MAR-2-05 RR:TC:SM 560115 MLR
Robert L. Eisen, Esq.
Karen Bysiewicz, Esq.
Coudert Brothers
1114 Avenue of the Americas
New York, NY 10036-7703
RE: Country of Origin Marking for Ugly Stik fishing rods;
component parts; substantial transformation; multiple
countries of origin
Dear Mr. Eisen and Ms. Bysiewicz:
This is in reference to your letters of October 4,
November 20, 1996, and January 22, 1997, requesting a ruling
on behalf of The Shakespeare Company ("Shakespeare"),
concerning the country of origin marking for Ugly Stik
fishing rods ("fishing rods"). A meeting was held at the
Office of Regulations & Rulings on January 14, 1997, and a
sample was submitted at that time.
FACTS:
It is stated that Shakespeare imports fishing rods from
the People's Republic of China (China), and that the fishing
rods are assembled in China from component parts
manufactured in various countries. The main components are
stated to be as follows: (1) a U.S.-made fiberglass rod
blank, measuring 5 « feet to 9 feet in length depending on
the style; (2) line guides, made in Japan or Korea; and (3)
a handle and reel seat made in various countries outside
China. The main assembly operations are stated to consist
of: (1) thread wrapping the line guide components onto the
rod, (2) epoxy encapsulating the thread, (3) fitting
ferrules on some styles so that the rods may be broken into
parts, and (4) affixing the handle and reel seat onto the
rod.
ISSUE:
What is the country of origin of the fishing rod for
marking purposes?
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.
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 the 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. Inc., 27 CCPA 297, 302, 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.
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. For country of origin marking purposes, a
substantial transformation of an imported article occurs
when it is used in the U.S. in manufacture, which results in
an article having a name, character, or use differing from
that of the imported article. See 19 CFR 134.35.
In Headquarters Ruling Letter 559036, issued to
Shakespeare on August 7, 1995, Customs concluded that
analogous assembly operations performed in China did not
result in a substantial transformation of the component
parts of the fishing rods. Customs determined that U.S.-made blanks, and foreign fishing lines, handles, and reel
seats assembled into fishing rods in China did not create a
new and different article of commerce, and that the name and
use of the component parts did not change as a result of the
assembly process. Additionally, the assembly process was
not found to be exceedingly complex. However, since the
fishing rods, made with U.S.-made blanks, were eligible for
the partial duty exemption under subheading 9802.00.80,
Harmonized Tariff Schedule of the United States (HTSUS),
pursuant to 19 CFR 10.22 the country of origin of the
fishing rods for marking purposes was "China". By T.D. 96-48 (61 FR 28932, June 6, 1996), we note that 19 CFR 10.22
has been removed.
HRL 559036 referred to HRL 734214 dated November 18,
1991, where Customs held that fishing rods "(without reels)"
assembled in China from Korean-origin fishing rods,
foregrips, reel seats, butt grips, and line guides were not
substantially transformed and the country of origin of the
imported fishing rods was Korea, where the component parts
were made. HRL 559036 also referred to C.S.D. 93-13 (May
26, 1992), where Customs considered the assembly of fishing
rods in China from semi-finished Taiwanese rods and reel
seats, Korean line guides, and Japanese paint In C.S.D. 93-13, it was held that the assembly process did not result in
the manufacture of a new and different article. Accordingly,
in C.S.D. 93-13, it was determined that the imported fishing
rods should be marked to indicate the country of origin of
each of its component parts. However, it was also
determined that in order for the marking to be conspicuous,
it was acceptable to mark the fishing rod in a single
centrally-located place denoting both the country where the
article was assembled and the actual countries of origin
from which the component parts were derived. Additionally,
the central marking did not have to specify the component's
particular country of origin. Therefore, the marking
"Assembled in China from Components Manufactured in Taiwan,
Korea, and China" was acceptable. We also note that by T.D.
96-48, 19 CFR 134.43(e) was modified, which makes the term
"Assembled in" an acceptable country of origin indicator,
such that the marking allowed in C.S.D. 93-13 is no longer
acceptable.
C.S.D. 93-13 also cited T.D. 67-173, 1 Cust. Bull. 366
(1967):
In T.D. 67-173 ... we considered whether the domestic
assembly of fishing rod parts, imported from only one
foreign country, constituted a substantial
transformation and found that it did not, stating that
the assembly of all or substantially all of the
components imported did not result in the manufacture
of a new and different article. Accordingly, we stated
that one of the parts, such as the main reel housing,
should be marked to indicate the country of origin, so
that the marking remains legible and conspicuous after
the reels were assembled. This determination was
followed in [HRL] 734214... As no material differences
exist between the present case and these earlier cases,
we adhere to the position that the assembly of fishing
rod components do not substantially transform the
component parts.
