HQ 560683 - Country of origin marking requirements applicable to digital watches assembled in the Philippines; watch movements; integrated circuit; LCD display; piezoelectric quartz crystal - United States International Trade Commision Rulings

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HQ 560683

July 26, 2001

MAR-05 RR:CR:SM 560683 KKV

CATEGORY: MARKING

Michael T. Sheehan
Timex Corporation
Park Road Extension, P.O. Box 310
Middlebury, CT 06762-0310

RE: Country of origin marking requirements applicable to digital watches assembled in the Philippines; watch movements; integrated circuit; LCD display; piezoelectric quartz crystal

Dear Mr. Sheehan:

This is in response to your letter dated August 26, 1997 which requests a binding ruling regarding the country of origin of digital watches assembled in the Philippines from imported components. A sample of the assembled watch was submitted for our examination. We regret the delay in responding.

FACTS:

The article under consideration is described as an Eight-Lap IRONMAN TRIATHLON digital watch. In addition to a time-of-day display in either a 12-hour or 24-hour format, the watch also has a calendar function which shows the day of the week, date and month and may be set to signal each hour. Also displayed on the time-of-day display are symbols which indicate whether other features of the watch (e.g., chronograph and alarm) have been activated.

The stopwatch (chronograph) feature tracks both lap and split times for up to 16 hours, with information being displayed along with the current lap/split time. Once ten seconds pass, the display will automatically default to the current lap/split times. The watch has a memory that counts the number of lap/splits taken up to 99 and recalls the last eight lap/split times recorded.

The watch also has an alarm that may be set up to 24 hours in advance and, upon sounding, the alarm setting pops up on the display for reminder and/or re-setting. Additionally, the watch has a countdown timer which can function for up to a 10-hour setting. Upon the selection of the specified time
period by the user, the watch will beep to indicate the end of the countdown period, and, depending upon the option selected by the user, will either stop, repeat the countdown function or start the chronograph function.

For viewing in darkness or low-light conditions, the watch has the INDIGLO night-light feature, an electroluminescent light source which, at the push of a button, illuminates the entire time display with a uniform bright light. Additionally the NIGHT-MODE option, when selected, will display the INDIGLO night-light for three seconds when pushing any button on the watch.

The time-of-day display consists of a liquid crystal display (LCD) timekeeping module (hereinafter, the “LCD Module”). This module is assembled into a watch case to which is affixed a strap or band, forming the completed watch. We are informed that the LCD Module consists of the following major components:
a) liquid crystal display (LCD) subassembly consisting of a liquid crystal device, elastomeric or conductive rubber connectors, and electroluminescent (EL) lamp polarizers;
b) electronic subassembly consisting of a printed circuit board (PCB), resistors, capacitors, piezoelectric quartz crystal, microprocessor integrated circuit, coils and an EL driver integrated circuit;
c) a plastic module frame into which the other pieces fit;
d) electrical switches and springs which enable the user to activate the merchandise functions described above; and
a battery, to supply electrical current to operate the article.

We are informed that the components function in the following manner. The battery supplies electrical power to the electronics subassembly, including the integrated circuit which, under the control of its stored instructions (i.e., program) generates and controls the oscillation of the quartz crystal piezoelectric oscillator, a circuit on the electronics subassembly consisting of capacitors, a portion of the integrated circuit and a piezoelectric quartz crystal cut into the shape of a tuning fork which produces 32,768 pulses per second. Each time the integrated circuit counts 32,768 pulses, the integrated circuit changes the information displayed on the LCD subassembly, which indicates “time.”

The electronics subassembly interconnects the battery, integrated circuit, quartz crystal and LCD assembly. The plastic module frame provides mechanical support for the battery, electronics subassembly and mechanical switches. In industry parlance, a fully assembled frame is referred to as a “Module.” “Modules” are assembled into cases, forming a “watchhead.” Attaching a strap or band to the “watchhead” creates an assembly referred to as a complete watch.

