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CLA 2 RR:TC:SM 559431 AT

MODIFICATION OF RULING LETTER RELATING TO THE COUNTRY OF ORIGIN MARKING OF IMPORTED GOLF CLUB SETS
AGENCY: U.S. Customs Service, Department of the Treasury ACTION: Notice of modification of country of origin marking ruling letter.
SUMMARY: Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement ("NAFTA") Implementation Act (Pub. L. 103-182, 107 Stat. 2057 (1993), this notice advises interested parties that Customs is modifying a ruling issued pursuant to 19 CFR Part 181 regarding a country of origin determination under 19 CFR Part 102 (NAFTA "Marking Rules") for imported golf club sets. Notice of the proposed modification was published on July 24, 1996, in the Customs Bulletin, volume 30, Number 29/30. EFFECTIVE DATE: This decision is effective for merchandise entered or withdrawn for warehouse for consumption (on or after 30 days after the date of publication in the Customs Bulletin). FOR FURTHER INFORMATION CONTACT: Anthony Tonucci, Special Classification and Marking Branch, (202-482-7073). SUPPLEMENTAL INFORMATION:
Background
On July 24, 1996, Customs published a notice in the Customs Bulletin, Volume 30, Number 29/30, proposing to modify a New York ruling letter (NY) 810816, issued June 1, 1995, which held that pursuant to section 102.14, interim Regulations (19 CFR 102.14), the country of origin of imported golf club sets assembled in Canada from U.S. origin stainless steel heads and rubber grips and Japanese origin stainless steel shafts is Canada, and thus marking the outside carton with the words "Assembled in Canada" was an acceptable country of origin marking for the imported golf club sets. No comments were received in response to this notice. Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement ("NAFTA") Implementation Act (Pub. L. 103-182, 107 Stat. 2057 (1993), this notice advises interested parties that Customs is modifying NY 810816 to reflect that pursuant to section 102.11(d)(2)(i), Customs Regulations (102.11(d)(2)(i)), the country of origin of the imported golf club sets is "Canada", rather than pursuant to section 102.14, as erroneously held in NY 810816. It remains Customs' position that the imported golf club sets are of Canadian origin and marking their retail container "Assembled in Canada" is an acceptable country of origin marking for the imported golf club sets. NY 810816 is set forth in "Attachment A". Headquarter's Ruling Letter 559431 modifying NY 810816 is set forth in Attachment B to this document. Dated:

John Durant, Director
Tariff Classification
Appeals Division

Attachments

HQ 559431

September 3, 1996
Mar-2 RR:TC:SM 559431 AT

CATEGORY: MARKING

Mr. Daniel Murphy
Operations Manager
DiMarco Golf
4500 Dixie Rd., Unit 12 A
Mississauga Canada L4W1V7

RE: Modification of NY 810816 concerning country of origin marking requirements of imported golf clubs assembled in Canada from U.S. and Japanese origin components; Article 509; NAFTA Marking Rules; section 102.11 of the interim regulations

Dear Mr. Murphy:

This letter is to inform you that Customs is reconsidering your original submission dated May 16, 1996, submitted to the National Import Specialist, New York Office, requesting a ruling concerning the country of origin marking requirements for imported golf clubs which are assembled in Canada from U.S. and Japanese components.

FACTS:

According to your May 16, 1996 submission, DiMarco Golf imports golf clubs into the U.S. which are assembled in Canada from U.S. and Japanese components. You state that all of the components (stainless steel heads, rubber golf club grips, ferrules and two sided grip tape) are of U.S. origin, except the stainless steel shafts which are of Japanese origin. These components are assembled in Canada into 8 piece golf club sets consisting of 7 irons (3,4,5,6,7,8, and 9) and a pitching wedge. You submit that the assembly operation performed in Canada to make the golf clubs consists of the following steps:

1. Cutting the stainless steel shaft.

2. Applying the ferrule to the shaft.

3. Epoxying the head to the shaft.

4. Applying the grip to the shaft.

5. Packaging the golf club sets ready for shipment.

6. Marking the carton "Assembled in Canada".

You inquired as to whether marking the outside carton in which the golf club sets were packaged with the words "Assembled in Canada" would be an acceptable country of origin marking for the imported golf club sets. In NY 810816 dated June 1, 1995, our New York office ruled that pursuant to section 102.14, interim Customs Regulations (19 CFR 102.14), the country of origin of the imported golf club sets is Canada, and thus marking the outside carton with the words "Assembled in Canada" was an acceptable country of origin marking for the imported golf club sets. We have determined, for the reasons set forth below, that our New York office erred in their analysis and conclusion that the country of origin of the imported golf club sets is "Canada" pursuant to section 102.14 of the interim regulations. Thus, modification of that ruling is required.

ISSUE:

What are the country of origin marking requirements of the imported golf club sets which are assembled in Canada with U.S. components and Japanese-origin stainless steel heads 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). The rules currently used for determining the country of origin of a good imported from a NAFTA country ("Marking Rules") are contained in Part 102, interim Customs Regulations (19 CFR Part 102) [final rule published as T.D. 96-48 in the Federal Register on June 6, 1996, effective on August 5, 1996, 61 FR 28932].

Section 134.1(b) of the Customs 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 Customs 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 Customs 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 Customs 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 this case, the golf club sets are assembled in Canada from U.S. and Japanese origin components. Thus, in order to determine the appropriate marking requirements for the imported golf club sets, we must determine under the NAFTA Marking Rules the country of origin of the golf clubs which are assembled in Canada in the manner described above.

