MAR-2-05 CO:R:C:V 734227 AT
Mr. Louis DeLeone, Jr.
Purchasing Manager
Corbin & Russwin Architectural Hardware
P.O. Box 4004
Berlin, Connecticut 06037
RE: Country of origin marking of imported lever handles to be
assembled with locksets; substantial transformation;
combining; 19 CFR 134.14
Dear Mr. DeLeone:
This is in response to your letters of June 20, 1991,
January 3, and March 17, 1992, requesting a country of origin
ruling regarding imported lever handles which are to be combined
with locksets manufactured in the U.S. A sample of the lever
handles and a completed lockset with cardboard box packaging
container were submitted for review.
FACTS:
Your company manufactures heavy duty lever locksets for
securing both residential and commercial doors. You intend to
import die cast brass levers from Korea. You state that the
brass levers will be chrome plated in your plant and then
combined with locksets manufactured in the U.S. into the
completed lever locksets. The plating consists of hand
polishing, buffing, placing each lever on a rack plating line and
then removing by hand each lever to be placed into a box. You
also state that the cost of the lever represents approximately
10 percent of the total cost of a completed lever lockset.
Examination of the completed lever lockset indicates that
the levers are attached to the lockset and that an ultimate
purchaser must remove the levers from each side of the lockset in
order to insert the lockset into the door. The cardboard box in
which the completed lever locksets are sold at retail are marked
with the words "Made in USA" on the front and right side panel in
black letters approximately 9 point (a point is a unit of type
measurement equal to 0.01384 inch or nearly 1/72 in., and all
type sizes are multiples of this unit). The words "Berlin,
Connecticut 06037 USA" are printed on the bottom of the box in
black lettering approximately 16 point. You state that you
intend to mark the box either on the lefthand panel or righthand
corner of the bottom panel with the words "Lockset Made in USA"
in black lettering approximately 9 point. The words "Lever Trim
Made in Korea" will appear directly below in black lettering
approximately 4 point.
ISSUE:
Whether the imported brass levers are substantially
transformed when they are chrome plated and combined in the U.S.
with U.S. manufactured locksets and packaged for distribution to
retail stores?
Whether the cardboard box marked in the manner described
above satisfies the marking requirements of 19 U.S.C. 1304 and 19
CFR Part 134?
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."
Substantial Transformation and Domestic Operations
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.
In this case, the brass levers are polished, buffed and
chrome plated prior to being combined with the locksets. The
Court of International Trade held in National Hand Tools Corp. v.
United States, Slip Op. 92-61 (April 27, 1992), that the heat
treating and nickel-chrome plating of various imported hand tool
components did not substantially change the imported articles.
Customs has also consistently ruled that these types of
operations are finishing operations which do not substantially
transform the imported components within the meaning of 19 CFR
134.35. See, T.D. 74-12(3) (November 1, 1973), the processing
of fully machined components of socket wrench sets by heat
treating, grinding, vibrating, polishing to remove scale or
blemishes resulting from the heat treatment, plating, assembly,
inspection and identification marking does not result in a
substantial transformation of the imported components; HQ 711320
(March 6, 1981), removal of minor imperfection from imported
socket blanks by a grinding or wrench process, die-stamping the
blanks with an appropriate logo, a multi-step heat treatment,
vibratory rotofinishing, chrome plating, further assembly and
packaging did not substantially transform the imported socket
blanks. Similarly, we find that the imported brass levers are
not substantially transformed when polished, buffed and chrome
plated prior to being assembled with the locksets.
The second issue is whether the combining of the chrome
plated levers with domestic manufactured locksets constitutes a
substantial transformation.
In HQ 731432 (June 6, 1988), Customs set forth some factors
to be considered in determining whether imported goods combined
in the U.S. with domestic products were substantially transformed
for country of origin marking purposes. The following six
factors were considered:
1) whether the article is completely finished;
2) the extent of the manufacturing process of combining the
imported article with the domestic article as compared with the
manufacturing of the imported article;
3) whether the article is permanently attached to its
counterparts
4) the overall importance of the article to the finished
product;
5) whether the article is functionally necessary to the
operation of the finished article or whether it is an accessory
which retains its independent function; and
6) whether the article remains visible after the combining.
These factors are not exclusive and there may be other
factors relevant to a particular case and no one factor is
determinative. See, HQ 728801 (February 26, 1986).
Applying these factors to this case, we note that the
levers are completely finished, except for plating and other
finishing operations, when they are attached to the domestic
locksets. The assembly operation of attaching two levers to the
completed lockset is neither complex nor requires a great deal of
skill. At the time of purchase the levers are attached to the
locksets in a non-permanent manner. In order to install the
lockset, the lever must be disassembled. The levers are essential
to the function of the completed article. The levers remain
visible after the combining.
Assessing the factors noted above, we find that the chrome
plated levers do not lose their separate identity when they are
combined with domestic locksets to form completed lever locksets.
