HQ 563019 - Country of Origin Marking of Acrylic Duck Calls - United States International Trade Commision Rulings

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HQ 563019

July 9, 2004

MAR-2-05 RR:CR:SM 563019 DCC

CATEGORY: MARKING

Mr. Christopher A. Holland

Smith, Gambrell & Russell, LLP

1230 Peachtree Street, NE
Suite 3100, Promenade II
Atlanta, Georgia 30309-3592

RE: Country of Origin Marking of Acrylic Duck Calls

Dear Mr. Holland:

This is in response to your letter dated April 8, 2004, requesting a ruling on behalf of EBSCO Industries, Inc. (“EBSCO”). Specifically, you ask whether acrylic components used to produce duck calls must be marked with their own country of origin. You submitted a sample duck call (Deluxe Acrylic Double Reed Duck Call, Model No. KH226) for our review.

FACTS:

You state that EBSCO assembles duck calls in the United States from the following components: acrylic end piece, acrylic barrel with metal ring, two tapered mylar reeds, channel piece, wedge piece, and lanyard. The acrylic end piece, barrel, and lanyard components are manufactured in China. The acrylic components are custom manufactured by hand on a lathe to obtain the desired shape, and buffed to remove scratches and make the pieces transparent. You note that the manufacture of the acrylic components requires great effort to obtain the desired shape and transparency. You explain that the acrylic duck calls cost significantly more than injection-molded plastic calls.

The reeds, channel and wedge piece components are produced in the United States. In a telephone call with my staff, you indicated that the reed assemblies used for the acrylic duck calls are also used to produce plastic calls. EBSCO plans to import the acrylic components and lanyards from China and assemble them with the reeds, channel and wedge pieces in the United States. You state that the imported lanyards will be separately marked with their country of origin.

The following is a description of the assembly process. The two reeds are aligned and placed between the channel and the wedge. These four pieces are then placed inside the acrylic end piece. The reed and end piece assemblage is then inserted into the acrylic barrel component. A lanyard is attached to the call. The sound of the call is tested and the alignment of the reeds is adjusted as necessary to obtain the desired pitch. You claim that placement of a country of origin marking directly on the acrylic pieces will substantially harm the duck call. As an alternative, you propose to place the country of origin marking on the product packaging. The proposed marking of the finished duck call is “Assembled in the USA of U.S. and Chinese components.”

ISSUES:

Whether the acrylic pieces are substantially transformed in the United States by the above-described processing so that a country of origin marking is not required.

Whether the acrylic pieces may be excepted from the country origin marking requirements under 19 C.F.R. § 134.32(b) or (d).

LAW & ANALYSIS:

Substantial Transformation

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 United States 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 United States the English name of the country of origin of the article. Congressional intent in enacting section 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 are 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., 27 C.C.P.A. 297, 302, C.A.D. 104 (1940).

Part 134, Customs and Border Protection (“CBP”) Regulations (19 C.F.R. § 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. § 1304. Section 134.1(b), CBP Regulations (19 C.F.R. § 134.1(b)), defines “country of origin” as the country of manufacture, production or growth of any article of foreign origin entering the United States. 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 Part 134. A substantial transformation occurs when an article emerges from a manufacturing process with a name, character, and use that differs from the original material subjected to the processing. See United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 (C.A.D. 98) (1940).

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 that are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See, C.S.D.s 80-111, 85-25, 89-110, 89-118, 89-129, 90-51 and 90-97.

In HRL 734750, dated June 28, 2004, CBP determined that computer switch housing subassemblies, which were manufactured in Mexico, were not substantially transformed when they were further processed in the United States. CBP noted that the subassembly was the most costly component and one of the most significant components in determining the overall size and shape of the finished keyboard. CBP further noted that, except for the less significant parts, almost all of the keyboard components were imported into the United States. CBP consequently concluded that the U.S. processing operations did not result in a substantial transformation of the imported subassemblies.

Based on the small number of components, the apparently simple U.S. assembly operations, and the relatively complex production of the foreign components, we find that the imported acrylic end and barrel pieces do not undergo a substantial transformation as a result of the U.S. assembly operations. According to your letter and the sample duck call, the U.S. assembly operations involve placing two reeds between holders (the channel and the wedge pieces), inserting these four parts into the acrylic end piece, and inserting this subassembly into the acrylic barrel piece. The assembled duck call is then tuned by blowing through the acrylic end piece and adjusting the position of the reeds to attain the desired pitch. Although tuning the duck call may require some skill, we note that the ultimate purchaser may easily disassemble the duck call to replace or adjust the reeds as necessary.

