MAR-2-05 CO:R:C:V 734393 NL
Mr. J. Epstein
W.N. Epstein & Company, Inc.
P.O. Box 45187
St. Louis, MO 63145-5187
RE: Country of Origin Marking - Nickel Cadmium Battery Packs;
Substantial Transformation; 19 CFR 134.46.
Dear Mr. Epstein:
This is in response to your letter of October 30, 1991, on
behalf of Access Manufacturing, Inc., in which you request advice
concerning the required country of origin marking for a molded
plastic pack containing nickel-cadmium batteries. You describe
the battery pack as an article which is commonly used to power
video camcorders.
FACTS:
A sample battery pack was submitted. The pack consists of
five 1.2 volt nickel cadmium battery cells enclosed in a sealed
plastic housing which has external contact plates. The cells are
manufactured in various countries and assembled into the pack in
Hong Kong. Your client states that the cost of the cells
accounts for 90% of the cost of the components which comprise the
pack.
The assembly consists of welding the cells together with
"tabs", inserting the joined cells into a "jig", covering the
cells with a layer of "hot glue", wiring in a thermostat, and
inserting the cells into an injection-molded plastic case which
is then permanently sealed by ultrasonic welding. No information
was submitted concerning the cost or time required for this
assembly operation.
The finished pack is sealed in clamshell plastic and shipped
in master cartons. You ask how the country of origin marking
requirements for this article are to be satisfied.
ISSUE:
How should the battery packs be marked for purposes of 19
U.S.C. 1304 and 19 CFR Part 134?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (!9 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 so as to indicate to the ultimate
purchaser in the U.S. the English name of the country of origin
of the article.
Part 134, Customs Regulations, implements the country of
origin marking requirements and exceptions of 19 U.S.C. 1304. As
provide at 19 CFR 134.1(b), the "country of origin" means the
country of manufacture, production, or growth of an article.
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". A substantial transfor-
mation is said to occur if, after processing or manufacture, an
article emerges having a different name, character, or use.
In this matter the issue to be decided is whether the
assembly in Hong Kong of battery cells from various countries is
sufficient to substantially transform them resulting in an
article (the battery pack) which is considered a product of Hong
Kong for purposes of 19 U.S.C. 1304 and 19 CFR Part 134. We
conclude that the Hong Kong assembly is not sufficient to effect
this change in country of origin, and that the assembled battery
pack must be marked so as to indicate the countries of origin of
the battery cells to the ultimate purchaser in the U.S.
Principally, we find that the assembly of the battery cells
into packs does not change the character or use of the cells.
There is arguably a change in the name of the finished article
from battery cells to battery pack, but this slight change is
overcome by the fact that there is no change in the character or
use of the cells. After assembly they serve the same purpose as
before - as a power source, and neither the character or the use
is different. The incorporation of the cells into the battery
pack adapts them for their intended use, but does not change the
use for which they were originally manufactured prior to
importation to Hong Kong.
A previous Headquarters Ruling Letter which considered the
entire process of manufacturing nickel cadmium battery cells and
joining cells together to make two-cell batteries is instructive.
See HRL 704711 (May 19, 1975). In brief, we ruled that the
manufacture of cells themselves (using components from Japan) was
completed in Hong Kong when the sealed cell "cans" were
manufactured. The subsequent joining in Japan of two cells by
attachment of a vinyl sleeve and spot welding a tab was
determined to be a mere finishing operation which did not change
the Hong Kong origin of the battery cells. We described the
finishing process as relatively simple compared with manufacture
of the cells. The same principles are applicable here. The
simple assembly of cells into battery packs is not sufficient to
result in an article which is considered a product of Hong Kong
for country of origin marking purposes.
We note that Customs would not object to an indication that
the battery pack is assembled in Hong Kong by a phrase such as,
"Assembled in Hong Kong", provided that the country of origin of
the battery cells is indicated in accordance with the
requirements of 19 CFR 134.46. That section provides that in any
case in which a reference to a country or locality other than the
country of origin appears on an article or its container, the
name of the actual country of origin must appear in close
proximity to such reference, in lettering of comparable size,
accompanied by "Made In", "Product of" or words of similar
meaning.
However, a special marking rule will be applicable if the
batteries are of U.S. origin and the assembled battery pack is
eligible for duty treatment under subheading 9802.00.80,
Harmonized Tariff Schedules of the United States. In that event,
as provided at section 10.22, Customs Regulations (19 CFR 10.22),
the country of assembly will be considered the country of origin
for marking purposes, and the phrase "assembled in" will be
sufficient for purposes of indicating the battery pack's country
of origin.
Your submission indicates that the packaging of the battery
packs will be such that it would be acceptable to mark the
country of origin on the package rather than the article, as it
appears that in all foreseeable circumstances the article would
reach the ultimate purchaser in the U.S. in the sealed clamshell
container. As indicated above, these containers must be marked
with the countries of origin of the battery cells which are
assembled into the battery packs.
HOLDING:
Nickel cadmium battery cells are not substantially
transformed when assembled into battery packs in Hong Kong. For
purposes of 19 U.S.C. 1304 and 19 CFR Part 134, the sealed
containers must be marked to indicate the countries of origin of
the battery cells. Any reference to Hong Kong must be rendered
in accordance with the requirements of 19 CFR 134.46.
Sincerely,
John Durant, Director
Commercial Rulings Division