However, it appears that T.D. 67-173 actually
considered the assembly of two separate articles: (1)
fishing rods and (2) fishing reels. In regard to fishing
rods, T.D. 67-173 stated that for "fishing rods, complete
except for handles ... imported and permanently attached to
handles made in the United States[,] the Bureau is of the
opinion that a manufacturer who produces fishing rods in
such manner may be considered the ultimate purchaser of the
imported rod parts." Therefore, marking the end of the rod
part which was to be attached to the handle was sufficient
as it would remain visible until it reached the
manufacturer. In regard to fishing reels, T.D. 67-173
stated that for "fishing reels imported in an unassembled or
partially assembled condition and assembled in the United
States ... one of the parts, such as the main reel housing,
should be marked to indicate the country of origin...."
In this case, you state that the fishing rod imported
into the U.S. is classifiable under General Rule of
Interpretation 1, Harmonized Tariff Schedule of the United
States. Accordingly, you claim that as the article is a
fishing rod and not its minor parts, the fishing rod as a
whole should be considered for country of origin marking
purposes. In this instance, you claim that since the
fishing rod is made with a U.S.-origin rod blank, the
finished fishing rod is not subject to the marking
requirements of 19 U.S.C. 1304, as the article is a product
of the U.S. exported and returned and exempt from marking
pursuant to 19 CFR 134.32(m), especially in light of the
removal of 19 CFR 10.22.
As support that the fishing rod should not be subject
to the marking requirements, you cite C.S.D. 79-443 (January
25, 1979), where Customs considered knives produced in the
U.S. and exported to Japan where the handles were exchanged
with Japanese handles. Upon return to the U.S., it was held
that because the processing and addition of the handles in
Japan did not result in a substantial transformation, the
knives remained articles of the U.S. and, therefore, were
not subject to the marking requirements of 19 U.S.C. 1304.
You note that in C.S.D. 79-443, Customs did not require the
knife handle to be marked with its own country of origin.
You also cite HRL 729519 dated May 18, 1988, where
Customs ruled that imported wine coolers were exempt from
country of origin marking. A flavor base of U.S. origin was
sent to Canada, where it was mixed with water (and in some
cases sugar) of Canadian origin. Customs held that no
substantial transformation occurred in Canada, and that upon
return to the U.S. the wine coolers were treated as U.S.
products exported and returned and exempt from marking
pursuant to 19 CFR 134.32(m).
Additionally, you contend that there are numerous
instances where Customs has not required articles to be
marked with the country of origin of their minor foreign
components. For example, you state that Customs has
consistently held that the country of origin of a clock or
watch is the country of manufacture of the watch or clock
movement. Furthermore, you state that Customs has not
required that the individual components of the watch or
clock, such as the dial or hands, be marked with their
individual countries of origin. See HRL 735158 dated
December 17, 1993, which held that the country of origin of
a table clock was the country of manufacture of the clock
movement because the movement constituted the "guts" of the
watch or clock. In this case, as in HRL 735158, you contend
that the rod blank is the "guts" of the completed fishing
rod since the rod blank gives the completed fishing rod its
shape and dimensions, determines its durability and its
flexibility, and dictates how well and in what manner the
rod will function. See also HRL 560202 dated December 20,
1996, where Customs held that integrated circuits from
Singapore and watch components from Japan and Hong Kong,
combined with other Chinese components in China into
finished LCD watches, had to be marked "Singapore" as
Customs has long held that the origin of a watch or clock is
the country of manufacture of the watch or clock movement.
Additionally, you cite HRL 733199 dated July 19, 1990,
where Customs considered paint brushes manufactured in the
Philippines from bristle heads and metal ferrules imported
from China and brush handles made in the Philippines. Based
upon Uniroyal, Inc. v. United States, 542 F. Supp. 1026,
(CIT 1982), where it was determined that imported uppers
were the essence of a completed shoe, Customs determined
that the operations in the Philippines did not result in a
substantial transformation, but held that the country of
origin of the paint brush was the country where the bristles
were made. It was stated that the imported bristles were
the very essence of the finished product, and that the
essential qualities of a paint brush are the type, diameter
and qualities of the bristles. You also note that Customs
did not require the origin of the handle to be marked to
indicate its own country of origin, although its origin
differed from the country of origin of the bristles. See
also HRL 733804 dated November 9, 1990, which held that the
assembly of an Italian-origin broom head onto a handle in
the U.S. did not result in a substantial transformation and
the country of origin of the broom head was the country of
origin for the completed broom whether it was assembled with
a foreign or U.S.-made handle.
