OT:RR:CTF:VS H305940 CMR
James Kearney, Esq.
Womble Bond Dickinson (US) LLP
8350 Broad Street
Suite 1500
Tysons, VA 22102
RE: Origin of incandescent string light sets
Dear Mr. Kearney:
This is in response to your request, dated July 11, 2019, on behalf of your client, Everstar Merchandise Co., Ltd./Tomson Merchandise Co., Ltd., for a ruling on the country of origin of string light sets for use on Christmas trees, which feature miniature incandescent bulbs. Your client imports the string light sets from the Philippines.
FACTS:
Raw material imported into the Philippines consists of incandescent bulbs, lead contacts, and polypropylene granules from China, and UL labels from the United States. The remaining materials are obtained in the Philippines.
The production process in the Philippines is as follows:
Chinese origin polypropylene granules are transformed into lamp holders and lamp husks through an extrusion process.
Chinese origin bulbs are inserted into the lamp holders using a specialized lamp assembly machine to produce the finished bulb with lamp holder assemblies.
The parts for the plug assembly and end-connector assembly, that is the plug, cord connector and fuse, are sourced and assembled.
Raw electric wire is sourced. The wire is cut into lengths using a specialized wire cutting machine and then fitted with end terminals (i.e., lead contacts). A light string assembly machine connects the bulb and lamp holder assemblies and the lamp husks to the electric wire.
The plug assembly and end-connector assembly are assembled with the common wire.
The light string assembly is connected to the common wire assembly (including the plug assembly and the end-connector assembly) in an assembly and twisting operation that produces the finished light string set.
You indicate that more than half of the value of the raw materials and inputs for Everstar’s light sets is attributable to Philippine sourcing.
ISSUE:
What is the country of origin of the light string sets produced as described above?
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 United States 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 an ultimate purchaser in the United States 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 markings on the imported goods the country of which the good is the product. "The evident purpose is to mark the goods so 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 (1940).
Part 134, Customs and Border Protection (CBP) Regulations (19 C.F.R. 134), implements the country of origin marking requirements and exceptions of 19 U.S.C.
§ 1304. Section 134.1(b), CBP Regulations (19 C.F.R. 134.1(b)), defines "country of origin" as “the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 regulations]. . . .” A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use which differs from the original material subjected to the process. United States v. Gibson Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940); Texas Instruments v. United States, 681 F.2d 778, 782 (1982).
In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, CBP considers the totality of the circumstances and makes such determinations on a case-by-case basis. The country of origin of the item’s components, extent of the processing that occurs within a country, and whether such processing renders a product with a new name, character, and use are primary considerations in such cases. Additionally, factors such as the resources expended on product design and development, the extent and nature of post-assembly inspection and testing procedures, and worker skill required during the actual manufacturing process will be considered when determining whether a substantial transformation has occurred. No one factor is determinative.
In Energizer Battery, Inc. v. United States, 190 F. Supp. 3d 1308 (2016), the Court of International Trade (“CIT”) interpreted the meaning of “substantial transformation.” In Energizer, the court stated that when “the post-importation processing consists of assembly, courts have been reluctant to find a change in character, particularly when the imported articles do not undergo a physical change.” Energizer at 1318. In addition, the court noted that “when the end-use was pre-determined at the time of importation, courts have generally not found a change in use.” Energizer at 1319, citing as an example, National Hand Tool Corp. v. United States, 16 C.I.T. 308, 310, aff’d, 989 F.2d 1201 (Fed. Cir. 1993).
CBP has previous held that the formation of lamp holders and lamp husks from plastic granules through an injecting molding process is a substantial transformation. See HQ H303773, dated June 13, 2019. CBP has also reconsidered and affirmed this position in H304419, dated December 11, 2024. As such, the lamp holders and lamp husks are products of the Philippines. The Philippine lamp holders, lamp husks, wires, plugs and end-connectors are assembled in the Philippines with Chinese origin light bulbs and lead contacts (i.e., end terminals).
In this case, unlike Energizer, the Chinese bulbs and lead contacts, in their condition as imported into the Philippines, are incomplete. The bulbs are transformed when combined with the Philippine origin lamp holders from incomplete and unusable to complete and usable. In addition, the lead contacts undergo a substantial transformation when fitted to the electrical wire, as they have no pre-determined use until combined with the wire.
Considering the totality of the circumstances, including the creation of the lamp holders and lamp husks in the Philippines, the manufacturing of the plugs, the sourcing of the wire, and the assembly of the various components in the Philippines, the country of origin of the string light sets is the Philippines.
HOLDING:
The country of origin of the string light sets, produced as described herein, is the Philippines.
Sincerely,
Monika R. Brenner, Chief
Valuation and Special Programs Branch