MAR-02 RR:CR:SM 560993 RSD
Peter Middleton, Esq.
Middleton & Shrull
44 Mall Road
Suite 208
Burlington, Massachusetts 01803-4530
RE: Country of origin of marking requirements for dryline
correction tape/disposable dispenser; substantial
transformation; simple assembly; usual container; 19 CFR 134.35; 19 CFR134.22(b)
Dear Mr. Middleton:
This is in response to your letter dated May 4, 1998, on
behalf of the Gillette Company (Gillette) requesting a ruling
concerning the country of origin marking of dryline correction
tape in a plastic dispenser. We have received two samples: a
correction tape in a completely assembled plastic dispenser; and
a correction tape with an unassembled plastic dispenser.
FACTS:
Gillette, located in Massachusetts, is planning to import a
product known as dryline correction tape in a disposable plastic
dispenser. The product is manufactured by a German company,
Henkel. It is used to correct mistakes on a page by rolling the
tape over an erroneous letter while exerting a slight downward
pressure. The white correction chemical is then transferred to
the paper.
There are six components in the product all of which are
manufactured in Germany. These components are a tape wound
around a plastic core referred to as a "pancake", plastic male
and female halves of the outer shell of the dispenser, a plastic
take up spool, a cogwheel, and a lever. Ordinarily, Henkel
personnel put all of these German made components in Hanover,
Germany on automated assembly lines. The outer shell of the
plastic dispenser is marked in the mold with "Germany". The
finished product will also have the country of origin marked on
the retail blister packaging.
Due to production demands, Henkel has found it necessary to
contract with a company located in Poland to have the product
hand assembled. Similar items are sold in the European
Community. It is intended that the products assembled in Poland
will still be labeled as "Made in Germany".
The assembly operation performed in Poland will consist of
the following:
1. The lever and cogwheel are inserted into the female half
of the dispenser cover.
2. The pancake and take up spool are fitted together and
then inserted into the female cover half.
3. The male half of the cover is then fastened to the
female half.
4. The completed articles are bulk packed in boxes for
return shipment to Germany.
After they are returned to Germany, the articles receive a
final inspection and are individually packaged for shipment. The
total cost of the finished product is 0.91 DM per unit. The
assembly cost attributable to the operation done in Poland is
0.15 DM or about 16.2% of the total product cost. The
explanation offered as to why the products are hand assembled in
Poland rather than using a fully automated process such as the
process that is used in Germany is because there would be a lead
time of 15 months to install the necessary new machinery in
Poland. Because the extra production in Poland is only needed
when full capacity is reached in Germany, any such extra
automated machinery would be idle for much of the year. The most
flexible and cost effective method is the hand assembly option in
Poland.
As previously noted, the marking "Germany" is in the mold of
the plastic dispenser. It is claimed that it would be quite
costly to manufacture separate components and to segregate the
parts between German and Polish production runs. The plastic
dispenser is not refillable and will be disposed of once the tape
is used up. The dispenser has no independent use other than
serving as a means of packaging the tape.
It is stated that the correction tape itself is classifiable
under subheading 3206.49.1000, Harmonized Tariff Schedule of the
United States (HTSUS). In Customs Headquarters Ruling Letter
(HRL) 086381, dated April 24, 1990, Customs determined that the
correction material rather than the plastic dispenser imparted
the essential character to the whole and hence the correct
classification was found to be subheading 3206.49.1000, HTSUS.
ISSUE:
What is the country of origin marking requirements for the
dryline correction tape which is sold in a plastic dispenser?
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. 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 good 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. 27 C.C.
P. A. 297 at 302; C.A.D. 104 (1940).
Section 134.35(a), Customs Regulations (19 CFR 134.35(a)),
states that the manufacturer or processor in the U.S. who
substantially transforms the imported articles into articles
having a new name, character or use will be considered the
ultimate purchaser of the imported article within the scope of 19
U.S.C. 1304. In such cases, the article will be excepted from
marking, although the outermost container in which the articles
are transported to the U.S. processor must be marked with the
origin of the articles. A substantial transformation occurs when
articles lose their identity and become new articles having a new
name, character, and use. United States v. Gibson-Thomsen Co.,
27 C.C.P.A. 267 at 270 (1940); Koru North America v. United
States, 12 CIT 1120, 701 F. Supp. 229 (1988).
In determining whether the combining of parts or materials
constitutes a substantial transformation, the issue is the extent
of operations performed and whether the parts lose their identity
and become an integral part of the new article. Belcrest Linens
v. United States, 6 CIT 204, 573 F. Supp. 1149 (1983), aff'd, 2
Fed. Cir. 105, 741 F.2d 1368 (1984). Assembly operations which
are minimal or simple, as opposed to complex or meaningful, will
generally not result in a substantial transformation. See C.S.D.
80-111, C.S.D. 85-25, C.S.D. 89-110, C.S.D. 89-118, C.S.D. 90-51,
and C.S.D. 90-97. The issue of whether a substantial
transformation occurs is determined on a case-by-case basis.
In this case, all of the components of the correction tape
and the dispenser are made in Germany. The components are
assembled together in Poland, but no further processing is done
to any of the components. Once the components are made they are
dedicated to use as part of the dryline correction tape and the
dispenser and they cannot be used for any other product. Putting
together the dispenser with the correction tape seems to be a
minimal operation. The assembly operation involves an
uncomplicated insertion and fitting together of only six pieces.
No specialized skills or tools are required to complete the
assembly. It takes a relatively small amount of time to assemble
the product and the value added in Poland compromises only about
16 percent of the cost of the total product. Therefore, we find
that the assembly of the pieces in Poland is not complex and
meaningful. Accordingly, we find that correction tape and
plastic dispenser pieces are not substantially transformed in
Poland and that the country of origin of the dryline tape and the
dispenser is Germany.
The country of origin marking, Germany, which is molded into
the plastic of the outer shell of the dispenser as shown on the
sample correction tape dispenser, meets the requirement of 19
U.S.C. 1304 and the implementing regulations of 19CFR Part 134.
We note also that the retail blister pack in which the correction
tape and dispenser is sold will also be marked with country of
origin of the correction tape.
HOLDING:
The assembly of the pieces of the German-made correction
tape and plastic dispenser pieces in Poland is not complex and
meaningful, and thus does not constitute a substantial
transformation. Therefore, the country of origin of the dryline
correction tape and plastic dispenser is Germany. The country of
origin marking on the correction dryline tape as shown on the
sample tape dispenser satisfies the requirements of 19 U.S.C.
1304 and the implementing regulations.
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
Commercial Rulings Division