MAR-2-05 CO:R:C:V 731953 KG
William D. Outman, II
Baker & McKenzie
815 Connecticut Avenue, NW
Suite 1100
Washington, D.C. 20006-4078
RE: Country of origin marking of imported electrical cables
Dear Mr. Outman:
This is in response to your letter of September 1, 1989, and
and the letter of November 25, 1988, from William F. Joffrey,
Customs House Brokers, on behalf of Adams-Russell Electronic
Company, Inc., requesting a country of origin ruling regarding
imported electrical cables. Samples of the imported raw cable,
the sub assembly cable with fittings and the final assembled
cable with the head assemblies attached were submitted for
examination. We regret the delay in responding to your inquiry.
FACTS:
Your client intends to export raw U.S. cable to Mexico to
assemble it into electrical cables with fittings. The sub
assembly cable with fittings is imported unfinished and will be
joined together with U.S. fabricated components to make the
final assembled cable. The sub assembly cable with fittings will
be imported into the U.S. under subheading 9802.00.80 of the
Harmonized Tariff Schedule of the United States ("HTSUS"), which
superceded and replaced item 807 of the Tariff Schedules of the
United States. There is no commercial use for the imported sub
assembly cable with the fittings in its imported form.
The value of the electrical cable with fittings at the time
it is imported from Mexico is $35.51. The domestic processing
adds $31.29 in material and $117.78 in labor costs (three hours
of labor). The total added domestic value is $149.07.
In the U.S., the head assemblies, which enable the sub
assembly cable with fittings to serve as a connection, will be
permanently attached to each end of the unfinished cable. This
processing includes: a visual inspection of the cable, pre-
testing to insure that the cable meets the proper specifications,
assembly of the connector heads, attaching the connector heads to
the cable, and final testing and inspection.
The finished cable with the head assemblies attached will be
used to connect navigation systems or radios to testing systems
on aircraft, principally military aircraft.
ISSUE:
Whether the imported cables are substantially transformed in
the U.S. for country of origin marking purposes, which would
except the imported cable itself from marking.
LAW AND ANALYSIS:
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 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.
The Court of International Trade stated in Koru North
America v. United States, 701 F.Supp. 229, 12 CIT (CIT 1988),
that: "In ascertaining what constitutes the country of origin
under the marking statute, a court must look at the sense in
which the term is used in the statute, giving reference to the
purpose of the particular legislation involved. The purpose of
the marking statute is outlined in United States v. Friedlaender
& Co., 27 CCPA 297 at 302, C.A.D. 104 (1940), where the court
stated that: "Congress intended 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."
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 134.35, Customs Regulations (19 CFR
134.35), states that the manufacturer or processor in the U.S.
who converts or combines the imported article into a different
article having a new name, character or use will be considered
the ultimate purchaser of the imported article within the
contemplation of 19 U.S.C. 1304, and the article shall be
excepted from marking. The outermost containers of the imported
articles shall be marked.
A substantial transformation occurs when articles lose their
identity and become new articles having a new name, character or
use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270
(1940), National Juice Products Association v. United States, 10
CIT 48, 628 F.Supp. 978 (CIT 1986), Koru North America v. United
States, 12 CIT ___, 701 F.Supp. 229 (CIT 1988).
In Superior Wire v. United States, 867 F.2d 1409 (Fed. Cir.
1989), involving the country of origin under a Voluntary
Restraint Agreement between the U.S. and Spain of wire drawn from
wire rod, the court found that no substantial transformation
occurred. In its analysis, the court affirmed the Court of
International Trade's conclusion that wire rod and wire may be
viewed as different stages of the same product. The character of
the final product was predetermined and there was no change in
use. "The end use of wire rod is generally known before the
rolling stage and the specifications are frequently determined by
reference to the end product for which the drawing wire will be
used."
Customs ruled in a case involving low insertion force
jumpers made of cables that a minor cutting manufacturing
operation which took place in Mexico was not a substantial
transformation in part because the articles were dedicated for
use prior to export to Mexico. HQ 730949 (July 18, 1988).
The imported cable which is the subject of this case is made
to specifications and cut to length for a specific purpose, to
connect navigation systems or radios to testing systems on
aircraft. Once this cable is cut to length and has the
subassemblies attached, it has no other use. Rather, like
Superior Wire, the imported cable is merely a different stage of
the same product. The conductor, the length and diameter of the
cable and the covering of the cable are predetermined. The
imported cable is dedicated for use; it could not be made into
anything other than the final product. Although the attachment
of the head assemblies in the U.S. adds to the value of the cable
and renders it ready for use, it does not create a new article
with a new name, character or use. Further, this imported cable
would be classified in heading 8544, HTSUS. The Explanatory
Notes for this heading indicate that "Wire, cable, etc., remain
classified in this heading if cut to length or fitted with
connectors (e.g., plugs, sockets, lugs, jacks, sleeves or
terminals) at one or both ends." Although there is significant
value added to the imported sub assembly cable, value is not the
only factor that Customs considers in making substantial
transformation determinations. For all the reasons discussed,
the imported cables are not substantially transformed in the U.S.
The imported cable is not excepted from marking by 19 CFR 134.35
and the U.S. manufacturer is not considered the ultimate
purchaser.
In this case, U.S. cable is exported to Mexico for assembly
into electrical cables with fittings. Pursuant to section 10.22,
Customs Regulations (19 CFR 10.22), imported articles which are
eligible for entry under subheading 9802.00.80 of the HTSUS are
considered products of the country of assembly. Goods made
entirely of American-made materials may be marked with the legend
"Assembled in ____ from material of U.S. origin," or a similar
phrase.
HOLDING:
The imported cables described above are not substantially
transformed in the U.S. Therefore, the imported cable must be
individually marked with its country of origin. If the cables
are eligible for entry into the U.S under HTSUS subheading
9802.00.80, the country of origin would be Mexico and the cable
may be marked with the phrase "Assembled in Mexico from material
of U.S. origin," or a similar phrase.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch