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HQ 734046

May 10, 1991

MAR-2-05 CO:R:C:V 734046 KG

CATEGORY: MARKING

Mr. Carlton L. Brainard
District Director of Customs
111 West Huron Street
Buffalo, New York 14202

RE: Country of origin marking of imported telephone sets; T.D. 91-7;

Dear Mr. Brainard:

This is in response to your memorandum of December 7, 1990, (IA 76/90), requesting internal advice on the country of origin marking of telephone sets imported by Northern Telecom Inc.

FACTS:

A sample telephone set was submitted for our examination. Each telephone set consists of different components from different countries of origin. The telephone set consists of a base unit, a handset, a handset cord and a cord to connect the telephone to the jack. The base unit consists of various components sourced from a variety of countries which are mounted on a printed circuit board and enclosed in a housing in Malaysia. The handset is made in China. The handset cord is made in Taiwan and the telephone cord is made in Mexico.

The base unit, handset, handset cord and telephone cord are packed together in the same box but are not attached to each other or combined. The value of the telephone base, which consists of a motherboard, keypad, plastic base and housing, is $63.35. The value of the handset, which consists of a receiver, transmitter, loudspeaker and wiring, is $3.35.

We requested further information from Northern Telecom as to exactly what processing is done in Malaysia. We never received this information. Therefore, this ruling is based on the limited information presented.

ISSUE:

What is the proper country of origin marking of these imported telephone sets described above?
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. Customs set forth its position regarding the proper country of origin marking of sets, mixtures and composite goods in T.D. 91-7 (January 8, 1991). Customs stated in this T.D. that for the purposes of country of origin marking, sets, mixtures and composite goods which are not substantially transformed as a result of their inclusion into the set, mixture or composite good retain their own country of origin. Further, "in most cases, the mere inclusion of an item in a collection will not substantially transform it into an article with a new name, character or use and therefore, each item must be separately marked with its own country of origin. (Where the marking of the container will reasonably indicate the country of origin to the ultimate purchaser, the container may be marked instead of the individual articles...)."

According to the limited information presented, it appears that the only processing done in Malaysia is the assembly of the base unit. Customs ruled in C.S.D. 85-25 (September 24, 1984) and in HQ 733159 (July 23, 1990), that mounting components onto a printed circuit board results in a substantial transformation. Pursuant to 19 CFR 134.1(b), further work or material added to an article in another country that results in a substantial transformation renders such other country the country of origin of the substantially transformed article. Because the components are mounted in the printed circuit board and enclosed in a housing in Malaysia, the country of origin of the base unit would be Malaysia.
There is no suggestion in this request for internal advice that any processing of any of the other components is done in Malaysia. As discussed above, merely packing the four separate components into the same box does not result in a substantial transformation. If the components are not substantially transformed by being packaged together, then each component retains its separate country of origin and must be marked accordingly. Based on the limited information presented, it appears that the base unit, headset, headset cord and telephone cord each retain their own country of origin and should be marked accordingly. Since no information was received concerning how and who these telephone sets are sold to, we cannot determine whether the marking must appear on the components or on a container.

HOLDING:

The base unit, headset, headset cord and telephone cord which are imported as a telephone set are not substantially transformed when they are packed together. Each component retains its own country of origin and should be marked accordingly.

Sincerely,

John Durant
Director,
Commercial Rulings Division

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