HQ 559139 - Country of origin marking for wireless loudspeaker systems; woofer; tweeter; essential character; 102.11(b)(1); 102.11(d)(1); NAFTA; Article 509; Canada - United States International Trade Commision Rulings

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HQ 559139

August 31, 1995

CLA-2 R:C:S 559139 MLR

CATEGORY: MARKING

Mr. Richard Miller
Recoton Corporation
2950 Lake Emma Road
Lake Mary, FL 32746

RE: Country of origin marking for wireless loudspeaker systems; woofer; tweeter; essential character; 102.11(b)(1); 102.11(d)(1); NAFTA; Article 509; Canada

Dear Mr. Miller:

This is in reference to your letter of April 6, 1995, requesting a ruling concerning the country of origin marking requirements for wireless loudspeaker systems. Samples were submitted with your request.

FACTS:

Recoton purchases and imports various wireless loudspeakers and loudspeaker systems from an unrelated Canadian manufacturer. The wireless loudspeakers reproduce sound in the same manner as traditional "hard-wire" loudspeakers. However, when used in conjunction with the wireless transmitter which is connected to the home stereo system, generally to the amplifier, the loudspeakers are capable of receiving wireless broadcasts. All of the loudspeaker systems are imported pre-packaged and ready for sale, either through retail outlets or by mail order. Some of the units may be placed on display by the loudspeaker retailer; therefore, each loudspeaker and transmitter is individually marked with a country of origin.

The W450 loudspeaker system consists of a pair of wireless loudspeakers, a wireless transmitter, and various AC adapters and cables. The W450 loudspeakers have both a woofer and a tweeter which reproduce a wide range of sound frequencies (50 Hertz to 15,000 Hertz). It is stated that the woofer is needed to produce the lower frequencies (50 Hertz to 1,000 Hertz), and the tweeter is needed to produce the higher frequencies (1,000 Hertz to 15,000 Hertz). Both the woofer and the tweeter have a magnet, a front plate, a back plate, a pole piece, and voice coil, and a former. The differences between the woofer and the tweeter are in the suspension, the diaphragm, and the size, which correspond to the wavelength of the sounds each is designed to reproduce. Additional information was also submitted on August 23, 1995, describing the crossover network which is basically a highpass filter that blocks low frequencies from the tweeter.

According to the Canadian manufacturer, the countries of origin of the major components of the W450 system are as follows: the cabinet and other hardware/crossover are from Canada; the woofer is from Taiwan; and the tweeter, amplified/receiver module, RCA-type cables, AC adapters, and transmitter are from China. Pursuant to an interim agreement with Customs, the W450 system is marked "Speakers Assembled in Canada with Components from China and Taiwan. Transmitter and AC Adapters Made in China." It is stated that the W450 wireless loudspeaker system is currently being entered under subheading 8518.22.00, Harmonized Tariff Schedule of the United States (HTSUS).

The WHT 421 is a wireless "sub-woofer" loudspeaker which reproduces sounds at extremely low frequencies (37 Hertz to 125 Hertz). Although the WHT 421 operates with the transmitter used in connection with W462 loudspeakers, the WHT 421 is imported and sold as a single loudspeaker. The WHT 421 contains a single sub-woofer, meaning that this is the one element used to produce sound. According to the Canadian manufacturer, the countries of origin of the major components of the WHT 421 are as follows: the cabinet and other hardware are from Canada; the woofer is from Taiwan; and the amplified/receiver module is from China. Presently, the WHT 421 is marked " Speakers Assembled in Canada with Components from China and Taiwan."

The WHT 462 loudspeaker system consists of a pair of wireless loudspeakers, a wireless transmitter, and various AC adapters and cables. The WHT 462 loudspeakers are commonly referred to as "rear-channel" loudspeakers. The WHT 462 reproduces sounds at mid-range frequencies (200 Hertz to 8,000 Hertz). Each WHT 462 loudspeaker contains a single woofer (also known as a mid-range), meaning that this is the one element used to produce sound. According to the Canadian manufacturer, the countries of origin of the major components of the WHT 462 are as follows: the cabinet and other hardware are from Canada; the woofer is from Taiwan; and the amplified/receiver module, RCA-type cables, AC adapter, and transmitter are from China. Presently, the WHT 462 is marked "Speakers Assembled in Canada with Components from China and Taiwan. Transmitter and AC Adapters Made in China." It is stated that the WHT 462 loudspeaker system and WHT 421 loudspeaker are currently being entered under subheading 8518.21.00, HTSUS.

