumers' goods in SDI, the court
determined that they did not undergo a substantial transformation. Two
opposing commenters state that the court in SDI did look at the shift
from producers' to consumers' goods.
Response: While Customs agrees that the court in SDI did look at
the shift from producers' to consumers' goods as this was specifically
raised by the plaintiff, the court also stated, citing Uniroyal, that
it ``has never held that the producer/consumer shift alone is
dispositive.'' SDI, 977 F. Supp. at 1240. Furthermore, the court stated
that by plaintiff's argument, ``virtually any unfinished product that
is finished by a producer before it is sold to a consumer would have
undergone substantial transformation.'' Id. While the court recognized
that the producer/consumer shift has some evidentiary value, the court
found that the chassis could be used by a consumer, and found that the
essence of the chassis remained the same. Also of relevance, is the
court's statement that while a change in essence is not always a
necessary prerequisite to a change in character, a lack of a change in
essence evidences a lack of a change in character. Id. This does not
hold true for the producer/consumer shift since even if there may be a
producer/consumer good shift, this is not necessarily indicative of a
change in character. Ultimately, the court in SDI decided that there
was no change in character and use and the subject goods did not
undergo a substantial transformation.
Comment: One supporting commenter states that in National Juice
Products Ass'n v. United States, 628 F. Supp. 978 (CIT 1986), the court
did not reach the result that Midwood would have dictated and expressly
stated that it was not obligated to follow the producers' good/
consumers' good test. One opposing commenter states that it was dicta
in National Juice to say that Uniroyal diminished the value of the
producers' versus consumers' goods test, and that National Hand Tool
Corp. v. United States, 16 CIT 308 (1992), stated that the
determination of substantial transformation must be based on the
totality of evidence.
Response: It is Customs opinion that in both Uniroyal and National
Juice, the imported materials could clearly be characterized as
producers' goods and the finished articles could clearly be considered
consumers' goods had the court wished to adopt the reasoning used in
Midwood. In National Juice, the court stated that the significance of
the producers' goods to consumers' goods transformation in marking
cases is diminished in light of its decision in Uniroyal. The court
also stated that ``under recent precedents, the transition from
producers' to consumers' goods is not determinative.'' National Juice,
628 F. Supp. at 989-990. Disregarding plaintiff's specific reliance on
Midwood, the court in National Juice stated that the imported product
was ``the very essence'' of the retail product and held that
manufacturing juice concentrate was not substantially transformed when
it was processed into retail orange juice. Id. at 991. We also note
that in National Hand Tool, the court did not even mention Midwood.
Comment: One supporting and two opposing commenters state that
Uniroyal distinguished the facts of Midwood. However, the supporting
commenter states that the court could have applied the Midwood test and
would have reached the opposite conclusion. The supporting commenter
also points out that the only case that used Midwood was Torrington,
which can be reconciled with the Uniroyal essence test, and that
Uniroyal and its progeny establish that there cannot be a substantial
transformation without changing the fundamental character, as
exemplified in National Juice and CPC Int'l, Inc. v. United States, 971
F. Supp. 574 (CIT 1997), appeal docketed, No. 98-1069 (Fed. Cir. 1997).
Response: Customs agrees with the supporting commenter. In both
Midwood and Uniroyal, the issue centered around the processes occurring
after the articles were imported into the United States.
In Midwood, the court only looked at the operations occurring after
importation. Witnesses also testified that as imported, the forgings
had no commercial use as they did not meet any specifications. The
court then found that the processes were manufacturing processes
``irrespective of how performed, and albeit that these processes are
representative of a successive stage of manufacture.'' Midwood, 313 F.
Supp. at 957. The court found that the ``end result of the
manufacturing processes'' was the transformation into ``different
articles having a new name, character and use.'' Id. The court noted
that the imported articles were `` `forgings' of one kind or another,''
indicating a name change. However, as to providing an analysis of the
change in use and character of the traditional substantial
transformation test, there was none except for the court's statement
that as producers' goods they are not used by the consumer and are not
capable of use by the consumer in that state. Further, the court found
that while the imported forgings are made as close to the dimensions of
ultimate finished form as is possible, they still remain forgings
unless and until converted by some manufacturer into consumers' goods.
