MAR-2-05 CO:R:C:V 733171 KG
William E. Melahn
Doherty and Melahn
54 Montgomery Street
Boston, Massachusetts 02116
RE: Country of origin marking of imported sub-assemblies for
vibrating razors
Dear Mr. Melahn:
This is in response to your letter of February 23, 1990,
submitted on behalf of The Gillette Company requesting a country
of origin ruling regarding imported sub-assemblies for vibrating
razors. We regret the delay in responding to your inquiry.
FACTS:
Your client imports razor handle and knob sub-assemblies
from Japan. These sub-assemblies are combined with head and
cartridge subassemblies made in the U.S. You submitted 4
exhibits, which illustrate all the parts of each sub-assembly.
The handle sub-assembly consists of a head/handle adapter,
weight, motor, ground terminal, motor insulation, positive
terminal and a metal handle. The knob sub-assembly consists of
an eyelet, a spring, knob threads, O-ring, knob insulator and a
knob. The purchase price for the sub-assemblies will be $3.50
FOB plus ocean freight and miscellaneous charges of $.25.
The head and cartridge assemblies are made in the U.S. The
head sub-assembly consists of a top plate, spring extension, two
fingers, a link, a spring, a button, a bottom plate, a washer
and an eyelet. The cartridge subassembly consists of an insert,
a cap, a secondary blade, a spacer, a primary blade and a
platform. The direct cost of the U.S. components is $1.38. Your
client states that both the head assembly and the cartridge
assembly require specially dedicated machines.
The final assembly of the finished razor involves quality
checks on the imported sub-assemblies, gluing the head onto the
handle, inserting the battery into the razor and attaching a
cartridge. A dispenser of five cartridges is packaged with the
razor.
ISSUE:
Whether the imported sub-assemblies made into vibrating
razors in the U.S. are substantially transformed in the U.S. for
country of origin marking purposes.
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 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. The Court of
International Trade stated in Koru North America v. United
States, 701 F.Supp. 229, 12 CIT (CIT 1988), that: "In
ascertaining what constitutes the country of origin under the
marking statute, a court must look at the sense in which the term
is used in the statute, giving reference to the purpose of the
particular legislation involved. The purpose of the marking
statute is outlined in United States v. Friedlaender & Co., 27
CCPA 297 at 302, C.A.D. 104 (1940), where the court stated that:
"Congress intended 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."
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, Customs Regulations (19 CFR
134.35), states that the manufacturer or processor in the U.S.
who substantially transforms the imported article will be
considered the ultimate purchaser of the imported article for
marking purposes and the article shall be excepted from marking.
The outermost containers of the imported articles shall be
marked.
A substantial transformation occurs when articles lose their
identity and become new articles having a new name, character or
use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270
(1940), National Juice Products Association v. United States, 10
CIT 48, 628 F.Supp. 978 (CIT 1986), Koru North America v. United
States, 12 CIT ___, 701 F.Supp. 229 (CIT 1988).
The issue involved in this case is whether the handle and
knob subassemblies which are attached to U.S.-made head and
cartridge subassemblies in the U.S. are substantially transformed
into a new article having a new name, character or use. Two
court cases have considered the issue of whether imported parts
combined in the U.S. with domestic parts were substantially
transformed for country of origin marking purposes. In the first
case, Gibson-Thomsen Co., the court held that imported wood brush
block and toothbrush handles which had bristles inserted into
them in the U.S. lost their identity as such and became new
articles having a new name, character and use. One of the
factors considered by the court in reaching its conclusion was
that the bristles used were "by far the most valuable element."
Also, the court looked at whether the imported article loses its
identity as such when combined with other articles. In that
case, the court concluded that wood handles were mere materials
to be used in the manufacture of toothbrushes and hairbrushes.
The court was also concerned that when an imported article was
combined with a domestic material, that the ultimate purchaser
not be confused into thinking that the domestic article was made
in a foreign country. Therefore, the court concluded that a mere
material to be used in the manufacture of a new article having a
new name, character and use and which, became an integral part of
the new article would not be required to be marked.
The second case involved imported shoe uppers which were
combined with domestic soles in the U.S. The imported uppers were
held in Uniroyal, Inc., v. U.S., 542 F.Supp. 1026, 3 CIT 220 (CIT
1982), to be the "essence of the completed shoe" and therefore,
not substantially transformed. The court described the imported
uppers as "complete shoes except for an outsole." The shoe had
already "obtained its ultimate shape, form and size." One
process performed in the U.S., relasting, was characterized as
"convenient, not necessary". The processes performed in the
U.S. were significantly less costly and less time consuming than
the foreign manufacturing process. The cost of the upper was
significantly greater than the cost of the outsole. Further, the
manufacture of the upper required at least five highly skilled
operations. The court concluded that the attachment of the
outsole was a minor manufacturing or combining process which
leaves the identity of the upper intact. This case is
distinguishable from Uniroyal because the imported sub-
assemblies, while important to the finished product, are not the
very essence of the finished product. Without the domestic sub-
assemblies, the imported product is only a vibrating handle with
none of the essential qualities of a razor.
There is also a ruling in which Customs set forth some
factors to be considered in determining whether imported goods
combined in the U.S. with domestic products were substantially
transformed for country of origin marking purposes. In HQ 732057
(April 16, 1990), Customs considered whether or not a circular
knife blade lost its separate identity when assembled into a
rotary cutting instrument. In reaching the conclusion that the
knife blade did not lose its separate identity when it was
combined with a domestic article, Customs considered six factors:
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;
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).
Although this case presents a close question, after a
thoughtful consideration of the cases discussed above, we
conclude that the attachment of U.S.-made head and cartridge
assemblies to the imported handle and knob assemblies is a
substantial transformation. The head and knob assemblies lose
their separate identities as such and become a new article
having a new name, character and use.
An examination of the six factors enumerated in HQ 732057
supports this conclusion. On the one hand, the imported sub-
assemblies are completely finished and only require attachment to
the domestic sub-assemblies to constitute a finished razor; the
process required to attach the imported sub-assemblies to the
domestic sub-assembly is not very complex or expensive; and the
imported sub-assemblies do remain visible after the razor is
finished. On the other hand, while the head and cartridge
assemblies are not the most valuable element of the finished
razor in terms of cost, these assemblies are essential to create
a functional article of commerce. Clearly, these head and
cartridge assemblies are not accessories or minor components.
Further, the imported and domestic sub-assemblies are permanently
attached to each other. Although the process of attaching the
handle and knob assemblies to the head and cartridges assemblies
is not a complex operation, that operation considered in
conjunction with the fact that the head and cartridge assemblies
are domestically made and require specialized machines to be put
together, persuades us that a substantial transformation occurs.
Since the imported sub-assemblies are substantially transformed
in the U.S. by a U.S. manufacturer, pursuant to 19 CFR 134.35,
the U.S. manufacturer is the ultimate purchaser of the imported
sub-assemblies.
HOLDING:
The imported handle and knob sub-assemblies for vibrating
razors are substantially transformed in the U.S. Therefore,
pursuant to 19 CFR 134.35, the U.S. manufacturer is the ultimate
purchaser of the imported sub-assemblies and the sub-assemblies
are excepted from individual marking. Only the outermost
containers of the imported sub-assemblies must be marked with its
country of origin.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch