HQ 560202 - Country of origin marking for imported watches designed in the U.S. - United States International Trade Commision Rulings

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December 20, 1996

HQ 560202

MAR-05 RR:TC:SM 560202 KKV

CATEGORY: CLASSIFICATION

Mr. Charles S. Coster
Time/By Design
277 Mt. Auburn Street
Cambridge, MA 02138

RE: Country of origin marking for imported watches designed in the U.S.

Dear Mr. Coster:

This is in response to your letter dated November 12, 1996, which requests a ruling concerning the country of origin marking requirements for imported watches which have been designed in the United States and assembled in China with components from China, Japan, Hong Kong and Singapore. Your letter incorporates by reference the facts contained in your earlier correspondence dated March 27, 1996. Additionally, a sample of the watch case without a watch strap has been submitted for our consideration.

FACTS:

You indicate that Time/By Design plans to import liquid crystal display (LCD) watches into the United States which were designed in the United States. Integrated circuits from Singapore and other watch components from Japan and Hong Kong are sent to China, where they are combined with other components from China and assembled into finished LCD watches and exported to Hong Kong for shipment to the U.S. You propose to mark the watches, "Designed in USA. Made in Singapore" stamped into the reverse side of the metal watch case.

ISSUE:

What are the country of origin marking requirements for finished LCD watches assembled in China of components from Singapore, Japan, China and Hong Kong?

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).

We note that while additional U.S. Note 4, Chapter 91, HTSUS, contains special marking requirements for certain watches, they are not applicable to "[m]ovements with opto-electronic display only and cases designed for use therewith." Because the watches at issue are specifically excepted from the special marking requirements set forth in additional U.S. Note 4, the articles must comply with the general marking requirements set forth in 19 U.S.C. 1304.

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.46, Customs Regulations (19 CFR 134.46), contains more restrictive marking requirements designed to alleviate the possibility of misleading an ultimate purchaser with regard to the country of origin of an imported article. Specifically, 19 CFR 134.46 requires that, in instances where the name of any city or locality in the U.S., or the name of any foreign country or locality other than the name of the country or locality in which the article was manufactured or produced, appears on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters or name, 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. Customs has ruled that in order to satisfy the close proximity requirement, the country of origin marking must appear on the same side(s) or surface(s) in which the name of the locality other than the country of origin appears ( See HQ 708994, dated April 24, 1978).

In the instant case, integrated circuits from Singapore and other watch components from Japan and Hong Kong are exported to China, where they are combined with additional components from China and assembled into finished watches. The finished watches are sent to Hong Kong for exportation to the U.S.

It has long been Customs position that the origin of a watch or clock is the country of manufacture of the watch or clock movement. Although the addition of the hands, dial, case or watchband may add definition to the timepiece, it does not substantially change the character or use of the watch or clock movement, which is the essence of the watch or clock (See Headquarters Ruling Letter 735197, dated January 4, 1994). Note 3, Chapter 91 of the Harmonized Tariff Schedule of the United States (HTSUS) states:

For the purposes of this chapter, the expression "watch movements" means devices regulated by a balance wheel and hairspring, quartz crystal or any other system capable of determining intervals of time, with a display or a system to which a mechanical display can be incorporated. Such watch movements shall not exceed 12 mm in thickness and 50 mm in width, length or diameter. [Emphasis ours.]

The watch in question has a liquid crystal display; your letter indicates that the integrated circuit is the component which functions as the watch movement for this type of watch. Under the manufacturing scenario you propose, because the integrated circuit, which is the system capable of determining intervals of time, is a product of Singapore, the origin of the finished watches assembled in China is Singapore.

Additionally, with regard to the watch strap or band, Customs has determined that watch strap must be separately marked when its country of origin is different than the watch. This is because the attachment of the watch strap to the watch does not effect a substantial transformation of the watch strap; after attachment, the strap maintains its separate identity. See HQ 734565 (October 16, 1993). Therefore, the country of origin of the watch strap must appear legibly, conspicuously, and permanently whether imported together with the watch or separately.

With regard to your proposed marking, we note that Customs has previously allowed the phrase "designed in" to be used in conjunction with country of origin information. In Headquarters Ruling Letter (HRL) 726695 (dated October 19, 1984), Customs ruled that the words "Designed in West Germany" could appear on packages of imported ornaments so long as the requirements of 19 CFR 134.46 and the requirements of 19 U.S.C. 1304 were satisfied. Likewise, in HRL 734144 (dated July 5, 1991) Customs held that a label marked "Designed in U.S.A." with the words "Made in (Country of Origin)" in close proximity and in the same size and color as the words "Designed in U.S.A." satisfies the marking requirements of 19 U.S.C. 1304 and 19 CFR 134.46 so long as the words "Made in (Country of Origin)" are legible, conspicuous and permanent. Therefore, in regard to the watches you plan to import, because the origin
of the watch is Singapore, the marking "Designed in USA. Made in Singapore" stamped into the reverse side of the metal watch case would be acceptable to Customs.

HOLDING:

The country of origin of a LCD watch assembled in China utilizing an integrated circuit from Singapore and other watch components from China, Japan and Hong Kong, is Singapore and must be marked accordingly. Additionally, the watch strap of the finished watch must be marked with its separate country of origin.

The phrase "Designed in USA." with the words "Made in Singapore" in close proximity and in the same size and color as the words "Designed in U.S.A." satisfies the marking requirements of 19 U.S.C. 1304 and 19 CFR 134.46 if the words "Made in Singapore" are legible, conspicuous and permanent.

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

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