HQ 0733171 - Country of origin marking of imported sub-assemblies for vibrating razors - United States International Trade Commision Rulings

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HQ 733171
July 2, 1990

MAR-2-05 CO:R:C:V 733171 KG

CATEGORY: MARKING

William E. Melahn
Doherty and Melahn
54 Montgomery Street
Boston, Massachusetts 02116

RE: Country of origin marking of imported sub-assemblies for vibrating razors

Dear Mr. Melahn:

This is in response to your letter of February 23, 1990, submitted on behalf of The Gillette Company requesting a country of origin ruling regarding imported sub-assemblies for vibrating razors. We regret the delay in responding to your inquiry.

FACTS:

Your client imports razor handle and knob sub-assemblies from Japan. These sub-assemblies are combined with head and cartridge subassemblies made in the U.S. You submitted 4 exhibits, which illustrate all the parts of each sub-assembly.

The handle sub-assembly consists of a head/handle adapter, weight, motor, ground terminal, motor insulation, positive terminal and a metal handle. The knob sub-assembly consists of an eyelet, a spring, knob threads, O-ring, knob insulator and a knob. The purchase price for the sub-assemblies will be $3.50 FOB plus ocean freight and miscellaneous charges of $.25.

The head and cartridge assemblies are made in the U.S. The head sub-assembly consists of a top plate, spring extension, two fingers, a link, a spring, a button, a bottom plate, a washer and an eyelet. The cartridge subassembly consists of an insert, a cap, a secondary blade, a spacer, a primary blade and a platform. The direct cost of the U.S. components is $1.38. Your client states that both the head assembly and the cartridge assembly require specially dedicated machines.

The final assembly of the finished razor involves quality checks on the imported sub-assemblies, gluing the head onto the handle, inserting the battery into the razor and attaching a cartridge. A dispenser of five cartridges is packaged with the razor.

ISSUE:

Whether the imported sub-assemblies made into vibrating razors in the U.S. are substantially transformed in the U.S. for country of origin marking purposes.

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 substantially transforms the imported article will be considered the ultimate purchaser of the imported article for marking purposes 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).

The issue involved in this case is whether the handle and knob subassemblies which are attached to U.S.-made head and cartridge subassemblies in the U.S. are substantially transformed into a new article having a new name, character or use. Two court cases have considered the issue of whether imported parts combined in the U.S. with domestic parts were substantially transformed for country of origin marking purposes. In the first case, Gibson-Thomsen Co., the court held that imported wood brush block and toothbrush handles which had bristles inserted into them in the U.S. lost their identity as such and became new articles having a new name, character and use. One of the factors considered by the court in reaching its conclusion was that the bristles used were "by far the most valuable element." Also, the court looked at whether the imported article loses its identity as such when combined with other articles. In that case, the court concluded that wood handles were mere materials to be used in the manufacture of toothbrushes and hairbrushes. The court was also concerned that when an imported article was combined with a domestic material, that the ultimate purchaser not be confused into thinking that the domestic article was made in a foreign country. Therefore, the court concluded that a mere material to be used in the manufacture of a new article having a new name, character and use and which, became an integral part of the new article would not be required to be marked.

The second case involved imported shoe uppers which were combined with domestic soles in the U.S. The imported uppers were held in Uniroyal, Inc., v. U.S., 542 F.Supp. 1026, 3 CIT 220 (CIT 1982), to be the "essence of the completed shoe" and therefore, not substantially transformed. The court described the imported uppers as "complete shoes except for an outsole." The shoe had already "obtained its ultimate shape, form and size." One process performed in the U.S., relasting, was characterized as "convenient, not necessary". The processes performed in the U.S. were significantly less costly and less time consuming than the foreign manufacturing process. The cost of the upper was significantly greater than the cost of the outsole. Further, the manufacture of the upper required at least five highly skilled operations. The court concluded that the attachment of the outsole was a minor manufacturing or combining process which leaves the identity of the upper intact. This case is distinguishable from Uniroyal because the imported sub- assemblies, while important to the finished product, are not the very essence of the finished product. Without the domestic sub- assemblies, the imported product is only a vibrating handle with none of the essential qualities of a razor.

There is also a ruling in which Customs set forth some factors to be considered in determining whether imported goods combined in the U.S. with domestic products were substantially transformed for country of origin marking purposes. In HQ 732057 (April 16, 1990), Customs considered whether or not a circular knife blade lost its separate identity when assembled into a rotary cutting instrument. In reaching the conclusion that the knife blade did not lose its separate identity when it was combined with a domestic article, Customs considered six factors:

1) whether the article is completely finished;

2) the extent of the manufacturing process of combining the article with its counterparts as compared with the manufacturing of the subject article;

3) whether the article is permanently attached to its counterparts;

4) the overall importance of the article to the finished product;

5) whether the article is functionally necessary to the operation of the finished article, or whether it is an accessory which retains its independent function; and

6) whether the article remains visible after the combining.

These factors are not exclusive and there may be other factors relevant to a particular case and no one factor is determinative. See HQ 728801 (February 26, 1986).

Although this case presents a close question, after a thoughtful consideration of the cases discussed above, we conclude that the attachment of U.S.-made head and cartridge assemblies to the imported handle and knob assemblies is a substantial transformation. The head and knob assemblies lose their separate identities as such and become a new article having a new name, character and use.

An examination of the six factors enumerated in HQ 732057 supports this conclusion. On the one hand, the imported sub- assemblies are completely finished and only require attachment to the domestic sub-assemblies to constitute a finished razor; the process required to attach the imported sub-assemblies to the domestic sub-assembly is not very complex or expensive; and the imported sub-assemblies do remain visible after the razor is finished. On the other hand, while the head and cartridge assemblies are not the most valuable element of the finished razor in terms of cost, these assemblies are essential to create a functional article of commerce. Clearly, these head and cartridge assemblies are not accessories or minor components. Further, the imported and domestic sub-assemblies are permanently attached to each other. Although the process of attaching the handle and knob assemblies to the head and cartridges assemblies is not a complex operation, that operation considered in conjunction with the fact that the head and cartridge assemblies are domestically made and require specialized machines to be put together, persuades us that a substantial transformation occurs. Since the imported sub-assemblies are substantially transformed in the U.S. by a U.S. manufacturer, pursuant to 19 CFR 134.35, the U.S. manufacturer is the ultimate purchaser of the imported sub-assemblies.

HOLDING:

The imported handle and knob sub-assemblies for vibrating razors are substantially transformed in the U.S. Therefore, pursuant to 19 CFR 134.35, the U.S. manufacturer is the ultimate purchaser of the imported sub-assemblies and the sub-assemblies are excepted from individual marking. Only the outermost containers of the imported sub-assemblies must be marked with its country of origin.

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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