MAR-2-05 CO:R:C:V 734350 ER
Ms. Usha R. Shah
Maharani
1720 E. Jeter Road
Argyle, Texas 76226
RE: Country of Origin Marking of Base Metal Components from
Various Countries; Substantial Transformation; Ultimate
Purchaser; Jewelry; 19 CFR 134.14; 19 CFR 134.32(d); 19
CFR 134.34; 19 CFR 134.35; 19 CFR 134.46; HQ 733603;
HQ 556060.
Dear Ms. Shah:
This is in response to your letter dated August 27, 1991
originally sent to the National Import Specialist Division
("NIS"), Branch 3, at the New York Seaport and subsequently
forwarded to this office under separate cover from the NIS dated
September 19, 1991. Your ruling request concerns the country of
origin marking requirements for base metal components imported
from various countries. The facts set forth below were obtained
from both of the above-mentioned submissions and by telephone
conversation on March 17, 1992.
FACTS:
The various samples submitted by Maharani are in plastic
packages marked A, B, C, D and E. The components are imported
from as many as eight different countries and are used in the
U.S. to manufacture imitation jewelry such as necklaces,
bracelets, earrings, brooches and barrettes.
Package A contains three completed imitation jewelry
articles each of which is identified by an item number: a
necklace (BR-738), a bracelet (BRC-23) and a pair of dangle
earrings (Z-1). These items each consist of a base metal linked
chain which has an assortment of metal charms attached to it.
Both the chain and the charms are imported unassembled in an
unmarked condition. The chain portion of the three items is
imported from Guatemala. The necklace and bracelet are assembled
by Maharani in Texas where the chain is cut, the two ends are
joined together and twenty to fifty charms are individually
attached to the chain. Similarly, the chain for the earrings is
cut in Texas after which charms and ear-wires are attached.
Package B contains two unmarked base metal heart-shaped
components that are used to make post earrings, barrettes and
button covers. Package B also includes item P-65, a pair of
completed post earrings, which, in the U.S., have stainless
steel posts from Hong Kong glued to the imported components and
plastic pin clutches from Hong Kong affixed to the posts.
Package C contains an unmarked brass component which is used
to make a button cover. Package C also includes items BUT-4, a
number of completed button covers, which have button cover
mechanisms from Hong Kong soldered to the imported components in
the U.S.
Package D contains an unmarked base metal component which is
used to make a brooch. Package D also includes item PIN-113, a
completed brooch, which has a bar-pin clasp from Hong Kong
soldered to the back of the imported component in the U.S.
Package E contains unmarked base metal components in the
form of cats which are used to make barrettes. Package E also
includes item THB-104, a completed barrette, which has a metal
clip, marked "Made in France", soldered to the cats in the U.S.
Once the various items are complete, Maharani packages each
item for retail with a card attached by a string that reads
"Assembled in USA". In the U.S. a "story card" is attached to
the samples in packages B, C, and D and displays the following
language:
Thai Metal Pieces, Pins & Necklaces,
Bracelets, Barrettes, & Earrings. The parts
are hand-made in Thailand. Designs are both
old tribal and new contemporary. The style
and method of making them are all based on
jewelry the Thai Northern hill tribes
personally wear.
By telephone conversation, you stated that when the articles are
designed in other countries, the story card is adapted to
identify the correct country in which the article is designed.
The sample necklace, bracelet and earrings contained in
package A bear similar story cards which characterize the chain
portions as "'Engagement Chains' or 'Wedding Chains' of Guatemala
..." and which explain that the charms are traditionally used by
indians in Mexico.
The barrette in package E has enclosed with it a card
stating that although the barrette is made in Texas, "Made in
France" clips are used because "they are the only ones that do
not break and do not slide out of your hair."
Maharani requests an exemption from country of origin
marking of the above described imported components on the basis
that none of the components is sold individually, but is instead
manufactured into a new and different article, imitation jewelry,
by Maharani after importation into the U.S. Accordingly,
Maharani asserts that the imported articles have been
substantially transformed by the operations performed in the
U.S.
