MAR-2-05 CO:R:C:V 734629 KR
Mr. William San Antonio
Marks USA Hardware Inc.
5300 New Horizons Boulevard
Amityville, NY 11701
RE: Country of origin marking of door lock set; keys; combining;
substantial transformation; 19 CFR 134.14; 19 CFR 134.32(m).
Dear Mr. San Antonio:
This is in response to your letter dated May 11, 1992,
requesting a country of origin ruling regarding a door lock set,
where the cylinder mechanism is imported from Taiwan and then
combined with other pieces, mechanisms, knobs and plates which are
manufactured in the United States. A sample of the lock set
including the imported cylinder was submitted for examination.
FACTS:
You state that you import cylinder lock mechanisms from
Taiwan. Attached with the cylinder are keys which are made in the
U.S. and shipped to Taiwan where they are cut to match the
cylinder. After importation the cylinder is combined with other
parts to create a door lock set. All the remaining parts of the
lock are manufactured in the United States. The United States
manufactured pieces include: two door knobs, two door plates (one
with a twisting lock lever), a doorjamb plate, a lock body (an
enclosed box containing the deadbolt, pressure retractable bolt,
lock switch, and internal mechanisms to operate the knobs so as to
retract the bolts), assorted screws, and written directions. The
only piece which has a country of origin marking is the lock body
which states in raised molded in letters "MADE IN USA". The lock
set comes packaged in a box with the name of the lock and the name
of the company "MARKS USA" printed on the box as well as the
company address. The lock pieces are combined and sent to the
actual installer of the door.
ISSUES:
1. Whether the imported lock cylinder is substantially
transformed when it is combined in the United States in the manner
described above.
2. Whether the keys which are manufactured in the U.S. and
sent abroad to be cut and returned to the U.S. must be marked to
show the country where the keys were cut.
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 1120 (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.
Frielaender & 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 converts or combines the imported article into a different
article having a new name, character or use will be considered the
ultimate purchaser of the imported article within the contemplation
of 19 U.S.C. 1304 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, 628
F. Supp. 978, 10 CIT 48 (CIT 1986); Koru North America v. United
States, 701 F. Supp. 229, 12 CIT 1120, (CIT 1988). 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, 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. 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. United States, 542 F. Supp.
1026, 3 CIT 220 (CIT 1982), to be the "essence of the completed
shoe" and therefore, not substantially transformed.
In HQ 731432 (June 6, 1988), 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. The following six factors were
considered:
1) whether the article is completely finished;
2) the extent of the manufacturing process of combining
the imported article with the domestic article as
compared with the manufacturing of the imported 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).
In a case similar to the instant situation, HQ 734440 (March
30, 1992), Customs used these six factors to determine that a lock
apparatus was substantially transformed in the U.S. when combined
with the remaining mechanisms of the lock. The lock apparatus was
only part of the internal working of the whole of the lock. Unlike
MARKS USA, the lock apparatus was permanently attached to the
remaining pieces and was not visible once assembled. The lock
apparatus was functionally necessary to the operation of the
finished article, and not an accessory retaining its independent
function. The predominant expense of the assembled lock was in the
parts produced in the U.S. The imported piece was a generic
mechanism which was inserted into remaining pieces which required
extensive manufacturing and development, and which received patents
in the U.S. and Taiwan.
In another similar case, HQ 734227 (June 26, 1992), Customs
found that imported lever handles attached to U.S. lock sets, when
the lever handles must be removed to install and then reattached,
are not substantially transformed. Customs found that even though
the levers were only 10 per cent of the total cost of the lock set
and were essential to the function of the lock set; the assembly
operation was not complex or requiring a great deal of skill, at
the time of purchase the levers were not attached in a permanent
manner but were disassembled at the time of installation, and the
levers remained visible after assembly. Therefore, the levers were
not substantially transformed and were required to be marked with
their country of origin.
