HQ 734659 - Country of origin marking of imported "Schick" razors; substantial transformation; Partially manufactured and assembled in Hong Kong and China - United States International Trade Commision Rulings

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HQ 734659

October 1, 1992

MAR-2-05 CO:R:C:V 734659 AT

CATEGORY: MARKING

Thomas Czubak, Esq.
Warner-Lambert Company
201 Tabor Road
Morris Plains, New Jersey 07950

RE: Country of origin marking of imported "Schick" razors; substantial transformation; Partially manufactured and assembled in Hong Kong and China

Dear Mr. Czubak:

This is in response to your letter of May 21, 1992, on behalf of Schick Ltd. (Schick), requesting a ruling on the country of origin of imported razors (Styles "Slim Twin" and "Tracer"). Photographs of parts and process flow, cost breakdowns, as well as the complete components used in the production of each style of razors were submitted for examination.

FACTS:

You state that Schick intends to import two razor products "Slim Twin" and "Tracer" from Hong Kong. You also state that the production of the razors will involve processing operations performed in two countries, Hong Kong and China. You claim that all the components that are assembled in Hong Kong and China are entirely manufactured in Hong Kong.

In the case of the "Slim Twin" razors the operations to be performed in China consists of assembling the frame, cam lever, pusher part, plated pivots, pusher sub-assembly, weight insertion and ultrasonic welding. After these operations are performed, the partially completed razors are shipped back to Hong Kong for final assembly which consists of electro-plating the shroud, silk screening the shroud and attaching the blank cartridge to the frame. You contend that the operations performed in Hong Kong represent approximately 77.2 percent of the total value of the finished razors.

In the case of the "Tracer" razors the operations of assembling the razor head will be performed in China consisting of assembling and heat stamping the top cover, assembling, heat stamping and inserting the actuator to the top, assembling and heat stamping the bottom frame and attaching the top cover to the bottom frame. and assembling the razor head of the razor involving the following assembling the htotal cost breakdown for of the

"Slim Twin" razor. you state that the following operations will be performed. in China components are manually The operations to be performed in Korea will consist of the cutting of Korean fabric into approximately 12 pieces which form the stuffed toy skin. These 12 pieces will then be exported to China where they will be sewn together into the skin for the stuffed toy. The skins will then be sent back to Korea where they will be stuffed with Korean stuffing material, sewn closed, the eyes and nose will be sewn on and packaged for shipment to the U.S. You state that the operations performed in Korea represent approximately 80 percent of the total value of the finished stuffed toys. You state that the cutting of the Korean fabric into the 12 pieces in Korea constitutes a substantial transformation and that the sewingoperation performed in China does not. Based on this you contend that the country of origin of the stuffed toys is Korea.

ISSUE:

What is the country of origin of the imported stuffed toys that are processed under the conditions described above?

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 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. 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. Friedlander & Co., 27 C.C.P.A. 297 at 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 transform- ation in order to render such other country the "country of origin" within the meaning of Part 134. A substantial transformation occurs when articles lose their identity and become new articles having a new name, character, or use. Koru North America v. United States, 12 CIT 1120, 701 F.Supp. 229 (1988). The question of when a substantial transformation occurs 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). (Although the stuffed toys consist of textile materials, the rules for determining the country of origin for textile products set forth in section 12.130 are not applicable because they are classified outside of section XI, HTSUS and they are not subject to quota).

In determining whether the assembly 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 Linens v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2 Fed.Cir. 105, 741 F.2d. 1368 (1984). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See, C.S.D.s 80-111, 85-25, 89-110, 89-118, 89-129 and 90-97.

In HQ 734214 (November 18, 1991), we considered whether the assembly in China of Taiwanese fishing rod components constituted a substantial transformation and found that it did not, stating that the assembly of all the foreign components in China did not result in the manufacture of a new and different article in that the assembly operation was simple, the foreign component parts did not lose their identity (no change to the physical dimensions of the components occurred) and the assembly operation added only 15 percent to the total value of the finished fishing rods. Accordingly, we ruled that the country of origin of the fishing rods was the place where the components were made "Taiwan" and not the place where the simple assembly took place "China". Similarly, in this case, we find that the sewing in China of the 12 pieces of fabric into the stuffed toy skin does not constitute a substantial transformation of the Korean fabric pieces. Like the fishing rod assembly in HQ 734214, the extent of the operations performed in China is simple in that it requires the sewing of only 12 small pieces of fabric, the 12 pieces of fabric do not lose their identity (no change to the physical dimensions of the fabric pieces occur as a result of sewing them together) and the assembly operation adds only 20 percent of the total value of the finished stuffed toy which we consider to be relatively low. Accordingly, the country of origin of the stuffed toys is Korea.

HOLDING:

The country of origin of the imported stuffed toys processed in the manner described above is Korea.

Sincerely,

John Durant, Director
Commercial Rulings Division

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