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HQ 735251

October 7, 1993

MAR-2-05 CO:R:C:V 735251 RSD

CATEGORY: MARKING

John Bessich, Esq.
Follick & Bessich
One Cross Island Plaza
Rosedale, New York 11422

RE: Country of origin of marking for quartz watches; use of "Assembled In" disallowed for most purposes of 19 U.S.C. 1304; watch movements; HQ 734758; HQ 731057; HQ 734141; HQ 711871 revoked; delayed effective date; six month adjustment period

Dear Mr. Bessich:

This is in response to your letter dated July 9, 1993, on behalf of the U.S. Watch Council regarding the country of origin marking requirements for moderate cost quartz movement watches. You specifically request that prior Customs headquarters ruling HQ 734758 (March 1, 1993) be modified with respect to the use of the phrase "Assembled in". Several letters from members of the U.S. Watch Council in support of your request have been submitted. A sample watch was also submitted. The sample will be returned to you under a separate cover.

FACTS:

The United States Watch Council is a watch industry organization consisting of nineteen member companies which import and sell wrist watches and other timepieces in the United States. Watch Council members are responsible for the sale of over 50,000,000 timepieces in the United States annually, valued on a retail basis at nearly one billion dollars. This ruling concerns relatively inexpensive analog watches with quartz movements which are typically sold in department stores, discount retail outlets, and through catalogues.

The specific concern of the Watch Council is whether the phrase "Assembled in" can be used to indicate the country of origin of imported watches. Frequently, the watches in question contain movement parts which are made in one country, and sent to another country for assembly into a completed watch movement. For example, movement parts made in Switzerland are sent to China or Hong Kong for assembly into the finished watch movement. The Watch Council would like to mark the country of origin of such watches with a marking indicating where the parts were made and where the movement was assembled. They also contend that they should be able to use the phrase "Assembled in" to indicate the origin of the watches. For example, the sample watch is marked on the back of the watch case in a circular fashion "SWISS MOVT PARTS ASSEMBLED IN CHINA".

On March 1, 1993, Customs Headquarters issued HQ 734758 regarding a proposed country of origin marking for a watch. The ruling held in part that the words "Swiss parts assembled in China" was unacceptable because it did not indicate the country of origin of the watch and could mislead ultimate purchasers into thinking that the watch was made in Switzerland. The ruling further pointed out that "Assembled in" ordinarily does not indicate the origin of an article and that the watch should be marked "China" or alternatively "Mov't China" or "China Movement".

The Watch Council contends that HQ 734758 is incorrect in disapproving the use of the words "Assembled in" to designate the origin of a watch. It seeks to have HQ 734758 modified so that the use of the phrase "Assembled in" would be an acceptable means of indicating the country of origin of a watch. Alternatively, the Council requests a period of time to allow watches marked with "Assembled in" to be entered into the U.S. A number of letters have been submitted from watch importers stating that they have been importing watches marked with the phrase "Assembled in", and that until the issuance of HQ 734758 they were unaware that such marking was not acceptable. These letters further state that prior to the issuance of HQ 734758, Customs at local ports of entry had not objected to a country of origin marking using "Assembled in". They also point out that an abrupt change in the country of origin marking requirements could cause a serious financial hardship for their business and request a delay in the effective date of HQ 734758 in order to allow them time to make the necessary adjustment in their marking practices.

ISSUE:

Can the phrase "Assembled In" be used to indicate the country of origin for watches imported into the United States?

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. 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 is a 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 C.C.P.A. 297 at 302 (1940). C.A.D. 104 (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. As provided in section 134.41(b), Customs Regulations (19 CFR 134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S, is able to find the marking easily and read it without strain.

For country of origin marking purposes under 19 U.S.C. 1304, Customs considers the country of origin of watches to be the country of manufacture of the watch movements. See HQ 731546 (October 27, 1988). Customs has also ruled that when unassembled parts of a watch movement from one country are assembled in a second country, the country of assembly is the country of origin for marking purposes under 19 U.S.C. 1304. See HQ 708386 (May 2, 1978). In HQ 734758, Customs ruled that for a watch with a movement made in China with Swiss parts the marking "Swiss parts assembled in China" was unacceptable because it did not indicate the country of origin of the watch and may mislead ultimate purchasers into thinking that the watch was made in Switzerland. We noted that the term "Assembled in" ordinarily does not indicate the origin of an article. Accordingly, the watch had to be marked "China", "Movt China, or "China Movt".

