HQ 0733783 - Country of origin marking requirements for imported watch strap buckles; substantial transformation; combining; 19 CFR 134.35 - United States International Trade Commision Rulings

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HQ 733783

December 20, 1990

MAR-2-05 CO:R:C:V 733783 RSD

CATEGORY: MARKING

Mr. Sheldon Parker
W.M.R. Watch Case Corp.
230 Fifth Avenue, Suite 809
New York, New York 10001

RE: Country of origin marking requirements for imported watch strap buckles; substantial transformation; combining; 19 CFR 134.35

Dear Mr. Parker:

This is in response to your letter dated September 13, 1990, requesting a binding ruling on the country of origin marking requirements for imported watch strap buckles which will be fitted onto U.S. made leather watch straps.

FACTS:

W.M.R. Watch Case Corp. intends to import watch strap buckles which are manufactured in Hong Kong. These buckles will be fitted onto U.S. made leather watch straps in the U.S. The buckles will be imported and sold in a package which is marked Hong Kong. The buckles are valued at approximately $0.15 each, and the value of the leather watch straps ranges from $0.80 to $4.00 each.

ISSUE:

Whether watch strap buckles which are to be attached to U.S. made leather watch straps must be individually marked to indicate their country of origin?

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. 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." United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).

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), provides that an article used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be within the principle of the decision of U.S. v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940). Under this principle, the manufacturer or processor in the U.S. who substantially transforms the imported article into an article with a new name, character, or use will be considered the "ultimate purchaser" of the imported article within the contemplation of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked in accord with this part.

The marking requirements of the watch strap buckles turn on whether the U.S. manufacturer who uses the buckles in the manufacture of watch straps is the ultimate purchaser of the straps. The U.S. manufacturer is the ultimate purchaser if the combination of the buckles with the straps is a substantial transformation. In HQ 731432 (June 6, 1988), we set forth the following six factors to be considered in determining whether an imported article loses its identity and is substantially transformed when it is combined with a domestic article:

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; see Uniroyal, Inc. v. United States, 3 CIT 220, 542 F.Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed. Cir., 1983) (no substantial transformation occurred where an imported footwear upper, the essence of the finished article, was combined with a domestically produced sole);

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).

Applying these factors to this case and to this product, we note that the buckle is permanently attached to the watch strap. While functionally necessary for the completed watch strap, the buckle is of far less importance to the finished article as compared to the leather strap. The finished leather watch strap is composed of a leather strap and a buckle. The major component of the watch strap is the leather strap, and the buckle is of minor significance. The buckle, while remaining physically unchanged, becomes subordinated to the more dominant component, the leather strap. This is supported by the relative minor values of the buckles compared with the value of the leather straps. The leather straps have a value of between 5 to more than 25 times greater than that of the buckles.

In HQ 708672 (March 14, 1978), Customs determined that imported dials and knobs were substantially transformed when they were attached to television receivers because they became integral parts of a new and different item. The knobs and dials were relatively minor components which lost their separate identities when they were combined with a more significant component, the television receiver. Similarly, we find that the buckles lose their separate identities and become an integral part of the leather straps when they are attached to the straps, a far more significant component of the final product. As such, the buckles are substantially transformed into a new and different article i.e., a leather watch strap. Therefore, the watch strap manufacturer is the ultimate purchaser of the buckles. Upon importation, only the containers or packages in which the buckles are imported must be marked to show the country of origin of the buckles, provided the conditions set forth below are satisfied.

HOLDING:

When the watch strap buckles are attached to the leather straps, they lose their separate identity and are substantially transformed. Accordingly, the individual buckles are excepted from country of origin marking and only the packages in which the buckles are imported must be marked with the country of origin of the buckles. However, for this marking exception to apply, the district director at the port of entry must be satisfied that the ultimate purchaser, the watch strap manufacturer, will receive the buckles in their original unopened properly marked package and that the buckles will be used only as described in this ruling and not otherwise sold.

Sincerely,

Marvin M. Amernick

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