ISSUE:
Whether the imported base metal components are excepted from
country of origin 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 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., 27 C.C.P.A. 297 at 302 (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 134.35, Customs Regulations (19 CFR
134.35), provides that an article 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 will be within the
principle of the decision of U.S. v. Gibson-Thomsen Co. Inc., 17
C.C.P.A. 267 (C.A.D. 98) (1940). Under this principle, the
manufacturer or processor in the U.S. who substantially
transforms the imported article into an article with a new name,
character, or use will be considered the "ultimate purchaser" of
the imported article within the meaning of section 304(a), Tariff
Act of 1930, as amended (19 U.S.C. 1304(a)), and the article
shall be excepted from marking. The outermost containers of the
imported articles shall be marked in accord with this part.
In HQ 556060 (August 27, 1991), Customs ruled that bending,
cutting and soldering operations performed to create earrings
resulted in a substantial transformation. There the jewelry
pieces were said to emerge as new articles with new
characteristics, a different name and a defined specific use
different from that formerly possessed. Similarly here we find
that the operations performed on the items identified in
package A result in new and different articles: necklaces,
bracelets and dangle earrings. These operations consist mainly
of cutting chain and joining its ends together, affixing each of
the numerous charms to the chain by bending and clamping, and
soldering various components to the imported pieces to form new
and different articles. Accordingly, Maharani is the "ultimate
purchaser" of the imported articles within the meaning of section
304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304) and
the articles are excepted from country of origin marking at the
time of entry, pursuant to section 134.35, Customs Regulations
(19 CFR 134.35), so long as the outermost containers of the
imported articles are properly marked with the country of origin.
However, the items in packages B, C, D and E are not
substantially transformed as a result of the operations performed
in the U.S. In each of these instances the only operation
performed after importation is either gluing or soldering,
neither of which is complex, time-consuming or requires skilled
labor. Moreover, the imported articles do not lose their
separate identities as a result of the gluing or soldering
operations. In fact, the imported articles impart the
fundamental character to the finished product. Accordingly,
these components are not excepted from country of origin marking.
With the exception of the cards attached to the barrette,
discussed below, Customs is satisfied that the cards (described
above) attached to the finished post earrings, brooches and
button covers (components in packages B, C and D) adequately
identify the country of origin of the components -- e.g. "parts
are hand-made in Thailand".
With respect to the barrette, it is necessary to distinguish
the instant facts from those in HQ 733603 (October 15, 1991)
where Customs ruled that the assembly in Canada of a bow with a
clip constituted a substantial transformation. There, unlike
here, one of the major components (the bow), originated from the
same country where the assembly was performed -- Canada. Hence,
it was proper for Customs to find that the French-made barrette
clip was substantially transformed in Canada into a new and
different article of commerce -- a fashion barrette. However, in
the instant case since neither of the two major components used
to create the barrette is of U.S. origin no substantial
transformation can be said to occur.
Of the two information cards presently attached to the
finished barrette, one identifies the country of origin of the
components from Thailand. The other card displays the statement
"[w]e make all our barrettes here in Texas" as well as
information identifying the French origin of clip. So as to
avoid misleading the consumer into believing that the barrettes
are made in Texas, the word "made" should be replaced by the word
"assembled" and the new statement should read "[w]e assemble all
our barrettes in Texas".
Customs also finds that the mark "Made in France" which
appears on the barrette clip is misleading. Section 134.14,
Customs Regulations (19 CFR 134.14), states when an imported
article is of a kind which is usually combined with another
article after importation but before delivery to an ultimate
purchaser and the name indicating the country of origin of the
article appears in a place on the article so that the name will
be visible after such combining, the marking shall include, in
addition to the name of the country of origin, words or symbols
which shall clearly show that the origin indicated is that of the
imported article only and not that of any other article with
which the imported article may be combined after importation.
Accordingly, the "Made in France" mark should either be removed
from the clip or the mark should be corrected to read "Clip Made
in France". Customs notes that the if the clips were not marked,
the information appearing on the two cards attached to the
finished barrette would accurately reflect the country of origin
of the respective components since the cards clearly state that
the decorative portion is made in Thailand and the clip is made
in France. However, for the reasons explained below, the
information presently appearing on the two cards, should be
combined to appear on only one card.
