MAR-2-05 CO:R:C:S 558881 MLR
Richard C. Katz, Esq.
90 Park Avenue
New York, NY 10016
RE: Country of origin marking of hollow wall anchors; imported
screws; J-list; U.S. housings; combining; assembly;
substantial transformation
Dear Mr. Katz:
This is in reference to your letter of November 4, 1994,
requesting a ruling on behalf of The Rawlplug Company, Inc.
("Rawlplug") regarding the country of origin marking of imported
screws which are combined with U.S.-origin housings to form
hollow wall anchors. Samples were submitted with your request.
FACTS:
Rawlplug is a manufacturer of industrial fastener products.
The product at issue is a hollow wall anchor (known in the trade
as a "Rawly") which consists of two parts, an imported screw
(from Taiwan) and a U.S.-manufactured housing or body. Hollow
wall anchors are used to attach all sorts of fixtures (such as
draperies, blinds, or shelving) onto fiberboard or sheetrock.
The screws are assembled into the housings and as the screw is
tightened, the housing expands and grips the inside of the wall
to securely attach the fixture to the wall. It is stated that
the imported screw represents approximately 8 percent of the
total cost of the hollow wall anchor. In a meeting at the Office
of Regulations & Rulings, it was stated that the only features of
the screws that are necessary to be compatible with the housing
are their length, and the shape of their threading; the type of
head on the screw is not important. The samples of the hollow
wall anchors are packed in a small cardboard box.
ISSUE:
What are the country of origin marking requirements
applicable to the hollow wall anchors?
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 Regulations (19 CFR Part 134), implements
the country of origin marking requirements and the exceptions of
19 U.S.C. 1304. The "country of origin" for marking purposes is
defined in 19 CFR 134.1(b), as the country of manufacture,
production or growth of any article of foreign origin entering
the U.S. The "ultimate purchaser" is generally defined in 19 CFR
134.1(d), as the last person in the U.S. who will receive the
article in the form in which it was imported.
An exception from marking is provided in 19 CFR 134.35 when
a domestic processor converts or combines an article of foreign
manufacture into an article having a new name, character, or use.
This constitutes a substantial transformation and the domestic
processor is deemed the "ultimate purchaser" of the imported
article. 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). Assembly operations which
are minimal or simple, as opposed to complex or meaningful, will
generally not result in a substantial transformation. See C.S.D.
85-25. However, the issue of whether a substantial
transformation occurs is determined on a case-by-case basis.
You claim that the imported screws are substantially
transformed when they are incorporated with the U.S.-origin
hollow wall anchor housings in the U.S. since the hollow wall
anchors have a name, character and use different from the
imported screws. You state that the name of the imported
articles are "screws", whereas the name of the U.S.-manufactured
articles are "hollow wall anchors." The character of the
imported screw is claimed to be a simple, common, cheap, and
fungible item, whereas the character of the U.S.-manufactured
article is a sophisticated, relatively expensive, technologically
advanced fastener. Lastly, the use of the imported screw is
limited because it is a simple, uncomplicated device that bolts
objects together, whereas the use of the U.S.-manufactured
article is to attach objects to hollow wall structures which an
ordinary screw cannot do.
You cite Headquarters Ruling Letter (HRL) 734796 dated
December 24, 1992, where Customs held that unassembled shelf kits
were not required to be marked to indicate the country of origin
of imported screws sold with the kits although the screws
maintained their individual identity, because the screws only
represented 4-5 percent of the value of the complete kits. You
claim that this lends support that the hollow wall anchor boxes
should not be marked to indicate the country of origin of the
imported screws since the screws only represent approximately 8
percent of the hollow wall anchors.
You also cite HRL 555365 dated September 7, 1990, where
Customs held that domestically manufactured junction boxes were
not required to be marked with the country of origin of imported
screws. The screws were not attached to the junction boxes and
represented 2.3 percent of the total value of the packaged
product. Customs stated that the screws lost their separate
identity and became an integral part of the U.S. junction boxes,
and the ultimate purchaser in the U.S. was buying the junction
box kit and not the individual screws. Similarly, you claim that
the imported screws lose their identity and are merged into the
hollow wall anchor, and, therefore, the hollow wall anchor boxes
should not be required to be marked with the country of origin of
the imported screws.
We disagree. In HRL 734227 dated June 26, 1992, Customs
found that imported lever handles attached to U.S. lock sets were
not substantially transformed. Customs found that even though
the levers were only 10 per cent of the total cost of the lock
set, they were essential to the lock set's function, and the
assembly operation was not complex or did not require a great
deal of skill. Furthermore, before installation of the lock set,
the levers had to be disassembled. Therefore, the levers were
required to be marked with their country of origin.
Similarly, in this case, based upon the samples submitted,
the assembly involves screwing the imported screw into the U.S.-origin housing. We do not find that this assembly operation
performed in the U.S. constitutes a substantial processing of the
imported component. It is a simple combining operation entailing
only the screwing together of two components. In addition, the
ultimate purchaser must remove the screw from the housing before
the hollow wall anchor may be placed into the wall. Furthermore,
although it is claimed that the screw only represents 8 percent
of the cost of the hollow wall anchor, we find that the screw is
an important component of the hollow wall anchor, without which
an object cannot be affixed to the wall. Therefore, since the
operation performed is minimal and the component parts do not
appear to lose their identity and become an integral part of a
new article, we find that the assembly operation constitutes a
minor processing of the imported component, which leaves the
identity of the imported component intact.
However, since screws are listed on the "J" list, they are
excepted from individual country of origin marking, and only the
outermost container in which the screws will reach the ultimate
purchaser (the hollow wall anchor boxes) must be marked to
indicate the country of origin of the imported screws. It is
acceptable to mark the boxes in which the hollow wall anchors are
packed "Screws Made in Taiwan."
HOLDING:
Based on the information and samples submitted, the imported
screws which are assembled into the U.S.-manufactured housings in
the U.S. to form hollow wall anchors, are not substantially
transformed as a result of the U.S. operations. Therefore, the
box in which the hollow wall anchors are packaged must be marked
to indicate the country of origin of the screws.
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
Commercial Rulings Division