HQ 0735576 - Country of origin marking for watch dials which will be incorporated in a finished watch; watch movements; misleading markings; substantial transformation; 19 CFR 134.35; - United States International Trade Commision Rulings

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HQ 735576
May 19, 1994

MAR-05 CO:R:C:V 735576 RSD

CATEGORY: MARKING

Mr. Anthony Martorano
Director, Materials Management
Longines Wittnauer Watch Company
New Rochelle, New York 10802

RE: Country of origin marking for watch dials which will be incorporated in a finished watch; watch movements; misleading markings; substantial transformation; 19 CFR 134.35;

Dear Mr. Martorano:

This is response to your letter dated April 20, 1994, concerning the country of origin marking of imported watch dials which will be incorporated into a finished watch in Puerto Rico. We have also received a letter from Longines Wittnauer's facility in Puerto Rico in which samples of a watch dial, a watch movement, and a finished watch were enclosed. As requested, these samples will be returned to Longines Wittnauer facility in Puerto Rico under a separate cover.

FACTS:

The Longines-Wittnauer Watch Company (Longines) manufactures and sells watches. It has watch manufacturing facilities in Puerto Rico and the U.S. Virgin Islands. To manufacture the watches in question, Longines uses watch movements made in Switzerland and dials made in Taiwan. Although you indicate in your letter that the dials are made in Taiwan, the sample watch dial is marked on the back with the country name "Thailand". The dials are also marked in the front with the word "Swiss". The dials are assembled onto the movements as part of the process of making the finished watches. The Swiss watch movement will be encased by Longines at its facility in Puerto Rico to make a finished watch. When the watch is complete, the Thailand or Taiwan marking printed on the back of the dial will not be visible. The word "Swiss" on the front of the dial remains visible on the finished watch.

You write that Longines is having some difficulty in clearing shipments of watch dials from Taiwan through Customs in Anchorage, Alaska because the word "Taiwan" is printed on the back of the dials and the word "Swiss" is on the front of the dials.

ISSUE:

Does it violate the country of origin marking law if the word "Taiwan" or "Thailand" is printed on the back of watch dials which will be assembled onto Swiss made watch movements, if those country references will not be visible after the watch is completed and the watch is marked "SWISS" to indicate that its country of origin is Switzerland?

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. 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. 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 the marking laws and regulations. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed. In such circumstances, the imported article is excepted from marking. The outermost containers of the imported articles shall be marked. (See 19 CFR 134.35).
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 this case the imported watch dials have two country of origin markings. The first marking, printed on the back of the dials, "Taiwan" or "Thailand", refers to the country where the dial is made. The second marking, "Swiss", refers to the country of origin of the movement on which the dial will be assembled. Under Customs policy regarding watches, the country of origin of the finished watch is the country where the movement is made, i.e. Switzerland. Therefore, the imported watch dials will be substantially transformed when they are combined with the Swiss movements.

Although the dials are marked with their own country of origin, which is different than that of the finished watches, we find that in this situation, these markings do not present a problem because they do not violate 19 U.S.C. 1304. We first assume for the purpose of this ruling that these markings accurately reflect the origin of the watch dials. Significantly, the Taiwan or Thailand markings are on the back of dials and will not be visible once the watch is fully assembled. Since the origin marking regarding the dial is concealed on the completed watch, there is no chance that the ultimate purchaser of the watch will be misled as to the origin of the watch by this marking. It is also proper to have the word "Swiss" on the front of the watch dial so that the origin of the fully assembled watch can be indicated. We note that this scenario is acceptable only if the Customs officials at the port of entry are satisfied that the dials will be assembled exclusively onto Swiss made movements and will not be resold separately.

You should also be advised that Customs is in process of preparing a Federal Register notice which will outline proposed standards and the appropriate methods for conspicuous and legible country of origin marking on watches.

This ruling does not address the special marking requirements for watches indicated in U.S. Note 4 of Chapter 91 of the Harmonized Tariff Schedule of the United States (HTSUSA) 19 U.S.C. 1202.

HOLDING:

Having two origin markings on the watch dials, one concerning the origin of the dials and another concerning the origin of the finished watch, does not violate 19 U.S.C. 1304, so long as the country of origin the dial is on the back and will not be visible to the ultimate purchaser on the finished watch, and the finished watch is otherwise marked with its correct country of origin.

Sincerely,

John Durant, Director

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