MAR-2-05 RR:CR:SM 561630 KSG
Karen Keeling
Fritz Companies, Inc.
806 Airpark Center Drive
Nashville, TN 37217
RE: Country of origin of mechanical pencils and ball point pens; substantial transformation; tariff classification
Dear Ms. Keeling:
This is in reference to your two letters of December 23, 1999, requesting binding rulings on behalf of National Pen Corporation, concerning the classification and country of origin of certain mechanical pencils and ball point pens. Samples were submitted with your request.
FACTS:
Your client imports mechanical pencil assemblies which are made in China. The imported assembly consists of a plastic tube, vinyl eraser, steel tube, spring and two pieces of lead. In the U.S., the imported assemblies are inserted into U.S.-made plastic barrels which are decorated and personalized.
Your client also imports non-refillable ball point pen cartridges made in China. Each ball point pen cartridge is comprised of a point, a plastic tube and spring made in China and ink that is of U.S.-origin. This assembly is inserted into a U.S.-origin barrel in the U.S. and combined with a a top with a clip, button and conical tip to make a finished non-refillable pen sold as an advertising item.
ISSUE:
What is the country of origin of the mechanical pencils and the non-refillable ball point pens, manufactured as described above?
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LAW AND ANALYSIS:
Based on the facts submitted, we believe that the mechanical pencil assemblies are classified in subheading 9608.99.6000 of the Harmonized Tariff Schedule of the United States (“HTSUS”).
Based on the facts submitted, we believe that the imported refills with ball point are classified in subheading 9608.60.000, HTSUS, and the imported springs are classified in subheading 7320.20.5020, HTSUS.
Section 304 of the 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 134.35(a)), Customs Regulations {19 CFR 134.35(a)},states that an article 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, will be within the principle of the decision in the case of U.S. v. Gibson-Thompsen Co. Inc., 27 CCPA 267 (CAD 98). Under this principle, the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the “ultimate purchaser” of the imported article and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked in accord with Part 134.
For country of origin marking purposes, a substantial transformation of an article occurs when it is used in manufacture, which results in an article having a name, character, or use differing from that of the article before the processing. However, if the manu-facturing or combining process is merely a minor one which leaves the identity of the article intact, a substantial transformation has not occurred. Uniroyal, Inc. v. United States, 3 CIT 220, 542 F. Supp. 1026, 1029 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983).
1. Mechanical pencils
In Headquarters Ruling Letter (“HRL”) 726001, dated September 11, 1984, Customs held that imported clutch pencil mechanisms combined with various components of U.S. origin (plastic pen barrel, pump-action cap, eraser, and clip) were substantially transformed when assembled in the U.S. and therefore, exempt from individual country of origin marking. HRL 726001 is distinguishable from the instant case because in this case, only the pen barrel is of U.S. origin. HRL 735139, dated February 15, 1994, and HRL 7335169, dated January 26, 1994, which follow HRL 726001, are also distinguishable because in those cases, the pencils are similarly comprised of multiple components of U.S.-origin as well as the imported clutch mechanisms.
The combining operation performed in the U.S. in this case is a simple operation involving the insertion of the inner assembly into the U.S.-origin barrel. The imported assembly, which includes the plastic tube, vinyl eraser, steel tube, spring, and two pieces of lead, comprise a substantial portion of the complete pencil. The only U.S. component is the plastic barrel. The imported assembly does not lose its identity and become an integral part of a new article. Accordingly, we find that the assemblies are not substantially transformed in the U.S. Therefore, the pencils must be marked to indicate that the country of origin of the mechanical pencil assemblies is China.
2. Ball point pens
Customs held in HRL 734053, dated September 20, 1991, that the simple assembly of foreign pen components and ink tubes of U.S. origin in the U.S. was not a substantial transformation. Also see HRL 735111, dated October 15, 1993. The basis of the conclusion in both rulings was the simple nature of the assembly operation involved. Based on the facts presented and the rulings cited above, we find that the assembly in the U.S. of the imported ball point pen cartridges with the other components in this case does not constitute a substantial transformation. Accordingly, the pens must be marked to indicate that the country of origin of the cartridges is China.
HOLDING:
Based on the facts submitted, the mechanical pencil assemblies are classified in subheading 9608.99.6000, HTSUS. The imported refills with ball points are classified in subheading 9608.60.0000, HTSUS. The springs are classified in subheading 7320.20.5020, HTSUS.
The imported mechanical pencil assemblies are not substantially transformed in the U.S. Therefore, pursuant to 19 U.S.C. 1304, the mechanical pencils must be marked to indicate that the country of origin of the assemblies is China.
The imported non-refillable ball point pen cartridges are also not substantially transformed in the U.S. Therefore, pursuant to 19 U.S.C. 1304, the ball point pens must be marked to indicate that the country of origin of the cartridges is China.
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