MAR-2-05 CO:R:C:V 735251 RSD
John Bessich, Esq.
Follick & Bessich
One Cross Island Plaza
Rosedale, New York 11422
RE: Country of origin of marking for quartz watches; use of
"Assembled In" disallowed for most purposes of 19 U.S.C. 1304;
watch movements; HQ 734758; HQ 731057; HQ 734141; HQ 711871
revoked; delayed effective date; six month adjustment period
Dear Mr. Bessich:
This is in response to your letter dated July 9, 1993, on
behalf of the U.S. Watch Council regarding the country of origin
marking requirements for moderate cost quartz movement watches.
You specifically request that prior Customs headquarters ruling
HQ 734758 (March 1, 1993) be modified with respect to the use of
the phrase "Assembled in". Several letters from members of the
U.S. Watch Council in support of your request have been
submitted. A sample watch was also submitted. The sample will
be returned to you under a separate cover.
FACTS:
The United States Watch Council is a watch industry
organization consisting of nineteen member companies which import
and sell wrist watches and other timepieces in the United States.
Watch Council members are responsible for the sale of over
50,000,000 timepieces in the United States annually, valued on a
retail basis at nearly one billion dollars. This ruling concerns
relatively inexpensive analog watches with quartz movements which
are typically sold in department stores, discount retail outlets,
and through catalogues.
The specific concern of the Watch Council is whether the
phrase "Assembled in" can be used to indicate the country of
origin of imported watches. Frequently, the watches in question
contain movement parts which are made in one country, and sent to
another country for assembly into a completed watch movement.
For example, movement parts made in Switzerland are sent to China
or Hong Kong for assembly into the finished watch movement. The
Watch Council would like to mark the country of origin of such
watches with a marking indicating where the parts were made and
where the movement was assembled. They also contend that they
should be able to use the phrase "Assembled in" to indicate the
origin of the watches. For example, the sample watch is marked
on the back of the watch case in a circular fashion "SWISS MOVT
PARTS ASSEMBLED IN CHINA".
On March 1, 1993, Customs Headquarters issued HQ 734758
regarding a proposed country of origin marking for a watch. The
ruling held in part that the words "Swiss parts assembled in
China" was unacceptable because it did not indicate the country
of origin of the watch and could mislead ultimate purchasers into
thinking that the watch was made in Switzerland. The ruling
further pointed out that "Assembled in" ordinarily does not
indicate the origin of an article and that the watch should be
marked "China" or alternatively "Mov't China" or "China
Movement".
The Watch Council contends that HQ 734758 is incorrect in
disapproving the use of the words "Assembled in" to designate the
origin of a watch. It seeks to have HQ 734758 modified so that
the use of the phrase "Assembled in" would be an acceptable means
of indicating the country of origin of a watch. Alternatively,
the Council requests a period of time to allow watches marked
with "Assembled in" to be entered into the U.S. A number of
letters have been submitted from watch importers stating that
they have been importing watches marked with the phrase
"Assembled in", and that until the issuance of HQ 734758 they
were unaware that such marking was not acceptable. These letters
further state that prior to the issuance of HQ 734758, Customs at
local ports of entry had not objected to a country of origin
marking using "Assembled in". They also point out that an abrupt
change in the country of origin marking requirements could cause
a serious financial hardship for their business and request a
delay in the effective date of HQ 734758 in order to allow them
time to make the necessary adjustment in their marking practices.
ISSUE:
Can the phrase "Assembled In" be used to indicate the
country of origin for watches imported into the United States?
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. 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 is a 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). C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. As provided in section 134.41(b), Customs
Regulations (19 CFR 134.41(b)), the country of origin marking is
considered conspicuous if the ultimate purchaser in the U.S, is
able to find the marking easily and read it without strain.
For country of origin marking purposes under 19 U.S.C. 1304,
Customs considers the country of origin of watches to be the
country of manufacture of the watch movements. See HQ 731546
(October 27, 1988). Customs has also ruled that when unassembled
parts of a watch movement from one country are assembled in a
second country, the country of assembly is the country of origin
for marking purposes under 19 U.S.C. 1304. See HQ 708386 (May 2,
1978). In HQ 734758, Customs ruled that for a watch with a
movement made in China with Swiss parts the marking "Swiss parts
assembled in China" was unacceptable because it did not indicate
the country of origin of the watch and may mislead ultimate
purchasers into thinking that the watch was made in Switzerland.
We noted that the term "Assembled in" ordinarily does not
indicate the origin of an article. Accordingly, the watch had to
be marked "China", "Movt China, or "China Movt".
The Watch Council challenges the finding of HQ 734758 that
the phrase "Assembled in" is an unacceptable means of indicating
the country of origin of a watch. Customs' general position
regarding the phrase "Assembled in" was stated in HQ 731507
(October 17, 1989). The ruling stated that the phrase "Assembled
in" will not constitute sufficient country of origin marking
outside the context of section 10.22, Customs Regulations (19 CFR
10.22) (i.e., where an assembled article is not eligible for
tariff treatment under subheading 9802.00.80, HTSUS). In such
case, the general country of origin rule applies and the country
of origin is the country of assembly only if the assembly process
constitutes a substantial transformation. The ruling also
indicated that the phrase "Assembled in" outside the context of
19 CFR 10.22 would be misleading since the country of assembly
may or may not be the country of origin for purposes of 19 U.S.C.
