HQ H009362 - Country of origin marking of a dental implant package - United States International Trade Commision Rulings

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HQ H009362

July 10, 2007

CLA-2 OT:RR:CTF:TCM H009362 KSH

CATEGORY: MARKING

Mr. Min Joo Kim
Osstem Inc.
One Ben Fairless Drive
Fairless Hills, PA 19030

RE: Country of origin marking of a dental implant package

Dear Mr. Kim:

This is in regard to your electronic ruling request dated March 17, 2007, on behalf of Osstem, Inc., requesting the country of origin marking of a dental implant package. Specifically, you have requested the country of origin of the dental implant components as imported from South Korea and whether the final dental implant package may be marked “Made in the USA.”

FACTS:

The merchandise at issue is a dental implant package which is composed of a fixture, mount, mount screw and cover screw. You state that the entire process of manufacturing the fixture will be completed in the United States. The mount, mount screw and cover screw are manufactured from U.S. origin titanium bars that undergo a milling process which includes cutting, removing oil and inspection in South Korea. The mount, mount screw and cover screw are then shipped back to the U.S. in bulk, cleaned by deburring, flushing, drying, inspecting, boiling, heat sterilizing and UV drying. They will be further processed by assembling the mount and mount screw into the fixture, insetting the goods in an ampule manufactured in Korea, gamma sterilizing, blister packaging and inspecting in the United States.

You state the mount, mount screw and cover screw are temporary accessories to assist in placing the fixture. Once the fixture is placed in the maxillofacial bone, the mount, mount screw and cover screw will be disposed of.

ISSUE:

Whether the assembly of the mount and mount screw with the U.S. origin fixture to create a dental implant package constitutes a substantial transformation, thereby excepting the components from country of origin marking.

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 into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or 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 and Border Protection (CBP) Regulations (19 CFR Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP 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. Since the imported components are assembled in the U.S., we must first determine whether they undergo a substantial transformation.

For country of origin marking purposes, a substantial transformation of an imported article occurs when it is used in the U.S. in a manufacturing operation which results in an article having a name, character, or use differing from that of the imported article. In such circumstances, the manufacturer or processor in the U.S. who converts or combines the imported article into a different article will be considered the "ultimate purchaser" of the imported article, and the imported article is thus excepted from marking and only the outermost container is required to be marked. See 19 CFR 134.35.

A substantial transformation results when a new and different article emerges from the processing having a distinctive name, character or use. U.S. v. Gibson-Thomsen Co., Inc., 27 CCPA 269 (1940). 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. Uniroyal, Inc. v. United States, 542 F. Supp. 1026 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. 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, 573 F. Supp.1149 (CIT 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). See also C.S.D. 85-25. However, the issue of whether a substantial transformation occurs is determined on a case-by-case basis. CBP ruled in C.S.D. 80-111, dated September 24, 1979, that a ceiling fan assembled in the United States in assembly line procedures was not substantially transformed in the United States. CBP considered factors such as the nature of the assembly, the amount of skilled labor and specialized equipment involved and the cost of the assembly process.

In Headquarters Ruling Letter (HQ) 734457, dated May 26, 1992, fishing rods were assembled in China from component parts manufactured in different countries (i.e., semi-finished Taiwanese rods and reel seats, Korean line guides, and Japanese paint). HQ 734457 followed T.D. 67-173, 1 Cust. Bull. 366 (1967), which held that the domestic assembly of fishing rod parts did not constitute a substantial transformation of those parts and, therefore, the main reel housing was required to be marked with the country of origin. In HQ 734560 dated July 20, 1992, telephone sets were considered, which consisted of a base unit made in Canada or Malaysia, a handset made in Canada or China, a handset cord made in Canada or Mexico, a cord to connect the telephone to the jack made in Canada or Mexico, and a transformer made in Taiwan. These items were assembled and tested in either Canada or Malaysia. It was determined that the assembly of these components into a telephone was extremely simple, and that they were not substantially transformed. Therefore, the carton in which the ultimate purchaser received the telephone could be marked: "telephone base made in (name of country); handset made in (name of country); transformer made in (name of country); line cord made in (name of country), or similar language."

