HQ 560427 - Country of origin marking; 19 CFR 134.35(a); Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 1368 (1984); C.S.D. 80-111; C.S.D. 85-25; C.S.D. 89-110; C.S.D. 89-118; C.S.D. 90-51; C.S.D. 90-97; HRL 734966; HRL 734213; HRL 734097; 15 U.S.C. 1124; 15 U.S.C. 1125 - United States International Trade Commision Rulings

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HQ 560427

August 21, 1997

MAR-2-05 RR:TC:SM 560427 DEC

CATEGORY: MARKING

Mr. Rick Tomfohrde
Christensen Display Products, Incorporated 2608 239th Avenue
Issaquah, Washington 98029

RE: Country of origin marking; 19 CFR 134.35(a); Belcrest Linens v. United States, 6 CIT 204, 573 F. Supp. 1149 (1983), aff'd, 2 Fed. Cir. 105, 741 F.2d 1368 (1984); C.S.D. 80-111; C.S.D. 85-25; C.S.D. 89-110; C.S.D. 89-118; C.S.D. 90-51; C.S.D. 90-97; HRL 734966; HRL 734213; HRL 734097; 15 U.S.C. 1124; 15 U.S.C. 1125

Dear Mr. Tomfohrde:

This is in reference to your letter of April 17, 1997, requesting a ruling concerning the country of origin marking requirements for a certain monitor to be used with a personal computer which is to be sold in the U.S.

FACTS:

You describe your company's product as a monitor for a personal computer whose target applications are industrial control systems. Your product is the display monitor only. It does not include the computer. The display technology used is a Flat Panel TFT/LCD. You state that, of the ten items on the major parts list included with your submission, all of the items except one are U.S. manufactured. The only part that is not U.S.-manufactured is the LCD module which you state is the most significant component.

The LCD module is manufactured in Japan by NEC. It is a 31 centimeter diagonal matrix TFT component panel. The component panel is non-functional by itself. It requires active electronics to process video signals to make it work. In your description of the LCD module, you indicate that this component includes the LCD panel, driving electronics, backlight, and inverter. The other components used in the production of the monitor include the following: (1) analog video module (accepts analog video signals, processes and generates LCD video, power, and timing signals), (2) touch screen controller module (accepts a series of signals from the touch screen and converts to a serial signal to the personal computer), (3) internal video cable, (4) internal serial cable, (5) internal DC power distribution wiring, (6) internal metal mounting plate, (7) front bezel, (8) front touch screen, and (9) back enclosure.

ISSUE:

Is the Japanese-origin LCD module described above substantially transformed when it is incorporated into the monitor in the U.S., thereby excepting the finished article from the country of origin marking requirements pursuant to 19 U.S.C. 1304?

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 in 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. 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 exceptions of 19 U.S.C. 1304. Section 134.35(a), Customs Regulations (19 CFR 134.35(a)), provides that the manufacturer or processor in the U.S. who converts or combines the imported article into a different article having a new name, character or use will be considered the ultimate purchaser of the imported article within the contemplation of 19 U.S.C. 1304 and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked, but the new article resulting from the U.S. processing or manufacturing is excepted from country of origin marking.

In determining whether the combining 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. 80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51, and C.S.D. 90-97. The issue of whether a substantial transformation occurs is determined on a case-by-case basis.

Customs has addressed the issue of substantial transformation with respect to the production of computer monitors. In Headquarters Ruling Letter (HRL) 734966, dated October 18, 1993, HRL 734213, dated February 20, 1992, and HRL 734097, dated November 25, 1991, Customs consistently determined that the assembly of the various components used to produce a computer monitor resulted in a substantial transformation of the component parts. While each of these cases is factually distinguishable, Customs' is satisfied from a review of the record in this case that the imported LCD module is substantially transformed in the U.S. when it is incorporated into the monitor. This finding is consistent with the treatment previously accorded to imported components of computer monitors. Therefore, only the outermost container of the LCD module when imported will be required to be marked with the country of origin pursuant to 19 CFR 134.35(a).

Since the LCD module is substantially transformed in the U.S. and the other components are all of U.S. origin, the completed personal computer monitor will not be considered a foreign article. Therefore, the monitor will not be subject to the country of origin marking requirements contained in 19 U.S.C. 1304. Whether an article may be marked as "Made in the USA" is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 on the propriety of proposed markings indicating that an article is made in the U.S.

HOLDING:

The LCD module imported into the U.S. and incorporated into the monitor to be used with a personal computer, as discussed above, are substantially transformed in the U.S. Such LCD modules are excepted from country of origin marking pursuant to 19 CFR 134.35(a).

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

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