1304.
This general position with respect to the use of "Assembled
in" was reiterated in HQ 734141 (September 12, 1991) regarding
the marking of imported pedometers. The ruling noted that the
designation "Assembled in" is reserved under the Customs laws for
the indication of the origin of an article which was assembled
abroad from U.S.-origin components within the meaning of
subheading 9802.00.80, Harmonized Tariff Schedule of the U.S.
(HTSUS). Section 10.22, Customs Regulations (19 CFR 10.22),
provides that such articles are deemed for marking purposes to
originate in the country of assembly, and "Assembled in" is the
permissible terminology. It was further stated that unless the
pedometer is eligible for importation under subheading
9802.00.80, HTSUS, it must be marked with the phrase "Made in",
"Product of" or simply the name of the country of origin. Under
the Customs laws and regulations, "Assembled in" is not regarded
as having the same meaning.
Although HQ 731507 and 734141 state the current Customs
position on the use of the phrase "Assembled in", a prior ruling
on watches has been discovered, HQ 711871 (January 17, 1980),
which permitted the use of "Assembled in" to indicate the country
of origin of a watch. The holding of HQ 711871 was that the
proper country of origin for solid state electronic watches which
contain solid state modules is the country of manufacture of the
solid state modules. The holding further stated that "Assembled
in Korea" stamped legibly and conspicuously on the outside of the
back of the watch case will meet this requirement. (emphasis
added).
Under a long standing Customs policy, the country of
assembly of a watch movement is the country of origin of a watch.
Notwithstanding HQ 711871, we remain of the opinion that the
phrase "Assembled in" would not properly indicate the country of
origin of a watch movement and hence the watch, to the ultimate
purchaser. Although the term "Assembled in" may accurately
indicate the country where an article was put or fit together, it
still does not sufficiently indicate the origin of an article
(i.e., where it was made or produced) under 19 U.S.C. 1304 except
for goods eligible under subheading 9802.00.80, HTSUS.
Accordingly, because HQ 711871 is not in accordance with the
current Customs position on the use of the phrase "Assembled in",
it is revoked.
We recognize however, that the holding of HQ 711871, and
possibly other similar Customs decisions, may have caused
confusion as to whether Customs would permit watches to be
imported marked with the phrase "Assembled in". The letters
submitted from various watch importers suggest that Customs
officials have allowed watches, marked in the manner of the
submitted sample, to be imported. Under these circumstances,
Customs believes that an interim period is appropriate in order
for watch importers to adjust their marking practices to comply
with the Customs position on the use of "Assembled in". Most of
the submissions state that they need until at least January 1,
1994, to make these adjustments. We will therefore grant a six
month grace period from the date that this ruling is issued,
allowing the use of the designation "Assembled in" to indicate
the origin of watch movements and watches themselves on watches.
During this period, Customs will permit the importation of
watches marked with the phrase "Assembled in" to indicate the
country of origin even if there is a statement on the watch
concerning where the movement parts are made. After the six
month period, watches marked with the designation "Assembled in"
will not be considered acceptably marked. The phrase "Assembled
in" will be considered to indicate origin only with respect to
those movements (and watches) which are eligible for importation
under subheading 9802.00.80 and thus to be marked in accordance
with section 10.22, Customs Regulations. Watches must be marked
with the phrases "Made in", "Product of", or simply with the name
of the country of origin. The country of origin of watches may
also be indicated by using the word "Movement" or an abbreviation
such as "Mov't". For example, the marking "China Movement" or
"Mov't China" are acceptable country of origin marking for
watches. See HQ 731546 October 27, 1988. The grace period on
the use of "Assembled in" will apply only to watches.
Watches may be marked with the country where the parts of
the movements or other parts are made as long as the marking is
in compliance with the requirements of 19 CFR 134.46. Section
134.46 requires that in any case in which the name of a place
other than the country of origin appears on an imported article
or its container, there shall appear, legibly and permanently, in
close proximity to such place 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. Thus, for
example, markings such as "Swiss Parts/Made In China" or "Swiss
Parts/Movement China" would be acceptable.
HOLDING:
The phrase "Assembled in" is not an acceptable designation
of the country of origin under 19 U.S.C. 1304. The marking on
the sample watch "Swiss Movement Part Assembled in China" is not
acceptable country of origin marking. Those portions of HQ
711781 and other rulings which are inconsistent with this ruling
are modified or revoked. In order to allow watch importers time
to make adjustment in their marking practices, a six month grace
period, during which watches marked with the phrase "Assembled
In", will be permitted to be imported in the U.S. After this six
month period, watches marked with the phrase "Assembled in" as a
means of indicating the country of origin will not be permitted
to be imported into the U.S.
Sincerely,
Harvey B. Fox, Director