HQ 0734521 - Country of origin marking of vise handle after attachment to vise; combining; substantial transformation. - United States International Trade Commision Rulings

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HQ 734521

September 17, 1992

MAR-2-05 CO:R:C:V 734521 KR

CATEGORY: MARKING

Mr. Victor Hanks
Trade Manager
Kurt Manufacturing Co.
Industrial Products Division
1325 N.E. Quincy Street
Minneapolis, MN 55413-1540

RE: Country of origin marking of vise handle after attachment to vise; combining; substantial transformation.

Dear Mr. Hanks:

This is in response to your letter received at Customs New York Seaport on January 27, 1992, and forwarded to Headquarters on February 24, 1992, and received on February 26, 1992, requesting a ruling on the country of origin marking requirements for vise handles imported from Taiwan which are to be combined with the remaining vise parts manufactured in the United States. Copies of a brochure showing the vise and handle as assembled were submitted for evaluation.

FACTS:

As imported, the vise handles are labeled "Made in Taiwan". The handle is combined with the other vise parts all made in the U.S.: the body, movable jaw, reversible jaw plates, nut, screw, retaining collar, screw support and thrust bearings. The handle represents 4 percent of the cost of the completed vise. You state that the handle will not be sold separately from the vise. You state that you wish to remove the Taiwan label after importation so that it does not appear on the assembled vise.

ISSUE:

Whether the handles are substantially transformed when they are combined in the United States in the manner 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.

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 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 an article loses its identity and becomes a new article 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 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 734440 (March 30, 1992) (applying the six factors to determine a lock was substantially transformed); and HQ 728801 (February 26, 1986). See also HQ 734219 (September 3, 1991) (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).

In this situation, the vise handle is substantially transformed after importation into the U.S. In HQ 733804 (November 9, 1990), Customs ruled that attaching a U.S. handle to an imported broom head does not substantially transform the imported broom head. Instead, the broom must be marked with the country of origin of the "essential element of the finished article." This was true "whether it is assembled with a foreign or U.S.-made handle." See also HQ 734246 (October 21, 1991) (holding that the country of origin of a hammer is determined by where the head is made, and not the handle); HQ 723857 (December 1, 1988). But see HQ 732896 (April 5, 1990) (holding that a mop handle must be separately marked from the mop head because they did "not lose their separate identity" because the mop head is removable).

In HQ 733196 (August 10, 1990), Customs compared the manufacturing costs of the different pieces to determine whether a ratchet must be marked with the country of origin of the ratchet handle or the pawl and attachment parts. Customs held that the imported ratchet handle was substantially transformed because the U.S.-made pawl and parts (70 percent of the manufacturing costs) were "the very essence of the finished product." In HQ 733199 (July 19, 1990), Customs used similar reasoning in holding that the country of origin of a paint brush is determined by the bristles and not the handle. Customs relied upon the manufacturing cost, the essence of the item, and on the bristles being permanently attached to the handle.

In this case, the vise handle is only a less important part among the various parts of the vise. Like the head of the hammer in HQ 734246, supra, the key parts of the vise are the body and jaws which are made in the U.S. The handle of the hammer was not controlling for the country of origin marking, but instead the head of the hammer determined the country of origin. Similarly, the vise rather than the vise handle determines the country of origin. Unlike the mop handle in HQ 732896, supra, the vise handle is permanently attached to the remaining pieces, is functionally necessary to the operation of the finished article, and not an accessory retaining its independent function. The vise is also a more complex instrument than the mop head and is not replaceable. Further, the predominant expense of the assembled vise, 96 percent, is in the parts produced in the U.S. See HQ 733199, supra.

Based on our consideration of all these factors, we conclude that the vise handle is substantially transformed in the U.S. as a result of combining it with the U.S. manufactured pieces. Accordingly, we find that Kurt Manufacturing Co. is the ultimate purchaser of the vise handle under 19 CFR 134.35. Therefore, prior to assembly the box containing the imported vise handle must continue to be marked with the country of origin of the vise handle, Taiwan. However, after assembly onto the vise the handle is excepted from marking.

You also seek authorization to remove a label attached to the handle upon importation which states the country of origin of the handle. Since the handle is substantially transformed, we agree that the label may be removed. Retaining it may cause confusion as to the country of origin of the entire vise. See HQ 733199 (July 19, 1990) (in Gibson Thomsen "[t]he court was also concerned that when an imported article was combined with a domestic material, that the ultimate purchaser not be confused into thinking that the domestic article was made in a foreign country.") Accordingly, once the vise handle loses its status as an article of foreign origin it is acceptable to remove the existing marking prior to sale of the assembled vise. It is noted, however, that it would not be permissible to add any labeling which would suggest that the handle is a product of the U.S.

HOLDING:

The imported vise handle is substantially transformed in the U.S. by combining it with the U.S. manufactured remaining vise pieces as described supra. Therefore, Kurt Manufacturing Co. is the ultimate purchaser of the vise handle. The vise handle is excepted from marking provided its container is marked with the country of origin upon importation and it will be used only in the manner described above and not otherwise sold. Kurt may remove the country of origin label attached to the handle upon assembly onto the vise.

Sincerely,

John Durant, Director

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