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NY I88421




December 11, 2002

CLA-2-84:RR:NC:1:104 I88421

CATEGORY: CLASSIFICATION

TARIFF NO.: 8403.90.0000

Mr. Rich Pencak
Pencak & Co. Inc.
25 Ball Street
Port Jervis, NY 12771

RE: The tariff classification of boiler parts from China

Dear Mr. Pencak:

In your letter dated November 8, 2002 on behalf of Waterpik Technologies you requested a tariff classification ruling.

The steel panels will be used in the assembly of Endurance central heating boiler units. The Endurance boilers come in three models -- EBP, EDP and EDN. The EBP series is a modulating combination boiler which provides domestic hot water as well as hydronic space heating. The EDP series is a modulating hydronic boiler. The EDN Series is a non-ferrous, modulating boiler. The EDP series and EDN series provide heat for hydronic space heating. All use natural or propane gas. The boilers are for residential use only. The panels come in various sizes and shapes. Examination of the two samples submitted shows that each panel is bent, curved, drilled or punched in accordance with the specifications of the boiler for which the panel has been designed. As such, the plates, presented unassembled, are identifiable as parts of boilers.

The applicable subheading for the steel boiler panels will be 8403.90.0000, Harmonized Tariff Schedule of the United States (HTS), which provides for Central heating boilers (other than those of heading 8402) and parts thereof: Parts. The rate of duty will be Free.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 C.F.R. 177).

You also inquired as to whether the imported panels are required to be individually marked with the country of origin if they are to be processed later in the U.S. by an U.S. manufacturer. An unmarked sample was submitted with your letter for review. Panels are identified on page 7 of the submitted brochure as being for the EBP series.

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 134.41(b), Customs Regulations (19 CFR 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. Section 134.1(d), defines the ultimate purchaser as generally the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked. See, 19 CFR 134.35.

According to the submitted data, your client has previously purchased raw sheet steel and preformed the following processes in its U.S. facility: Cutting each piece to specifications,
Forming and bending the edges of each side, Drilling holes in each side,
Punching (where applicable) to allow inlet/outlet piping, Degreasing/cleaning,
Painting,
Storing/drying,
Inspection,
Attaching hardware (where applicable) for panel assembly and (10) Manually assembling each panel set (8 pieces) for each boiler unit. Your client has indicated in his letter of 10/23/02, that the firm now intends “to import these completed panels from China”. (Emphasis added) When you refer to the submitted sample in your letter of 11/8/02, you state that “This is how the end product will be imported, in ready to assemble and used with the entire heating system”.

In this case, sufficient evidence has not been presented for this office to make a determination as to whether the panels are substantially transformed as a result of the U.S. processing. The statements in the 10/23/02 and 11/8/02 letters imply that processes cited above will now be performed in China rather than the U.S. Other than minor assembly to the other components, little, if any, processing seems to be done to the panels themselves once in the U.S. It appears the panels are finished products at the time of their importation. What other processes, if any, are done to the panels in the U.S.? Compare the overseas manufacturing process of the imported article with the process of combining the imported panels with the balance of the components in the U.S. For each boiler model in question, list the major components used to assemble a complete boiler (including the panels). Submit cost data figures for these processes (e.g., quantity and cost of each major component, labor costs and time). Is the domestic processing less costly and time consuming than the manufacturing processes performed in China?

In addition, you have not supplied country of origin information on the balance of the components used in the assembly of the boilers. With the exception of the panels, are all the other major boiler components of U.S. origin? If not, show country of origin for each major component.

When this information is available, you may wish to consider resubmission of your request concerning the marking of this merchandise. If you decide to resubmit your request, please include all of the material that we have returned to you and mail your request to U.S. Customs, Customs Information Exchange, 10th Floor, One Penn Plaza, New York, NY 10119, attn: Binding Rulings Section.

In your letter, you state that, in your opinion, marking the panels with “CHINA” will mislead the consumer as to the boiler’s country of origin. You feel that the consumer will assume the entire boiler, not just the panels, is manufactured in China. For further information regarding the Federal Trade Commission’s “Made in USA” marking requirements, you may want to view their website at “www.ftc.gov” and click on “Business Guidance”.

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Robert Losche at 646-733-3011.

Sincerely,

Robert B. Swierupski
Director,

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