The use of the word "Texas" on the card triggers application
of section 134.46, Customs Regulations (19 CFR 134.46), which
states that when the name of a locality other than the country or
locality in which the article was manufactured or produced,
appears on an imported article or its container, there shall
appear, legibly and permanently, in close proximity to such
reference, and in letters of at least a comparable size, the name
of the country of origin preceded by "Made in," "Product of," or
other words of similar meaning. Customs has interpreted this
section to require that the correct country of origin appear on
the same side or surface as the reference to the U.S. locality.
(See, HQ 734232 (November 20, 1991) citing to HQ 733618 (July 26,
1990) concerning soccer balls; HQ 732191 (April 27, 1990)
concerning paint brush sets; HQ 733084 (March 19, 1990)
concerning keywound alarm clocks; HQ 708994 (April 24, 1978)
concerning product labels.) Consequently, the information
currently appearing on the two cards should be combined so that
the countries of origin of the clip and the base metal components
(France and Thailand) also appear on the same card as the
reference to Texas.
So long as the requirements of 19 CFR 134.34 are satisfied,
the district director may authorize an exception from marking the
imported articles in packages B, C, D and E provided the cards
are affixed after importation. This exception is provided for
pursuant to 19 U.S.C. 1304(a)(3)(D) and sections 134.32(d) and
134.34, Customs Regulations (19 CFR 134.32(d) and 19 CFR 134.34)
if the containers in which the articles are repacked will
indicate the origin of the articles to an ultimate purchaser in
the U.S. Since no samples of proposed retail containers were
submitted in the instant case, if this alternative is pursued,
the district director at the port would have to determine if the
containers were appropriately marked with country of origin. In
any event, articles which are to be repacked after release from
Customs custody may be excepted from individual marking at the
discretion of the district director under the following
conditions: (1) The containers 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 the liquidation of the entry.
The FTC should be contacted regarding the appropriateness of
the use of certain cards which are marked "Assembled in U.S.A.".
The FTC address is: Federal Trade Commission, Division of
Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C.
20508.
HOLDING:
The imported base metal components in package A (chain from
Guatemala and charms) are substantially transformed into new and
different articles (necklaces, bracelets and dangle earrings) by
the operations performed in the U.S. Thus, in accordance with 19
CFR 134.35, Maharani is the ultimate purchaser of the imported
components and these components are excepted from individual
country of origin marking so long as the containers in which
Maharani receives them are properly marked with the country of
origin and Customs officials at the port of entry are satisfied
that the components will be used by Maharani only in the manner
set forth above.
The imported base metal components in packages B, C, D and E
(various items used to make post earrings, button covers,
brooches and barrettes) are not substantially transformed by the
minor assembly operations (gluing and soldering) performed in
the U.S. Accordingly, these items must be marked with their
country of origin at the time of importation. Alternatively,
and in accordance with 19 U.S.C. 1304(a)(3)(D) and 19 CFR
134.32(d) and 19 CFR 134.34, the district director may, solely at
his own discretion, except from individual marking those
components identified in packages B, C, D and E which are to be
repacked after release from Customs custody, so long as the
requirements of 19 CFR 134.34 are satisfied. Customs is
satisfied that the cards attached to the post earrings, button
covers and brooches adequately identify the country of origin of
the base metal components.
For the barrettes, the information presently appearing on
two attached cards must be combined to appear on only one card so
that the information concerning the French origin of the
barrette, the Thai origin of the metal components and the fact
that the parts are "assembled in Texas" all appears on the same
card in accordance with 19 CFR 134.46. Additionally, the words
"Made in France" on the barrette clips must either be removed or
changed to read "Clip Made in France". Inquiries regarding a
reasonable period of time in which to comply with the corrective
marking requirements for the barrette clips should be directed to
the district director.
The FTC should be contacted regarding the use of the words
"Assembled in U.S.A."
Sincerely,
John Durant, Director
Commercial Rulings Division