HQ 0734265 - Country of origin marking of imported locking snaps to be assembled with a metal swivel clip and plastic slide; substantial transformation; HQ 734382; HQ 731432 - United States International Trade Commision Rulings

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HQ 734265

April 13, 1992

MAR-2-05 CO:R:C:V 734265 AT

CATEGORY: MARKING

Mr. David W. Reynolds
President
Triple Outdoors, Ltd.
P.O. Box 1277
Apache Junction, Arizona 85217-1277

RE: Country of origin marking of imported locking snaps to be assembled with a metal swivel clip and plastic slide; substantial transformation; HQ 734382; HQ 731432

Dear Mr. Reynolds:

This is in response to your letters of July 22, and December 10, 1991, requesting a country of origin ruling regarding imported metal locking snaps which are to be combined with metal swivel clips and plastic slides manufactured in the U.S. A sample of the metal locking snap before and after its assembly was submitted for review.

FACTS:

Your company manufactures the Quick Slide Stringer System for stringing fish. You intend to import one of its components, a metal locking snap, from Taiwan. The metal locking snaps will be combined in the U.S. with metal swivel clips and plastic slides manufactured in the U.S. The locking snap measures approximately 4 inches in length and is irregularly shaped. You state that the locking snap by itself has no real use and only becomes functional when the metal swivel clip and plastic slide are permanently attached to it. Once assembled it can then be used to hook a fishes lip and be attached to your vinyl coated fish stringer cable. You state that the locking snap accounts for approximately 24 percent of the total cost of the finished article. You further state that the words "American Made Quality" appear on the packages in which the stringer sets are sold to retail stores.

ISSUE:

Whether the imported locking snaps are substantially transformed when they are combined in the U.S. with the metal swivel clips and plastic slides and packaged for distribution to retail stores?

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.

In HQ 731432 (June 6, 1988), 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. The following six factors were considered:

1) whether the article is completely finished;

2) the extent of the manufacturing process of combining the imported article with the domestic article as compared with the manufacturing of the imported 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).

Applying these factors to this case, we note that the locking snaps are completely finished when they are imported. The assembly operation of attaching a metal swivel and plastic slide to the completed locking snap is neither complex nor requires a great deal of skill. The locking snap is permanently attached to the metal swivel chain. The locking snap is essential to the function of the completed article. The locking snap remains visible after the combining.

Assessing the factors noted above, we find that the locking snap does not lose its separate identity when it is assembled with the other parts to form a finished quick slide locking snap. The locking snap appears to be the most significant component of the completed article, which in our opinion provides its essential character. The locking snap is the dominant component of the completed article, which contributes the most to its function of hooking the fishes mouth. Assembly of the locking snap with the other domestic parts in no way changes the characteristic of the locking snap, and the snap is clearly recognizable both before and after the assembly. Although the locking snap only accounts for approximately 24 percent of the total cost of the finished article, this fact is not determinative. See, HQ 734382, February 19, 1992 (wheels that were combined with other domestic parts into casters were not substantially transformed, even though the wheels only accounted for about 20 percent of the value of the finished caster). In addition, such costs of producing goods in Taiwan are usually
going to be significantly lower than costs of producing similar goods in the U.S. Accordingly, the locking snap is not substantially transformed when it is combined with the other parts to form a finished quick slide locking snap. The purchaser of the quick slide locking snap is the ultimate purchaser of the locking snaps. Therefore, the locking snaps must be individually marked to indicate their country of origin. Because the locking snaps are combined with other domestic parts before delivery to the ultimate purchaser, the locking snap should be marked in a manner which clearly shows that the origin indicated is that of the locking snap alone (e.g. "Locking Snap Made in Taiwan"). See 19 CFR 134.14.

With respect to the marking "American Made Quality" printed on the packaging container in which the quick slide locking snaps are sold to retail stores we advise that an additional marking indicating that the locking snaps are made in Taiwan is required. Further we advise you to contact the Federal Trade Commission, Division of Enforcement, 6th & Pennsylvania Avenue, NW, Washington, D.C. 20508 before you undertake to mark your finished product in that fashion since use of the phrase "American Made Quality" is under that agency's jurisdiction.

HOLDING

The locking snaps are not substantially transformed when they are assembled with the other domestic parts to make quick slide locking snaps. The buyers of the quick slide locking snaps are the ultimate purchasers of the locking snaps. The locking snaps must be marked to indicate their country of origin in accordance with the requirements of 19 CFR 134.14.

Sincerely,

John Durant, Director
Commercial Rulings Division

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