HQ 0734457 - Country of origin marking of fishing rods assembled in China with component parts from different countries. Ultimate purchaser; legal sufficiency (content) of marking; substantial transformation; 734214; T.D. 67- 173; C.S.D. 89-111; multiple-country-sourcing: 734011; 734165; T.D. 91-7; central marking; 19 CFR 134.46; country other than the country of origin - United States International Trade Commision Rulings

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HQ 734457

May 26, 1992

MAR-2-05 CO:R:C:V 734457 GRV

CATEGORY: MARKING

Mr. Matthew Chang
Assistant Vice President
C. Itoh & Co. (America) Inc.
335 Madison Avenue
New York, N.Y. 10017

RE: Country of origin marking of fishing rods assembled in China with component parts from different countries. Ultimate purchaser; legal sufficiency (content) of marking; substantial transformation; 734214; T.D. 67- 173; C.S.D. 89-111; multiple-country-sourcing: 734011; 734165; T.D. 91-7; central marking; 19 CFR 134.46; country other than the country of origin

Dear Mr. Chang:

This is in response to your letter of December 27, 1991, requesting a ruling regarding the country of origin marking of fishing rods from China.

FACTS:

Your company will import fishing rods assembled in China from component parts manufactured in different countries. The fishing rod component parts consist of semi-finished Taiwanese rods, variously measuring 7.5-15.5 mm in diameter at the butt, and reel seats and Korean line guides. (The top portion of the rod is finished in China). Paint for the fishing rods will come from Japan. No description of the Chinese assembly operation is provided. The assembled fishing rods are estimated to cost between $8.00-$9.00.

Although no samples of the completed article or the country of origin marking to be employed were submitted for examination, you request a ruling stating what the country of origin marking on the imported products should indicate.

In a telephone conversation with a member of my staff on January 31, 1992, Mr. McManus of your company agreed that the imported article must be marked and indicated that a country of origin marking such as "ASSEMBLED IN CHINA FROM COMPONENTS MANUFACTURED IN TAIWAN, KOREA, AND CHINA" seemed appropriate. ISSUE:

How should the imported fishing rods be marked to satisfy the requirements of 19 U.S.C. 1304 and 19 CFR Part 134?

LAW AND ANALYSIS:

The marking statute, 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit in such a manner as to indicate to the ultimate pur- chaser the English name of the country of origin of the article. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The primary purpose of the country of origin marking statute is to "mark the goods so that at the time of purchase the ulti- mate purchaser may, by knowing where the goods were produced, be able to buy or refuse to buy them, if such marking should influ- ence his will." United States v. Friedlaender & Co., 27 CCPA 297, 302, C.A.D. 104 (1940).

The "Ultimate Purchaser" Consideration

The "ultimate purchaser" is defined generally as the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d). If an article is to be sold at retail in its imported form, the purchaser at retail is the "ultimate purchaser." 19 CFR 134.1(3). The sufficiency of the country of origin marking should be such as to afford the "ultimate purchaser" the requisite notice that the merchandise is of foreign origin. And Customs has previously stated that the country of origin marking should be presented in a format that is conspicuous: made readily apparent, 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. C.S.D. 91-23.

While determinations as to the legal sufficiency of country of origin marking normally entail a determination that a particular country constitutes the country of origin of a given imported article, certain import transactions present notice issues that concern the content the country of origin marking should contain. Such a case is this case; it brings certain factual and legal issues together that have not been fully considered in past rulings. The factual issues presented reflect certain modern trade realities/practices: the multiple-country- sourcing of component parts not substantially transformed in any one country. The legal issues involve the applicability of special marking requirements where countries other than the country of origin are denoted and whether the designation of more than one country of origin is appropriate under the marking laws --whether such a marking serves to aid or confuse the ultimate purchaser's decision to buy a certain product. Accordingly, we proceed to delineate our concerns, findings, and reasons for determining in this case that a "central marking" that denotes the actual countries of origin from which components parts of a fishing rod derive, but does not specify with particularity which component comes from which country, reasonably affords the ultimate purchaser the requisite notice as to the foreign origin of the imported product.

The Criteria for Determining the Country of Origin of Imported Merchandise

The country of origin for marking purposes is defined at 134.1(b), Customs Regulations (19 CFR 134.1(b)), to mean 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 trans- formation in order to render such other country the "country of origin" within the meaning of Part 134. A substantial transfor- mation occurs when articles lose their identity and become new articles having a new name, character, or use. Koru North America v. United States, 12 CIT 1120, 701 F.Supp. 229 (1988).

In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2 Fed.Cir. 105, 741 F.2d 1368 (1984). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. As a general rule, if materials/components are not substantially transformed as a result of their inclusion in a set or mixed/ composite goods, then each item must be individually marked to indicate its own country or origin.

In T.D. 67-173, 1 Cust.Bull. 366 (1967), we considered whether the domestic assembly of fishing rod parts, imported from only one foreign country, constituted a substantial transforma- tion and found that it did not, stating that the assembly of all or substantially all of the components imported did not result in the manufacture of a new and different article. Accordingly, we stated that one of the parts, such as the main reel housing, should be marked to indicate the country of origin, so that the marking remains legible and conspicuous after the reels were assembled. This determination was followed in Headquarters Ruling Letter (HRL) 734214 dated November 18, 1991, which involved the foreign assembly of the same type of merchandise --component parts imported from only one other foreign country. As no material differences exist between the present case and these earlier cases, we adhere to the position that the assembly of fishing rod components do not substantially transform the component parts. Accordingly, the imported fishing rods should be individually marked to indicate the country of origin of each of its component parts. However, for the reasons which follow, we find that the "central" marking scheme proposed affords the necessary notice to ultimate purchasers concerning the foreign origin of the imported article and constitutes an acceptable country of origin marking for the merchandise imported here.

