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HQ 559109




July 26, 1995

MAR-2 R:C:S 559109 BLS

CATEGORY: MARKING

TARIFF NO.: 8204.20.0000

Mr. Arvind K. Suri
Senior Vice President, Imports
J.F. Moran Co., Inc.
20 Avery Road
Cranston, Rhode Island 02910

RE: Country of origin marking requirements for a multi-socket pin assembly mechanism; substantial transformation; National Hand Tool; subheading 8204.20.00 HTSUS

Dear Mr. Suri:

This is in reference to your letter dated March 2, 1995, on behalf of American International Tool Industries, Inc., requesting a ruling regarding country of origin marking for a "multi-socket pin assembly mechanism" which is assembled in the U.S. You also request the proper classification for the imported metal casing used in the assembly of the completed product. Samples of the imported casing, the pin mechanism, and the completed article, have been submitted.

FACTS:

The imported casing is produced in Taiwan and has been machine cut to resemble a socket or socket holder. The pin mechanism, of U.S.-origin, consists of 30 pins, all of equal size and shape, which are individually attached by springs to a plastic base. In the U.S., the base is assembled with the casing by insertion into the socket hole, which has been machined abroad in conformity with the shape of the plastic base. The finished article will be packaged in a blister pack as a "multi-socket" and will be marketed as a "one socket fits all" tool for homeowners, mechanics, bikers, etc.

You believe that the imported casing is properly classifiable under subheading 8467.99, Harmonized Tariff Schedule of the United States (HTSUS), and that after assembly in the U.S. with the pin mechanism, the completed article should be considered a product of the U.S. You have also enclosed a sample display card as part of the blister pack which reflects the U.S. as
the country of origin, and in addition, includes the following language on the front and back of the display card, near the bottom, in large letters:

MULTI-SOCKET TOOL COMPANY
A DIVISION OF
AMERICAN INTERNATIONAL TOOL INDUSTRIES, INC. 1116-B Park Avenue - Cranston, RI 02910

ISSUES:

1) What are the proper country of origin marking requirements for the multi-socket pin assembly mechanism made from imported and domestic components?

2) What is the proper classification of the imported multi-socket casing?

LAW AND ANALYSIS:

1) Country of Origin Marking

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 United States 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 United States 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., 27 C.C.P.A. 297, 302 (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. The case of United States v. Gibson-Thomsen Co., Inc.. 27 CCPA 267, C.A.D. 98 (1940), provides that an article used in manufacture in the U.S. which results in an article having a name, character or use differing from that of the imported constituent article will be considered substantially transformed. In such circumstances, the U.S. manufacturer will be considered the ultimate purchaser. The
imported article will be excepted from the marking requirements and only the outermost container is required to be marked. (See 19 CFR 134.35(a).) However, if the manufacturing process is merely a minor one leaving the identity of the imported article intact, the consumer or user of the article who obtains the article after the processing will be regarded as the ultimate purchaser. (See 19 CFR 134.1(d)(2).) Thus, as applied to the instant case, the U.S. assembler will be considered the ultimate purchaser of the casing only if the component undergoes a substantial transformation as a result of the assembly operations in the U.S.

In National Hand Tool v. United States, Slip Op. 92-61 (April 27, 1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993), the Court of International Trade held that imported hand tool components which were used to produce flex sockets, speeder handles and flex handles were not substantially transformed when further processed and assembled in the U.S. The components were cold-formed or hot-forged into their final shape prior to importation, with the exception of the speeder handle bars, which were reshaped by a power press after importation. In the U.S., the articles were heat treated, cleaned, and electroplated, and the grip of the flex handles were knurled. The imported components were then assembled with other parts.

