MAR-02 RR:TC:SM 559887 DEC
Ms. Ann Dea Chinni
Tate Engineering Systems, Incorporated
601 W. West Street
Baltimore, Maryland 21230
RE: Country of origin marking of loading arms; NY 850661; NY
866443; HRL 732940
HRL 731330; HRL 732350; HRL 558919; 19 CFR 134.35;
substantial
transformation
Dear Ms. Chinni:
This is in response to your letter of May 30, 1996,
requesting a ruling concerning the country of origin marking
requirements for top and bottom loading/unloading arms which will
be built in the U.S. using, in part, imported components from
India.
FACTS:
Tate Engineering Systems, Incorporated (Tate), specializes
in the production of petroleum handling equipment. Tate intends
to import swivel joints and torsion spring balance assemblies
from India to be used in the production of top and bottom
loading/unloading arms in the U.S. The loading/unloading arms
will be installed at refineries and fuel terminals for the
purpose of transferring petroleum products, acids, chemical
solvents, and other fluids to and from vehicle and rail tankers.
See NY 866442, dated September 11, 1991. The swivel joints will
be used to connect two pipes which allow for varying degrees of
movement or rotation of the pipes. See NY 850661, dated March
28, 1990.
The bottom loading/unloading arms will be welded, assembled,
sandblasted, painted, and comprehensively tested in Tate's
production facility in the U.S. You state that the partially
assembled and/or fully assembled swivel joints and torsion spring
balance will be not be in a condition to be sold as a final
article when imported into the U.S. and that they will have no
other use than for being modified and assembled
into the bottom load/unload arm assembly.
You have submitted the following list of operations to be
performed in the U.S.:
A. The imported shipping containers, containing the swivel
joint and the
torsion spring balance assembly will be opened and the
contents
checked against the bill of lading.
B. The components will be unpacked and the swivel joint
with butt weld
surfaces will be cleaned and inspected.
C. Individual components for the loading arm will be fixed
in jigs to facilitate
assembly.
D. The WNRF flange will be welded to the elbow at the
swivel joint.
E. The primary tube will be welded to the two swivel
joints.
F. The inboard arm will then be installed up to the WNRF
flange on the
header.
G. The split flange design will then be tightened.
H. Keeping the last elbow on the horizontal center line,
the outboard arm is
joined by welding.
I. The TTMA flange is then aligned with the bolt holes in
the off-center line
position and welded.
J. The TTMA flange joints (with gasket) are then tightened
using nuts and
bolts.
K. Keeping the outboard arm in the horizontal position, a
sleeve to attach the
torsion spring balance is then slid over the outboard
arm.
L. The lever of the torsion spring balance is then fixed
with a pin and nuts.
M. The sleeve is then tack welded to the outboard arm.
N. The end name tag is then tack welded to the bottom
loading arm.
O. The connector end of the loading arm is then sealed
with a blind plug.
P. The assembled bottom loading arm is then hydro tested.
Q. The rotation of each swivel joint is then tested for
leaks.
R. After testing is complete, the bottom loading arm is
evacuated of liquid.
S. The torsion spring balance springs are then tightened
to check the
balance of the loading arm.
T. After checking the balance of the loading arm, the
torsion spring balance
springs are loosened so the loading arm can be prepared
for painting.
U. The surfaces are then prepared for painting by lightly
sandblasting the
loading arm assembly.
V. The bottom loading arm is then painted with one coat of
primer and two
coats of enamel paint.
W. After the paint has dried, an inspection of the loading
arm is conducted to
ensure the quality of the painting operation.
X. A comprehensive inspection of the loading arm is then
performed to
ensure that the finished product meets, or exceeds, all
of the
manufacturing requirements and specifications.
Y. The bottom loading arm is then prepared for shipment to
a user or
prepared for short-term storage.
A drawing depicting these operations was submitted with your
ruling request together with brochures for the loading arms and
the swivel joints.
