HQ 735096 - Country of origin marking requirements for aluminum extrusions imported from Mexico to be assembled in the U.S. into louvers and grilles; Article 509; NAFTA Marking Rules; section 102.11(a) of the interim regulations; section 102.16(a)(2) of the interim regulations; section 134.35(b) of the interim regulations; substantial transformation. - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1995 HQ Rulings > HQ 558985 - HQ 735131 > HQ 735096

Previous Ruling Next Ruling
HQ 735096

March 22, 1995

Mar-2-05 CO:R:C:S 735096 AT

CATEGORY: MARKING

Leslie Alan Glick, Esq.
Richard Burke, Esq.
Porter, Wright, Morris & Arthur
1233 20th Street, N.W.
Washington, D.C. 20036-2395

RE: Country of origin marking requirements for aluminum extrusions imported from Mexico to be assembled in the U.S. into louvers and grilles; Article 509; NAFTA Marking Rules; section 102.11(a) of the interim regulations; section 102.16(a)(2) of the interim regulations; section 134.35(b) of the interim regulations; substantial transformation.

Dear Sirs:

This is in response to your letters dated April 8, 1993, and April 29, 1994, on behalf of Construction Specialties, Inc. ("CSI") concerning the country of origin marking requirements for imported Mexican aluminum extrusions that are to be used in making fixed, operating and penthouse louvers and grilles in the U.S. Additional information consisting of a video tape, diagrams, photographs and a written narrative detailing the manufacturing process of a fixed operating formed acoustic louver as well as samples of the unassembled extrusions was submitted on November 17, 1994, for our review. We regret the delay in responding.

FACTS:

CSI intends to import Mexican aluminum extrusions into the U.S. to be used in the manufacture of fixed, operating and penthouse louvers and grilles at their Del Rio, Texas, facility. According to your submission, some of the components that are used in the manufacture of the finished louvers and grilles such as the screens and insulation blank-offs are manufactured in the U.S. at the Del Rio facility. You state that the CSI performs the following operations to make the U.S. origin screens and insulation blank-offs.

The screens are used to cover all or part of the louvers. Four pieces that make up the screen extrusion frame are joined together one by one at the corners with an aluminum corner clip and are then crimped, with four crimps per corner, to secure the assembly of the frame. A screen (mesh) material is then aligned with the frame. A screen-to-frame clip is used to attach the screen to the frame at a number of locations around the perimeter of the frame. Holes are punched into the frames according to the layout specifications of each screen type. The finished screens are then inspected.

The first step in the manufacture of the insulated blank-off involves the shearing of two pieces of custom size sheeting. Each sheet is then formed on two of its four sides to form half of the insulated blank-off. The two halves are then ready to be assembled to the pre-cut insulated material. Holes are punched and an adhesive is then applied to the inside of each formed insulated blank-off and the two pieces are pressed together. The finished blank-off is then inspected.

According to your submission, the manufacturing process of the louvers and grilles is distinct from each other as described in the following paragraphs.

Assembly of Fixed Louvers

The fixed louvers are assembled according to the specifications set forth in the layout order. First, holes are punched in the jambs and/or mullions, as well as in the sill, head and blade extrusions. The head and sill are then mechanically fastened to the ends of the jambs and/or mullions. Next, the blades are assembled with the jambs and/or mullions by attaching both ends of the jambs and/or mullions with the sill, head and blades. During this assembly process, various holes, notching and/or modifications are required and are performed by the individual assembler as the need arises. Depending on the specific layout order, a single or series of structural extrusions are added to the back of the louver at pre-specified locations. They may be combined with the extruded blade braces to support additional structural loads.

The layout order may specify that screens and/or insulated blank-offs be attached to the front or back of the fixed louver by sheet metal screws. The finished fixed louvers are then inspected and packaged for shipping. Assembly of Operating Louvers

The assembly of the operating louver essentially mirrors the steps of the assembly of the fixed louvers. Layout orders determine the size and type of operating louver. The extruded aluminum profiles are attached to the head and sill of each jamb and/or mullion, except that the holes in the jamb and/or mullion is larger (.725" dia.) along the entire length of the jamb and/or mullion. The holes are then press-fitted with a self-lubricating nylon bearing that allows the pinion to pivot during the normal operation of the louver.

Simultaneously, a subassembly of the blades that attach to the jambs and/or mullions is undertaken. A custom made aluminum die cast pinion is press-fitted into the end of the blade extrusion (a double-boss is extruded into the blade so that it may accept the pinion). Continuous vinyl gaskets are attached along the length of the blades to minimize air and water leakage when the louver is in its closed position. Other vinyl gaskets are riveted to the end of the blade also to prevent water leakage.

