HQ 0734008 - Internal Advice request concerning the country of origin marking requirements for belt buckles, belts, substantial transformation, 19 CFR 134.35 - United States International Trade Commision Rulings

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HQ 734008

March 19, 1991
Mar-2-05 CO:R:C:V 734008 RSD

CATEGORY: MARKING

District of Director of Customs
P.O. Box 619050
1205 Royal Lane
Dallas, Texas 75261

RE: Internal Advice request concerning the country of origin marking requirements for belt buckles, belts, substantial transformation, 19 CFR 134.35

Dear Sir:

This is in response to your memorandum dated December 21, 1990, forwarding the internal advice request of Trans-Trade, Inc. on behalf of Ginnie Johansen Designs, on the country of origin marking requirements for imported belt buckles. Samples of the buckles and a Ginnie Johansen catalogue containing illustrations of the belts they sell were submitted.

FACTS:

Trans-Trade, Inc., submitted an internal advice request on behalf of Ginnie Johansen Designs. Ginnie Johansen Designs imports buckles, slides (the rings that hold the end of the belt in place), and ornament components which will be used to manufacture belts. Ginnie Johansen Designs furnishes these articles only to belt manufacturers. The finished belts are then sold by Ginnie Johansen Designs through its catalogue. Your office issued several marking notices (CF 4647) for failing to mark the buckles, slides and ornament components with their country of origin. You indicate in your memorandum that you now agree with the importer that the slides and ornament components are not required to be marked. Therefore, this ruling will only address the issue of whether the buckles are required to be marked.

In telephone conversations with Wendy Chiszar, purchasing manager for Ginnie Johansen Design, we were advised that almost all of the leather straps used to make the finished belts are made in the U.S., although a few leather straps are imported. We were also told that the leather belt straps cost between $6.00 and $10.00 and most of buckles cost between $1.00 and $2.00, with a few of them costing about $5.00. The price of the finished belts ranges between $19.00 and $36.00. It also has been indicated that Ginnie Johansen Designs retains ownership of the buckles while they are being used in manufacturing the belts and does not resell the buckles to other parties. The buckles are exclusively used in the manufacture of belts by their contractors. The other materials that are used to make the belts, such as ornaments, could come from a variety of countries. All the belts that Ginnie Johansen has made and sells are made of leather.

ISSUE:

Whether belt buckles which are used in the manufacture of belts 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 belt buckles turn on whether the U.S. manufacturer who uses the buckles in the manufacture of belt is the ultimate purchaser of the belt buckles. The U.S. manufacturer is the ultimate purchaser if the buckles are substantially transformed when they are assembled with the leather belt strap to form a completed belt. In HQ 733783, December 20, 1990, Customs ruled that watch strap buckles lose their separate identities and are substantially transformed when they are attached to a leather watch strap. We noted that while the buckle was functionally necessary for the completed watch strap, it was of far less importance to the finished article as compared with the leather strap. We further noted that the leather straps have a greater value than that of the buckles. In this case, we find that the same reasoning would apply. The buckles are a minor component of the completed belts, which lose their separate identity when they are combined with the more significant component, the leather belt strap. For the most part consumers would be buying the belts and not the buckles. If we were to require the belt buckles to be marked with their own country of origin, consumers might mistakenly conclude that this was the country origin of the belt. Although there could be cases where the buckles were so unique or expensive that the individual consumer would be buying the belt mainly to get the buckle; this is not the case here. Consumers are buying the belts not the buckles. The buckles mostly cost between $1.00 or $2.00, while the finished belts are priced between $19.00 and $36.00. Accordingly, we find that the buckles lose their separate identity and become part of a new article of commerce, a leather belt. Therefore, the belt manufacturer is the ultimate purchaser of the buckles.

HOLDING:

When the buckles are used to make a leather belt, they lose their separate identity and they are substantially transformed. Accordingly, pursuant to 19 CFR 134.35, the individual buckles are excepted from country of origin marking and only the package 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 belt maker, 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,

John Durant, Director

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