With regard to the subject timepieces, you indicate that the ”Module” components are assembled in the Philippines with components whose country of origin is as follows:

Component Country of Origin

Integrated circuit USA or Japan
Piezoelectric oscillator USA or Japan
Printed circuit board (PCB) Hong Kong
Plastic module frame Hong Kong, China or France Battery USA or Japan

ISSUE:

What is the country of origin of the subject watches?

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, Harmonized Tariff Schedule of the United States (HTSUS), contains special marking requirements for certain watches, they are not applicable to “[m]ovements with optoelectronic 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.

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 (HRL) 735197, dated January 4, 1994).

In HRL 560202, dated December 20, 1996, Customs considered whether LCD watches assembled in China with components from China, Singapore, Japan, and Hong Kong could be marked with the phrase “Designed in USA. Made in Singapore.” Based upon the information provided in that case, Customs determined that the integrated circuit was the component which functions as the watch movement and, since the integrated circuit was a product of Singapore, held that “Designed in USA. Made in Singapore” was acceptable for purposes of 19 U.S.C. 1304.

However, in the Customs Bulletin dated June 6, 2001, Customs published, pursuant to section 625(c)(1) of Title VI ("Customs Modernization") of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat. 2057), a notice advising interested parties that Customs is modifying that portion of HRL 560202, supra, that pertains to the country of origin of liquid crystal display watches for marking purposes.

With regard to the identity of those components which constitute the “movement” of a watch with a liquid crystal display, Customs examined Note 3, Chapter 91 of the Harmonized Tariff Schedule of the United States (HTSUS), which 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]

In an LCD watch, time division and regulation is accomplished by the quartz piezoelectric oscillator which, when placed in an electric field, vibrates (oscillates), thus creating the electrical impulse which is translated by the integrated electronic circuitry to operate the watch. When supplied with electrical power from the battery, the microprocessor integrated circuit generates and controls the oscillation of the crystal in accordance with its stored instruction (program). As the oscillator vibrates, the pulses are sent to a microchip which counts the pulses and instructs the LCD to change the information displayed as “hours,” “minutes” and “seconds.”

Accordingly, Customs concluded that neither the integrated circuit nor the piezoelectric quartz crystal, acting alone, is a “system capable of determining intervals of time” within the meaning of Note 3. Instead, intervals of time may only be accomplished by the combination of components listed as the “electronic subassembly.” Although the LCD subassembly does not measure or determine intervals of time, but merely displays, the language of Note 3 defines “watch movements” as “devices regulated by aquartz crystal or any other system capable of determining intervals of time, with a display” (emphasis added). Therefore, Customs held that the components which comprise the “watch movement” of the subject LCD watch are those components listed as comprising both the electronic subassembly and the LCD subassembly: the printed circuit board (PCB), resistors, capacitors, piezoelectric quartz crystal, integrated circuit, transistor, coils and electroluminescent (EL) circuit driver, the liquid crystal device, elastomeric or conductive rubber connectors and electroluminescent lamp polarizers. (See Vol. 35, Cust. Bull. No. 23, p. 43 (June 6, 2001)).

With regard to the watches under consideration here, inasmuch as these separate components are assembled together in the Philippines to form a “watch movement,” the country of origin of the imported watches is the Philippines and the articles must be marked accordingly.

HOLDING:

For the reasons explained above, the “watch movement” of a watch with a liquid crystal display consists of the printed circuit board (PCB), resistors, capacitors, piezoelectric quartz crystal, integrated circuit, transistor, coils and electroluminescent (EL) circuit driver, the liquid crystal device, elastomeric or conductive rubber connectors and electroluminescent lamp polarizers. Accordingly, where these components are assembled together in the Philippines to form a “watch movement,” the country of origin of the imported watches is the Philippines and the articles must be marked accordingly.

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
Director
Commercial Rulings Division

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