The blade subassembly is then assembled with the jambs or mullions by inserting the pinions through the bearing and fastening each blade to the jamb with a locking type nut. This process is then repeated on the other side of the louver until all the blades have been assembled, except that a continuous linkage operator bar is assembled into the pinions at one side of the louver. The operator bar acts as the transmission used to move the operating blades simultaneously. The operating mechanism is then installed to the other end of the linkage so that all louvers may be mechanically opened and closed.

Again, screens and blank-offs may be attached to the operating louvers pursuant to the layout order. The finished fixed louvers are then inspected and packaged for shipment to the U.S. customer.

Assembly of Penthouse Louvers

The basic steps in the assembly of the penthouse louver are similar to those necessary to assemble the fixed louver. Layout orders determine the type and size of penthouse louver. The extruded aluminum profiles are attached to the head and sill of each jamb and/or mullion.

Assembly of the penthouse louvers requires the use of structural extruded aluminum profiles to mount the louver assembly in the opening. Structural loading requirements determine the size and type of the structural extruded profiles. If required, additional structural support may be provided by attaching blade braces with pre-punched holes to the structural extruded profiles through the use of stainless steel bolts, nuts and washers.

Assembly of a penthouse roof, from parts manufactured in Mexico, is performed and attached to the louver. Insulated blank-offs and screens may also be attached to the penthouse louver. Finally, the penthouse louver may require a formed trim. The formed trim is installed onto the penthouse louver with stainless steel screws. The finished penthouse louvers are then inspected and packaged for shipment to the U.S. customer.

Assembly of Grilles

A layout order is prepared which determines the quantities, models and sizes of grilles. The first step that must be performed is the assembly of a vertical and horizontal grid. At this stage, the "X" blade, manufactured by CSI using formed trim with punched slots, may be inserted into the grid. Subsequently, a locking cap made from extruded profiles is assembled to the grille. The locking cap locks all of the other components so that a single grille is formed.

Depending on the structural loading required, a single or series of extruded aluminum profiles may be added to the grille at a specified location, horizontally or vertically to give the grille additional structural support. Blank-off sheets and form trims may also be added to the grille at this point, depending on the layout order. The operations for the assembly of these items into the grille follows the steps of similar operations in the assembly of the louvers.

The grilles may also require the assembly of aluminum castings which are manufactured in the U.S. The castings are installed in the grille subassembly with stainless steel screws. The finished grilles are then inspected and packaged for shipment to the U.S. customer.

You state that throughout the assembly process of the louvers and grilles, operations such as drilling, trimming, welding, gluing, cutting to shape, hole punching, notching and fastening, are required to be performed by the individual assembler which involves a great deal of skill, complexity and time. Based on this, you assert that the imported aluminum extrusions are substantially transformed in the U.S. in that thename, character and use of the imported parts change as a result of the U.S. operations. Thus, you maintain that CSI is the ultimate purchaser of the imported aluminum extrusions and the articles themselves are excepted from country of origin marking and only the outermost containers in which the aluminum extrusions are imported must be marked with the country of origin--Mexico.

ISSUE:

What are the country of origin marking requirements of the imported aluminum extrusions which are to be used in the manufacture of louvers and grilles in the manner described above?

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.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the interim amendments to the Customs Regulations published as T.D. 94-4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994, to coincide with the effective date of the NAFTA. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in T.D. 94-4 (adding a new Part 102, Customs Regulations). The marking requirements of these goods are set forth in T.D. 94-1 (interim amendments to various provisions of Part 134, Customs Regulations).

Section 134.1(b) of the interim regulations, 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 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) of the 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) of the interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the interim regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.

In order to determine the country of origin marking requirements, we must first apply the NAFTA Marking Rules to determine whether the imported aluminum extrusions are goods of a NAFTA country prior to being further processed in the United States. Part 102 of the interim regulations, sets forth the NAFTA Marking Rules for purposes of determining whether a good is a good of a NAFTA country for marking purposes.

You state that the aluminum extrusions are imported from Mexico. In the absence of specific facts, we are assuming for purposes of this ruling, that the aluminum extrusions will be determined to be goods of Mexico pursuant to Part 102, at the time of importation from Mexico.