The court stated that the determination of a substantial transformation must be based on the totality of the evidence, and applied the criteria of name, character, and use, to determine whether a substantial transformation had occurred. The court found that the character of the articles remained substantially unchanged after heat treatment, electroplating and assembly, as this processing did not change the form of the components as imported, that the use of the imported articles was predetermined at the time of importation, and that the name of the components also remained the same after entry into the U.S. The court discounted plaintiff's argument that a substantial transformation should be found based on the value of the processing performed in the U.S., but decided the issue based solely on the criteria of name, character, and use.

A similar finding was made in Superior Wire v. United States, 867 F.2d 1409 (Fed. Cir. 1989), where the appellate court affirmed the Court of International Trade's holding that a substantial transformation did not occur as a result of the multi-stage processing of drawing wire rod into wire. In that case, the court noted that the "end use of the wire is generally known before the rolling stage and the specifications are frequently determined by reference to the end product for which the drawing will be used." Accordingly, the court found that the character of the final product was predetermined and that the processing did not result in a significant change in either character or use of the imported material. While the wire rod and processed wire had different names and identities in the industry, the court concluded that they were essentially different stages of the same product.

In the instant case, the imported casing is fully machined abroad to conform to the parameters of the U.S.-origin pin mechanism, so that the casing in its imported form can be assembled with
the pin mechanism without any further machining. The final identity and character of the completed article is generally established by the form of the imported casing, which has the outward appearance of a socket. Further, the use of the casing is predetermined at the time of importation, since in its imported form it is intended to be used only as a component of the completed article.

Accordingly, we find that the imported casing does not undergo a substantial transformation as a result of the assembly process in the U.S. Therefore, the ultimate purchaser will be the consumer/user of the finished article. However, pursuant to section 134.34(a)(1), Customs Regulations (19 CFR 134.34(a)(1)), an exception to the marking requirements under 19 CFR 134.32(d) may be authorized in the discretion of the district director for imported articles which are to be repacked after release from Customs custody if the container in which the articles are repacked, in this case the blister pack, will indicate the origin of the articles to the ultimate purchaser in the U.S. The marking on the blister pack under these circumstances may be in a form such as the following:

Casing made in Taiwan
Assembled in the U.S. with U.S. pin mechanism

In addition, we note that the appearance of the U.S. address of the assembler on the display card as reflected on the submitted sample will trigger the requirements of section 134.46, Customs Regulations (19 CFR 134.46). This provision requires that in such case, there shall appear, in close proximity to such address, legibly and permanently, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning. Such country of origin marking must be located on the front and back of the display card, if the U.S. address appears in both locations.

Classification

In our opinion, the imported casing is properly classifiable according to GRI 2(a), under subheading 8204.20.00, HTSUS, which provides for socket wrenches, with or without handles, drives and extensions, and parts thereof. The casing cannot be classified under subheading 8467.99.00, HTSUS, as it is not a part of a pneumatic tool, nor a part of a tool with a self-contained non-electric motor. Articles classifiable under subheading 8204.20.00, HTSUS, are subject to a duty rate of 9% ad valorem.

HOLDING:

1) An imported casing used in the U.S. to produce a multi-socket pin assembly mechanism does not undergo a substantial transformation in the U.S. Therefore, the consumer of the
finished product and not the assembler will be regarded as the ultimate purchaser of the imported casing. However, pursuant to 19 CFR 134(a), an exception to the marking requirements under 19 CFR 134.32(d) may be authorized in the discretion of the district director for imported articles which are to be repacked after release from Customs custody if the container in which the articles are repacked, the blister pack in this case, will indicate the origin of the articles to the ultimate purchaser in the U.S. The appearance of the assembler's U.S. address as reflected on the submitted sample container will also trigger the provisions of 19 CFR 134.46, requiring country of origin marking to be placed in close proximity to the U.S. address, where located, in accordance with the regulatory requirements.

2) In our opinion, the imported casing is properly classifiable under subheading 8204.20.00, HTSUS, which provides for socket wrenches, drives and extensions, and parts thereof. Articles classifiable under this provision are subject to a rate of duty of 9% ad valorem.

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

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