HQ 0734505 - Country of origin marking of Lite-Box portable lights; combining; substantial transformation; alternative country of origin marking; 19 CFR 134.46 - United States International Trade Commision Rulings

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HQ 734505

August 27, 1992

MAR-2-05 CO:R:C:V 734505 KR

CATEGORY: MARKING

Mr. R. Kevin Williams
Sonnenberg, Anderson, O'Donnell & Rodriguez 200 West Adams Street, Suite 2625
Chicago, Illinois 60606

RE: Country of origin marking of Lite-Box portable lights; combining; substantial transformation; alternative country of origin marking; 19 CFR 134.46

Dear Mr. Williams:

This is in response to your letter dated February 13, 1992, requesting a country of origin marking ruling on behalf of your client, Streamlight Inc., regarding Lite-Box portable lights/lanterns which have parts from various countries which are to be combined and assembled in the United States. Samples of three models of Lite-Box were submitted for examination. This ruling will apply only to model numbers SL-40XI, SL-40XF, and SL- 40XPF.

FACTS:

You state that Streamlight, Inc. intends to assemble three models of Lite-Boxes in the United States. Each model contains the same five major components: a plastic lantern body, a plastic charging rack, a charging cord/convertor, a 6 volt rechargeable battery, and a flood lamp. These parts are made in various countries. The plastic lantern body and charging rack are made in China. The charging cord/convertor is made in either Taiwan or China. The battery is made in either the United Kingdom, Japan, Taiwan, Korea, or the U.S. The flood lamps are made in the U.S. The differences between the models are not important for country of origin marking purposes.

The Lite-Box has an adhesive label attached in an indentation on two sides of the plastic body. The label, in approximately 5 point print (a point is approximately .01384 inch or 1/72 of an inch), states: "ASSEMBLED BY STREAMLIGHT ... NORRISTOWN, PA ...."

On top of the plastic body is an adhesive label which states in approximately 8 point print:

Assembled in U.S.A. by
Streamlight, Inc
1030 West Germantown Pike
Norristown, PA 19403 from U.S. and foreign components:
Bulb and Strap -- Made in U.S.A.
Battery -- Made in Japan
Lantern Case, Charging Stand, and
Convertor -- Made in China

You state that you also have an adhesive label for your model which has a battery which is made in the U.S. The only difference from the above label is that the word "Battery" is inserted before "Bulb", and the entire line stating "Battery -- Made in Japan" is removed.

The charging stand has an adhesive label on its face which states the Norristown, PA address. On the back of the charging stand "MADE IN CHINA" in approximately 4 point print is molded into the plastic. The charging cord/convertor is marked in approximately 5 point print with the Norristown, PA address on the convertor box part of the cord. Approximately 1 1/8 inch below this, in comparable size print is marked "MADE IN CHINA".

You state that you are now receiving batteries which are made in the United Kingdom, Taiwan and Korea. You are also receiving cord/convertors from Taiwan. You state that these other part suppliers cause a possible ten variations to the adhesive country of origin marking label. You also state that your storage of parts after importation and prior to assembly separates the item by part type, but then commingles the parts inside their respective inventory bins regardless of the country of origin.

You state that you were using an assembly line operation to assemble the Lite-Box. With the additional countries supplying the parts, in order to keep the marking labels appropriate, you state that you will have to switch from assembly line production, to "batch" production (one person assembly of each light). You argue that this is more expensive, more time consuming, requires additional training of the assemblers and is likely to cause mistakes by placing wrong origin parts in a particularly marked Lite-Box.

Therefore, you are requesting to be allowed to use a single label to mark the country of origin which is similar to the ones described above, but which replaces the battery and convertor lines with:

Battery --Made in U.S.A., Japan, the United Kingdom, Taiwan or Korea
and:

Convertor -- Made in China or Taiwan

The individual shipping cartons of the Lite-Box has the Norristown, PA address on two sides in approximately 58 point print. Below this, on only one side in approximately 9 point print is printed:

Assembled in U.S.A. by
Streamlight, Inc
1030 West Germantown Pike
Norristown, PA 19403 from parts made in the
U.S.A., Taiwan, Hong Kong,
China and/or Japan
(see label on lantern for details)

You state, however, that you will also place the same label on the shipping carton of the individual Lite-Box as you place on the Lite-Box itself.

ISSUE:

1. Whether the Lite-box assembly in the U.S. is a substantial transformation.

2. Whether the country of origin marking may list alternative countries as the possible country of origin, or must the actual and individual country of origin be marked on the Lite-Box.

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 1120 (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. Frielaender & 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.

A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940); National Juice Products Association v. United States, 628 F. Supp. 978, 10 CIT 48 (CIT 1986); Koru North America v. United States, 701 F. Supp. 229, 12 CIT 1120, (CIT 1988). Two court cases have considered the issue of whether imported parts combined in the U.S. with domestic parts were substantially transformed for country of origin marking purposes. In the first case, Gibson-Thomsen, the court held that imported wood brush block and toothbrush handles which had bristles inserted into them in the U.S. lost their identity as such and became new articles having a new name, character and use. The second case involved imported shoe uppers which were combined with domestic soles in the U.S. The imported uppers were held in Uniroyal, Inc. v. United States, 542 F. Supp. 1026, 3 CIT 220 (CIT 1982), to be the "essence of the completed shoe" and therefore, not substantially transformed.

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). See also HQ 734219 (September 3, 1991) (Customs applied these six factors and ruled that imported water pans and charcoal pans were not substantially transformed in the U.S. by combining them with other domestic and foreign components during a repackaging operation in the U.S. of smoker/grill units).