Section 102.11 of the interim Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining country of origin of goods from NAFTA countries for marking purposes. Section 102.11(a) of the interim Customs 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 Customs 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."

Since the individual golf clubs (7 irons and a pitching wedge) which make up the imported golf club sets are assembled in Canada from U.S. and Japanese components (foreign, as defined in section 102.1(e) of the interim regulations) the golf clubs are neither wholly obtained/produced nor produced exclusively from domestic materials. Therefore, paragraphs (a)(1) and (a)(2) of section 102.11 cannot be used to determine the country of origin of the golf club sets. Thus, paragraph (a)(3) of section 102.11 is the applicable rule that next must be applied to determine the origin of the finished article.

The three components (excluding fasteners) of the assembled golf clubs, in this case, consists of the U.S. origin stainless steel shaft and rubber grips, and the Japanese origin stainless steel heads. The completely assembled golf clubs are classified under subheading 9506.31, HTSUS. The stainless steel heads and shafts and the rubber golf grips are classified as parts of golf clubs under subheading 9506.39, HTSUS. The applicable change in tariff classification set out in section 102.20(s), Section XX, Chapters 94 through 96, 9506.31 of the interim regulations provides:

9506.31 ..... A change to subheading 9506.31 from any other subheading, except subheading 9506.39.

In this case, since the foreign stainless steel shafts and heads and the rubber grips are classified under subheading 9506.39, HTSUS, they do not undergo the applicable change in tariff classification set out in section 102.20(s), and, as a result, section 102.11(b) of the hierarchial rules must be applied next to determine the country of origin of the assembled golf clubs. Section 102.11(b) of the interim Customs 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, or

(2) If the material that imparts the essential character of the good is fungible, has been commingled, and direct physical identification of the origin of the commingled material is not practical, the country or countries of origin may be determined on the basis of an inventory management method provided under the Appendix to part 181 of the Customs Regulations.

Although the imported articles are commonly referred to as "golf club sets" they are not described in the Harmonized System as a set, or are classified as a set pursuant to General Rule of Interpretation 3. Thus, section 102.11(c) is not applicable, but section 102.11(b) must be applied in determining the origin of the golf clubs.

Applying section 102.11(b)(1), to the facts of this case, we find that there is no single material that imparts the essential character to the golf clubs. In our opinion, in this case, all three components (stainless steel golf club shafts and heads and the rubber golf club grips) are essential parts of the golf clubs. Accordingly, since section 102.11(c) is not applicable, section 102.11(d) of the hierarchial rules must be applied next to determine the country of origin of the golf clubs.

Section 102.11(d) of the interim Customs regulations provides that:

(d) Where the country of origin of the good cannot be determined under paragraph (a),(b) or (c) of this section, the country of origin of the good shall be determined as follows: (1) The last country in which the good underwent production, other than by simple assembly or minor processing, or

(2) If the good is produced by simple assembly:

(i) The country in which the good is assembled if the parts that merit equal consideration as imparting the essential character of the good do not have the same country of origin, or

(ii) The country of origin of the parts assembled into the good that merit equal consideration as imparting the essential character of the good if all those parts have the same country of origin.

"Simple assembly" is defined in section 102.1(o) of the interim Customs Regulations 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. (Emphasis added).

Based on the facts in this case, the golf clubs are produced in Canada as a result of "simple assembly" since there are only three components (heads, shafts and grips) all of which (excluding fasteners) are foreign and are fitted together by gluing. On the other hand, since these components have different countries of origin--the U.S. and Japan--section 102.11(d)(2)(i) of the interim Customs Regulations, is the applicable rule for determining the country of origin of the golf clubs. Applying section 102.11(d)(2)(i) to the facts in this case, we find that the country of origin of the imported golf club sets is Canada-- the country in which the goods are assembled. Accordingly, the individual golf clubs or their retail containers in which the golf club sets are sold to the ultimate purchaser in the U.S., must be marked to indicate Canada as the country of origin of the golf club sets in accordance with the marking requirements of 19 U.S.C. 1304.

We note that while it appears that the golf clubs which are assembled from U.S. origin stainless steel heads and rubber grips are eligible for a partial duty exemption under 9802.00.80, HTSUS and that the country of origin marking requirements of 19 CFR 10.22 apply, please note that in T.D. 96-48 published at 61 F.R. 28932, 28955 (June 6, 1996) Customs has removed 19 CFR 10.22. Also, section 102.14 has been removed pursuant to T.D. 96-48 as well. These regulatory amendments will be effective for goods entered, or withdrawn from warehouse, for consumption on or after August 5, 1996.

However, pursuant to section 134.43(e), Customs Regulations (19 CFR 134.43(e)), also amended by T.D. 96-48 and effective on August 5, 1996, marking the retail containers in which the imported golf club sets are sold to the ultimate purchaser in the U.S. with the words, "Assembled in Canada", is an acceptable country of origin marking since Canada--the country of final assembly--is the country of origin of the golf club sets.

HOLDING:

Pursuant to 19 CFR 102.11(d)(2)(i) the country of origin of imported golf club sets which are assembled in Canada from U.S. origin stainless steel heads and rubber grips and Japanese-origin stainless steel shafts in the manner described above, is Canada. New York ruling 810816 is hereby modified in accordance with this ruling.

Pursuant to 19 CFR 134.43(e), marking the retail containers in which the golf club sets are sold to the ultimate purchaser in the U.S. with the words "Assembled in Canada" is an acceptable country of origin marking for the imported golf club sets under 19 U.S.C. 1304, for those that are entered, or withdrawn from warehouse, for consumption on or after August 5, 1996.

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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