In contrast to the simple U.S. assembly operations, you state that production of the acrylic components in China is a multi-step, intricate process. The acrylic components will be custom made by hand turning on a lathe to create the desired shape of the end and barrel pieces. After shaping, the acrylic components will be buffed to remove scratches and create the transparent appearance desired by consumers. At some point, presumably in China, a metal band is attached to one end of the barrel piece. You note that the production of the acrylic components in China requires great effort to obtain the desired shape and transparency.

Furthermore, based on your description of the production process, it appears that the manufacture of the acrylic components in China involves considerably more time, effort and equipment than the simple assembly of these components with the reeds, channel and wedge pieces in the United States. Moreover, the acrylic end and barrel pieces attain their final form in China—they are not further processed after importation into the United States. Consequently, the name, character and use of the acrylic components do not change as a result of the assembly operations performed in the United States. Accordingly, we find that the imported acrylic end and barrel pieces are not substantially transformed when assembled with U.S. components in the United States to make the finished duck calls. Therefore, pursuant to 19 C.F.R. § 134, unless excepted from the marking requirements as described below, the finished duck calls must be marked to indicate China as the country of origin.

Exceptions to the Marking Requirements

Pursuant to section 134.32(b), CBP Regulations (19 C.F.R. § 134.32(b)), CBP may grant an exception to the country of origin marking requirements for “articles that cannot be marked prior to shipment to the United States without injury.” You assert that the imported acrylic end and barrel pieces should be excepted from the marking requirement because they cannot be marked without causing “substantial harm” to these parts. In support of this assertion, you note that it is necessary for the acrylic parts of the duck call to be transparent.

Although you claim that a country of origin marking would damage the duck call, you do not explain in detail how such a marking would injure the acrylic components. In addition, you state it is important to maintain the transparency of the acrylic parts. We note, however, that these components are partially obscured by the lanyard, which is attached to both acrylic pieces, and the metal band, which is attached to the acrylic barrel. Without specific information regarding the type of damage a country of origin marking will cause to an imported article, CBP cannot grant an exception to the marking requirements pursuant to section 134.32(b). See HRL 732167, dated November 20, 1989 (denying exception to country of origin marking requirements for alleged injury when importer failed to provide information regarding type of injury the articles would sustain as a result of marking). Therefore, we find that the imported acrylic end and barrel components may not be excepted from the marking requirements on the basis that they cannot be marked without injury.

You further claim that the imported acrylic components should be excepted from the marking requirements pursuant to section 134.32(d), CBP Regulations (19 C.F.R. § 134.32(d)). This section provides an exception from country of origin marking for articles for which the marking of the containers will reasonably indicate the origin of the imported articles. You note that the packaging for the duck calls will conspicuously indicate the origin of the finished article, and that such packaging will reach the ultimate purchaser unopened.

Although an imported article may be excepted from the country of origin marking requirements under section 134.32(d), because the acrylic end and barrel components will be repacked in the United States, the provisions of section 134.26 are applicable. Section 134.26(a) provides that if an article subject to country of origin marking is intended to be repacked after its release from CBP custody, or the port director having custody of the article has reason to believe that the article will be repacked after its release, the importer must 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 . . .”; or 2) that if he does not repack the article he will give notice to subsequent purchasers or repackers of their obligations under section 134.26.

As applied in the instant case, the imported acrylic components may be excepted from individual marking, provided the outermost container in which the foreign parts are imported into the United States is marked with the country of origin of the parts, the packaging in which the assembled duck call will reach the ultimate purchaser is properly marked with the country of origin of the imported foreign parts, and the certification requirements of 19 C.F.R. § 134.26 are satisfied.

HOLDING:

Based on the information provided, the acrylic end and barrel components are not substantially transformed as a result of their assembly with U.S. components to produce duck calls. Assuming that the outermost containers in which the foreign parts are imported are marked with the proper country of origin, the packaging in which the assembled duck calls will reach the ultimate purchaser is properly marked with the country of origin of the foreign parts, and that the other conditions set forth in section 134.26 are satisfied, individual marking of the acrylic end and barrel pieces is not required.

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 CBP officer handling the transaction.

Sincerely,

Myles B. Harmon, Director
Commercial Rulings Division

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