Based on our consideration of all these factors, we conclude that the Lite-Box is not substantially transformed in the U.S. as a result of combining it with the U.S. and other countries' manufactured pieces. The Lite-Box is a simple assembly operation in the U.S. Several predominant parts are from outside the U.S. Many parts remain visible after assembly. Some of the parts, such as the cord/convertor, retain their independent function. Accordingly, we find that the consumer at retail is the ultimate purchaser of the Lite-Box under 19 CFR 134.35.

Section 134.1(d), Customs Regulations (19 CFR 134.1(d)), defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. The definition then gives examples of who might be the ultimate purchaser if the imported article is used in manufacture, and if the imported article is sold at retail in its imported form. If the article is sold at retail in its imported form, the purchaser at retail is the ultimate purchaser. Since the Lite- Box is not substantially transformed, it is not considered to undergo a change in its imported form. Therefore, the retail purchaser of the Lite-Box is the ultimate purchaser and the Lite- Box must be marked with the country of origin. The Lite-Box may also be displayed and sold in its shipping carton. Therefore, the shipping carton must also be marked with the country of origin of the Lite-Box.

In this situation you seek to mark the Lite-Box and shipping Customs policy is that in most circumstances, it is not acceptable for purposes of 19 U.S.C. 1304 to mark an article with the legend "Product of ____ or ____". In C.S.D. 89-111 we ruled that certain effervescent enzymatic cleaner tablets, products of both the U.S. and West Germany, were required to be marked for retail sale with the actual country of origin of West Germany. Although Customs acknowledged that the seller could avoid expense by using the disjunctive marking, "Made in ___, or ____", Customs was not satisfied that fully accurate marking would amount to an economic prohibition, and therefore required the item to be marked with only the actual country of origin of each individual item.

In two other rulings, C.S.D. 84-50, regarding fertilizer, and C.S.D. 84-44, regarding honey, the product was a repacked blend from multiple countries, and marking of the major source countries was required. In those cases Customs did not agree that it was economically prohibitive to mark the articles with a substantial degree of accuracy.

In contrast, Customs, in C.S.D. 84-56, has allowed one exception to the rule not allowing marking in the disjunctive. In C.S.D. 84-56, Customs allowed fasteners to be marked "from one or more of the following countries...." to indicate the country of origin of fasteners, where there were many varieties from many countries. The major source countries were required to be indicated. The ruling in C.S.D. 84-56 is restricted only for fasteners, and there is no reason to extend it to the present case.

You stated that it would be more expensive to separately store the same article from different countries, and that batch production would be more time consuming. However, you have not submitted evidence to establish that it would be economically prohibitive to mark the actual country of origin on the Lite-Box. You also have not supplied any evidence to warrant the use of the "common sense" approach for the marking of items in a set. The parts imported from various countries, i.e. rechargeable batteries, do not qualify as "relatively insignificant"; nor have you shown that the number of different parts are "too numerous". See TD 91- 7, 25 Cust. Bull. 6 (1991).

Customs Regulations (19 CFR 134.46), requires that when the name of any city or locality in the U.S., or the name of any foreign country or locality other than the name of the country or locality in which the article was manufactured or produced, appear on a 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. Customs has ruled that in order to satisfy the close proximity requirement, the country of origin marking must appear on the same side(s) or surface(s) in which the name of the locality other than the country of origin appears. HQ 708994 (April 24, 1978). The purpose of 19 CFR 134.46 is to prevent the possibility of misleading or deceiving the ultimate purchaser as to the origin of the imported article.

The Lite-Box has the address of the importer in many places on the various pieces and shipping carton. The charging stand has an adhesive label with the PA address on the front of it. Although the stand has "Made in China" molded into the plastic on the back, we find that this location is not conspicuous, and the marking is not in close proximity to the PA address as required by 19 CFR 134.46. The country of origin adhesive label must appear on the same side and in comparable print size as the PA address.

The cord/convertor has the PA address on it with "MADE IN CHINA" appearing approximately 1 1/8 inch below in comparable print type. We find this satisfies 19 CFR 134.46. The plastic body of the Lite-Box has an adhesive labels on each of two sides which has the PA address. The country of origin marking appears on the top of the Lite-Box. Normally, Customs requires that the country of origin label appear on the same side as the other location marked on the item to meet the conspicuous and close proximity requirement. In this case, because the country of origin label is so conspicuous on the top of the Lite-Box and in such close proximity, and because the label will not fit on the side of the Lite-Box, we will allow the one adhesive label on the top to satisfy the requirements of 19 CFR 134.46 for the two side PA addresses.

The shipping carton has the PA address on two sides in 58 point print. Below this on one side in 9 point print is the country of origin label. We find that the country of origin label must be on both sides of the box. Further, the country of origin must appear in comparable size print. Therefore, either the PA address must be reduced in size, or the country of origin marking must be increased in size on the shipping carton.

Another option available is to use a pre-printed marking which has all the possible countries of origin printed on it. Then, upon assembly, the actual country of origin could be punched or marked on the pre-printed label. This marking scheme must comply with the Customs statutes and regulations 19 U.S.C. Part 1304, and 19 CFR Part 134), as well as the concerns addressed above.

HOLDING:

The Lite-Box is not substantially transformed in the U.S. by combining it with the U.S. manufactured parts and assembling them as described supra. The country of origin marking may not list the countries in the disjunctive, but must list the actual country of origin of each of the components individual Lite-Box. The adhesive labels must be placed in close proximity and in comparable print size to each Norristown, PA address as described supra, in order to meet the requirements of 19 CFR 134.46.

Sincerely,

John Durant, Director

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