The Conspicuous Marking Requirement

As the imported fishing rods must be marked, we turn to address how the imported fishing rods should be marked to denote the various countries of origin of the component parts. The clear language of 1304 requires 'conspicuous' marking, and to this end 134.41(b), Customs Regulations (19 CFR 134.41(b)), further provides, in part, that the ultimate purchaser in the U.S. must be able to find the marking easily--a visibility concern--and read it without strain--a legibility concern. Whether words are considered "conspicuous" or not is not determined by the size of type face alone, but the location of disclosure, and manner in which it is set off from other information are also determinative. See, 8A Words and Phrases 366 (1951). Thus, "conspicuousness" is a relative, i.e., context-dependent, concept. See, C.S.D. 91-23. Because no sample of the proposed marking was submitted for examination, we do not address whether or not the "central marking" scheme is legible, only whether it renders the country of origin marking visible.

Where locations other than the country of origin of the merchandise appear on an imported article, 134.46 imposes further marking requirements on the imported article. It provides that:

[i]n 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 United States, or the name of any foreign country or locality other than the country or locality in which the article was manufactured or produced, 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 a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning.
The purpose of this regulation is to prevent the possibility of misleading or deceiving the ultimate purchaser as to the origin of the imported article. 19 CFR 134.36(b). However, this regulation presupposes that there is only one country of origin for imported products. Where no substantial transformation of discreet component parts occurs, as here, other considerations concerning the proper content of the marking for purposes of country of origin markings must be weighed.

In C.S.D. 89-111, we considered whether a country of origin marking which designated two countries in the alternative (either/or) as the country of origin of the imported article was sufficient to satisfy the requirements of 19 U.S.C. 1304 and found that alternative marking was deficient; it did not clearly indicate the actual country of origin. See also, Customs Infor- mation Letter 734011 dated May 14, 1991 (alternative marking of brass hardware and plumbing kits, etc., stated in terms such as "one or more" ar "and/or" does not generally afford ultimate purchasers the specific indication of the actual country of origin required by 19 U.S.C. 1304).

However, in a recent Headquarters ruling concerning toy building bricks (HRL 734165 dated December 2, 1991) we considered whether a package marking scheme which identified the foreign countries where the articles were actually made satisfied the statutory requirements and found that, under the circumstances, the package marking--"Made in (country of origin 1) , (country of origin 2) , and (country of origin 3) "--properly informed the ultimate purchaser of the foreign origin of the fungible merchandise inside. Acknowledging that the alternative of this position was to require that each piece of the article be individually marked, which, in this case, would be exceptionally burdensome and unnecessary, we held that, so long as each package would contain pieces from the all the identified countries listed on the package, the multiple country marking on the package would be acceptable. And in T.D. 91-7 we stated that a "common sense" approach to marking requirements applicable to articles in certain circumstances would be observed.

In this case, the marking scheme proposed embraces two separate concerns: (1) centrally locating the countries of origin marking, and (2) not requiring the marking to specify which component part(s) comes from which foreign country, i.e., what content is required in the marking. For the reasons which follow, we are persuaded that the marking scheme in this case achieves the marking goal of affording the requisite notice to ultimate purchasers that the imported merchandise is of foreign origin and outweighs an overly strict interpretation of the statutory requirements. Regarding the central location concern, we note that certain of the component parts (the line guides of the fishing rod) are so small that it would be commercially impractical to mark each component part with its country of origin (Korea). Further, the influence such individual markings would exert on ultimate purchaser's decisions to purchase the imported article is not manifestly clear. Second, the necessity for requiring each individual component part to be individually marked would result in various markings being scattered all over the article; ultimate purchasers would have to search the article to discover the various countries of origin from which each component part was derived. Such a marking result does not appear to us to address the primary purpose of the marking laws and leads us to find that the notice afforded ultimate purchasers by a centrally located country of origin marking meets the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.

Regarding the second aspect of the marking--not specifying which component part(s) comes from which foreign country, weigh- ing the relatively small unit cost of the merchandise ($8.00- $9.00) with the convenience afforded ultimate purchasers by a single conspicuous marking with the fact of the limited writing space available at the reel seat, we are further persuaded that the marking scheme provides the requisite notice of foreign origin to the ultimate purchaser without causing harm to the traditional concerns associated with country of origin marking determinations, and further outweighs an overly strict interpre- tation of the statutory requirements. This weighted or "common sense" approach to country of origin marking--discussed in T.D. 91-7--is deemed appropriate in the present case.

However, because no sample of the proposed marking was submitted for examination, we do not find that the marking you will actually employ on the imported fishing rods meets the conspicuousness (legible) requirements of 19 U.S.C. 1304. We only find that its content is acceptable, i.e., legally sufficient, for purposes of satisfying the marking requirements concerning notice to the ultimate purchaser. Accordingly, you are advised to check with the Customs officials at the port you intend to import these fishing rods through to ensure that the country of origin marking method you employ meets the conspicuous marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.

HOLDING:

A single, centrally-located, country of origin marking on imported fishing rods that denotes both the country where the article was assembled and the actual countries of origin from which the component parts derive, but does not specify with particularity which component comes from which country, such as "ASSEMBLED IN CHINA FROM COMPONENTS MANUFACTURED IN TAIWAN, KOREA, AND CHINA," is acceptable for purposes of 19 U.S.C. 1304 and 19 CFR Part 134, as it reasonably affords the necessary notice to ultimate purchasers concerning the foreign origin of the imported merchandise.

This holding is restricted to the facts presented in this transaction and does not constitute a change in practice concerning the general marking requirement that component parts be individually marked to indicate their specific country of origin.

Sincerely,

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