MAR-2-05 CO:R:C:V RSD
Mr. Thomas W. Tolleson, Project Manager
Weslock Corporation
7700 Irvine Center Drive
Suite 670
Irvine, California 92718
RE: Country of origin marking of door locksets; door knobs;
locks; lock cylinders, assembling; combining; substantial
transformation; 19 CFR 134.35
Dear Mr. Tolleson:
This is in response to your letter dated December 3, 1992,
addressed to the District Director, Los Angeles, regarding the
country of origin marking for a door lockset made with Chinese
and U.S. components. Your letter was forwarded to us for a
reply. A meeting was held with you and Mr. Brent Reider at our
office to discuss this case. You have made additional
submissions dated April 1, 1993, and April 15, 1993. We have
received samples of a complete door lockset and the various
components. You request that certain cost information in this
ruling and the diagrams in the accompanying file remain
confidential. The confidential information contained in this
ruling will be in brackets and will not be in copies of this
ruling released to the public. All confidential information in
the case file will remain confidential.
FACTS:
Weslock Corporation, a division of American Builders
Hardware, is in the process of developing a new door lockset.
The lockset will be marketed under the name "Series 300" as a
high quality residential door lockset with a low retail price.
The lockset will contain components made in China and the United
States. The Chinese components consist of an outside rosette and
an inside rosette assembly and parts of a latch mechanism. The
U.S. components of the lockset consist of two door knobs, a
locking cylinder, the face plate and parts of the latch
mechanism. The lockset will be sold together in one package.
The two knobs are attached to the rosettes in the package, but
the back door knob is intended to be easily screwed off so that
the lockset can be installed in a door. The latch is totally
unattached, but it will be assembled with the other components when the lockset is installed into a door. The package also
contains other items necessary to install the lockset, such as
screws.
Weslock indicates that the three basic imported
subcomponents will cost about [ and will comprise about of
the total cost of the finished lock set of The remaining U.S.
costs are attributed to processing consisting of
.]
The knobs and rosettes are made out of brass. When the
lockset is installed, only the outside section of the rosettes
will remain visible. The manufacture of the rosettes is done in
China with only a single machine through a single stamping
operation. The rosettes do not require tight tolerances, and
therefore the stamping and machining operations do not require a
great deal of precision. No annealing or heat treating is
involved in making the rosettes. The polishing of the rosettes
is done by one brush.
The door knobs are to be made in the U.S. They are one
piece knobs and require extremely tight tolerances in order for
the lockset to function properly. The manufacture of the knobs
involves multiple stamping, drawing, and machining operations,
which require a good deal of precision, involved in making the
knobs. Five different machines are used to produce the knobs.
Some of these machines are especially designed for Weslock and
can be highly complex. For example, one of these machines has 9
different tools on it. To ensure the elasticity of the brass and
to strengthen the knobs, they must be annealed at a very high
temperature. In order to polish the knobs, five different
brushes are used.
The locking cylinder is the portion of the door lockset
which allows it to lock and function as a security device. It is
the part in which the key is placed into the door knob to unlock
or lock the door. It is also manufactured in the U.S. Weslock
puts the lock cylinder into the outside of the front door knob.
Because there are 100,000 key combinations, the design of the
lock cylinder is complex. The cylinder works with a system of
pins which are triggered when the key is inserted. Because each
locking cylinder is unique, the pins which make the cylinder
function must be individually made for each cylinder and to
ensure that the lock operates properly they must be precisely
cut.
In your submission of April 15, 1993, you indicate that the
latch mechanism will include U.S. made components and that it
will be assembled in the United States. Weslock states that it
will import one loose component known as the cam, which is a part
of the latch that has two tabs and a square 5/16" hole through
the center and the cam assembly (7/8" diameter 1 1/4" long).
Weslock will manufacture the two side plates and the conversion
plate in the United States.
The faceplate is a part on the outside of the latch which
also will be manufactured and assembled onto the latch in the
United States. It will be manufactured by designing and building
a 5 to 7 station progressive die to produce the "facepart" of the
faceplate. The setting up of the die and the stamping out of the
part will be done with a 60 ton punch press. The stamped out
piece is wet tumbled and deburred in a vibra-hone machine. Then
it is barrel plated and pro-sealed in the plating line. The
faceplate is attached to the sub-assembly using a custom built
staking press. A similar process is used to manufacture and
assemble the conversion plate. It is inserted into the latch
assembly with a custom designed assembly tool.
ISSUE:
Are the imported components, the rosettes and the parts of a
latch mechanism, substantially transformed when they are combined
with U.S. made parts to make door lockset?
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 and that the manufacturer or
processor will be considered the ultimate purchaser of the
constituent materials. In such circumstances, the imported
article is excepted from marking and only the outermost container
is required to be marked (see section 134.35, Customs
Regulations).
Customs on several occasions has considered whether imported
components used in making a locking apparatus were substantially
transformed when they were combined with U.S. components. In HQ
734440 (March 30, 1992), Custom ruled that a lock apparatus was
substantially transformed in the U.S. as a result of combining it
with the U.S. manufactured pieces. We noted that 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 the remaining pieces which required extensive
manufacturing and development.
