HQ 560694 - Country of origin marking for set of stud removers; automotive industry; substantial transformation; assembly; chrome plating; container marking; 19 CFR 134.32(d); 19 CFR 134.26 - United States International Trade Commision Rulings

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HQ 560694

December 17, 1997

MAR-2-05 RR:TC:SM 560694 MLR

CATEGORY: MARKING

Mr. Brian B. Porter
Stahlwille Tools North America, Inc.
3916 Murdock Ave.
Sarasota, FL 34231

RE: Country of origin marking for set of stud removers; automotive industry; substantial transformation; assembly; chrome plating; container marking; 19 CFR 134.32(d); 19 CFR 134.26

Dear Mr. Porter:

This is in reference to your letter of September 30, 1997, requesting a ruling concerning the country of origin marking requirements for a set of stud removers used for the automotive industry. Samples were submitted with your request.

FACTS:

It is stated that Stahlwille will be manufacturing a set of stud removers, i.e., a screw or bolt without a head, for use in the automotive industry. It is stated that the following parts are imported from Japan: deep socket (not chrome plated or marked), cage, rollers, washer, and a snap ring, each part of which is imported for 12 millimeter (mm), 10 mm, 8 mm and 6 mm stud removers. It is stated that each component by itself it totally useless. In the U.S., the deep sockets are chrome plated, and the various components are assembled together to form 12 mm, 10 mm, 8 mm, or 6 mm stud removers. The various stud removers are packaged in top and bottom foam inserts of U.S. origin which are placed in a metal tool box imported from Germany.

A sample of a deep socket, a cage, the rollers, the washer, and the snap ring for the 12 mm stud remover, the top foam and bottom foam insert for the stud remover set, and the metal box for the stud remover set have been submitted with your ruling request. It is stated that the components for the 6 mm, 8 mm, and 10 mm stud removers are identical except that they are smaller in size than the 12 mm components.

ISSUE:

What are the country of origin marking requirements of the stud remover sets at issue?

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. 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 imported article occurs when it is used in the U.S. in the manufacture, which results in an article having a name, character, or use differing from that of the imported article. If such substantial transformation occurs, then the manufacturer is the "ultimate purchaser" of the imported article; such article is excepted from individual marking and only the outermost container in which the U.S. manufacturer receives the article is required to be marked. See 19 CFR 134.35. On the other hand, if the manufacturing or combining process is merely a minor one which leaves the identity of the imported article intact, a substantial transformation has not occurred and an appropriate marking must appear on the imported article so that the consumer can know the country of origin. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).

The question in this case is whether the assembly of the five Japanese-origin components, i.e., the deep socket, cage, rollers, washer, and snap ring, in the U.S. to form a stud remover constitutes a substantial transformation into a new article having a new name, character or use.

In National Hand Tool Corp. v. United States, 16 CIT 308 (1992), aff'd, 989 F.2d 1201 (Fed. Cir. 1993), the court considered sockets and flex handles which were either cold formed or hot forged into their final shape prior to importation, speeder handles which were reshaped by a power press after importation, and the grip of flex handles which were knurled in the U.S. The imported articles were then heat treated which strengthened the surface of the steel, and cleaned by sandblasting, tumbling, and/or chemical vibration before being electroplated. In certain instances, various components were assembled together which the court stated required some skill and dexterity. The court determined that the imported articles were not substantially transformed and that they remained products of Taiwan.

In this case we find that the assembly of the components is rather simple and that the essential character of the finished stud remover is imparted by the deep socket which locks into the stud to allow it to be removed. Accordingly, while there is a change in name from the various components to a stud remover, we find that the character of the deep socket is not changed when it is assembled with the other components into a stud remover, and that the deep socket has a predetermined use for use as a stud remover. Therefore, since there is no substantial transformation of the Japanese components in the U.S., the ultimate purchaser of the finished stud removers will be the automotive servicing center or the purchaser at retail. Therefore, the finished stud removers must be marked to indicate to the ultimate purchasers in the U.S. that they are products of Japan.

In this case, it is stated that the finished stud removers will be packaged in the metal box from Germany. Pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d), an exception from individual marking is applicable where the marking of the container of such article will reasonably indicate the origin of the article. This exception is normally applied in cases where the article is imported in a properly marked container and Customs officials at the port of entry are satisfied that the ultimate purchaser will receive it in the original unopened marked container. Relevant factors regarding whether an article is likely to remain in its original container include the chain of distribution, the type of container, and the nature of the article. However, if the components are imported in bulk in marked containers and thereafter will be assembled together, but remain products of Japan, the certification requirements of 19 CFR 134.26 must be followed.

Section 134.26(a), Customs Regulations {19 CFR 134.26(a)}, provides in pertinent part that:

If an imported article subject to these requirements is intended to be repacked in retail containers (e.g. blister packs) after its release from Customs custody, or if the port director having custody of the article, has reason to believe that such article will be repacked after its release, the importer shall certify to the port director that: (1) If the importer does the repacking, he shall not obscure or conceal the country of origin marking appearing on the article, or else the new container shall be marked to indicate the country of origin of the article in accordance with the requirements of this part

Accordingly, with regard to the imported components for the stud removers, we find that if they are imported in marked containers and the repacking certification set forth at 19 CFR 134.26(a) is filed with Customs at the port of entry with respect to the marking of the repacked stud removers, they will be excepted from individual marking at the time of importation pursuant to 19 CFR 134.32(d).

Additionally, it is also indicated that the metal tool box is also of foreign origin. Section 134.23 provides that "containers or holders is designed for or capable of reuse ... must be individually marked to indicate the country of their own origin". As the metal tool box will hold the various stud removers when they are not in use, we find that the box is designed for reuse, and, therefore, must be marked to indicate its own origin to the ultimate purchaser. Accordingly, the metal tool box should be labeled with a marking such as "Stud Removers Made in Japan; Container Made in Germany".

HOLDING:

Based on the facts and samples presented, the assembly of the imported Japanese components into finished stud removers in the U.S. is not a substantial transformation. Furthermore, we find that since the metal tool box from Germany is designed for reuse, it must be marked to indicate its own origin to the ultimate purchaser. Accordingly, we find that if the imported components for the stud removers are imported in marked containers and the repacking certification set forth at 19 CFR 134.26(a) is filed with Customs at the port of entry with respect to the marking of the repacked stud removers, they will be excepted from individual marking at the time of importation pursuant to 19 CFR 134.32(d). A marking on the tool box such as "Stud Removers Made in Japan; Container Made in Germany" will be acceptable.

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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