The Canadian manufacturing process begins by laminating U.S.-origin vinyl to Canadian particle board. The laminated board is then cut into panels ready for assembly. A grille frame is also cut from Canadian particle board, after which it is painted black and wrapped with acoustically transparent cloth. Next, the wood panels are assembled into cabinets, and the amplifier/receiver, crossover, woofer, tweeter, name plate, rear label, and serial number are installed. Lastly, the grille is affixed. A delayed effective date is requested to implement the findings of this ruling.

ISSUE:

What are the country of origin marking requirements of the WHT 462 and W450 loudspeaker systems and the WHT 421 loudspeaker?

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 (or its container) 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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

Section 134.1(b), interim regulations, defines "country of origin" as:

The country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 this part; however for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).

Section 134.1(j), interim regulations, provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g), interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA Marking Rules set out at 19 CFR Part 102, interim regulations.

Section 102.11, interim regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of NAFTA country for marking purposes. Section 102.11, interim regulations, sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a), interim regulations, states that the country of origin of a good is the country in which:

(1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.

In this case, the applicable rule is section 102.11(a)(3), interim regulations. "Foreign material" is defined in section 102.1(e), interim regulations, as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced." Accordingly, in order to determine whether Canada is the country of origin, we must look at those materials whose country of origin is other than Canada. Therefore, for all of the loudspeakers (W450, WHT 421, and WHT 462), all the materials except the cabinet and hardware/crossover are considered foreign materials.

Recoton states that the W450 loudspeakers are classifiable under subheading 8518.22.00, HTSUS, and that the WHT 421 and WHT 462 loudspeakers are classifiable under subheading 8518.21.00, HTSUS. The applicable change in tariff classification set out in section 102.20(p), Section XVI, Chapters 84 through 85, 8518.10-8518.50 of the interim regulations provides:

8518.10-8518.50 ... A change to subheading 8518.10 through 8518.50 from any other heading.

Recoton states that the woofer installed into all of the loudspeakers and the tweeter installed into the W450 are classifiable under heading 8518, HTSUS, and that the receiver module installed into all of the loudspeakers is classifiable under heading 8527, HTSUS. For purposes of the RCA-type cables, AC adapters, and transmitter which are packed with the W450 and WHT 462, section 102.17, interim regulations, states that "[a] foreign material shall not be considered to have undergone the applicable change in tariff classification set out in 102.20, or satisfy the other applicable requirements of that Section by reason of ... (c) Simple packing, repacking or retail packaging without more than minor processing...."

Therefore, the receiver module classifiable under heading 8527, HTSUS, and installed into the W450, WHT 421, and WHT 462, undergoes the applicable change in tariff classification set out in section 102.20(p). However, since the woofer and the tweeter are classifiable under heading 8518, HTSUS, and the RCA-type cables, AC adapters, and transmitter are only packed together for importation and subsequent sale in the U.S., they will not undergo the applicable tariff shift. Therefore, for purposes of determining the country of origin for the W450, WHT 421, and WHT 462, section 102.11(b) of the hierarchial rules must be applied.

Section 102.11(b), interim regulations, provides that:

Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a), the country of origin of the good:

(1) Is the country or countries of origin of the single material that imparts the essential character of the good ...

When determining the essential character of a good under section 102.11, interim regulations, section 102.18(b) provides that only domestic and foreign materials that are classified in a tariff provision from which a change is not allowed shall be taken into consideration, and that in deciding among these materials, consideration is given to various factors, including the nature of the material or component, bulk, quantity, weight, value, and the role of a constituent material in relation to the use of the goods.

Based upon the above factors, we find that for the WHT 421 loudspeaker, the woofer is the single material that imparts the essential character to this good. Accordingly, the country of origin of the WHT 421 wireless "sub-woofer" loudspeaker pursuant to section 102.11(b)(1), interim regulations, is Taiwan.

In regard to the WHT 462 loudspeaker system, a change in tariff classification is not allowed for the woofer because it is classifiable under heading 8518, HTSUS. Furthermore, a change is not allowed for the RCA-cables, AC adapters, and transmitter pursuant to section 102.17 because they only undergo packaging operations. Accordingly, among these materials, we are of the opinion that the single material which imparts the essential character of the WHT 462 loudspeaker system is the woofer from Taiwan since it is the material which reproduces the sound. Therefore, pursuant to section 102.11(b)(1), the country of origin of the WHT 462 loudspeaker system is Taiwan.