In HQ 734629 (October 1, 1992), we ruled that a lock
cylinder was not substantially transformed after entry into the
U.S. The lock cylinder was not attached to the remaining pieces
of the lock until after it was received by the installer. The
lock cylinder did not lose its separate identity when combined
with the remaining pieces. The cylinder remained visible even
after assembly by the installer. The attachment process was a
simple screw mount, that was easily screwed in or out to replace.
In HQ 734227 (June 26, 1992), Customs found that chrome
plated levers that were to be assembled with locksets did not
lose their separate identity when they were combined with
domestic locksets to form completed lever locksets. The levers
were a significant component of the completed article and their
assembly in no way changed the character of the lever. The
levers were clearly recognizable both before and after the
assembly. The lever was a separate component which had to be
disassembled from the rest of the lockset prior to its
installation.
In this case, the question that must be resolved is whether
the imported components of the lockset retain or lose their
separate identity when they are combined with the domestic
components to make the door locksets. Although assembly of the
imported rosettes with the other components of the lockset is not
especially complex, these parts do not have any independent
function and do not have a separate commercial use other than to
be combine with the knobs and the locking cylinder to make a door
lockset. They are subcomponents which are intended to be joined
with other components to make the finished article. The finished
article, the door lockset is a distinct article with a name,
character, and use which is different from its individual
components. Rather than being a collection of individual
components, when it is fully assembled, the door lockset
functions as one unit, a door opening and closing security
device. Unlike the levers in HQ 734227 or the lock cylinder in
HQ 734639, the character of the rosettes is changed as they
become part of this unit, and they do not remain separate
articles. We also note that unlike the levers or the cylinder in
those two cases, the rosettes are attached to the knobs when the
installer receives the lockset.
In addition, Customs has previously considered the origin of
the components used as a relevant factor and the addition of
significant U.S. components as a significant indicia of a
substantial transformation in cases where the manufacturing
operation is performed in the U.S. For example in 730069
(December 23, 1986), a substantial transformation of imported
jack components was found based in large part on the fact that
significant domestic components were added in the U.S. See also
734259 (April 13, 1992), (imported baler housing substantially
transformed when combined with essential U.S. components to make
high density hydraulic balers) and HQ 709570 (November 24, 1978)
imported electric motor substantially transformed when combined
in the U.S. with abrasive belt machine consisting of all domestic
components; however, no substantial transformation if an
essential components of the abrasive belt machine was foreign).
In this case, the most complex parts of the finished lockset,
which require the most skill and the precision to make, are the
knobs and lock cylinder. As in HQ 734440, the parts which are
most important and determine the basic character of the finished
article, are made in the United States. Although the rosettes
are significant parts of the lockset, they are not as important
nor are they as complex as the domestic components in the
lockset.
Based on the above considerations, we conclude that the
imported rosettes lose their identity when they are combined with
U.S. made door knobs and the lock cylinder to make a door
lockset, and are substantially transformed. Therefore, under 19
CFR 134.35, they do not have to be individually marked to
indicate their country of origin.
However, we also note that when the latch is packaged for
the door lockset installer, it is not attached to the rest of the
lockset. Under Weslock's original manufacturing scheme, the
entire latch would be manufactured in China. Since, it was a
separate piece, not connected to the rest of the lockset, we
would consider it as a separate article in a collection of other
articles which would have to be individually marked to indicate
its own country of origin. However, in its most recent
submission Weslock has proposed significant changes in the way
the latch will be manufactured. Important components of the
latch, including the two side plates, the face plate and the
conversion plate will be manufactured in the U.S. Additionally,
the assembly necessary to complete the actual latch cage will be
done in the U.S. According to this new manufacturing plan, the
major imported components of the latch will consist of the "cam
assembly" and the "cam" itself. Under this scenario, we find
that significant processing on the latch is done in the U.S. The
imported components as imported are not a latch, but when they
are assembled together with the U.S. made parts, the become part
of a new article, the finished latch. Accordingly, under
Weslock's most recent proposal, we find that the imported
components of the latch are also substantially transformed as a
result of the work done in the U.S.
Accordingly, under 19 CFR 134.35, Weslock is the ultimate
purchaser of the imported components involved in making the
lockset and these parts are excepted from individual country of
origin marking. Only the outermost containers must be marked to
indicate the country of origin of the imported components.
Finally, you indicate in your submission of December 3,
1992, that you want to mark the finished lockset "Made in the
USA". The Customs Service does not have the authority to approve
such a marking. The Federal Trade Commission has jurisdiction
over the use of phrases such as "Made in the USA". It is our
understanding that in order to mark a product "Made in the USA",
all the components of the article must be made in the United
States. We suggest that you contact FTC before you put a "Made
in the USA" marking on your products.
HOLDING:
The imported components of a door lockset, the rosettes and
parts of the latch, are substantially transformed when they are
assembled together with significant U.S. components in the U.S.
to make the finished door lockset. Accordingly, under 19 CFR
134.35, the individual components do not have to be marked as
long as the outermost containers of the imported articles are
properly marked.
Sincerely,
John Durant, Director
Commercial Rulings Division
cc: District Director of Customs
Los Angeles District
Area Director, New York Seaport