In HQ 558881, dated March 3, 1995, we determined the assembly of a hollow wall anchor which involved screwing the imported screw into the U.S.-origin housing in the U.S. did not constitute a substantial processing of the imported component. We noted it was a simple combining operation entailing only the screwing together of two components in which the ultimate purchaser had to remove the screw from the housing before the hollow wall anchor may be placed into the wall. Although the screw was claimed to only represent 8 percent of the cost of the hollow wall anchor, we found that the screw was an important component of the hollow wall anchor, without which an object cannot be affixed to the wall.

We find that this case also does not involve a complex assembly operation. Rather, the assembly of the components to create a dental implant package is relatively simple and, consequently, does not result in a substantial transformation of the components. Each of the components remains intact upon assembly and as indicated by you, will be disassembled once the fixture screw is affixed to the bone.

The mount, mount screw and cover screw are types of screws or nuts. Articles of a class or kind of bolts, nuts, washers and screws are on the so-called "J" list of marking exceptions. This list is found under section 134.33, CBP Regulations (19 CFR 134.33), and provides that "[a]rticles of a class or kind listed [under this section] are excepted from the requirements of country of origin marking in accordance with the provision of section 304(a)(3)(J), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)(3)(J). However, in the case of any article described in this list which is imported in a container, the outermost container in which the article ordinarily reaches the ultimate purchaser is required to be marked to indicate the origin of its contents. ..."

19 CFR 134.25 provides that if a J-List article is intended to be repacked in new containers for sale to an ultimate purchaser after release from CBP 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, the new container shall be marked to indicate the origin of its contents; or that 2) if the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify the purchaser or transferee, in writing, at the time of sale or transfer, that any repacking of the article must conform to these requirements.

Similarly, section 134.32(d), CBP Regulations (19 CFR 134.32(d)), provides an exception to the country of origin marking requirements for "[a]rticles for which the marking of the containers will reasonably indicate the origin of the articles." Articles for which the marking of the containers will reasonably indicate their origin are excepted from individual marking under 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). This exception applies only if the article in question is imported in a properly marked container and CBP is satisfied that the article will reach the ultimate purchaser in this original marked unopened 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.

When the imported article is to be repackaged and the container in which an article is to be repackaged after release from CBP custody will be marked with the article’s proper country of origin, the provisions of 19 CFR 134.34 should be used. Section 134.34, CBP Regulations (19 CFR 134.34), provides that, at the discretion of the port director, an exception from individual marking may be authorized for imported articles which are to be repacked after release from CBP custody when: (1) the containers in which the articles are repacked will indicate the origin of the articles to the ultimate purchaser in the U.S. and (2) the importer arranges for supervision of the marking of the containers by CBP officers at the importer's expense or secures such verification, as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to the liquidation of the entry.

The outermost container in which the dental implant package reaches the ultimate purchaser is the container into which the mount, mount screw and cover screw are repackaged in the U.S. with the fixture and ampule. Accordingly, the individual components of the dental implant package can be excepted from marking provided the CBP officials at the port of importation are satisfied that the packaging in which the components will be sold to the ultimate purchaser is properly marked to indicate the country of origin of the mount, mount screw, cover screw and ampule and provided the requirements of 19 CFR 134.25 and 19 CFR 134.34 are followed.

HOLDING:

On the basis of the information submitted, we find that the imported components are not substantially transformed by the assembly performed in the U.S. In accordance with 19 CFR 134.32(d) and 19 CFR 134.33, the individual components of the dental implant package need not be marked. The container or packaging (in this case blister wrap) in which the dental implant package is sold to the ultimate purchaser, must be marked to indicate the country of origin of the mount, mount screw, cover screw and ampule provided the port director at the port of entry is satisfied that the components of the dental implant package will be sold only in a properly marked container, and the other provisions of 19 CFR 134.25 and 19 CFR 134.34 are followed. The marking of the dental implant package “Made in the USA” is not appropriate.

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 CBP officer handling the transaction.

Sincerely,

Gail A. Hamill, Chief
Tariff Classification and Marking Branch

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