MAR-2-05 CO:R:C:V 734521 KR
Mr. Victor Hanks
Trade Manager
Kurt Manufacturing Co.
Industrial Products Division
1325 N.E. Quincy Street
Minneapolis, MN 55413-1540
RE: Country of origin marking of vise handle after attachment to
vise; combining; substantial transformation.
Dear Mr. Hanks:
This is in response to your letter received at Customs New
York Seaport on January 27, 1992, and forwarded to Headquarters on
February 24, 1992, and received on February 26, 1992, requesting
a ruling on the country of origin marking requirements for vise
handles imported from Taiwan which are to be combined with the
remaining vise parts manufactured in the United States. Copies of
a brochure showing the vise and handle as assembled were submitted
for evaluation.
FACTS:
As imported, the vise handles are labeled "Made in Taiwan".
The handle is combined with the other vise parts all made in the
U.S.: the body, movable jaw, reversible jaw plates, nut, screw,
retaining collar, screw support and thrust bearings. The handle
represents 4 percent of the cost of the completed vise. You state
that the handle will not be sold separately from the vise. You
state that you wish to remove the Taiwan label after importation
so that it does not appear on the assembled vise.
ISSUE:
Whether the handles are substantially transformed when they
are combined in the United States in the manner described above.
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.
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 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 an article loses its
identity and becomes a new article 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, 628
F. Supp. 978, 10 CIT 48 (CIT 1986); Koru North America v. United
States, 701 F. Supp. 229, 12 CIT 1120, (CIT 1988). Two court cases
have considered whether imported parts combined in the U.S. with
domestic parts were substantially transformed for country of origin
marking purposes. In the first case, Gibson-Thomsen, the court
held that imported wood brush block and toothbrush handles which
had bristles inserted into them in the U.S. lost their identity as
such and became new articles having a new name, character and use.
The second case involved imported shoe uppers which were combined
with domestic soles in the U.S. The imported uppers were held in
Uniroyal, Inc. v. United States, 542 F. Supp. 1026, 3 CIT 220 (CIT
1982), to be the "essence of the completed shoe" and therefore, not
substantially transformed.
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 734440 (March 30, 1992) (applying the six factors to
determine a lock was substantially transformed); and HQ 728801
(February 26, 1986). See also HQ 734219 (September 3, 1991)
(imported water pans and charcoal pans were not substantially
transformed in the U.S. by combining them with other domestic and
foreign components during a repackaging operation in the U.S. of
smoker/grill units).
In this situation, the vise handle is substantially
transformed after importation into the U.S. In HQ 733804 (November
9, 1990), Customs ruled that attaching a U.S. handle to an imported
broom head does not substantially transform the imported broom
head. Instead, the broom must be marked with the country of origin
of the "essential element of the finished article." This was true
"whether it is assembled with a foreign or U.S.-made handle." See
also HQ 734246 (October 21, 1991) (holding that the country of
origin of a hammer is determined by where the head is made, and not
the handle); HQ 723857 (December 1, 1988). But see HQ 732896
(April 5, 1990) (holding that a mop handle must be separately
marked from the mop head because they did "not lose their separate
identity" because the mop head is removable).
In HQ 733196 (August 10, 1990), Customs compared the
manufacturing costs of the different pieces to determine whether
a ratchet must be marked with the country of origin of the ratchet
handle or the pawl and attachment parts. Customs held that the
imported ratchet handle was substantially transformed because the
U.S.-made pawl and parts (70 percent of the manufacturing costs)
were "the very essence of the finished product." In HQ 733199
(July 19, 1990), Customs used similar reasoning in holding that the
country of origin of a paint brush is determined by the bristles
and not the handle. Customs relied upon the manufacturing cost,
the essence of the item, and on the bristles being permanently
attached to the handle.
In this case, the vise handle is only a less important part
among the various parts of the vise. Like the head of the hammer
in HQ 734246, supra, the key parts of the vise are the body and
jaws which are made in the U.S. The handle of the hammer was not
controlling for the country of origin marking, but instead the head
of the hammer determined the country of origin. Similarly, the
vise rather than the vise handle determines the country of origin.
Unlike the mop handle in HQ 732896, supra, the vise handle is
permanently attached to the remaining pieces, is functionally
necessary to the operation of the finished article, and not an
accessory retaining its independent function. The vise is also a
more complex instrument than the mop head and is not replaceable.
Further, the predominant expense of the assembled vise, 96 percent,
is in the parts produced in the U.S. See HQ 733199, supra.
Based on our consideration of all these factors, we conclude
that the vise handle is substantially transformed in the U.S. as
a result of combining it with the U.S. manufactured pieces.
Accordingly, we find that Kurt Manufacturing Co. is the ultimate
purchaser of the vise handle under 19 CFR 134.35. Therefore,
prior to assembly the box containing the imported vise handle must
continue to be marked with the country of origin of the vise
handle, Taiwan. However, after assembly onto the vise the handle
is excepted from marking.
You also seek authorization to remove a label attached to the
handle upon importation which states the country of origin of the
handle. Since the handle is substantially transformed, we agree
that the label may be removed. Retaining it may cause confusion
as to the country of origin of the entire vise. See HQ 733199
(July 19, 1990) (in Gibson Thomsen "[t]he court was also concerned
that when an imported article was combined with a domestic
material, that the ultimate purchaser not be confused into thinking
that the domestic article was made in a foreign country.")
Accordingly, once the vise handle loses its status as an article
of foreign origin it is acceptable to remove the existing marking
prior to sale of the assembled vise. It is noted, however, that
it would not be permissible to add any labeling which would suggest
that the handle is a product of the U.S.
HOLDING:
The imported vise handle is substantially transformed in the
U.S. by combining it with the U.S. manufactured remaining vise
pieces as described supra. Therefore, Kurt Manufacturing Co. is
the ultimate purchaser of the vise handle. The vise handle is
excepted from marking provided its container is marked with the
country of origin upon importation and it will be used only in the
manner described above and not otherwise sold. Kurt may remove the
country of origin label attached to the handle upon assembly onto
the vise.
Sincerely,
John Durant, Director
Commercial Rulings Division