The Watch Council challenges the finding of HQ 734758 that the phrase "Assembled in" is an unacceptable means of indicating the country of origin of a watch. Customs' general position regarding the phrase "Assembled in" was stated in HQ 731507 (October 17, 1989). The ruling stated that the phrase "Assembled in" will not constitute sufficient country of origin marking outside the context of section 10.22, Customs Regulations (19 CFR 10.22) (i.e., where an assembled article is not eligible for tariff treatment under subheading 9802.00.80, HTSUS). In such case, the general country of origin rule applies and the country of origin is the country of assembly only if the assembly process constitutes a substantial transformation. The ruling also indicated that the phrase "Assembled in" outside the context of 19 CFR 10.22 would be misleading since the country of assembly may or may not be the country of origin for purposes of 19 U.S.C. 1304.

This general position with respect to the use of "Assembled in" was reiterated in HQ 734141 (September 12, 1991) regarding the marking of imported pedometers. The ruling noted that the designation "Assembled in" is reserved under the Customs laws for the indication of the origin of an article which was assembled abroad from U.S.-origin components within the meaning of subheading 9802.00.80, Harmonized Tariff Schedule of the U.S. (HTSUS). Section 10.22, Customs Regulations (19 CFR 10.22), provides that such articles are deemed for marking purposes to originate in the country of assembly, and "Assembled in" is the permissible terminology. It was further stated that unless the pedometer is eligible for importation under subheading 9802.00.80, HTSUS, it must be marked with the phrase "Made in", "Product of" or simply the name of the country of origin. Under the Customs laws and regulations, "Assembled in" is not regarded as having the same meaning.

Although HQ 731507 and 734141 state the current Customs position on the use of the phrase "Assembled in", a prior ruling on watches has been discovered, HQ 711871 (January 17, 1980), which permitted the use of "Assembled in" to indicate the country of origin of a watch. The holding of HQ 711871 was that the proper country of origin for solid state electronic watches which contain solid state modules is the country of manufacture of the solid state modules. The holding further stated that "Assembled in Korea" stamped legibly and conspicuously on the outside of the back of the watch case will meet this requirement. (emphasis added).

Under a long standing Customs policy, the country of assembly of a watch movement is the country of origin of a watch. Notwithstanding HQ 711871, we remain of the opinion that the phrase "Assembled in" would not properly indicate the country of origin of a watch movement and hence the watch, to the ultimate purchaser. Although the term "Assembled in" may accurately indicate the country where an article was put or fit together, it still does not sufficiently indicate the origin of an article (i.e., where it was made or produced) under 19 U.S.C. 1304 except for goods eligible under subheading 9802.00.80, HTSUS. Accordingly, because HQ 711871 is not in accordance with the current Customs position on the use of the phrase "Assembled in", it is revoked.

We recognize however, that the holding of HQ 711871, and possibly other similar Customs decisions, may have caused confusion as to whether Customs would permit watches to be imported marked with the phrase "Assembled in". The letters submitted from various watch importers suggest that Customs officials have allowed watches, marked in the manner of the submitted sample, to be imported. Under these circumstances, Customs believes that an interim period is appropriate in order for watch importers to adjust their marking practices to comply with the Customs position on the use of "Assembled in". Most of the submissions state that they need until at least January 1, 1994, to make these adjustments. We will therefore grant a six month grace period from the date that this ruling is issued, allowing the use of the designation "Assembled in" to indicate the origin of watch movements and watches themselves on watches. During this period, Customs will permit the importation of watches marked with the phrase "Assembled in" to indicate the country of origin even if there is a statement on the watch concerning where the movement parts are made. After the six month period, watches marked with the designation "Assembled in" will not be considered acceptably marked. The phrase "Assembled in" will be considered to indicate origin only with respect to those movements (and watches) which are eligible for importation under subheading 9802.00.80 and thus to be marked in accordance with section 10.22, Customs Regulations. Watches must be marked with the phrases "Made in", "Product of", or simply with the name of the country of origin. The country of origin of watches may also be indicated by using the word "Movement" or an abbreviation such as "Mov't". For example, the marking "China Movement" or "Mov't China" are acceptable country of origin marking for watches. See HQ 731546 October 27, 1988. The grace period on the use of "Assembled in" will apply only to watches.

Watches may be marked with the country where the parts of the movements or other parts are made as long as the marking is in compliance with the requirements of 19 CFR 134.46. Section 134.46 requires that in any case in which the name of a place other than the country of origin appears on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such place 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. Thus, for example, markings such as "Swiss Parts/Made In China" or "Swiss Parts/Movement China" would be acceptable.

HOLDING:

The phrase "Assembled in" is not an acceptable designation of the country of origin under 19 U.S.C. 1304. The marking on the sample watch "Swiss Movement Part Assembled in China" is not acceptable country of origin marking. Those portions of HQ 711781 and other rulings which are inconsistent with this ruling are modified or revoked. In order to allow watch importers time to make adjustment in their marking practices, a six month grace period, during which watches marked with the phrase "Assembled In", will be permitted to be imported in the U.S. After this six month period, watches marked with the phrase "Assembled in" as a means of indicating the country of origin will not be permitted to be imported into the U.S.

Sincerely,

Harvey B. Fox, Director

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