Id. Lastly, the court in Midwood stated that a country of origin
marking for the benefit of the purchaser of flanges and fittings serves
no purpose because the ASA specifications have their own marking
requirements. Id. Accordingly, in effect the court concluded that
because of ASA marking requirements no other markings were necessary.
There was no mention of changes in character and use in terms of the
actual physical characteristics or purpose of the imported and finished
goods.
By contrast, the court in Uniroyal did not solely focus upon the
attachment of the outsole to the imported upper, but also considered
the processes that occurred in making the upper abroad. Furthermore,
unlike Midwood where the court noted that the forgings' dimensions were
close to their finished form, but nevertheless found a substantial
transformation, the court in Uniroyal focused upon the imported upper's
finished shape, form, and size in finding no change in either character
or use when made into the finished shoe. The court in Uniroyal made
this finding even though the upper was not marketable at retail as a
complete shoe without the outsole.
In making distinctions with other court decisions, the court in
Uniroyal could point to the fact that in Gibson-Thomsen the imported
articles were materials that lost their identity when combined with
other articles and were substantially transformed. In distinguishing
United States v. International Paint Co., Inc., 35 CCPA, C.A.D. 376
(1948), a case involving
[[Page 13829]]
drawback, the court in Uniroyal noted that the upper did not undergo
any physical change whatever and did not change in use as the upper was
intended to be attached to an outsole. In International Paint, however,
the paint changed into an antifouling paint. In distinguishing Grafton
Spools Ltd. v. United States, 45 Cust. Ct. 16, C.D. 2190 (1960), a case
pertaining to the country of origin marking of ribbon spools, the court
pointed to the fact that the ribbon, and not the spool, was what was
important or the essence of the article. However in distinguishing
Midwood, the court in Uniroyal had to emphasize Midwood's analysis of
the manufacturing processes, because the court in Midwood had not
analyzed changes in the character and use of the forgings except to the
extent that they changed from producers' to consumers' goods.
Therefore, while Customs agrees that Uniroyal distinguished Midwood, as
stated in SDI, ``while a change in essence is not always a necessary
prerequisite to a change in character, a lack of a change in essence
evidences a lack of a change in character.'' SDI, 977 F. Supp. at 1240.
Comment: Two supporting commenters state that in CPC, the plaintiff
relied on Midwood that peanut slurry was a producer good, and pointed
out that the court dismissed the Midwood test, stating that National
Juice had rejected the transformation from a producers' goods to
consumers' goods as a determinative criterion in marking cases.
Response: Customs agrees that as in SDI, the court in CPC rejected
plaintiff's reliance on Midwood.
Comment: One supporting commenter states that in Madison Galleries,
Ltd. v. United States, 688 F. Supp. 1544 (CIT 1988), aff'd, 870 F.2d
627 (Fed Cir. 1989), the court in dicta stated that the post-Midwood
cases may have diminished the significance of a producers' good-
consumers' good approach. An opposing commenter states that Midwood has
been cited with approval in Madison Galleries.
Response: Customs does not believe that the court in Madison
Galleries either approved or disapproved of the Midwood decision. In
Madison Galleries, a case pertaining to the Generalized System of
Preferences (GSP), the court did not have to find that the article was
a ``product of'' a GSP country, as the GSP at that time did not have
such a requirement. While Madison Galleries cited Midwood, it was in
response to the defendant's argument that it is not logical for an
article to receive duty-free treatment under the GSP when that article
would not have to be marked as a product of that GSP country. The court
in Madison Galleries responded that, as exemplified in Midwood,
analysis of the marking requirements ``can include consideration of the
nature of the intended, immediate recipient of a foreign article, i.e.,
whether, for example that recipient is a producer or a consumer.''