In regard to the W450 loudspeaker system, a change in tariff classification is not allowed for the woofer and tweeter because they are both classifiable under heading 8518, HTSUS. Furthermore, a change is not allowed for the RCA-cables, AC adapters, and transmitter pursuant to section 102.17 because they only undergo packaging operations. In determining which material imparts the essential character of the W450 loudspeaker system, it is stated that in order for the W450 to reproduce a wide range of sound frequencies (50 Hertz to 15,000 Hertz), the woofer is needed to produce the lower frequencies (50 Hertz to 1,000 Hertz), and the tweeter is needed to produce the higher frequencies (1,000 Hertz to 15,000 Hertz). Furthermore, it is stated that the differences between the woofer and tweeter only correspond to the wavelength of sounds each is designed to reproduce. Consequently, we find that both the woofer and the tweeter appear to be equally important in reproducing the sound that the W450 system is designed to produce. Therefore, as no one material imparts the essential character of the W450 system, the country of origin of the W450 system cannot be determined pursuant to section 102.11(b)(1), interim regulations.

As the W450 system is not specifically described in the Harmonized System as a set or mixture, or classified as a set, mixture or composite good pursuant to General Rule of Interpretation 3, section 102.11(c), is not applicable.

Therefore, the next step in the country of origin interim regulations hierarchy is section 102.11(d). Pursuant to section 102.11(d):

Where the country of origin of a good cannot be determined under paragraphs (a) through (c), the country of origin of the good is:

(1) The last country in which the good underwent production, other than by simple assembly or minor processing.

"Production" is defined in section 102.1(n) as including, in part, "manufacturing, processing or assembling a good." "Simple assembly" is defined in section 102.1(o) as "the fitting together of five or fewer parts all of which are foreign (excluding fasteners such as screws, bolts, etc.) by bolting, gluing, soldering, sewing or by other means without more than minor processing." "Minor processing" is defined in section 102.1(m) as including, in part, "trimming, filing or cutting off small amounts of excess materials."

Since we have already determined that the receiver module becomes a domestic material, and the cabinet and crossover are domestic materials, all of the parts of the W450 are not foreign. Therefore, the production of the W450 system in Canada does not result from a "simple assembly." Accordingly, pursuant to section 102.11(d)(1), interim regulations, the country of origin of the W450 loudspeaker system is Canada.

Since the country of origin of the WHT 421 and WHT 462 loudspeaker system is Taiwan, and the country of origin of the W450 system is Canada, the marking "Speakers Assembled in Canada with Components from China and Taiwan" is not appropriate. Rather, the container in which the ultimate purchaser receives the WHT 421, WHT 462 system, and W450 system should be marked "Product of Taiwan (or Canada for the W450)," "Made in Taiwan (or Canada for the W450)," or similar wording to indicate the country of origin of the WHT 421, WHT 462 system, and W450 system. The individual components do not require any marking, but they also may be marked "Product of Taiwan (or Canada)," "Made in Taiwan (or Canada)," or similar wording. If the individual components of the loudspeaker systems are marked with a country other than Taiwan (or Canada for the W450 system), the retail container must clearly indicate the country of origin of the WHT 421 and WHT 462 as Taiwan, and W450 as Canada, and must make reference to the countries indicated on the components so that the ultimate purchaser is not misled as the actual origin of the imported good.

Accordingly, we suggest that the container be labeled "Speaker (or Speaker System for the WHT 462 and W450) Made in Taiwan (or Canada)." If the components contain markings other than the country of origin, the container should be marked "with Components from (countries identified on various components)." Additionally, for the WHT 421 and WHT 462, it would also be appropriate to add the words "Assembled in Canada" as long as the country of origin (Taiwan) is preceded by "Made in" or "Product of."

In regard to your request to delay the effective date of this ruling in order to allow time to make the necessary marking adjustments, although you have not submitted any evidence of economic hardship regarding relabeling costs, Customs is willing to delay the effective date of these marking requirements 30 days from the date of this ruling because of the time and labor necessary to relabel any shipments en route.

HOLDING:

Based upon the information provided, pursuant to section 102.11(b)(1), interim regulations, the country of origin of the WHT 421 and WHT 462 loudspeaker system is Taiwan, and the country of origin of the W450 loudspeaker system pursuant to section 102.11(d)(1), is Canada. Marking the container and/or components "Made in Taiwan (or Canada for the W450)" would be acceptable.

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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