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HQ 734006


March 25, 1991

MAR-2-05 CO:R:C:V 734006 NL

CATEGORY: MARKING

Robert F. Seely, Esq.
Katten, Muchin & Zavis
525 West Monroe Street
Chicago, IL 60606-3693

RE: Country of Origin of Enteral Feeding Sets; Substantial Transformation; 19 CFR 10.22; 9802.00.80, HTSUS.

Dear Mr. Seely:

This is in response to your submission of December 18, 1990, in which you request a ruling concerning the country of origin of the Model 7736 Kangaroo Feeding Set (KFS) produced by your client, Sherwood Medical Company. This ruling is issued pursuant to Part 177, Customs Regulations (19 CFR Part 177).

FACTS:

As set forth in your December 18 submission, the KFS is a medical device used to administer liquid nutritional preparations through the gastrointestinal tract. All the parts of the KFS are of U.S. origin except the roller clamp, which is manufactured in Italy. Three U.S.-origin parts of the KFS are assembled in Mexico in the following manner: the printed bag is joined by heat sealing to the EZ Cap and the outlet tube; the ring magnet is assembled into the PVC bushing to form the magnet assembly; and the upper tubing, drip chamber top and body are assembled by heat sealing. All the materials used in the assembly of these components are of U.S. origin. The three components are shipped to Sherwood Medical's U.S. facility for assembly into the KFS as follows: First, the end cap and cover are assembled and heat sealed to the lower tubing. The upper end of the lower tubing is heat sealed to the lower end of the magnet assembly. A piece of silicon tubing is heat sealed to the upper end of the magnet assembly and the lower end of the drip chamber. The roller clamp is manually assembled on the upper tubing and the upper end of the tubing is heat sealed to the outlet tube at the lower end of the bag. The assembled KFS is inspected, then coiled, folded, and packed with a jejunostomy ("J") tube, and packed in a polyvinyl bag. As indicated in the submission, the value added in Mexico accounts for less than ten percent of the direct cost of manufacturing the KFS, and it contains no materials of Mexican origin.

As imported into the U.S. the assembled Mexican parts are eligible for reduced duty as American articles assembled abroad, under subheading 9802.00.80, Harmonized Tariff Schedule of the United States (HTSUS). In accordance with the requirements of section 10.22, Customs Regulations (19 CFR 10.22), the completed KFS (after final assembly in the U.S.), will be marked "Assembled in Mexico".

ISSUE:

Does the assembly of the components in Mexico effect a substantial transformation such that they become products of Mexico?

LAW AND ANALYSIS:

For tariff and other purposes the country of origin of an imported article is determined by reference to the country in which it was manufactured, produced, or grown. If in another country further work or material is added to the article so as to effect a substantial transformation, the second country becomes the country of origin for marking purposes. A substantial transformation is said to occur when, within the principle of the case of United States v. Gibson-Thomsen Co., Inc., 27 CCPA 267 (C.A.D. 98)(1940), an article emerges after processing with a new name, character, or use. See, 19 CFR 134.35.

Articles eligible for tariff treatment under subheading 9802.00.80, HTSUS, as U.S. articles assembled abroad HTSUS are subject to the special country of origin marking requirements of section 10.22, Customs Regulations (19 CFR 10.22). That section provides in full that:

Assembled articles entitled to the exemption [from duty] are considered products of the country of assembly for the purposes of the country of origin marking requirements of section 304, Tariff
Act of 1930, as amended (19 U.S.C.
1304). If an imported assembled article is made entirely of
American-made materials, the United
States origin of the material may be disclosed by using a legend such as "Assembled in ______ from material of U.S. origin", or a similar phrase.

It is noted that under section 10.22 the country of assembly is the country of origin for marking purposes only. In all other respects the country of origin of the article is to be
determined in accordance with fundamental Customs principles. That is, the article's origin (other than for marking purposes) is determined by reference to the country of manufacture or production or the country in which the article last underwent a substantial transformation.

Here, it is our opinion that the U.S. origin components assembled in Mexico are not substantially transformed by assembly there. Rather, the assembly is of the kind which makes the imported articles eligible for the duty exemption provided under subheading 9802.00.80, HTSUS: the fabricated U.S. components were exported to Mexico ready for assembly without further fabrication; they have not lost their physical identity by change in form, shape, or otherwise; and they have not been advanced in value or improved in condition except by being assembled and except by operations incidental to the assembly process. This intermediate processing step in the manufacture of the KFS does not change the name, character, or use of the assembled components within the meaning of the substantial transformation test, but constitutes a simple assembly. The bag remains a bag, albeit with a cap and tube attached. The ring magnet and its bushing are merely put together as intended. The existing pieces of the drip chamber top are merely assembled in their intended form. No other non-U.S. parts have been added. In addition, because the KFS remains far from complete after assembly in Mexico, it cannot be said that these parts have yet lost their separate identities by becoming parts of the KFS, which does not yet exist as such. Thus, for purposes other than country of country of origin marking, the components assembled in Mexico do not become products of Mexico, as they are not substantially transformed by Mexican assembly. Thus, it is our opinion that there are no Mexican-origin components in the KFS.

HOLDING:

Although 19 CFR 10.22 requires the KFS enteral feeding kit to be marked with the legend "Assembled in Mexico", Mexico is the country of origin only for marking purposes. Because the components assembled in Mexico are not substantially transformed, for purposes other than marking they remain products of the U.S.

Sincerely,

John Durant
Director, Commercial

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