Madison Galleries, 588 F. Supp. at 1547. Therefore, the court in
Madison Galleries did not cite Midwood as support for the contention
that the good was a ``product of'' the GSP country.
Comment: One supporting commenter states that in Ferrostaal Metals
Corp. v. United States, 664 F. Supp. 535 (CIT 1987), where the result
was consistent with the producers' good/consumers' good test, the
court, while citing Midwood, did not rely on Midwood, but stated that
the change was indicative of a substantial transformation. One opposing
commenter states that Ferrostaal specifically rejected the essence
test, and two opposing commenters state that Midwood was cited with
approval in the Ferrostaal case.
Response: Customs does not believe that Ferrostaal supports the
producers' goods versus consumers' goods test for determining
substantial transformation. The court in Ferrostaal noted that while
Uniroyal referred to an essence test, the test to be applied was
whether the ``imported article underwent a `substantial transformation'
which results in an article having a name, character or use differing
from that of the imported article.'' Ferrostaal, 664 F. Supp. at 538,
citing Uniroyal, 542 F. Supp. at 1029-30. Therefore, the court in
Ferrostaal specifically rejected defendant's argument that an
``essence'' test displaced the change in name, character, and use test.
Id.
Customs, by this notice, is not suggesting that the essence test
replace the substantial transformation test. To the contrary, Customs
adheres to the position stated in CPC, supra, that the essence test is
``embraced by and aids in applying the traditional change of name,
character or use test.'' CPC, 971 F. Supp. at 583. As Customs noted in
the notice of proposed interpretation, the court in Ferrostaal also
cited Midwood for its conclusion that a transition from producers'
goods to consumers' goods was indicative of a change in use. Id. at
541. However, the court extensively considered the changes in character
as result of the annealing and galvanizing processes as evidence of a
substantial transformation. Id. at 539.
Comment: One supporting commenter states that Midwood is legally
unnecessary as courts have completely disregarded the producers' versus
consumers' goods test or given it little to no weight. As support, the
commenter cites Zuniga v. United States, 996 F.2d 1203 (Fed. Cir.
1993), where a casting slip was not substantially transformed by minor
processes; Aztec Milling Co. v. United States, 890 F.2d 1150 (Fed. Cir.
1989), where dry corn flour was not substantially transformed and
intermediate products did not lose identifying characteristics of
constituent material; United States v. Murray, 621 F.2d 1163 (1st Cir.
1980), cert denied, 449 U.S. 837 (1980), where glue blend was not
substantially transformed because it did not undergo a fundamental
change; and Grafton Spools, Ltd. v. United States, 45 Cust. Ct. 16
(1960), where imported empty spools were not substantially transformed
when wound with thread.
Response: Customs agrees that the courts generally have disregarded
or given little weight to the producers' versus consumers' goods test.
Comment: One commenter states that Customs incorrectly cited Gibson
Thomsen, supra, as support for the position that the substantial
transformation test requires a change in name, character, ``and'' use,
as opposed to a change in name, character ``or'' use.
Response: Customs disagrees. The Court of Customs and Patent
Appeals in Gibson-Thomsen cited the criteria, ``a new name, character,
and use'', five times in its decision. 27 CCPA 267, 270, 271, 272, 273
(1940) (emphasis added).
Comment: The proposal violates the Congressional request not to
undertake changes to the country of origin rules while the World Trade
Organization (WTO) continues to develop international harmonized
country of origin rules.
Response: In the letter dated September 30, 1996, referred to in
the comment, members of the Senate and the House of Representatives
requested that any changes in policy with regard to country of origin
marking requirements be deferred. The letter particularly requested
deferring any changes in policy with regard to the country of origin
marking requirements of metal forgings for hand tools. In fact, Customs
has not made any policy changes with regard to hand tools, and also has
not finalized its proposed regulations governing rules of origin for
non-preferential trade even though the original deadline for completing
the WTO process has passed. Moreover, in a September 30th letter, the
Chairmen of the Senate Finance Committee and the Committee on Ways and
Means
[[Page 13830]]
expressly recognized that such deferment in no way would affect the
right of private parties to contest existing Treasury rulings. The
subject notice of proposed interpretation was specifically initiated as
a result of a private party's request to make the NAFTA and non-NAFTA
rules for the country of origin marking of fittings and flanges
uniform.
