OT:RR:CTF:FTM H308201 MJD
Ms. Lisa Pietz
Page & Jones, Inc.
2850 Wall Triana Hwy, Suite 205
Huntsville, AL 35824
RE: Country of Origin Marking of Lighted Pine Vinyl Wreath
Dear Ms. Pietz,
This is in response to your letter, dated January 9, 2020, requesting a binding ruling, on behalf of Caffco International, with respect to the country of origin marking of a lighted pine vinyl wreath. Your request was forwarded to this office by the National Commodity Specialist Division for review. A sample of the wreath was submitted to this office for examination and will be returned to you with this decision. A video of the manufacturing process was also provided upon request. Our ruling is set forth below.
FACTS:
According to your submission, the manufacturing of the wreath will take place in Cambodia with all of the materials sourced from China, except for the brown master carton the wreath is placed in when it’s completed and shipped out of Cambodia. The following are the materials from China: PVC sheet in rolls, PVC pine needles in bundles and plastic berry picks, galvanized iron wire in rolls, glitter, natural pinecones, battery operated LED light set, and flexo print packaging. The finished product is a lighted pine vinyl wreath with glittered natural pinecones and glittered berries.
The ruling request describes the manufacturing process as follows:
The manufacturing process begins by taking PVC rolls, cutting it into predetermined lengths and width, then adding a thin gauge and narrow strip of brown PVC as the strips are cut into “bristles” creating ropes. The berry picks, bristle pine bundles and pinecones are dipped in adhesive then the glitter is applied by hand. The ropes are shaped and cut to create the actual bristle effect. Seven of the needle bundles are inserted into the garland twisting machine multiple times to create a pine vinyl garland. [T]he thick gauge wire is cut to length to create a double frame, and the garland is added to the frame. The glittered picks are then attached to the wreath and the light set is attached. The wreath is then shaped and secured. Each wreath’s light set is tested and then packed into retail boxes. The retail boxes are packed into shipping cartons, 6 retail packages per carton.
You state that “46.06% of the $24.50 production cost is from processing and fabrication completed in Cambodia,” and believe the materials imported from China to make the wreath are substantially transformed into the finished wreath in Cambodia. Therefore, you argue that the country of origin for marking purposes of the wreath is Cambodia.
ISSUE:
What is the country of origin for marking purposes of the lighted pine vinyl wreath?
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 United States 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 an ultimate purchaser in the United States 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 markings on the imported goods the country of which the good is the product. “The evident purpose is to mark the goods so 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 and Border Protection (“CBP”) Regulations (19 C.F.R. § 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Section 134.1(b), CBP Regulations (19 C.F.R. § 134.1(b)), defines “country of origin” as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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” within the meaning of this part.” A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, and use which differs from the original material subjected to the process. United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments v. United States, 681 F.2d 778, 782 (1982).
In determining whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the article’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative.
CBP has held in a number of cases that complex and meaningful assembly operations involving a large number of components result in a substantial transformation. In Headquarters Ruling Letter (“HQ”) H303866, dated February 13, 2020, CBP found that a centrifugal pump assembly designed for use in automotive windshield washer systems involved complex assembly operations. The finished pump was processed and assembled in Mexico, with half of its component parts coming from Mexico, approximately one third from China, and the remaining from various countries including Japan and the United States. CBP found that the soldering, fusing, machining, plastic injection molding, and crimping to form the finished centrifugal pump was complex and resulted in a substantial transformation in Mexico. Thus, the centrifugal pump was deemed a product of Mexico. Similarly in HQ H303529, dated June 6, 2019, CBP determined that the assembly of an incomplete postage meter used for the printing function in the mail handling system was complex and extensive. In HQ H303529, while one of the major subassemblies was made in Malaysia, the remaining subassemblies were made in China, and the final assembly process of connecting the subassemblies also occurred in China. CBP found that the assembly process that occurred in China was sufficiently extensive and complex as to substantially transform the components into a product of China. In doing so, CBP noted that the question of the complexity of the assembly process which occurred in China was not limited to an examination of the assembly of the various subassemblies to one another, but included an examination of all the assembly processes involved in China in the production of the incomplete postage meter.
By contrast, assembly operations that are minimal or simple will generally not result in a substantial transformation. CBP has numerous examples where parts of a product were imported from one or more countries, fully assembled in another country, and were not deemed to have substantially transformed in the country of assembly because the manufacturing process was minimal and simple. For example, in C.S.D. 80-111, dated September 24, 1980, CBP ruled that the U.S. assembly of a fan with imported components did not constitute a substantial transformation. The ceiling fan motors were assembled in a 20-step assembly line procedure and the fan blades in 5-step procedure. CBP found that the fans did not undergo substantial transformation in the United States because the manufacturing processes of the fans consisted of “basically assembly line procedures” that did not require large amounts of skilled labor or specialized equipment. Also, in HQ H301619, dated November 6, 2018, CBP found that an electric motor made from components of China and assembled in Mexico was a product of China because the production process consisted of simple assembly. CBP stated that “the foreign subassemblies had a pre-determined end-use and did not undergo a change in use due to the assembly process in Mexico. Based on the information provided, the production process performed in Mexico is mere simple assembly and the foreign subassemblies are not substantially transformed.”
In the instant case, we find that the assembly of the wreath is not complex, and the Chinese-origin components are not substantially transformed into a wreath in Cambodia. While the manufacturing of the wreath involves multiple steps, the manufacturing process itself is not complicated and includes cutting of the green PVC rolls into sheets of predetermined lengths and widths and adding a strip of brown PVC and a narrow gauge wire. The strips are then cut into “bristles” creating ropes to form the backdrop or “filler” for the addition of the pre-made berry picks, bristle pine bundles, injection molded plastic pine, pinecones and lighting kit. From the information provided in the ruling request and video, the process consist of feeding materials into machines and manually attaching, glittering, or assembling items by hand, none of which is complex or requires highly skilled labor. In addition, while the various components are attached together to the wreath, they nevertheless have a pre-determined end use prior to importation, which is not changed when they are manufactured into a wreath in Cambodia. Therefore, we find that the Chinese-origin components are not substantially transformed when manufactured in Cambodia into the lighted pine vinyl wreath, and the country of origin is China.
HOLDING:
Based on the facts provided, the country of origin marking of the lighted pine vinyl wreath is China.
Please note that 19 C.F.R. § 177.9(b)(1) provides that “[e]ach ruling letter is issued on the assumption that all of the information furnished in connection with the ruling request and incorporated in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. The application of a ruling letter by a CBP field office to the transaction to which it is purported to relate is subject to the verification of the facts incorporated in the ruling letter, a comparison of the transaction described therein to the actual transaction, and the satisfaction of any conditions on which the ruling was based.”
A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the CBP officer handling the transaction.
Sincerely,
Yuliya A. Gulis, Chief Food, Textiles and Marking Branch