ISSUE:
What are the country of origin marking requirements of
swivel joints and torsion spring balance assemblies imported from
India to be used in the production of top and bottom
loading/unloading arms in the U.S. as described above?
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 in 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.
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 exceptions of 19
U.S.C. 1304. Section 134.1(b), Customs 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.
For country of origin marking purposes, a substantial
transformation of an imported article occurs when it is used in
the U.S. in manufacture, which results in an article having a
name, character, or use differing from that of the imported
article. If such substantial transformation occurs, then the
manufacturer is the "ultimate purchaser" of the imported article,
and the article is excepted from marking and only the outermost
container is required to be marked. See 19 CFR 134.35. On the
other hand, 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 and an
appropriate marking must appear on the imported article so that
the consumer can know the country of origin. Uniroyal, Inc. v.
United States, 542 F. Supp. 1026, 1029 (CIT 1982), aff'd, 702
F.2d 1022 (Fed. Cir. 1983).
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.
In Headquarters Ruling Letter (HRL) 732940, dated July 5,
1990, Customs considered water pump assemblies comprised of 6-8
components including a casting, bearing, impeller, hub, seal,
mounting gasket, and in some cases, a spacer, and tubes or plugs.
The casting and bearing were the most costly components.
Although the assembly process was not exceedingly complex, and in
one instance a Taiwanese-origin casting was used to produce the
water pump, which remained visible after assembly, a substantial
transformation was found. The main reason was because the
casting was only one of several important components of the water
pump (the others were of U.S.-origin), and because it was
permanently attached to the remaining components. See also HRL
731330, dated July 13, 1988 (imported spark plug insulator
assemblies consisting of a ceramic insulator and a center
electrode mounted in the insulator, and a ground electrode were
considered substantially transformed in the U.S. by the welding
of the ground electrode to a steel shell, bending the ground
electrode to the desired shape, and mounting the insulator
assembly in the steel shell using seals; accordingly, the
imported items did not require individual marking); HRL 732350,
dated June 23, 1989 (imported transducers (i.e., microphones and
receivers) wired to a faceplate, along with a signal processing
circuit, which was then cemented into a shell to create hearing
aids were considered substantially transformed and excepted from
individual country of origin markings pursuant to 19 CFR 134.35,
primarily because the transducers could not be removed from the
shell); and HRL 558919, dated March 20, 1995 (an imported
extruder subassembly is substantially transformed in the U.S.
when it is wired and combined with the U.S. components to create
a vertical extruder).
In this case, we find that the operations which involve the
incorporation of the imported swivel joints and torsion spring
balance assembly into the top and bottom loading/unloading arms
result in a loss of the imported articles' separate identities.
The use of the swivel joints and torsion spring balance assembly
in the U.S. results in the complete integration of these
components into the finished top and bottom loading/unloading
arms analogous to the incorporation of various components as
detailed in the rulings cited above and constitutes a substantial
transformation of the imported swivel joints and torsion spring
balance assembly. Accordingly, Tate will be deemed the ultimate
purchaser of the imported swivel joints and torsion spring
balance assembly and only their outermost containers must be
marked to indicate that their country of origin is India. The
finished top and bottom loading/unloading arms will be excepted
from country of origin marking.
Please be aware that Customs will not address whether an
article may be marked with the U.S.A. symbol. The determination
of whether a good may be marked "Made in USA" under any
circumstances is under the primary jurisdiction of the Federal
Trade Commission and not the Customs Service. We therefore
recommend that you contact the Federal Trade Commission, Division
of Enforcement, located at 6th and Pennsylvania Avenue, N.W.,
Washington, D.C. 20580, for any views concerning marking a
product which is of U.S. origin with the "USA" symbol.
HOLDING:
On the basis of the information submitted, we find that the
imported swivel joints and torsion spring balance assembly are
substantially transformed, and, therefore, are excepted from
individual marking, provided the cartons in which Tate receives
them are
properly marked with their country of origin, and Customs
officials at the port of entry are satisfied that the components
will be produced in the manner described above.
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
Tariff Classification Appeals
Division