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HQ 559408




March 25, 1996

MAR 02- RR:TC:SM 559408 KKV

CATEGORY: MARKING

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

RE: Country of origin marking; battery packs; battery cells; U.S. components assembled in China; HRL 731507; HRL 729938; 19 CFR 10.22

Dear Mr. Miller:

This is in response to your letter dated August 24, 1995, which seeks additional clarification regarding New York ruling 808423, concerning the country of origin marking requirements for imported battery packs which have been assembled in China, or other countries, from battery cells of U.S. components and other foreign components. An unmarked sample of the battery pack has been submitted for our review.

FACTS:

The submitted sample of the finished battery pack consists of a rectangular plastic housing containing six (6) nickel-cadmium battery cells which are wired together and connected to external contact plates. We are informed that the U.S. origin cells are shipped to China where, together with other foreign components, the cells are assembled into finished battery packs before importation into the United States.

We note that, although your letter requests "reconsideration" of New York ruling 808423, your current inquiry focuses upon facts and proposed marking which differ slightly from your initial request. Therefore, your request will be treated as a separate request for a ruling under the purview of 19 CFR Part 177 and this ruling shall not be construed as an affirmation, modification or overruling of New York ruling 808423.

ISSUE:

Whether the proposed markings, "Made in China" or "Cells Made in USA, Assembled in China" are acceptable country of origin markings for battery packs assembled in China from U.S. origin battery cells.

LAW AND ANALYSIS:

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 of the Customs Regulations implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.41(b), mandates that the ultimate purchaser in the United States must be able to find the marking easily and read it without strain.

As a general matter, "country of origin" is defined in section 134.1(b), Customs Regulations, 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, an exception to the general rule that the country of origin of an article is the country where the last substantial transformation occurs, is set forth in section 10.22, Customs Regulations (19 CFR 10.22), which specifies the following country of origin marking requirements for articles entitled to a duty exemption under subheading 9802.00.80, HTSUS:

Assembled articles entitled to the exemption are considered products of the country of assembly for the purposes of the country of origin marking requirements of section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304). If an imported assembled article is made entirely of
American-made materials, the United States origin of the material may be disclosed by using a legend such as "Assembled in from material of U.S. origin," or a similar phrase.

In this case because U.S. origin battery cells are exported to China to be assembled into finished battery packs, it appears that the finished battery packs will be eligible for the partial duty exemption under subheading 9802.00.80. Thus, the country of origin marking for the imported battery packs is determined by the requirements of 19 CFR 10.22.

We note, however, that Customs has issued a notice of proposed rulemaking to remove 19 CFR 10.22 in conjunction with the "Rules for Determining the Country of Origin of a Good for Purposes of Annex 311 of the North American Free Trade Agreement; Rules of Origin Applicable to Imported Merchandise" published on May 5, 1995, in the Federal Register, 60 Fed. Reg. 22312. If the proposal to repeal 19 CFR 10.22 is adopted as a final rule and the U.S. components are not substantially transformed into a new and different article as a result of the assembly performed abroad, the battery packs may not have to be marked upon their return to the United States. Customs may adopt new regulations which prescribe the circumstances for the general use of the words "Assembled in" as a country of origin indicator. In the interim period, however, Customs will continue to apply 19 CFR 10.22 to determine the country of origin of imported articles eligible under subheading 9802.00.80, HTSUS, for country of origin marking purposes.

Your current request for a ruling asserts that, where U.S. origin battery cells are exported to China for assembly into battery packs, the finished battery packs may appropriately be marked either "Made in China" or "Cells Made in U.S.A., Assembled in China." In support of your position, you asserted that the latter marking, "Cells Made in U.S.A., Assembled in China," is appropriate because the marking "conforms with Section 134.46 because Assembled in' is equivalent to Made in' for purposes of articles eligible for 9802.00.82 partial duty exemption" and reference Headquarters Ruling Letter (HRL) 731507, dated October 17, 1989.

In HRL 731507, Customs determined that under the provisions of section 10.22, the phrase "Made in", "Product of", or "Assembled in," used by itself, preceding the country of assembly or merely the name of the country of assembly constitute acceptable country of origin marking, where all or part of the assembled article consists of U.S. materials. Customs also ruled that the origin of the materials comprising the assembled article may be added to the country of origin designation, whether or not the article consists entirely of U.S. materials, thus holding that "Assembled in ____ from U.S. and Japanese material" is a proper marking.

However, we note that, in HRL 729938, dated May 13, 1987, Customs considered appropriate marking for wearing apparel assembled in Mexico and imported under item 807.00, Tariff Schedules of the United States. In that case, the wearing apparel was made either entirely of U.S. components or primarily of U.S. components. Customs held that, if an article contains any foreign material, either the identification of the U.S. components must be omitted or the foreign components must be identified as well. The rationale behind this decision was to prevent the ultimate purchaser from being misled into believing that all components came from the United States when, in fact, they did not.

Thus, in light of the aforementioned analysis, Customs rejects the marking "Cells Made in USA, Assembled in China" as insufficient. The subject battery packs may be marked "Made in China" or "Assembled in China." In the alternative, once information establishing the country of origin (China) has been set forth first, Customs would permit the inclusion of the origin of the materials comprising the assembled article, provided however, that all components are appropriately identified. Thus, Customs would accept "Assembled in China from U.S. and foreign materials."

Finally, you request clarification as to the country of origin of battery packs assembled in China from cells of U.S. origin for purposes of completing a Shipper's Export Declaration (SED). As previously stated, as a general rule, the country of origin of an article is the country where the last substantial transformation occurs. In instances where, as here, foreign processing is limited to mere simple assembly operations, the article has not been substantially transformed into a new and different article. Thus, for customs origin purposes other than marking, the country of origin of battery packs assembled in China from cells of U.S. origin is the United States. However, this finding is not binding upon the U.S. Department of Commerce, within whose jurisdiction lies the administration of the Shipper's Export Declaration. Therefore, we recommend that you contact that agency for a binding determination as to the proper preparation of that form.

HOLDING:

Where U.S. origin battery cells are shipped to China and, together with other foreign components, are assembled into finished battery packs before importation into the United States, the battery packs may be marked "Made in China" or "Assembled in China" pursuant to the requirements of 19 CFR 10.22. In the alternative, once information establishing the country of origin (China) has been set forth first, Customs would permit the inclusion of the origin of the materials comprising the assembled article, provided however, that all components are appropriately identified; thus, Customs would accept "Assembled in China from U.S. and Chinese materials" or "Assembled in China. Cells made in USA. Other components made in China." The marking "Cells Made in USA. Assembled in China" is not acceptable.

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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