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HQ 731953

April 27, 1990

MAR-2-05 CO:R:C:V 731953 KG

CATEGORY: MARKING

William D. Outman, II
Baker & McKenzie
815 Connecticut Avenue, NW
Suite 1100
Washington, D.C. 20006-4078

RE: Country of origin marking of imported electrical cables

Dear Mr. Outman:

This is in response to your letter of September 1, 1989, and and the letter of November 25, 1988, from William F. Joffrey, Customs House Brokers, on behalf of Adams-Russell Electronic Company, Inc., requesting a country of origin ruling regarding imported electrical cables. Samples of the imported raw cable, the sub assembly cable with fittings and the final assembled cable with the head assemblies attached were submitted for examination. We regret the delay in responding to your inquiry.

FACTS:

Your client intends to export raw U.S. cable to Mexico to assemble it into electrical cables with fittings. The sub assembly cable with fittings is imported unfinished and will be joined together with U.S. fabricated components to make the final assembled cable. The sub assembly cable with fittings will be imported into the U.S. under subheading 9802.00.80 of the Harmonized Tariff Schedule of the United States ("HTSUS"), which superceded and replaced item 807 of the Tariff Schedules of the United States. There is no commercial use for the imported sub assembly cable with the fittings in its imported form.

The value of the electrical cable with fittings at the time it is imported from Mexico is $35.51. The domestic processing adds $31.29 in material and $117.78 in labor costs (three hours of labor). The total added domestic value is $149.07.

In the U.S., the head assemblies, which enable the sub assembly cable with fittings to serve as a connection, will be permanently attached to each end of the unfinished cable. This processing includes: a visual inspection of the cable, pre- testing to insure that the cable meets the proper specifications, assembly of the connector heads, attaching the connector heads to the cable, and final testing and inspection.

The finished cable with the head assemblies attached will be used to connect navigation systems or radios to testing systems on aircraft, principally military aircraft.

ISSUE:

Whether the imported cables are substantially transformed in the U.S. for country of origin marking purposes, which would except the imported cable itself from marking.

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 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.

The Court of International Trade stated in Koru North America v. United States, 701 F.Supp. 229, 12 CIT (CIT 1988), that: "In ascertaining what constitutes the country of origin under the marking statute, a court must look at the sense in which the term is used in the statute, giving reference to the purpose of the particular legislation involved. The purpose of the marking statute is outlined in United States v. Friedlaender & Co., 27 CCPA 297 at 302, C.A.D. 104 (1940), where the court stated that: "Congress intended 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."

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.35, Customs Regulations (19 CFR 134.35), states that the manufacturer or processor in the U.S. who converts or combines the imported article into a different article having a new name, character or use will be considered the ultimate purchaser of the imported article within the contemplation of 19 U.S.C. 1304, and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked.

A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940), National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986), Koru North America v. United States, 12 CIT ___, 701 F.Supp. 229 (CIT 1988).

In Superior Wire v. United States, 867 F.2d 1409 (Fed. Cir. 1989), involving the country of origin under a Voluntary Restraint Agreement between the U.S. and Spain of wire drawn from wire rod, the court found that no substantial transformation occurred. In its analysis, the court affirmed the Court of International Trade's conclusion that wire rod and wire may be viewed as different stages of the same product. The character of the final product was predetermined and there was no change in use. "The end use of wire rod is generally known before the rolling stage and the specifications are frequently determined by reference to the end product for which the drawing wire will be used."

Customs ruled in a case involving low insertion force jumpers made of cables that a minor cutting manufacturing operation which took place in Mexico was not a substantial transformation in part because the articles were dedicated for use prior to export to Mexico. HQ 730949 (July 18, 1988).

The imported cable which is the subject of this case is made to specifications and cut to length for a specific purpose, to connect navigation systems or radios to testing systems on aircraft. Once this cable is cut to length and has the subassemblies attached, it has no other use. Rather, like Superior Wire, the imported cable is merely a different stage of the same product. The conductor, the length and diameter of the cable and the covering of the cable are predetermined. The imported cable is dedicated for use; it could not be made into anything other than the final product. Although the attachment of the head assemblies in the U.S. adds to the value of the cable and renders it ready for use, it does not create a new article with a new name, character or use. Further, this imported cable would be classified in heading 8544, HTSUS. The Explanatory Notes for this heading indicate that "Wire, cable, etc., remain classified in this heading if cut to length or fitted with connectors (e.g., plugs, sockets, lugs, jacks, sleeves or terminals) at one or both ends." Although there is significant value added to the imported sub assembly cable, value is not the only factor that Customs considers in making substantial transformation determinations. For all the reasons discussed, the imported cables are not substantially transformed in the U.S. The imported cable is not excepted from marking by 19 CFR 134.35 and the U.S. manufacturer is not considered the ultimate purchaser.

In this case, U.S. cable is exported to Mexico for assembly into electrical cables with fittings. Pursuant to section 10.22, Customs Regulations (19 CFR 10.22), imported articles which are eligible for entry under subheading 9802.00.80 of the HTSUS are considered products of the country of assembly. Goods made entirely of American-made materials may be marked with the legend "Assembled in ____ from material of U.S. origin," or a similar phrase.

HOLDING:

The imported cables described above are not substantially transformed in the U.S. Therefore, the imported cable must be individually marked with its country of origin. If the cables are eligible for entry into the U.S under HTSUS subheading 9802.00.80, the country of origin would be Mexico and the cable may be marked with the phrase "Assembled in Mexico from material of U.S. origin," or a similar phrase.

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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