RR:CR:SM 561322 RSD
Mr. Ron Hodge
F.H. Kaysing Co. of Wichita
P.O. Box 12497
Wichita, Kansas 67277
RE: Country origin marking of an aircraft assembled in the U.S. from parts made in U.S., U.K. and Singapore; substantial transformation; marking of spare parts; 19 CFR 134.35
Dear Mr. Hodge:
This is in response to your letter dated March 24, 1999, on behalf of an aircraft manufacturer requesting a ruling concerning the country of origin marking requirements applicable to an aircraft fuselage imported from the United Kingdom and other imported parts used to complete the construction of an aircraft known as the Hawker 800XP.
FACTS:
The aircraft manufacturer imports an aircraft fuselage from the United Kingdom which is used in making an airplane called the Hawker 800XP. The Hawker 800XP is a high end, double engine, private passenger plane that is generally used for business purposes. The Hawker fuselage is constructed in the U.K. by British Aerospace and includes vertical stabilizers; the wings, including ailerons; flaps; air brakes; the passenger door; and rear tank. Hamble Aerostructures in the U.K. produces other parts for the aircraft such as horizontal stabilizers, overfin, ventral fairing, tail cone, dorsal fairing and the rudder. For shipping purposes, the fuselage is imported disassembled. As imported, the fuselage is without an interior, the engines or avionics, and it is unpainted. The engines and the avionics are made in the U.S. The landing gear is imported from Singapore. You have also provided information regarding the value of materials used in the completed aircraft and indicate the value of the Hawker aircraft attributable to the UK, U.S., and Singapore.
The aircraft manufacturer completes the final assembly of the aircraft, including installation of the engines, at its Wichita plant. The planes are sold all over the world. You estimate that about one plane is assembled per month. To support maintenance of the Hawker,
that the aircraft manufacturer keeps an inventory of spare parts from the foreign manufacturers. The spare parts are then sold to Hawker owners as required by update bulletins, modifications, damage incurred, failure, etc. As the sole supplier of the Hawker, most of these processes will be done by the aircraft manufacturer or its’ related repair and service stations. However, these spare parts will be available for retail sale either directly to the Hawker owner, or to repair and service centers not related to the aircraft manufacturer. The imported spare parts will range from simple hardware (e.g. nuts, bolts, and shims), to more complex structural and electrical components (e.g. ribs, struts, skins, relay boxes, and elect looms).
ISSUE:
What are the country of origin marking requirements for the completed Hawker aircraft?
What are the country of origin marking requirements for the spare parts for the Hawker aircraft?
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 (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. 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 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. 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 manufacture, which results in an article having a name, character, or use differing from that of the imported article. 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, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).
Section 134.35(a), Customs Regulations (19 CFR 134.35(a)), states that the manufacturer or processor in the U.S. who substantially transforms the imported articles into articles having a new name, character or use will be considered the ultimate purchaser of the imported article within the scope of 19 U.S.C. §1304. In such cases, the article will be excepted from marking, although the outermost container in which the articles are transported to the U.S. processor must be marked with the origin of the articles.
Headquarters Ruling Letter (HRL) 951072, dated May 22, 1992, involved the reassembly of a U.S.S.R.-origin airplane in Egypt. There was no substantial change in name, character or use of the airplane. The airplane that was reassembled in Egypt was exactly the same airplane that was built and then disassembled in the U.S.S.R. Consequently, we determined that the airplane was not substantially transformed in Egypt. In contrast, in HRL 546092, dated September 16, 1992, a Yak 52 aircraft built in Romania was disassembled in Russia and certain vital components of the aircraft were replaced in order to render the aircraft suitable for performing aerobatic acts. In particular, the aircraft was completely disassembled in order to replace the aircraft’s spar with a new heavier spar. A spar is one of the main longitudinal supports of the wings of an aircraft. In addition, a new engine and propeller were fitted as part of the modification of the aircraft. The newly designed aircraft was capable of use with up to nine positive and seven negative gravitational forces. We noted that the purpose of the disassembly and reassembly of the Yak 52 aircraft in Russia was not to restore the aircraft to be used in the manner for which it was originally built. Rather, the work performed on the Yak 52 aircraft transformed it from a trainer plane into a plane capable of aerobatic flight. In addition, the reassembly was very substantial involving, most notably, a completely new spar, engine, and propeller. Accordingly, we found that the processing in Russia resulted in a substantial transformation of the Yak 52 aircraft.
