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HQ 731507


October 17, 1989

MAR-2 CO:R:C:V 731507 LR

CATEGORY: MARKING

District Director of Customs
Nogales, Arizona 85621

RE: Country of origin marking of assembled articles entitled to entry under subheading 9802.00.80, HTSUS.

Dear Mr. Lawrence:

This is in response to your letter of June 6, 1988, requesting reconsideration of Headquarters ruling 728597, dated May 16, 1988, in which it was determined that the legend "Assembled in Mexico" was not acceptable country of origin marking for articles assembled in Mexico and imported under subheading 9802.00.80, HTSUS (formerly item 807.00, TSUS). We regret the delay in responding.

FACTS:

HQ 728597 concerned the country of origin marking requirements for imported wire harnesses imported into the U.S. under item 807.00, TSUS. Although marking of the container in lieu of the article itself was found to be acceptable, Customs also found that the requested marking "Assembled in Mexico" on the containers was unacceptable. In this regard, the ruling states:

Section 10.22 of the Customs Regulations provides, with respect to merchandise that has been granted a partial exemption under item 807.00, Tariff Schedules of the United States, 1/ that assembled articles are considered to be products of the country of assembly for the purpose of the country of origin marking requirements of 19 U.S.C. 1304. Accordingly, the proper marking legend must read "Product of Mexico", "Made in Mexico", or words of similar meaning. If the imported wire harnesses with fittings are made entirely of American-made materials, the United States origin of the materials may be disclosed by using a legend such as "Assembled in Mexico from material of U.S. origin", or a similar phrase.

1/ See note 3

You indicate that the marking "Assembled in Mexico" is widely used in the 807/Twin Plant industry in Mexico and is accepted by Customs at a number of different districts. In your opinion, this method of marking is appropriate and ask that we reconsider our position on this issue.

ISSUE:

What is the acceptable method of marking assembled articles which are eligible for importation under subheading 9802.00.80, HTSUS?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires, subject certain specified exceptions, that all articles of foreign origin imported into the U.S. shall be marked to indicate the country of origin to the ultimate purchaser in the U.S. Although the country of origin of a product is generally determined on the basis of where the last substantial transformation occurs, 2/ there is an exception to the general rule set forth in section 10.22, Customs Regulations, for articles which are entitled to an exemption from duty under subheading 9802.00.80, HTSUS (formerly item 807.00, TSUS). Section 10.22 provides that assembled articles entitled to the exemption are considered products of the country of assembly for purposes of 19 U.S.C. 1304.

The exemption applies to articles assembled abroad in whole or in part of fabricated components, the product of the U.S., with no operation performed thereon except the attachment of the components to form the imported merchandise and operations incidental thereto. The presence of foreign materials will not preclude classification under subheading 9802.00.80. The assembled article is subject to duty upon the full appraised value of the imported article, less the cost or value of such products of the U.S. 3/ For articles entitled to the exemption, the country of origin is the country of assembly whether or not the assembly operation constitutes a substantial transformation.

2/ Section 134.1(b), Customs Regulations, defines the 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 this part."

3/ Since duty must always be paid on the cost of the assembly under subheading 9802.00.80, all articles eligible for importation under this subheading receive only a partial exemption from duty.

There has been considerable confusion concerning the acceptability of the marking "Assembled in " under the provisions of section 10.22. Although the regulation provides that the marking "Assembled in from material of U.S. U.S. origin" is permissible when the assembled article is made entirely of American-made materials, it provides no guidance regarding the use of the phrase "Assembled in ". There are contradictory rulings on this issue.

As indicated above, Customs determined in HQ 728597 that "Assembled in Mexico" was not appropriate country of origin marking under section 10.22 and required the merchandise to be marked "Product of Mexico", "Made in Mexico", or words of similar meaning. See also HQ 730500, March 10, 1988 (jewelry assembled in Mexico from U.S. and foreign materials and entitled to an exemption under item 807, TSUS, cannot be marked "Assembled in Mexico," but must be marked "Made in Mexico", "Product of Mexico" or words of similar meaning).

However, in HQ 729938, May 13, 1987, Customs determined that with respect to garments assembled in Mexico from U.S. and foreign components and entitled to an exemption under item 807, TSUS, the following markings were acceptable: "Assembled in Mexico", "Made in Mexico" or "Assembled in (or Made in) Mexico from U.S. crafted fabric components and foreign trim." In another ruling, Customs determined that color TV's assembled in Mexico from U.S. and Japanese materials and imported under item 807, TSUS, may be marked "Assembled in Mexico". In that case, the word "America" or a locality in the U.S. was to appear on the assembled article. Customs determined that in the context of an 807 importation, the words "Assembled in" are words of similar meaning to "Made in" or "Product of" within the meaning of section 134.46 and 134.47, Customs Regulations. 4/ Most recently, Customs determined in HQ 083455, September 6, 1989, that roller bearing assemblies, assembled in Mexico from Romanian and U.S. components and eligible for treatment under subheading 9802.00.80, HTSUS, could be marked "Assembled in Mexico" or "Assembled in Mexico from Romanian and U.S. components."

4/ Section 134.46 requires that in any case in which the name of a place other than the country of origin appears on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such place name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning. Section 134.47, which is applicable when the place name is part of a trademark, trade name, or souvenir marking, similarly requires "Made in," "Product of," or other words of similar meaning to precede the country of origin (emphasis added).

Upon examination of the contradictory positions, we find that the rulings which approved of "Assembled in " should be followed. As explained below, this position is consistent with Customs intent in promulgating section 10.22 and satisfies the purpose of the marking statute to inform the ultimate purchaser of the country of origin.

