HQ 0735095 - Country of Origin Marking Requirements for Parts of Toys Imported from China and Assembled in U.S.; Substantial Transformation; Assembly; 19 CFR 134.35. - United States International Trade Commision Rulings

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HQ 735095
August 17, 1993
MAR-2-05 CO:R:C:V 735095 ER

CATEGORY: MARKING

Mr. David Diaz
American Toy Company of Texas
301 E Illinois
Midland, Texas 79701

RE: Country of Origin Marking Requirements for Parts of Toys Imported from China and Assembled in U.S.; Substantial Transformation; Assembly; 19 CFR 134.35.

Dear Mr. Diaz:

This is in response to your letter dated March 23, 1993, in which you request a country of origin marking determination regarding stuffed toys assembled in the U.S. from parts imported from China.

FACTS:

Your company is considering importing parts for stuffed toys from China, to be assembled into finished stuffed toys by your company in Midland, Texas. Samples were submitted of the parts in their condition as imported, and of the final product, a stuffed toy, after assembly in the U.S.

The parts submitted consist of two legs, two arms, a head with eyes and nose attached, two ears, a torso and tail. The parts are made out of acrylic "fur" material. At the time of importation, the ears, arms, legs and tail are already stuffed with a polyester fill and individually sewn shut to prevent the stuffing from falling out. One half yard of acrylic material and one half pound of stuffing is used to complete the parts up to this point. You state that the imported parts are subject to a 6.8 percent duty rate. For purposes of this ruling we assume the parts are classifiable under heading 9503, Harmonized Tariff Schedule ("HTS") and are not subject to quota.

After importation, an additional one pound of polyester fill is stuffed into the head and torso and the parts are assembled together to create the finished toy.

ISSUE:

What are the country of origin marking requirements for the stuffed animals?

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 its 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 are 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 CCPA 297 at 302; C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as 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, Customs Regulations (19 CFR 12.130) are not applicable because the toys are classified outside of section XI, HTS and they are not subject to quota. Thus the test for determining the country of origin of the stuffed animals is substantial transformation.

Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the "country of origin" within the meaning of Part 134. A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. 19 CFR 134.35. The question of when a substantial transformation occurs 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 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.

HQ 734214 (November 18, 1991), considered whether the assembly in China of Taiwanese fishing rod components constituted a substantial transformation and found that it did not, stating that the assembly of all the foreign components in China did not result in the manufacture of a new and different article in that the assembly operation was simple and the foreign component parts did not lose their identity (no change to the physical dimensions of the components occurred). Accordingly, Customs ruled that the country of origin of the fishing rods was the place where the components were made (Taiwan) and not the place where the simple assembly took place (China).

In HQ 734193 (January 6, 1992), Customs, relying on HQ 734214 (above), found that the sewing together of 12 pieces of pre-cut fabric did not constitute a substantial transformation of the Korean fabric pieces. In that decision, the fabric was first cut to size into 12 pieces in Korea. The pieces were then exported to China where they were sewn together to form the skin for the stuffed toy. The skins were returned to Korea where they were stuffed with Korean stuffing material, eyes and nose sewn on, and sewn closed before shipment to the U.S. In finding no substantial transformation of the pieces in China, Customs focused on the fact those operations consisted only of the sewing together of 12 pieces of fabric which did not alter the identity of the pieces, i.e. no change of the physical dimensions of the fabric pieces occurred as a result of sewing them together. Accordingly, the country of origin of the stuffed toys remained Korea. Since no substantial transformation of the pieces occurred in China, it was not necessary to evaluate whether the final assembly operations performed on the pieces returned to Korea amounted to a substantial transformation. Also see, HQ 734916 (July 29, 1993) where Customs found that parts of stuffed toys were not substantially transformed as a result of the sewing together of approximately 19 cut fabric pieces.

In the instant case, the parts in their condition as imported already possess the essential character of the finished article. Except for the head and the torso, all the other parts are complete: cut, sewn together, stuffed and sewn shut. The only operations remaining to be performed in the U.S. are the stuffing of the head and torso and the stitching together of the parts. Such operations are simple, result in no change of the physical dimensions of the parts and do not substantially transform the parts into a new and different article. Consequently, the finished product would remain a product of China, for purposes of country of origin marking.

HOLDING:

The country of origin of the stuffed toys described in this ruling which are assembled in the U.S. with parts from China, is China. In order to satsify the requirements of 19 U.S.C. 1304, the toys must be marked to indicate "China".

Sincerely,

John Durant, Director

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