In HQ 734219 (September 3, 1991), Customs applied the six
factors and ruled that imported water pans and charcoal pans were
not substantially transformed in the U.S. by combining them with
other domestic and foreign components during a repackaging
operation in the U.S. of smoker/grill units. Customs stated that
the water pans and charcoal pans were completely finished articles
when imported, there was no extensive manufacturing process
involved in combining the pans with its other domestic and foreign
counterparts and that placing the pans into a cardboard container
along with other domestic and foreign articles was a minor
operation which was not complex, required no skill and was not
time-consuming. Customs also stated that the pans where not
permanently attached to the smoker/grill unit during the combining
process nor where they permanently attached once assembly of the
unit was completed by the consumer. Moreover, Customs stated that
the pans were functionally necessary to the use of the smoker/grill
unit in that the unit could not perform the essential operations
of barbecuing, smoking, roasting or steaming without the pans.
In this situation, the lock cylinder is not substantially
transformed after entry into the U.S. The lock cylinder is not
attached to the remaining pieces of the lock set until after it is
received by the installer. The lock cylinder does not lose its
separate identity when combined with the remaining pieces. The
cylinder remains visible even after assembly by the installer. The
lock cylinder is also replaceable if a change of key is desired.
The attachment process is a simple screw mount, that is easily
screwed in, or out to replace. Even though the predominant expense
of the lock is in the parts produced in the U.S., this fact is not
determinative.
Based on our consideration of all these factors, we conclude
that the lock cylinder is not substantially transformed in the U.S.
as a result of combining it with the U.S. manufactured pieces.
Accordingly, we find that Marks USA is not the ultimate purchaser
of the lock cylinder under 19 CFR 134.35. Section 134.1(d),
Customs Regulations (19 CFR 134.1(d)), defines the ultimate
purchaser as generally the last person in the U.S. who will receive
the article in the form in which it was imported. The definition
then gives examples of who might be the ultimate purchaser if the
imported article is used in manufacture, if the imported article
is sold at retail in its imported form, the purchaser at retail is
the ultimate purchaser. Since the lock cylinder is shipped to the
installer in the same form in which it was imported, in a separate
bag, unattached the remaining pieces, it is not substantially
transformed and is not considered to have undergone a change in its
imported form. Therefore, the owner of the building in which the
door is installed or the installer is the ultimate purchaser,
depending on how the door is sold. Therefore, the lock cylinder
must be individually marked with its country of origin. Because
the lock cylinders are combined with domestic parts before delivery
to the ultimate purchaser, the lock cylinders should be marked in
a manner which clearly shows that the origin indicated is that of
the lock cylinders alone (e.g. "Lock Cylinder Made in Taiwan").
See 19 CFR 134.14. Upon entry the individual lock cylinder must
be marked with the country of origin, Taiwan. In addition, because
the lock cylinder will be repacked in the U.S. prior to sale to the
ultimate purchaser the certification requirements of 19 CFR 134.26
apply.
However, if certain conditions are met, the district director
may authorize an exception under 19 CFR 134.32(d) from marking
the lock cylinder at the time of importation. In this regard, 19
CFR 134.34(a) provides that:
an exception under section 134.32(d) may be authorized
in the discretion of the district director for imported
articles which are to be repacked after release from
Customs custody under the following conditions:
(1) the container in which the articles are repacked will
indicate the origin of the articles to an ultimate
purchaser in the U.S.
(2) The importer arranges for supervision of the marking
of the contains by Customs officers at the importer's
expense or secures such verification, as may be
necessary, by certification and the submission of a
sample or otherwise, of the marking prior to liquidation
of the entry.
Whether or not the district director authorizes the above
exception the retail box must satisfy the requirements of 19 CFR
134.46. Examination of the cardboard box in which the entire lock
set is intended to be shipped contains the words "MARKS USA" on
two sides and the mailing label. The lock body contains the words
"MADE IN U.S.A." 134.46, Customs Regulations (19 CFR 134.46),
requires that when the name of any city or locality in the U.S.,
or the name of any foreign country or locality other than the name
of the country or locality in which the article was manufactured
or produced, appear on a imported article or its container, there
shall appear, legibly and permanently, in close proximity to such
words, letters or name, and in at least a comparable size, the name
of the country of origin preceded by "Made in," "Product of," or
other words of similar meaning. Customs has ruled that in order
to satisfy the close proximity requirement, the country of origin
marking must appear on the same side(s) or surface(s) in which the
name of the locality other than the country of origin appears. See
HQ 708994 (April 24, 1978). The purpose of 19 CFR 134.46 is to
prevent the possibility of misleading or deceiving the ultimate
purchaser as to the origin of the imported article.