An examination of the history of section 10.22 reveals that Customs intended the phrase "Assembled in " to be acceptable marking in the context of that provision. The regulation was promulgated in 1975, as part of a package of interpretative regulations concerning the 807 exemption. The notice of the proposed regulations was published in the Federal Register on July 5, 1974 (39 FR 24651). Proposed section 10.18, pertaining to the country of origin marking requirements for such merchandise, provided:

Assembled articles entitled to the exemption are considered products of the country of assembly for purposes of the country of origin marking requirements of section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304). If an imported assembled article entitled to the exemption was made entirely of American-made components and materials, and does not contain any foreign-made components, the marking "Assembled in " may be substituted for "Made in (emphasis added).

Upon analysis of the comments received in response to the proposed regulation, Customs determined that certain changes to section 10.18 were necessary. In this regard, Customs indicated:

Several commenters objected that the proposed wording seemed to imply that the term "Made in" is a mandatory part of country of origin marking. The terms "Assembled in" or "Made in" are optional, and either is acceptable. The term "from materials of United States origin" or a similar phrase can be added at the importer's option if all materials are of United States origin. There is no requirement that the returned articles must be marked with the additional wording to qualify for item 807.00. (Analysis of Comments: Attachment to July 14, 1975 memorandum from Commissioner of Customs to the Assistant Secretary regarding the 807 regulations).

The final 807 regulations were published as T.D. 75-230 (40 FR 43025, September 18, 1975). The final version of section 10.18 was published as section 10.22. Although the first sentence of the proposed regulation which indicated that assembled articles entitled to the exemption are considered products of the country of assembly was left intact, Customs changed the second sentence by deleting the language which
indicated that "Assembled in" was only permissible where the article was made entirely from U.S. materials and substituted the words set forth below in bold. Section 10.22 provides:

Assembled articles entitled to the exemption are considered products of the country of assembly for the purposes of the country of origin marking requirements of section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304). If an imported assembled article is made entirely of American- made materials, the United States origin of the material may be disclosed by using a legend such as "Assembled in from material of U.S. origin," or a similar phrase.

Although section 10.22 does not specify when "Assembled in ___ " is acceptable marking, the conclusion that it is permissible both when the assembled article consists entirely of U.S. materials and when it does not is inescapable based on Customs analysis of comments and the changes made to proposed section 10.18. As indicated above, in analyzing the comments, Customs stated that the terms "Assembled in" or "Made in" are optional, and either is acceptable. Customs further indicated that the term "from materials of U.S. origin" or a similar phrase can be added at the importer's option if all materials are of U.S. origin. These statements clearly imply that "Assembled in" by itself is sufficient marking whether or not all the materials are American-made. These statements coupled with the deletion of the sentence from proposed section 10.18 which said that "Assembled in" was permissible only if the article contained no foreign-made components, are clear indications that Customs considered "Assembled in " acceptable marking whenever section 10.22 is applicable.

We are also of the opinion that the phrase "Assembled in " satisfies the statutory requirement of 19 U.S.C. 1304 to indicate the country of origin to the ultimate purchaser. In the context of section 10.22, "Assembled in " does exactly this. Whenever section 10.22 applies, the country of assembly is always the country of origin, whether or not the assembly constitutes a substantial transformation. Accordingly, in the context of section 10.22, we believe the phrase "Assembled in " adequately conveys origin. Moreover, in this context, the "Assembled in" indicator may well be more accurate, descriptive and revealing to the ultimate purchaser than the traditional "Made in" or "Product of" indicators which generally connote that the article was either made entirely in or substantially transformed in the designated country. (For the same reason, for purposes of section 10.22 merchandise, we consider the words "Assembled in" to be words of similar meaning to "Made in" or "Product of" within the context of section 134.46 and 134.47).

We also find that the origin of the materials comprising the assembled article may be added to the country of origin indicator whether or not the article consists entirely of American-made materials. We see no reason why assembled articles made entirely from U.S. materials should be permitted to be marked "Assembled in from material of U.S. origin" (the language specifically approved in section 10.22) and assembled articles not made entirely from U.S. materials should not be permitted to be marked with a similar phrase such as "Assembled in from U.S. and Japanese materials." In both instances, the identity of the materials merely provides the ultimate purchaser with additional pertinent information. While this information is not required, it serves a useful function and should be encouraged.

Finally, it should be noted that the phrase "Assembled in" will not constitute sufficient country of origin marking outside the context of section 10.22 (i.e., where an assembled article is not eligible for the subheading 9802.00.80 exemption). In such case, the general country of origin rule applies and the country of origin is the country of assembly only if the assembly process constitutes a substantial transformation. Approval of the phrase "Assembled in" outside the context of section 10.22 would be misleading since the country of assembly may or may not be the country of origin for purposes of 19 U.S.C. 1304.

HOLDING:

Under the provisions of section 10.22, the words "Made in", "Product of" or "Assembled in" preceding the country of assembly or merely the name of the country of assembly constitute acceptable country of origin marking. Any of these designations is acceptable, whether or not the assembled article consists entirely of U.S. materials. The origin of the materials comprising the assembled article may be added to the country of origin designation, whether or not the article consists entirely of U.S. materials. Finally, with respect to articles which are subject to the provisions of section 10.22, the phrase "Assembled in" constitutes words of similar meaning to "Made in" and "Product of" for purposes of sections 134.46 and 134.47. To the extent they are inconsistent with this ruling, HQ 728597 and HQ 730500 are modified.

Sincerely,

John Durant, Director
Commercial Rulings Division

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