HQ 558938 - Country of origin marking of blood pressure instruments; sphygmomanometer; components; assembly; substantial transformation - United States International Trade Commision Rulings

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HQ 558938

March 30, 1995

MAR-2-05 CO:R:C:S 558938 MLR

CATEGORY: MARKING

Mr. Marc Blitstein
American Diagnostic Corp.
93 Otis Street
West Babylon, NY 11704

RE: Country of origin marking of blood pressure instruments; sphygmomanometer; components; assembly; substantial transformation

Dear Mr. Blitstein:

This is in reference to your letter of November 29, 1994, requesting a ruling regarding the country of origin marking of blood pressure instruments. A sample of a complete Prosphyg 760, an aneroid sphygmomanometer, and the components which comprise the sphygmomanometer were submitted with your request.

FACTS:

The sample is a Prosphyg 760, an aneroid sphygmomanometer. The 760 represents one of hundreds of models of sphygmomanometers which American Diagnostic Corp. ("ADC") produces. The models differ in cuff size, color, as well as the features and quality of the components used. A sphygmomanometer is comprised of a gauge which measures the air pressure in the bladder, the bladder (an inflatable bag) which applies pressure to the limb, the cuff which secures the bladder around the limb, the bulb which inflates the bladder, the end valve which regulates the inflation of the bulb, the air valve which regulates the deflation of the system, and the zipper case for storage of the complete sphygmomanometer. ADC offers various types of the above-mentioned components, which when combined together result in 300 different models of sphygmomanometers.

Each component of the sphygmomanometer is sourced from a different supplier from numerous countries. The sample submitted has a label pasted on a polybag (which contains a zippered case with the sphygmomanometer) indicating the possible source countries of the components. The most frequent source countries are as follows:

Gauge Made in Japan, Hong Kong, Germany, or Taiwan Bladder Made in Japan or Indonesia
Cuff Made in Japan or Indonesia
Bulb Made in U.S.A. or Indonesia
Valves Made in Japan or Taiwan
Carrying Case Made in Indonesia or Taiwan Box and Instructions - U.S.A.

It is stated that while the components of certain models are sourced from the same countries, the sourcing of some components will depend on their availability. Therefore, because the same packaging is used for numerous models, it is claimed that it is impractical to print the countries of origin for each of the components on the box itself.

The assembly performed in the U.S. involves force fitting the end valve and the air valve into opposite ends of the bulb, inserting the bladder into the cuff, connecting the bulb (which contains the end and air valves) to one tube of the bladder, connecting the gauge to the second tube of the bladder, wrapping the cuff and bladder around the bulb and the gauge, and inserting the completed article into the zippered case which is then placed into a chipboard box with instructions. The total time required to perform the inspection, assembly, and packaging of each sphygmomanometer is 3 « to 9 minutes depending upon the complexity and number of components involved (i.e., multicuff systems incorporate the cuffs and bladders in each of the 5 most popular clinical sizes). All assembly and packaging is performed by hand. It is stated that although the assembly does not require technical skill, mechanical dexterity is required, especially to insert the bladder into the cuff and the end and air valves into the bulb.

ISSUE:

Whether the assembly of the various imported components to create a blood pressure instrument constitutes a substantial transformation, thereby excepting the components from country of origin marking.

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. 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. Since the imported components are assembled in the U.S., we must first determine whether they undergo a substantial transformation.

For country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in the U.S. in manufacture, which results in an article having a name, character, or use differing from that of the imported article. In such circumstances, the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the "ultimate purchaser" of the imported article, and the article is excepted from marking and only the outermost container is required to be marked. See 19 CFR 134.35.

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) 734457 dated May 26, 1992, fishing rods were assembled in China from component parts manufactured in different countries (i.e., Taiwanese rods and reel seats, Korean line guides, and Japanese paint). HRL 734457 followed T.D. 67-173, 1 Cust. Bull. 366 (1967), which held that the domestic assembly of fishing rod parts did not constitute a substantial transformation of those parts and, therefore, the main reel housing was required to be marked with the country of origin. In HRL 734560 dated July 20, 1992, telephone sets were considered, which consisted of a base unit made in Canada or Malaysia, a handset made in Canada or China, a handset cord made in Canada or Mexico, a cord to connect the telephone to the jack made in Mexico, and a transformer made in Taiwan. These items were assembled and tested in either Canada or Malaysia. It was determined that the assembly of these components into a telephone was extremely simple, and that they were not substantially transformed. Therefore, the carton in which the ultimate purchaser received the telephone could be marked: "telephone base made in (name of country); handset made in (name of country); transformer made in (name of country); line cord made in (name of country)."

We find that this case also does not involve a complex assembly operation. Rather, the assembly of the components to create a sphygmomanometer is relatively simple and, consequently does not result in a substantial transformation of the components. Accordingly, upon importation each individual component should be marked with its country of origin. In addition, if the assembled components are sold in a container (i.e., the polybag) without being taken out of the polybag by the ultimate purchaser prior to sale, the polybag will be required to be labeled to indicate the country of origin of the imported components. 19 CFR 134.24(d)(3). However, the polybag could be labeled "Contents from (country of origin of imported components). See Marking on Each Article Inside." See HRL 732679 dated May 4, 1990.

Your proposed marking on the polybag listing the country of origin of a particular component in the alternative, such as "Gauge Made in Japan, Hong Kong, Germany, or Taiwan", will not be appropriate. In C.S.D. 89-111, it was determined that the designation of two countries in the alternative (either/or) as the country of origin of the imported article did not satisfy the requirements of 19 U.S.C. 1304.

In the alternative, articles for which the marking of the containers will reasonably indicate the country of origin of the article can be excepted from country of origin marking under 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). Because the imported components of the sphygmomanometer will be taken out of the containers in which they are imported so that they may be assembled together, and they will be repacked into a new container after assembly (i.e., the polybag), 19 CFR 134.34 is applicable. 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.; (2) The importer arranges for supervision of the marking of the containers by Customs officers at the importer's expense or to secure such verification, as may be necessary by certification and the submission of a sample or otherwise, of the marking prior to liquidation of the entry. Accordingly, the individual components of the sphygmomanometer can be excepted from marking provided the Customs officials at the port of importation are satisfied that the polybag in which the assembled components will be sold to the ultimate purchaser is properly marked to indicate the country of origin of the components comprising the sphygmomanometer, and the requirements of 19 CFR 134.34 are followed.

HOLDING:

On the basis of the information submitted, we find that the imported components are not substantially transformed by the assembly performed in the U.S. Accordingly, each individual imported component of the sphygmomanometer is required to be marked with its country of origin. In the alternative, the polybag, in which the sphygmomanometer is sold to the ultimate purchaser, can be marked to indicate the country of origin of the components contained in the sphygmomanometer provided the district director at the port of entry is satisfied that the assembled components of the sphygmomanometers will be sold only in a properly marked container, and the other provisions of 19 CFR 134.34 are followed. The listing of the country of origin of a particular component in the alternative on the polybag is not appropriate.

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,

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