MAR 2-05 RR:TC:SM 559558 AT
Jonathan M. Fee, Esq.
Grunfeld, Desiderio, Lebowitz & Silverman
1201 West Peachtree Street, N.E.
Suite 4860
Atlanta, Georgia 30309
RE: Country of origin marking requirements for imported
rubber tires which are to be further processed and used to manufacture garbage receptacles in the U.S.; 19 CFR
134.35; substantial transformation; ultimate purchaser
Dear Mr. Fee:
This is in response to your letter dated November 13, 1995, on behalf of Schaefer Systems International, Inc. ("Schaefer") requesting a ruling on the country of origin marking requirements for rubber tires imported by Schaefer to be further processed and used in the manufacture of garbage receptacles in the U.S. A sample tire and wheel assembly was submitted for our review.
FACTS:
Schaefer manufactures garbage receptacles in Charlotte, North Carolina. Each receptacle consists mainly of a molded, high density polyethylene ("HDPE") body, a hinged molded HDPE lid, an axle and other incidental hardware, and two wheels. Schaefer molds the bodies and lids in the U.S. in its factory.
You state that Schaefer imports rubber tires directly from its overseas suppliers and places them in the possession of a subcontractor who manufactures molded plastic wheel hubs in the U.S. and attaches the imported tires to the hubs to make wheel assemblies. Before attaching a tire to the hub, the subcontractor places a spring and a locking pin inside the hub. It then attaches the tire to the hub with a machine that stretches the tire slightly and fits it over the hub. The locking pin protrudes into the axle-hole in the center of the hub so that it will lock the wheel onto a notched axle-end. The completed wheel assemblies are then returned to Schaefer to be used as parts for complete garbage receptacles.
You state that Schaefer sells the garbage receptacles, either fully assembled to individual households, or partially assembled to municipalities and private waste companies which then complete assembly of the garbage receptacles before distributing them to individual households. According to your submission, to ship partially assembled garbage receptacles to municipalities and private waste companies, Schaefer assembles two wheels and an axle to one receptacle, then "nests" five more bodies, without wheels, inside the first. It places two wheels and related hardware in the bottom of each nested body, and places axles for the five nested bodies inside the topmost body. This allows efficient shipment of "kits" consisting of six partially assembled garbage receptacles each.
You claim that neither Schaefer nor the municipalities or private waste companies ever ship unassembled garbage receptacles to individual households because assembly is relatively difficult and requires the use of a special mounting tool unavailable to households.
You state that the tires are imported in stacks on pallets which are shrink wrapped with an outer covering of plastic. A large paper sign is attached by tape or glue to the outside of the shrink wrapping setting forth the country of origin of the tires which are delivered to the subcontractor to be made into wheel assemblies.
You assert that the imported tires are substantially transformed in the U.S. as a result of being assembled into wheel assemblies which are later incorporated into complete or partially assembled garbage receptacles, and thus are excepted from being individually marked with their foreign country of origin. ISSUE:
What are the country of origin marking requirements for rubber tires imported into the U.S. which are to be used in the assembly of wheel assemblies for incorporation into completed or partially completed garbage receptacles in the manner described above?
LAW AND ANALYSIS:
The marking statute, section 304, Tariff Act of 1930, as amended (19 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 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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.
Section 134.1(b), Customs Regulations (19 CFR 134.1(b)), defines "country of origin" as the country of manufacture, production or growth of any article of foreign origin entering the U.S. 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 the marking laws and regulations. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character or use differing from that of the constituent article will be considered substantially transformed and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked (see section 134.35(a), Customs Regulations).
The country of origin marking requirements for the imported rubber tires that are used in the assembly of wheel assemblies in the U.S., which are then used by Schaefer to make complete or partially assembled garbage receptacles depends upon whether a substantial transformation occurs as a result of the U.S. assembly operation. If the imported tires are substantially transformed as a result of the assembly operation, then the imported tires are excepted from being individually marked with their foreign origin and only the outermost containers in which the tires are imported must be marked to indicate the tires' foreign origin.
For country or origin purposes, 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 CCPA 267 (1940); National Juice Products Association v. United States, 10 CIT 48 (1986). Whether a substantial transformation occurs is determined on a case-by-case basis.
In this case, we find that the imported tires are substantially transformed as a result of the assembly operation performed to make wheel assemblies for complete or partially assembled garbage receptacles. The operation changes the name, character and use of the tires. After the assembly operation is completed, the tire has a new name, "wheel assembly". Also, the wheel assembly is recognizable as having a different use from that of the rubber tire. The character of the imported tire changes as a result of being assembled to the U.S. origin wheel hubs. Prior to assembly it is a rubber tire, but after assembly it becomes an essential component of a wheel assembly part of a garbage receptacle. Thus, the imported tires are substantially transformed in the U.S. as a result of being assembled with U.S. components into wheel assemblies for later incorporation into complete or partially assembled garbage receptacles. Accordingly, the imported rubber tires are excepted from being individually marked with their foreign origin and only the outermost containers in which the tires are imported must be marked to indicate the country of origin of the tires.
HOLDING:
The imported rubber tires are substantially transformed in the U.S. as a result of being assembled into wheel assemblies for later incorporation into complete or partially assembled garbage receptacles. Accordingly, the imported rubber tires are excepted from being individually marked with their foreign origin and only the outermost containers in which the tires are imported must be marked to indicate the country of origin of the tires. A copy of this ruling 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 Customs officer handling the transaction.
Sincerely,
John Durant, Director
Tariff Classification
Appeals Division