However, the Mexican aluminum extrusions imported into the U.S. are to be assembled by CSI into fixed blade louvers, operating blade louvers, penthouse louvers and grilles. Thus, the country of origin marking requirements of the finished louvers and grills will be based on the determination of whether the processing in the United States would cause the finished louvers and grilles to be of United States origin pursuant to the NAFTA Marking Rules. To make this determination, an analysis of the Part 102 rules must be undertaken. Section 102.11(a) of the interim regulations states that "[t]he 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 requirements of these rules are satisfied." "Foreign Material" is defined in section 102.1(e) of the 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."

Section 134.35(b), Customs Regulations (19 CFR 134.35(b)), states that:

A good of a NAFTA country which is to be processed in a manner that would result in the good becoming a good of the United States under the NAFTA Marking Rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.

Applying the NAFTA Marking Rules to the Mexican aluminum extrusions and the assembly operations to be performed in the United States, no determination of country of origin can be made under section 102.11(a)(1) and (a)(2) of the interim regulations. The finished product, a louver or grille, is neither wholly obtained or produced in a single country as is provided under section 102.11(a)(1), nor is the finished product produced exclusively from domestic materials (i.e., materials of U.S. origin) as provided under section 102.11(a)(2). Thus, paragraph (a)(3) of section 102.11 is the applicable rule that next must be applied to determine the origin of the finished louvers and grilles.

The imported aluminum extrusions are classified under subheading 7610.90, HTSUS. The finished louvers and grilles are classified in the same subheading. The applicable change in tariff classification set out in section 102.20(o), Section XV, Chapters 72 through 83, 7606-7615 of the interim regulations provides:

7606-7615 .... A change to heading 7606 through 7615 from any other heading, including another heading within that group.

Since the imported Mexican aluminum extrusions are classified under subheading 7610.90 before and after they are assembled into louvers or grilles, the applicable tariff shift requirement is not met.

However, because subheading 7610.90, HTSUS, provides for both the good itself (louvers and grilles) and its parts (aluminum extrusions) the applicable rule that must be applied to determine the origin of the finished louvers and grilles is section 102.16(a)(2) of the interim regulations. Section 102.16(a)(2) provides that if the applicable tariff shift does not occur because:

The heading for the good provides for both the good itself and its parts and is not further subdivided into subheadings, or the subheading for the good provides for both the good itself and its parts, the country of origin of a good is the country in which the good was produced provided that the production of the good results in a substantial transformation of those parts. (Emphasis (added).

Section 102.1(p) of the interim regulations states that "substantial transformation means production which results in a new article, with a new name, character, and use." 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 Linen v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 1368 (1984).

In this case, we find that the imported Mexican aluminum extrusions are substantially transformed, in that there is a change in the name, character and use, as a result of the processing and assembly operations performed in the U.S. The imported aluminum extrusions do not have any independent function or a separate commercial use other than to be assembled into a finished louver or grille. The character of the extrusions changes as they become part of the finished article; they do not remain separate articles after assembly. The finished article, louver or grille, is a distinct article with a new name, character, and use which is different from its individual components. The assembly operations performed in the U.S. to make the finished louvers and grilles in our opinion are complex. For example, review of the video tape and photographs indicate that, to assemble the sample operating louver, at least 17 components must be assembled by the assembler by means of gluing, welding and screwing. Additional operations such as drilling, trimming, cutting to shape, hole punching and notching must also be performed by the assembler. Also, the assembly operation involves a significant amount of time. The video tape indicates that it takes approximately 18 minutes to assemble a fixed louver and approximately 45 minutes to assemble an operating louver. Thus, the imported Mexican aluminum extrusions do become goods of the U.S. as a result of the U.S. operations. Accordingly, in accordance with section 134.35(b), the aluminum extrusions are excepted from being individually marked with their country of origin--Mexico--and because the aluminum extrusions are processed by CSI, the outermost containers in which the extrusions are imported are also excepted from country of origin marking. HOLDING:

Assuming that the imported aluminum extrusions are goods of Mexico, pursuant to section 102.16(a)(2) of the interim amendments to the Customs Regulations, the processing and assembly operations performed in the U.S. to make fixed louvers, operating louvers, penthouse louvers and grilles, in the manner described above, result in a substantial transformation of the imported aluminum extrusions into goods of the U.S. Accordingly, in accordance with section 134.35(b), the aluminum extrusions are excepted from being individually marked with their country of origin--Mexico--and because the aluminum extrusions are processed by CSI, the outermost containers in which the extrusions are imported are also excepted from country of origin marking.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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

Previous Ruling Next Ruling