We note that The Encyclopedia Americana, Volume 11 at
324 (Int'l Ed. 1980) indicates that fishing tackle consists
of a rod, a line, a reel and a hook or lure. In C.S.D. 93-13, HRL 734214, and HRL 559036 it appears that the article
considered was only a rod without a reel, but that T.D. 67-173 considered a rod as well as a reel. Accordingly,
since T.D. 67-173 actually determined that the ultimate
purchaser of a practically complete rod without a handle was
the manufacturer of the finished rod, rather than being
extended, T.D. 67-173 was effectively overruled by C.S.D.
93-13 and later rulings in which it was concluded that rod
components do not undergo a substantial transformation by
being assembled into a finished rod.
Similarly, in this case, we do not find that China is
the last country where the fishing rod imported into the
U.S. underwent a substantial transformation. Rather, it is
our opinion that the fishing rod's characteristics are
primarily imparted at the time of manufacture in the U.S.,
as the rod blank is exported from the U.S. in the length,
diameter, and flexibility of the finished rod. Accordingly,
consistent with HRL 735158 (country of origin of clock was
country of manufacture of clock movement) and C.S.D. 79-443
(knife remained product of the U.S. after handle was
replaced in Japan), we find that the essential character of
the finished rod is imparted by the rod blank. Since the
country of origin of the rod blank is the U.S., the country
of origin of the finished rod imported into the U.S. is the
U.S.
This finding is consistent with Uniroyal, where the
court considered whether the addition of an outsole in the
U.S. to imported uppers lasted in Indonesia effected a
substantial transformation of the uppers. The court
concluded that a substantial transformation of the upper had
not occurred since the attachment of the outsole to the
upper was a minor manufacturing or combining process which
left the identity of the upper intact. The upper was
described as a substantially complete shoe and the
manufacturing process taking place in the U.S. required only
a small fraction of the time and cost involved in producing
the upper. Furthermore, in Uniroyal, the court determined
that the completed upper was the very essence of the
completed shoe.
The concept of the "very essence" of a product was
again applied by the court in National Juice Products v.
United States, 628 F. Supp. 978 (CIT 1986), where the court
addressed each of the factors -- name, character and use --
in finding that no substantial transformation occurred in
the production of retail orange juice products from
manufacturing concentrate. The court found that the change
in name from "concentrated orange juice for manufacturing"
to "frozen concentrated orange juice" and "orange juice from
concentrate" was not significant to a finding of substantial
transformation. Instead, the court stated that these names
"merely refer to the same product, orange juice, at
different stages of production." Id. at 989.
The court agreed with Customs that the imported
manufacturing concentrate "imparts the essential character
to the juice and makes it orange juice. . . [and thus], as
in Uniroyal, the imported product is the very essence of the
retail product." The court found that the retail product in
this case was essentially the juice concentrate derived in
substantial part from foreign grown, harvested, and
processed oranges. Although the addition of the water,
orange essences, and oils to the orange juice concentrate
made it suitable for retail sale, according to the court,
this did not change the fundamental character or use of the
product; it was still essentially the product of the juice
of oranges.
As in Uniroyal and National Juice, it is our opinion
that the rod blank imparts the essential character to the
finished rod. However, unlike National Juice which required
the finished juice to be marked with the countries from
which the juice concentrate was derived, in this case, as in
Uniroyal, there is only one component which imparts the
essential character of the finished article. Therefore,
since the one essential component of the fishing rod is the
rod blank, and the rod blank is of U.S.-origin the finished
fishing rod will not be required to be marked pursuant to 19
U.S.C. 1304.
HOLDING:
Based upon the information provided, as the rod blank
is the essence of the finished fishing rod, it is our
opinion that it is not substantially transformed as a result
of the assembly operations performed in China. Therefore,
as the rod blank is of U.S. origin, the country of origin of
the finished fishing rod will be the U.S., and, therefore,
the finished fishing rod will not required to be marked with
a country of origin pursuant to 19 CFR 134.32(m).
A copy of this ruling letter should be attached to the
entry documents filed at the time the goods are 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