HQ 558875 - Country of origin marking of adapter module; metal connector; plastic base; assembly; substantial transformation - United States International Trade Commision Rulings

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HQ 558875

February 27, 1995

MAR-2-05 CO:R:C:S 558875 MLR

CATEGORY: MARKING

Mr. Daniel W. Szymanski
Panduit Corporation
17301 Ridgeland Avenue
Tinley Park, Illinois 60477-0981

RE: Country of origin marking of adapter module; metal connector; plastic base; assembly; substantial transformation

Dear Mr. Szymanski:

This is in reference to your letter of October 28, 1994, requesting a ruling regarding the country of origin marking of adapter modules. A sample was submitted with your request.

FACTS:

Panduit Corporation ("Panduit") is a manufacturer of electrical connectors, wiring and communication products. Panduit plans to import metal connectors in bulk from Taiwan. These metal connectors will be attached to plastic bases which Panduit manufactures in the U.S. From the sample, it appears that the plastic base and metal connector are screwed together. The resulting product is referred to as an adapter module. The adapter modules are packed in poly bags (which are currently marked "Made in USA"), and labeled for sale to its distributors.

ISSUE:

What are the country of origin marking requirements of the finished adapter module?

LAW AND ANALYSIS:

The marking statute, section 304, 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 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. Inc., 27 CCPA 297, 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. The "country of origin" for marking purposes is defined in 19 CFR 134.1(b), as the country of manufacture, production or growth of any article of foreign origin entering the U.S. The "ultimate purchaser" is generally defined in 19 CFR 134.1(d), as the last person in the U.S. who will receive the article in the form in which it was imported.

An exception from marking is provided in 19 CFR 134.35 when a domestic processor converts or combines an article of foreign manufacture into an article having a new name, character, or use. This constitutes a substantial transformation and the domestic processor is deemed the "ultimate purchaser" of the imported article, and only the outermost container is required to be marked. In determining whether the combining 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, 573 F. Supp. 1149 (CIT 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 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. 85-25. However, the issue of whether a substantial transformation occurs is determined on a case-by-case basis.

In Headquarters Ruling Letter (HRL) 732238 dated May 9, 1989, Customs considered the assembly of pen components, namely, a cap and barrel from Taiwan, and a cartridge, spring, and cap from the U.S. Customs held that the Taiwanese cap and barrel were not substantially transformed by the assembly operation performed in the U.S., and therefore, the pens had to be individually marked; however, a marking such as "Barrel and Cap Made in Taiwan" satisfied the requirements of 19 CFR 134.14(a) (relating to articles usually combined after importation).

In HRL 734227 dated June 26, 1992, Customs found that imported lever handles attached to U.S. lock sets were not substantially transformed. Customs found that even though the levers were only 10 per cent of the total cost of the lock set, they were essential to the lock set's function, and the assembly operation was not complex or did not require a great deal of skill. Furthermore, before installation of the lock set, the levers had to be disassembled. Therefore, the levers were required to be marked with their country of origin.

In HRL 734882 dated August 9, 1993, Customs considered lamp shades manufactured in China and Thailand, using art glass of U.S. origin, that were screwed onto electrically-wired zinc bases of U.S. origin in the U.S. Customs found that the lamp shade was just as or more important than the base, and imparted the unique character of the lamp. Furthermore, since the shades were quite visible, did not lose their character and separate identities, and could be removed from the bases, it was held that the assembly operation in the U.S. was minor, and the shades were not substantially transformed in the U.S. Therefore, the U.S. lamp manufacturer was not considered to be the ultimate purchaser of the shades and the shades had to be marked to indicate their country of manufacture.

In this case, the assembly involves screwing together a U.S.-origin plastic base and a Taiwanese-origin metal connector. We do not find that this assembly operation performed in the U.S. constitutes a substantial processing of the imported component. It is a simple combining operation entailing only the screwing together of two components. Therefore, since the operation performed is minimal and, after viewing the sample submitted, the component parts do not appear to lose their identity and become an integral part of a new article, we find that the assembly operation constitutes a minor processing of the imported component, which leaves the identity of the imported component intact. Accordingly, the imported metal connectors must be legibly and conspicuously marked to indicate their country of origin: "Taiwan."

In the alternative, the importer may seek approval of local Customs officials for a repacking operation conducted under Customs supervision as provided under 19 CFR 134.34. Section 134.34, Customs Regulations (19 CFR 134.34), provides that an exception may be authorized in the discretion of the district director under 19 CFR 134.32(d) for imported articles which are to be repacked after release from Customs custody under the following conditions: (1) the containers in which the articles are repacked will indicate the origin of the articles to an ultimate purchaser in the U.S.; and (2) the importer arranges for supervision of the marking of the containers by Customs officers at the importer's expense or secures such verification, as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to the liquidation of the entry.

If approval is granted by the district director under 19 CFR 134.34, the "Made in USA" marking on the poly bag should be removed, and it would be acceptable to mark the poly bag "Metal Connector Made in Taiwan."

HOLDING:

Based on the information and sample submitted, the imported metal connectors which are used to manufacture adaptor modules in the U.S. in the manner described above, are not substantially transformed as a result of the U.S. operations. Therefore, Panduit is not the ultimate purchaser of the imported metal connectors and the connectors must be individually marked with their country of origin "Taiwan", unless the district director at the port of entry approves marking after importation pursuant to 19 CFR 134.34.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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