The levers are a significant component of the completed article,
due to the fact that one could not open or close the door without
the levers essential character. Assembly of the levers with the
domestic locksets in no way changes the characteristic of the
lever, and the levers are clearly recognizable both before and
after the assembly. In fact, as noted above, the lever is a
separate component which must be disassembled from the rest of
the lockset prior to installation. Although the levers only
accounts for approximately 10 percent of the total cost of the
finished article, this fact is not determinative. After
examining all the factors we find that the imported levers are
not substantially transformed when combined with domestic
locksets into finished lever locksets and your company is not the
ultimate purchaser of the imported levers under 19 CFR 134.35.
Section 134.1(d), Customs Regulations (19 CFR 134.1(d)),
defines the ultimate purchaser as generally the last person in
the U.S. who will receive the article in the form in which it was
imported. The definition then gives examples of who might be the
ultimate purchaser if the imported article is used in
manufacture, if the imported article is sold at retail in its
imported form and if an imported article is distributed as a
gift. If an article is to be sold at retail in its imported
form, the purchaser at retail is the ultimate purchaser. Since
the imported levers are not substantially transformed, they are
not considered to undergo a change in their imported form.
Therefore, the retail purchaser of the lever lockset is the
ultimate purchaser and the levers must be individually marked
with their country of origin. Because the levers are combined
with domestic locksets before delivery to the ultimate purchaser,
the levers should be marked in a manner which clearly shows that
the origin indicated is that of the levers alone (e.g. "Levers
Made in Korea"). See 19 CFR 134.14. In addition, because the
levers will be repacked in the U.S. prior to sale to the ultimate
purchaser the certification requirements of 19 CFR 134.26 apply.
Country of Origin Marking of Repackaging Container
However, if certain conditions are met, the district
director may authorize an exception under 19 CFR 134.32(d) from
marking the levers at the time of importation. In this regard,
19 CFR 134.34(a) provides that:
an exception under section 134.32(d) may be authorized in
the discretion of the district director for imported
articles which are to be repacked after release from
Customs custody under the following conditions:
(1) The container in which the articles are repacked will
indicate the origin of the articles to an ultimate
purchaser in the U.S.
(2) The importer arranges for supervision of the marking
of the containers by Customs officers at the importer's
expense or secures such verification, as may be
necessary, by certification and the submission of a
sample or otherwise, of the marking prior to liquidation
of the entry.
Whether or not the district director authorizes the above
exception the retail box must satisfy the requirements of 19 CFR
134.46. Examination of the cardboard box in which the finished
lever locksets are intended to be repackaged into reveals that
the words "Lockset Made in U.S.A" and "Lever Trim Made in Korea"
will be printed on either the lefthand panel or righthand corner
of the bottom panel. Also, the words "Berlin, Connecticut 06037
USA" are printed on the bottom of the box. Section 134.46,
Customs Regulations (19 CFR 134.46) requires that in any case in
which the words "U.S.," or "American," the letters "U.S.A.," any
variation of such words or letters, or the name of any city or
locality other than the country or locality in which the article
was manufactured or produced, appear on an imported article or
its container, there shall appear, legibly and permanently, in
close proximity to such words, letters or name, and in at least a
comparable size, the name of the country of origin preceded by
"Made in," "Product of", or other words of similar meaning
(emphasis added). In order to satisfy the close proximity
requirement of this regulation, the country of origin marking
must appear on the same side(s) or surface(s) on which the name
of the locality other than the country of origin appears.
Therefore the marking on the box must satisfy the requirements of
section 134.46 since the words "USA" and "Berlin, Connecticut
USA" appear on the box.
We note that with respect to your proposed marking "Lockset
Made in USA; Lever Trim Made in Korea" to be printed on either
the lefthand panel or righthand corner of the bottom panel, the
lettering "Made in Korea" is not in a comparable size to the
marking "Made in USA", and therefore it does not meet the
comparable size requirement of 19 CFR 134.46.
With respect to each "Made in USA" marking printed on the
packaging container in which the lever locksets are sold to
retail stores, we advise that an additional marking indicating
that the levers are made in Korea is required in close proximity
to and in comparable size letters. Further we advise you to
contact the Federal Trade Commission, Division of Enforcement,
6th & Pennsylvania Avenue, NW, Washington, D.C. 20508 before you
undertake to mark your finished product in that fashion since use
of the phrase "Made in USA" is under that agency's jurisdiction.
Also, we are referring a copy of your March 3, 1992, letter
to the Office of Trade Operations, regarding marking practices of
your competitors along with a copy of this ruling to ensure that
competitors are complying with country of origin marking
requirements.
HOLDING
The levers are not substantially transformed when they are
chrome plated and then assembled with domestic manufactured
locksets to make lever locksets. The buyers of the lever
locksets are the ultimate purchasers of the levers. The levers
must be marked to indicate their country of origin in accordance
with the requirements of 19 CFR 134.14. Because the levers will
be packaged in the U.S. prior to receipt by the ultimate
purchaser the certification procedures set forth in 19 CFR 134.26
apply. Alternatively, you may request from the district director
an exception from marking the levers itself under the procedures
set forth in 19 CFR 134.34.
Sincerely,
John Durant, Director
Commercial Rulings Division