Comment: Two opposing commenters state that Customs lacks authority
to limit Midwood and that 19 U.S.C. 1625(d) and 19 CFR 177.10(d) does
not give Customs authority to disregard a court decision without first
seeking appellate review, citing Nestle Refrigerated Food Co. v. United
States, 18 CIT 661 (1994), Orlando Food Corp. v. United States, Slip
Op. 97-19 (CIT 1997), and Volkswagenwerk Aktiengesellschaft v. Federal
Maritime Commission, 390 U.S. 261, 272 (1968). They state that in
Orlando Food, the CIT criticized Customs for limiting the application
of a CIT decision after publication in the Federal Register. In Orlando
Food, the court stated that Customs application of the section 1625(d)
process circumvented judicial process. These commenters also cite CPC
Int'l, Inc. v. United States, 933 F. Supp. 1093, 1101-02, 1104 (CIT
1996), appeal pending, where the court stated that Custom may not
encroach on the judicial function by abrogating binding case law.
Response: Customs disagrees. Congress specifically codified 19 CFR
177.10 as part of Title VI, Customs Modernization, of the North
American Free Trade Agreement implementation Act, Pub. L. 103-182, 103d
Congress, 107 Stat. 2057 (1993), by adding 19 U.S.C. 1625(d) which
states that ``a decision that proposes to limit the application of a
court decision shall be published in the Customs Bulletin together with
notice of opportunity for public comment thereon prior to a final
decision.'' The legislative history, House Report No. 103-361(I),
reflects that Congress specifically recognizes that section 623 of H.R.
3450 (which became section 623 of Pub. L. 103-182 amending 19 U.S.C.
1625) requires only that ``a decision that limits the application of a
court decision * * * be published for notice and comment in the Customs
Bulletin.'' In this instance, Customs not only published the notice of
proposed interpretation in the Customs Bulletin, but also in the
Federal Register soliciting comments. Congress explained that the
reason for the change was to provide ``assurances of transparency
concerning Customs rulings and policy directives through publication in
the Customs Bulletin or other easily accessible sources.'' House Report
at 2674.
The CIT reference in Orlando Food that Customs application of 19
U.S.C. 1625(d) circumvents the judicial process is dicta. However, it
is Customs opinion that considering all of the industry and trading
pattern changes with which it has been faced and challenged within the
last 28 years since the Midwood decision, Customs action under this
notice is justified. Customs has acted in direct response to a private
party's inquiry and in the absence of Customs action pursuant to 19
U.S.C. 1625(d), the country of origin marking requirements for fittings
and flanges would remain unchanged and not uniform.
Comment: Seven commenters state that the Midwood decision has
caused artificial distinctions within the pipe fitting industry,
confusion, or does not accurately indicate the origin to consumers,
which is the purpose of the marking statute, citing Globemaster Inc. v.
United States, 340 F. Supp. 974, 976 (Cust. Ct. 1972), as support. One
supporting commenter states that it is a GATT violation if the proposal
is not adopted since the NAFTA Marking Rules are different. One
opposing commenter states that it is unclear why Customs wants to
eliminate the producers' versus consumers' good test.
Response: In response to the opposing commenter, the comments in
support of the proposal illustrate why Customs has responded to the
private party's request to address the situation concerning the marking
of fittings and flanges. As one commenter puts it: ``this whole issue
has been a thorn of incredible proportion in the side of industry in
general and the pipe fitting industry in particular.'' Because Customs
believes that the issue presented in Midwood would be decided
differently today, and because the NAFTA Marking Rules and Midwood
decision render different results, it is Customs position that this
action is necessary in order to provide equitable treatment to all
importers of pipe fittings and flanges.
