MAR-2-05 CO:R:V:C 732057 RSD
Horst F. Biernath
Bimex, Incorporated
3617 Shallowford Road
Atlanta, Georgia 30340-1073
RE: Country of origin marking requirement of a knife blade for a
rotary fabric cutting instrument
Dear Mr. Biernath:
This is in reply to your letter dated December 16, 1988,
supplemented by your letter of February 8, 1990, requesting a
ruling on whether an imported circular knife blade for a rotary
fabric cutting instrument must be marked with its country of
origin. We regret the delay in responding.
FACTS:
You plan to import circular steel knife blades from Taiwan
in the sizes of 45mm Diameter .3mm thick 8mm bore and 28mm
Diameter .3mm thick 5mm bore. Your customer, Salem, a U.S.
manufacturer, assembles the knife blades in rotary cutting
instruments which are used to cut fabric. The importation of the
knife blades is planned in bulk, but blister packing of one or
two blades per pack is possible. The knife blades will be
branded with the assembler's name on one side. The box will be
marked "Made in Taiwan." You ask if the branding "Made in
Taiwan" can be left off the knife blades so that the assembler
can advertise its product as "Made in the USA." You indicate
that the sales price of the complete assembly is $11.95 and the
cost of the knife blade represents approximately 6% of the cost
of the finished product. A sample of a circular knife blade and
a copy of a brochure explaining the use of the rotary cutting
instrument was submitted.
ISSUE:
Does the circular knife blade for a rotary cutting
instrument have to be marked with the country of origin?
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 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. 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and the 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. Accordingly, the
manufacturer or processor who converts or combines constituent
materials into different articles will be considered the ultimate
purchaser of the constituent materials. If the manufacturer is
the ultimate purchaser, the imported article is excepted from
marking (see section 134.35, Customs Regulations).
In determining whether there is a substantial
transformation, the fundamental question in this case is whether
the circular knife blade loses its identity when it is assembled
in the rotary fabric cutting instrument. In HQ 731432 (June 6,
1988), we pointed out six factors to be considered in determining
whether an imported article loses its identity when it is
combined with a domestic article:
1) whether the article is completely finished;
2) the extent of the manufacturing process of combining the
article with its counterparts as compared with the manufacturing
of the subject article;
3) whether the article is permanently attached to its
counterparts;
4) the overall importance of the article to the finished
product; see Uniroyal, Inc. v. United States, 3 CIT 220, 542
F.Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed Cir, 1983) (no
substantial transformation occurred where an imported footwear
upper, the essence of the finished article, was combined with a
domestically produced sole);
5) whether the article is functionally necessary to the
operation of the finished article, or whether it is an accessory
which retains its independent function; and,
6) whether the article remains visible after the combining.
These factors are not exclusive and there may be other
factors relevant to a particular case and no one factor is
determinative. See HQ 728801 (February 26, 1986).
Applying these factors to this case and to this product, we
find that the circular knife blade is a finished product. The
process of attaching the blade to the handle of the rotary
cutting instrument does not appear to be an extensive process
when compared to the amount of processing involved in producing
the blade itself. You have informed a member of my staff in a
telephone conversation that when the blade becomes dull, it can
be easily replaced. We assume that the purpose of blister
packing one or two blade per pack is for the replacement market
as opposed to the bulk packing for the manufacturer. The knife
blade is absolutely necessary to the operation of the rotary
cutting instrument, and remains visible after the combining.
You contend that because the knife blade represents only
about 6 % of the value of the rotary cutting instrument, it
should not have to be marked. However, the relative value of the
imported item to the finished good is only one factor to be
considered and may be outweighed by other factors. In HQ 719118
(April 20, 1982), we found that a calendar which was combined
with a plastic holding device would still have to be marked even
though the calendar represented only about 8 % of the value of
the finished product because it was an essential element of the
final product.
Likewise here, the circular knife blade is a critical
element of the finished product. We find it also significant
that the blade is easily replaceable and when the blade is sold
as a replacement part it will have to be marked with the country
of origin. In considering the factors mentioned above, we find
that the knife blade does not lose its separate identity when it
is assembled with the handle of the rotary cutting instrument.
Section 134.14(a), Customs Regulations (19 CFR 134.14(a)),
requires that when an imported article is of a kind which is
usually combined with another article after importation but
before delivery to an ultimate purchaser and the name indicating
the country of origin of the article appears in a place on the
article so that the name will be visible after such combining,
the marking shall include, in addition to the name of the country
of origin, words or symbols which shall clearly show that the
origin indicated is that of the imported article only and not
that of any other article with which the imported article may be
combined after importation. Therefore, to indicate to the
ultimate purchaser that only the blade is of foreign origin, the
blade should be marked "Blade Made in Taiwan."
You have also requested a ruling on the proper tariff
classification number for the knife blade under the Harmonized
Tariff Schedule of the United States. By copy of this letter, we
have referred this request to our General Classification Branch
so that they can review the matter and issue you a ruling on the
classification of this product.
HOLDING:
Assembling the circular knife blade with the handle of a
rotary cutting instrument is not a substantial transformation.
Because it does not lose its separate identity, the circular
knife blade must be marked "Blade Made in Taiwan" in accordance
with 19 U.S.C. 1304 and 19 CFR Part 134.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch