HQ 559550 - Country of origin marking of cargo bars; substantial transformation; 19 CFR ?134.35 - 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 > 1996 HQ Rulings > HQ 559510 - HQ 559720 > HQ 559550

Previous Ruling Next Ruling
HQ 559550

May 15, 1996

CLA-2 RR:TC:SM 559550 kbr

CATEGORY: MARKING

Harry Hamrick
Harry L. Hamrick & Co., Inc.
1487 Watsons Place
Lawrenceville, GA 30243

RE: Country of origin marking of cargo bars; substantial transformation; 19 CFR ?134.35

Dear Mr. Hamrick:

This is in response to your letters received November 9, 1995, requesting a ruling regarding the country of origin marking of a cargo bar component imported into the U.S. and assembled into a finished cargo bar. A sample of the finished cargo bar was submitted with your request.

FACTS:

The cargo bar component is a black steel ratchet-like assembly imported from Taiwan, which is attached to a U.S. manufactured aluminum tube assembly. The purpose of the imported component is to control the length to which a tube may extend. The extending tube slides inside another tube. The imported ratchet component has a round open end which slips over the larger aluminum tube and is tightened into a position on the tube by a simple screw tightening the sides of the open ratchet end. You state that the imported component is 30% of the value of the completed product. Further, the imported component is sometimes sold separately as a replacement part.

ISSUE:

Whether the imported cargo bar component is substantially transformed by the assembly process in the U.S.

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 imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article 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. 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. Inc., 27 CCPA 297, 302, C.A.D. 104 (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. For country of origin marking purposes, a substantial transformation of an article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the article before the processing. See HQ 558747 (January 20, 1995).

Section 134.35, Customs Regulations (19 CFR ?134.35), states that the manufacturer or processor in the U.S. who converts or combines the imported articles into articles having a new name, character or use will be considered the ultimate purchaser of the imported article within the scope of 19 U.S.C. 1304 and the article will be excepted from marking.

A substantial transformation occurs when articles lose their identity and become new articles having a new name, character, or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940); Koru North America v. United States, 12 CIT 1120, 701 F. Supp. 229 (1988). The question of when a substantial transformation occurs for marking purposes is a question of fact to be determined on a case-by-case basis. Uniroyal Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026 (1982), aff'd, 1 Fed. Cir. 21, 702 F.2d 1022 (1983).

The country of origin marking requirements for the imported component that are used in the assembly of the cargo bar in the U.S., depends upon whether a substantial transformation occurs as a result of the U.S. assembly operation. If the imported component is substantially transformed as a result of the assembly operation, then the imported component is excepted from being individually marked with its foreign origin and only the outermost containers in which the component is imported must be marked to indicate the component's foreign origin.

In HQ 559558 (December 14, 1995), Customs held that a wheel assembly was substantially transformed when attached to a garbage receptacle. It was determined that the wheels became an essential component of the greater whole and had a new name character and use.

In the instant case, you are importing a rachet-like assembly from Taiwan. In the U.S., this rachet-like component is assembled with U.S. tube components by slipping the component over the end of an aluminum tube and tightening the component into position. After assembly, the cargo bar may be used by extending a tube and locking the extension tube into place. The wide tubed area of the assembled cargo bar will then retain cargo in position. We find that the imported component undergoes a change in name, character and use after assembly. See i.e. Section 10.12(e) (19 CFR ?10.12(e)) (which states that "the manufacturing process must be such that the foreign components or materials have been substantially transformed into a new and different article, or have been merged into a new and different article.) Therefore, only the outermost container in which the components are imported must be marked with the country of origin, Taiwan. However, after assembly with U.S. components in the U.S., the finished cargo bar is excepted from country of origin marking.

The imported component is sometimes sold separately as a replacement part. When sold as a part, rather than assembled into a finished cargo bar, the imported component or its container, must be marked with its country of origin, Taiwan, in accordance with 19 CFR ?134.11 and 19 CFR ?134.24.

HOLDING:

Based upon the information provided, we find that for purposes of 19 U.S.C. 1304, the processing in the U.S. of the imported cargo bar component in the manner set forth above constitutes a substantial transformation; therefore, the finished cargo bar is excepted from country of origin marking. Upon entry, the imported component, or its container, must be marked with the country of origin, Taiwan. When the imported component is sold as a replacement part, it must be appropriately marked with the country or origin, Taiwan.

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

Previous Ruling Next Ruling