Similarly, 134.47, Customs Regulations (19 CFR 134.47),
requires a slightly less restrictive marking. Under 134.47, when
the name of a place other than the country of origin appears as
part of a trademark or trade name or as part of a souvenir marking,
the name of the actual country of origin must appear in close
proximity to the place "or in some other conspicuous location".
In other words, if the question concerns a trade name, trademark
or souvenir, the country of origin marking needs only to meet the
general standard of conspicuousness. In either 134.46 or 134.47,
the name of the country of origin must be preceded by "Made in",
"Product of", or words of similar meaning. See HQ 734175 (February
24, 1992); HQ 734277 (December 24, 1991).
In this case, a location other than the country of origin
appears two different ways on the cardboard carton, the company
name "MARKS USA", and the company address. In order to satisfy the
requirements of 19 CFR 134.46, the words "Lock Cylinder Made
in Taiwan", or similar words, must appear in close proximity to and
in comparable size letters as the U.S. address on the carton.
"MARKS USA" is a trade name. Therefore, the less restrictive
requirements of 19 CFR 134.47 apply to such reference. The
country of origin of the lock cylinder must be placed on the
cardboard carton in a conspicuous location preceded by the words
"Lock Cylinder Made in", or "Lock Cylinder a Product of", or words
of similar meaning.
The lock body marking "MADE IN U.S.A." is not visible until
the lock body is removed from the packaging. The shipping carton
will inform the ultimate purchaser of the country of origin of the
lock cylinder, therefore, the marking on the lock body will clearly
refer only to the lock body and not the lock cylinder. Further,
the lock cylinder is not attached but is contained in its own
plastic bag.
We further find that the keys associated with the imported
lock cylinder need not be marked with the country of origin. 19
CFR 134.32(m) allows articles exported and returned to the U.S.
not to be marked with the country they are being shipped from. In
this case the keys are exported to Taiwan where they are cut to
match the lock cylinder and then returned to the U.S. Using the
six factors above, we find that the keys are not substantially
transformed by the simple cutting to match the lock cylinder.
Therefore, the keys fall within the exception to marking of 19 CFR
134.32(m).
The sample packaging contains the words, "MARKS USA", and the
lock body contains the marking "MADE IN U.S.A." This ruling does
not address the issue of whether "USA" may be marked on the
packaging, or lock. The determination of marking an item with the
"USA" symbol is under the primary jurisdiction of the Federal Trade
Commission and not this service. We, therefore, recommend that you
contact the Federal Trade Commission, Division of Enforcement,
located at 6th and Pennsylvania Avenue, N.W., Washington, D.C.
20580, for any views concerning marking the lock with the "USA"
symbol.
HOLDING:
The imported lock cylinder is not substantially transformed
in the U.S. by combining it with the U.S. manufactured remaining
lock pieces as described supra. Therefore, MARKS USA is not the
ultimate purchaser of the lock cylinder and the lock cylinder is
subject to marking in accordance with the requirements of 19 CFR
134.14. Because the lock cylinders will be packaged in the U.S.
prior to receipt by the ultimate purchaser the certification
procedures set forth in 19 CFR 134.26 apply. Because of the
reference to "MARKS USA" and a U.S. address on the new packages,
the requirements of 19 CFR 134.46 and 19 CFR 134.47 apply.
Alternatively, you may request from the district director an
exception from marking the lock cylinders itself under the
procedures set forth in 19 CFR 134.34. The key is excepted from
marking under 19 CFR 134.32(m).
Sincerely,
John Durant, Director
Commercial Rulings Division