Comment: Three commenters supporting the proposal request that it
be applied immediately or as expeditiously as possible. One commenter
states that any marking required by the change can be accomplished
through inexpensive means, in a short time frame, and without
substantial economic loss. The commenter states that any further delay
will continue to cause economic injury to certain industry members who
have suffered lost sales and price suppression because of unmarked
foreign flanges. One commenter opposing the proposal states that
Customs in the past has delayed the effective date of a rule change for
12 months. The commenter states that if Customs adopts the proposal, it
would represent a drastic change to the rules under which fitting and
flange producers operate. This commenter states that if the proposal is
adopted, marking pipe fittings and flanges would entail far more than
printing new labels; it would also require the purchase and
installation of new machinery.
Response: Customs understands the concerns of both opposing and
supporting parties. However, the fact remains that the rules for the
country of origin marking for importations from NAFTA and non-NAFTA
countries are not uniform. The change in treatment proposed by Customs
will place all importers of pipe fittings and flanges on an equal
footing. Customs notes that when the NAFTA Marking Rules were adopted,
importations from NAFTA countries that were previously not subject to
marking became subject to a marking requirement and those importers
were able to make these changes in far less than a one-year period.
Because the current country of origin marking requirement for pipe
fittings and flanges is based on administrative treatment, rather than
a specific ruling, Customs will require that all pipe fittings and
flanges produced in the United States from imported forgings be marked
with the country of origin of the imported forging. As specified in 19
CFR 177.10, Customs will make the change effective 90 days after
publication of this notice in the Federal Register, except in the case
of a ruling subject to the procedure specified in 19 U.S.C. 1625.
Conclusion
In Superior Wire v. United States, supra, while the Federal Circuit
acknowledged the lower court's reference to the producers' to
consumers' goods shift, the Federal Circuit only analyzed the changes
in name, character and use. The Federal Circuit also relied on
Uniroyal, supra, where that distinction was not found to be
determinative as to substantial transformation. The lower court in
Superior Wire also did not analyze the facts of Midwood, supra,
although it was a metal objects case. The court in Ferrostaal, supra,
did not advocate the dilution of the traditional substantial
transformation test in not finding the producers' to consumers' goods
distinction to be particularly determinative. In SDI, National Juice,
Uniroyal, and CPC, supra, the Midwood argument was rejected and the
courts
[[Page 13831]]
examined the ``essence'' of the articles at issue. The court in
National Hand Tool, Aztec Milling, Murray, and Zuniga, supra, did not
even mention the Midwood decision. The only cases that really did not
outright reject or diminish the application of the producers' to
consumers' good shift are Torrington and Madison Galleries, supra, but
the citation to Midwood in Madison Galleries does not even stand for
the position that the article became a ``product of'' the GSP country.
Customs has provided notice in the Customs Bulletin (and Federal
Register) as required by 19 U.S.C. 1625(d) of its intention not to rely
on the producers' to consumers' good test. The opposing commenters have
not cited a single decision (not even the favorable Torrington
decision) where a court decided the substantial transformation test
solely based on the producers' to consumers' good transition.
Furthermore, since the transition from producers' to consumers'
good is not necessarily indicative of a substantial transformation,
unlike a change in ``essence'', the purpose of the producers' to
consumers' goods analysis does not aid in the determination of whether
an article underwent a substantial transformation. Therefore, Customs
will no longer rely on the distinction between producers' goods and
consumers' goods in making country of origin determinations.
Inasmuch as the question of whether a good has been substantially
transformed is based on specific facts, parties who have received
rulings based on the producers' goods-consumers' goods analysis
articulated in Midwood can continue to rely on those rulings unless and
until Customs modifies or revokes them pursuant to 19 U.S.C. 1625, or
they are specifically overruled by a court.
Approved: February 11, 2000.
Raymond W. Kelly,
Commissioner of Customs.
John P. Simpson,
Deputy Assistant Secretary of the Treasury.
[FR Doc. 00-6115 Filed 3-13-00; 8:45 am]
BILLING CODE 4820-02-P