HQ 0734382 - Country of origin marking of imported wheels used in making industrial casters, combining, 19 CFR 134.35 - United States International Trade Commision Rulings

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HQ 734382
February 19, 1992

MAR-2-05 CO:R:C:V 734382 RSD

CATEGORY: MARKING

Mr. Walter T. Chung
General Manager
PJ Company
2410 S. Sequoia Drive
Compton, California 90220

RE: Country of origin marking of imported wheels used in making industrial casters, combining, 19 CFR 134.35

Dear Mr. Chung:

This is in response to your letter dated September 21, 1991, forwarded to Customs headquarters by the National Import Specialist, New York Seaport, and received by our office on October 17, 1991, concerning the country of origin marking requirements for imported plastic wheels used in making industrial casters. We have received a sample of a wheel and the finished caster for our consideration.

FACTS:

PJ Company imports plastic wheels from Taiwan and combines them with various other articles to make industrial casters. The sample wheel measures about 6 inches in diameter. PJ company imports yokes for the casters from Korea. All other components of the casters such as the bearing, grease, plastic components (bushing and retainer washers), and zerk bolts are purchased from domestic suppliers. These items are assembled together with the wheels by PJ Company to make the finished casters. The cost of the imported wheel is approximately 20 percent of the finished caster. The casters are sold to companies for use as parts of material handling equipment such as hand trucks, dollies, wagons, and carts.

ISSUE:

Are the imported wheels substantially transformed when they are assembled with other parts to make casters?

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.

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 wheels are completely finished when they are imported. Although no specific information was presented regarding the manufacturing process involved in assembling the wheel onto the casters, it does not appear that the process is exceptionally complex or requires a great deal of skill. The wheel is permanently attached to the casters. The wheel is essential to the function of the caster. The wheel remains visible after the combining.

Assessing the factors noted above, we find that the wheel does not lose its separate identity when it is assembled with the other parts to form a finished caster. The wheel is probably the most significant component of a completed caster, which in our opinion provides its essential character. The wheel is the dominant component of the casters, which contributes the most to their function of permitting non-mechanical carts to roll. The buyers of casters are likely to be concerned about the wheels they would be buying. Assembly of the caster in no way changes the characteristics of the wheel, and the wheel is clearly recognizable both before and after the assembly. Although the wheel only accounts for about 20 percent of the value of the finished caster, this fact is not determinative. See HQ 734246, October 21, 1991. In addition, such cost figures may not be particularly helpful because the 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 wheel is not substantially transformed when it is combined with the other parts to form the finished caster. The purchaser of the caster is the ultimate purchaser of the wheels. Therefore, the wheels must individually marked to indicate their country of origin. Because the wheels are combined with other articles before delivery to the ultimate purchaser, the wheel should be marked in a manner which clearly shows that the origin indicated is that of the wheel alone (e.g. "Wheel Made in Taiwan"). See 19 CFR 134.14.
HOLDING:

The wheels are not substantially transformed when they are assembled with the other parts to makes casters. The buyers of the casters are the ultimate purchasers of the wheels. The wheels must be individually marked to indicate their country of origin in accordance with the requirements of 19 CFR 134.14.

Sincerely,

John Durant, Director

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