MAR-2-05 CO:R:C:V 734053 GRV
Mr. R. Scott Tucker
Vice President
Faro International Inc.
22935 Savi Ranch Pkwy
Yorba Linda, CA 92687
RE: Country of origin marking of plastic pen parts imported
to be assembled with U.S. component pen parts into
completed ballpoint pens. Ultimate purchaser; 19 CFR
134.1; assembly; Belcrest Linens; C.S.D. 85-25; C.S.D.
90-51; C.S.D. 80-111; 732238; 733825; T.D. 70-214(3)
Dear Mr. Tucker:
This is in response to your letters of February 15 and May
21, 1991, requesting a ruling regarding the country of origin
marking requirements applicable to plastic pen parts imported
from Japan to be assembled with U.S. component pen parts into
completed ballpoint pens. Samples of the plastic pen parts
imported were submitted for examination.
FACTS:
Your company imports four plastic pen parts from Japan and
sells them exclusively to the Kansas City Association for the
Blind (KCAB). The four plastic parts imported comprise the
(1) barrel, (2) plug, (3) cap, and (4) conical tip of the pen;
all exterior portions of the completed pens. KCAB in turn
assembles these imported pen components with completed ink tubes
of U.S. origin to make completed pens. The assembly operation
entails inserting an ink tube into a pen barrel, screwing a plug
and conical tip onto the respective ends of the pen barrel, and
placing a cap over the pen tip. These assembled pens are then
sold in special markets.
It is your contention that because approximately 55% of the
total cost of the completed pens is U.S.-value-added, the
imported plastic pen parts should not have to be marked to
indicate that they are from Japan.
Regarding the sample components submitted for examination,
no component part is marked to indicate its country of origin.
ISSUE:
Whether the imported plastic pen parts must be marked to
indicate their country of origin, as required by 19 U.S.C. 1304.
LAW AND ANALYSIS:
The marking statute, 304 of the 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 the English name of the country of origin of the
article. Part 134, Customs Regulations (19 CFR Part 134),
implements the country of origin marking requirements and
exceptions of 19 U.S.C. 1304.
The primary purpose of the country of origin marking statute
is to "mark the goods so that at the time of purchase the ulti-
mate purchaser may, by knowing where the goods were produced, be
able to buy or refuse to buy them, if such marking should influ-
ence his will." United States v. Friedlaender & Co., 27 CCPA
297, 302, C.A.D. 104 (1940).
The "ultimate purchaser" is defined generally as the last
person in the U.S. who will receive the article in the form in
which it was imported. 19 CFR 134.1(d). If an article is to be
sold at retail in its imported form, the purchaser at retail is
the "ultimate purchaser." 19 CFR 134.1(3). However, if an
imported article will be used in manufacture, the manufacturer
may be the "ultimate purchaser" if [s]he subjects the imported
article to a process which results in a substantial transforma-
tion of the article, even though the process may not result in a
new or different article. But, if the manufacturing process is a
minor one which leaves the identity of the imported article
intact, the consumer or user of the article, who obtains the
article after the processing, will be regarded as the "ultimate
purchaser." 19 CFR 134.1(d)(1) and (2).
A substantial transformation occurs when an imported article
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. Under this principle, the manufacturer or
processor in the U.S. who converts or combines the imported
article into the different article will be considered the
"ultimate purchaser" of the imported article, and the article
shall be excepted from marking. However, the outermost contain-
ers of the imported articles must be marked. 19 CFR 134.35.
As the issue of whether a substantial transformation occurs is
for marking purposes a question of fact, it is determined on a
case-by-case basis.
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, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2
Fed.Cir. 105, 741 F.2d 1368 (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.s 80-111, 85-25, 89-110, 89-118, 89-129 and 90-97.
In C.S.D. 90-51, 24 Cust.Bull. ___ (1990), we considered
whether certain valve components, imported to be assembled with
numerous U.S. components to make certain valves, were substan-
tially transformed so as to make the importer/manufacturer the
ultimate purchaser for purposes of country of origin marking.
Finding that the imported components lost their separate
identities in the finished valve products, we held that the
imported components were substantially transformed by the
assembly operation, and excepted the imported components from
individual country of origin marking. However, the outermost
container of the imported components was required to be marked to
indicate the country of origin of the components. Cf., C.S.D.
80-111 (foreign fan components not substantially transformed by
domestic, 20-step, assembly-line operations, as the identity of
the foreign components was not lost or physically altered, no
skilled labor or specialized equipment was required, and the
assembly costs were relatively low).
Regarding the assembly of pen components, in Headquarters
Ruling Letter (HRL) 732238 dated May 9, 1989, pen components (cap
and barrel) from Taiwan were imported to be assembled with
domestic components (cartridge, spring and cap) into completed
cartridge pens. Concluding that the assembled pens had to be
individually marked, we further stated that a marking such as
"Barrel and Cap Made in Taiwan" would satisfy the requirements of
19 CFR 134.14(a) (relating to articles usually combined after
importation). In a letter dated January 2, 1991 (733825),
Headquarters further clarified the country of origin marking
requirements applicable to imported pens ("highlighting markers")
assembled in one country with component parts made in another
country. We concluded that if the assembly of the pens was a
mere combining of parts in a simple operation, the assembly of
the pen parts would not constitute a substantial transformation.
In this case, we do not find that the assembly operation
performed in the U.S. constitutes a substantial processing of the
imported components. It is a simple combining operation entail-
ing only the insertion of an ink tube into a pen barrel, the
screwing together of a plug and conical tip onto the respective
ends of the pen barrel, and the placement of a cap over the pen
tip. In addition, the only domestic component that is added is
the ink tube. As the extent of operations performed is minimal
and, after viewing the samples submitted, the component parts do
not appear to lose their identity and become an integral part of
the new article, we find that the assembly operation constitutes
a minor processing of the imported components, which leaves the
identity of the imported components intact. Accordingly, the
imported pens must be legibly and conspicuously marked to
indicate their country of origin: "Japan." In this regard, we
have held that marking on the end surface of the barrel or cap of
imported pens is unacceptable, as failing to be legible and
conspicuous. The country of origin marking preferably should
appear in contrasting color to the surface of the barrel to which
applied in a letter size sufficiently large to be readily
observed from a casual examination. T.D. 70-214(3), 4 Cust.Bull.
700 (1970).
HOLDING:
Based on the information and samples submitted, the imported
plastic pens must be marked to indicate their country of origin,
as required by 19 U.S.C. 1304, as the domestic assembly operation
is a minor operation which does not substantially transform the
component parts imported. Accordingly, you are advised to check
with the Customs officials at the port you intend to import these
pen components through to ensure that the country of origin
marking method you employ meets the marking requirements of 19
U.S.C. 1304 and 19 CFR Part 134.
Sincerely,
John Durant, Director
Commercial Rulings Division