HQ 0734136 - Country of origin marking requirements of imported golf club heads to be used in the manufacture of golf clubs. Substantial transformation; ultimate purchaser; 19 U.S.C. 1304; 19 CFR 134.1(d); 19 CFR 134.35; 19 CFR 134.36(b); ORR 824-70; HQ 724901; HQ 733185; HQ 656214 - United States International Trade Commision Rulings

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HQ 734136

June 17, 1991

MAR-2-05 CO:R:C:V 734136 AT

CATEGORY: MARKING

Mr. Raymond F. Martin
Spalding Sports Worldwide
425 Meadow Street
P.O.Box 901
Chicopee, MA 01021-0901

RE: Country of origin marking requirements of imported golf club heads to be used in the manufacture of golf clubs. Substantial transformation; ultimate purchaser; 19 U.S.C. 1304; 19 CFR 134.1(d); 19 CFR 134.35; 19 CFR 134.36(b); ORR 824-70; HQ 724901; HQ 733185; HQ 656214

Dear Mr. Martin:

This is in reply to your letter dated April 17, 1991, in which you request a ruling on the country of origin marking requirements of golf club heads that you intend to import to be used in the manufacturing of finished golf clubs.

FACTS:

You intend to import golf club heads for manufacturing of finished golf clubs. After receiving these golf club heads you then assemble them with shafts and grips of U.S. origin, polish and buff them up, to become a finished golf club. You state that you do not ship these heads to anyone else and that they are used only in your manufacturing process. Further, you state that when a club head comes into the U.S. it is worth anywhere from $2.50 to $6.50 each. However, when the manufacturing process is complete and it becomes a finished golf club with the added grip, shaft, and labor it's worth $54 to $84 per golf club.

ISSUE:

What are the country of origin marking requirements of imported golf club heads to be combined with a shaft and grip of U.S. origin to form a completed golf club?

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 (1988): "In ascertaining what constitutes the country of origin under the marking statute, a court must look at the sense in which the term 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 (1940) at 302: "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 134.1(d), Customs Regulations (19 CFR 134.1(d)), defines the ultimate purchaser as "generally the last person in the U.S. who will receive the article in the form in which it was imported. If an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article." Under the provisions of 19 CFR 134.35 and 19 CFR 134.32(d), if the manufacturer is the ultimate purchaser, the imported article is excepted from individual marking provided the containers in which the article is imported are marked and such containers will reach the manufacturer intact.

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 CCPA 267 (1940); National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986); Koru North America v. United States, supra.

Customs ruled in ORR 824-70 (August 24, 1970), that a manufacturer who purchased imported golf club heads, either finished or unfinished, and assembled them with shafts and grips of U.S. origin into finished golf club heads, was the ultimate
purchaser of the imported golf club heads. The ruling directed that if the Regional Commissioner of Customs was satisfied that the imported golf club heads were to be used by an original equipment manufacturer, then the golf club heads were excepted from individual marking. In HQ 728213 (July 3, 1985), Customs reiterated this position. In HQ 724901 (April 9, 1984), Customs advised that the ultimate purchaser of imported golf club grips to be used in the manufacture of golf clubs was the golf club manufacturer. Customs stated that golf club grips which are imported by golf club manufacturers in the U.S. are substantially transformed into new and different articles of commerce, i.e., golf clubs.

In HQ 733185 (April 11, 1990) Customs reiterated the position that golf club grips imported by golf club manufacturers or intended to be sold to golf club manufacturers would be excepted from individual marking. However, Customs also found that imported golf club grips that were to be used in the repair or replacement of grips that were to be used in the repair or purchased or received by the consumer must be individually marked. Customs reasoned that the mere fitting of a replacement grip onto a golf club shaft is a simple assembly not constituting a substantial transformation.

As in ORR 824-70, in this case, the golf club heads are imported by you, the manufacturer of the golf clubs, so that they can be assembled with golf club grips and shafts of U.S. origin forming a new and different article of commerce, i.e., a golf club. The addition of major U.S. components in the U.S. to form a completed golf club constitutes a substantial transformation of the imported head. Therefore, you are the ultimate purchaser of the golf club heads and pursuant to 19 CFR 134.35, only the outermost container of the imported heads must be marked to indicate the country of origin of the articles, provided the district director at the port of entry is satisfied that the imported golf club heads will only be used by you in your manufacturing processing of finished golf clubs.

With regard to the subject imported golf club heads, it should be noted that 19 CFR 134.46 provides that in any case in which the words "United States," or "American," the letters "U.S.A.," any variation of such words or letters, or the name of any city or locality in the U.S. appear on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters or name, and in at least in a comparable size the name of the country of origin preceded by "Made In," or "Product of," or other words of similar meaning. In addition, as provided in 19 CFR 134.36(b), an exception from marking shall not apply to any article bearing any words described in 19 CFR 134.46 which imply that an article was made or produced in a country other than the actual country of origin.

In this regard, Customs has determined that an imported golf club head bearing the U.S. address of the importer is not excepted from individual country of origin marking. Accordingly, the golf club heads that you import are excepted from individual marking only if they bear no U.S. reference. If they do, the requirements of 19 CFR 134.46 would apply.

HOLDING:

Imported golf club heads which are assembled with grips and shafts of U.S. origin by you, the original manufacturer of golf clubs are excepted from individual country of origin marking and only the containers of such heads must be marked, pursuant to 19 CFR 134.35 and 19 CFR 134.32(d), provided that (1) the heads do not bear the words "United States," or "American," the letters "U.S.A.," any variation of such words or letters, or the name of any city or locality in the U.S.; and (2) Customs officials at the port of entry are satisfied that the articles will reach you, the original manufacturer, in their original, unopened containers.

Sincerely,

John Durant, Director

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