In the instant case, we believe that the assembly of the imported component parts of fuselage plus the installation of key components of the aircraft in the U.S. constitutes a substantial transformation. In this situation, the work which must be done on the imported fuselage to complete the finished Hawker is too extensive for the imported fuselage to be considered the essence of the aircraft. Although the fuselage is clearly dedicated to be used for the Hawker aircraft, as it arrives in the U.S. it is in a very unfinished form. The fuselage arrives in the U.S. unassembled, unpainted and does not have an interior. Even more significantly, the fuselage is basically an empty shell which lacks essential components which are necessary to allow it to function as an aircraft. The most important of these components are the two engines. Other important components, including the avionics and the landing gears, are also installed in the U.S. We find that the installation of these components is not a simple minor finishing operation, but a sophisticated procedure which requires a high degree of technical skill. The complexity of the assembly of the aircraft is demonstrated by the fact that only one aircraft is assembled per month. We also note that the engines and the avionics are made in the U.S. and that approximately 70 percent of the value of the finished aircraft is attributable to operations performed in the U.S. Accordingly, we find that the aircraft manufacturer substantially transforms the imported fuselage when it assembles the imported component parts and installs important parts such as the engines, avionics, the aircraft interior, and the landing gear to make the finished Hawker 800XP aircraft.
Under 19 CFR §134.35(a), the manufacturer of the Hawker 800XP aircraft, is the ultimate purchaser of the imported fuselage, and thus the fuselage is excepted from marking with its country of origin. Only the outermost containers in which these parts are imported are required to be marked with their country of origin.
The second issue you raise is whether the imported spare parts for the aircraft would have to be marked with their country of origin. Customs has generally held in situations in which technicians install replacement parts to make repairs for automobiles or appliances that the installer of the replacement or repair parts is not the ultimate purchaser. See HRL 734820, dated April 21, 1994; and HRL 733241 August 27, 1990. For example, HRL 733352, dated May 3, 1991, involved pressure gauges used in dishwashers, drilling equipment, and refrigerators which were not imported for use by original equipment manufacturers, but resold to or used by independent “jobbers” as replacement parts. Customs ruled that the ultimate purchaser generally will be the owner of the commercial dishwasher, drilling equipment or refrigeration equipment. We explained that the owner of the commercial dishwasher, drilling equipment or refrigeration equipment generally will be the last person in the U.S. who will receive the pressure gauge in the form in which it is imported. See 19 CFR 134.1(d). Based on the information provided, it appears that the same analysis would be applicable to this case because the owner of the aircraft will be the last person in the U.S. who will receive aircraft spare parts in the form in which they are imported. Thus, the owner would be the ultimate purchaser of the spare parts used to repair or maintain the aircraft. Accordingly, the imported spare parts for the Hawker aircraft must be marked to indicate their country of origin whether the parts are sold and/or installed at an aircraft manufacturer related facility or a facility that is unrelated to manufacturer.
The exception from individual country of origin marking pursuant to 19 CFR 134.33 (the “J List”), as “parts for machines imported from same country as parts” would not be applicable to the imported spare parts because the country of origin of the aircraft, which is the U.S., will not be the same as the country of origin of the imported spare parts.
HOLDING:
The imported fuselage is substantially transformed in the U.S. when it is reassembled and combined with the engines, avionics and the landing gear to make the Hawker 800XP aircraft. The country of origin of the Hawker 800XP aircraft is the U.S. The spare parts must be separately marked to indicate their country of origin regardless of whether they are sold by a facility which is related or unrelated to the manufacturer.
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
Commercial Rulings Division