HQ 0734916 - Country of origin marking requirements for Stuffed Animal Toys. - United States International Trade Commision Rulings

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HQ 734916

July 29, 1993

MAR-2-05 CO:R:C:V 734916 RC

CATEGORY: MARKING

Mr. James G. Meagley
Phillips, Lytle, Hitchcock, Blaine & Huber 3400 Marine Midland Center
Buffalo, New York 14203

RE: Country of origin marking requirements for Stuffed Animal Toys.

Dear Mr. Meagley:

This is in response to your inquiry of December 5, 1992, requesting a ruling on the country of origin marking requirements for imported stuffed animal toys.

FACTS:

Your client, Fisher-Price, is in the business of manufacturing and importing stuffed-animals. Production will involve operations performed in two countries: Hong Kong and China. The fabric will be purchased from Japan or Taiwan and die-cut in Hong Kong. A rattle to be sewn in will be made in Hong Kong. Lace, an applique, and fiberfill stuffing may or may not be of Hong Kong origin. Unspecified other components will be purchased in Hong Kong. The fabric pieces, approximately 19, will be assembled by sewing in China. Applique and embroidery will be added in China. Finally, the toy will be stuffed, closed, cleaned, trimmed, inspected, and metal detected in Hong Kong. It will be packed for retail sale in the U.S. The operations performed in China will represent approximately 31 percent of the FOB Hong Kong cost of the toy. The operations performed in Hong Kong represent approximately 69 percent of the total value of the finished stuffed toys.

ISSUE:

What is the country of origin of imported stuffed animal toys processed in the above-described manner?

LAW AND ANALYSIS:

Pursuant to section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), articles of foreign origin or their containers must be marked in a conspicuous place legibly, indelibly, and permanently to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. The "country of origin" for marking purposes is defined by section 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.

Although the stuffed toys consist of textile materials, the rules for determining the country of origin for textile products set forth in section 12.130 are not applicable because the toys are classified outside of section XI, HTSUS and they are not subject to quota. Thus, the test for determining the country of origin of the stuffed animals is substantial transformation.

A substantial transformation is effected when articles, as a result of their assembly, 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); Koru North America v. United States, 12 CIT 1120, 701 F.Supp. 229 (1988). In determining whether the assembly 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. See, C.S.D.'s 80-111, 85-25, 89-110, 89-118, 89-129 and 90-97. The question of when a substantial transformation occurs for marking purposes is a question of fact to be determined on a case-by- case basis. Uniroyal Inc. v. United States, 3 CIT 220, 542 F.Supp. 1026 (1982), aff'd, 1 Fed. Cir. 21, 702 F.2d 1022 (1983).

In HQ 734193 (January 6, 1992), Customs determined the country of origin of a stuffed toy consisting of approximately 12 fabric pieces of Korean origin which were cut in Korea and assembled in China. Customs considered the operations performed in China to be minimal or simple for the following reasons: (1) the sewing entailed only 12 pieces of fabric, (2) the 12 pieces did not lose their identity, and (3) the assembly operation comprised only 20 percent of the total value of the finished toy, a relatively low percentage.

Here, the assembly by sewing of approximately 19 cut fabric pieces is comparbly minimal or simple. The pieces do not become a new and different article of Chinese origin or lose their identity by their being sewn together in China. While the cost of the assembly comprises approximately 31 percent of the article's total cost, somewhat higher than the 20 percent of HQ 734193, it is still relatively low. Therefore, we consider the Chinese sewing operation a simple assembly and not a substantial transformation. As such, Hong Kong is the country of origin of the finished stuffed animals for marking purposes.

HOLDING:

The country of origin of the stuffed toy mouse for marking purposes is Hong Kong. The submitted sample mouse and retail box as marked satisfy the requirements of Part 134. Indicating "Hong Kong" in lieu of "China" for the country of origin marking on the sample mouse and retail box will be acceptable. This finding extends only to the facts set forth herein.

Sincerely,

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