HQ 558881 - Country of origin marking of hollow wall anchors; imported screws; J-list; U.S. housings; combining; assembly; substantial transformation - United States International Trade Commision Rulings

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HQ 558881

March 3, 1995

MAR-2-05 CO:R:C:S 558881 MLR

CATEGORY: MARKING

Richard C. Katz, Esq.
90 Park Avenue
New York, NY 10016

RE: Country of origin marking of hollow wall anchors; imported screws; J-list; U.S. housings; combining; assembly; substantial transformation

Dear Mr. Katz:

This is in reference to your letter of November 4, 1994, requesting a ruling on behalf of The Rawlplug Company, Inc. ("Rawlplug") regarding the country of origin marking of imported screws which are combined with U.S.-origin housings to form hollow wall anchors. Samples were submitted with your request.

FACTS:

Rawlplug is a manufacturer of industrial fastener products. The product at issue is a hollow wall anchor (known in the trade as a "Rawly") which consists of two parts, an imported screw (from Taiwan) and a U.S.-manufactured housing or body. Hollow wall anchors are used to attach all sorts of fixtures (such as draperies, blinds, or shelving) onto fiberboard or sheetrock. The screws are assembled into the housings and as the screw is tightened, the housing expands and grips the inside of the wall to securely attach the fixture to the wall. It is stated that the imported screw represents approximately 8 percent of the total cost of the hollow wall anchor. In a meeting at the Office of Regulations & Rulings, it was stated that the only features of the screws that are necessary to be compatible with the housing are their length, and the shape of their threading; the type of head on the screw is not important. The samples of the hollow wall anchors are packed in a small cardboard box.

ISSUE:

What are the country of origin marking requirements applicable to the hollow wall anchors?

LAW AND ANALYSIS:

The marking statute, section 304, 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. 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. Inc., 27 CCPA 297, 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. The "country of origin" for marking purposes is defined in 19 CFR 134.1(b), as the country of manufacture, production or growth of any article of foreign origin entering the U.S. The "ultimate purchaser" is generally defined in 19 CFR 134.1(d), as the last person in the U.S. who will receive the article in the form in which it was imported.

An exception from marking is provided in 19 CFR 134.35 when a domestic processor converts or combines an article of foreign manufacture into an article having a new name, character, or use. This constitutes a substantial transformation and the domestic processor is deemed the "ultimate purchaser" of the imported article. In determining whether the combining of parts or materials constitutes a substantial transformation, the issue is the extent of operations performed and whether the parts lose their identity and become an integral part of the new article. Belcrest Linens v. United States, 573 F. Supp. 1149 (CIT 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. See C.S.D. 85-25. However, the issue of whether a substantial transformation occurs is determined on a case-by-case basis.

You claim that the imported screws are substantially transformed when they are incorporated with the U.S.-origin hollow wall anchor housings in the U.S. since the hollow wall anchors have a name, character and use different from the imported screws. You state that the name of the imported articles are "screws", whereas the name of the U.S.-manufactured articles are "hollow wall anchors." The character of the imported screw is claimed to be a simple, common, cheap, and fungible item, whereas the character of the U.S.-manufactured article is a sophisticated, relatively expensive, technologically advanced fastener. Lastly, the use of the imported screw is limited because it is a simple, uncomplicated device that bolts objects together, whereas the use of the U.S.-manufactured article is to attach objects to hollow wall structures which an ordinary screw cannot do.

You cite Headquarters Ruling Letter (HRL) 734796 dated December 24, 1992, where Customs held that unassembled shelf kits were not required to be marked to indicate the country of origin of imported screws sold with the kits although the screws maintained their individual identity, because the screws only represented 4-5 percent of the value of the complete kits. You claim that this lends support that the hollow wall anchor boxes should not be marked to indicate the country of origin of the imported screws since the screws only represent approximately 8 percent of the hollow wall anchors.

You also cite HRL 555365 dated September 7, 1990, where Customs held that domestically manufactured junction boxes were not required to be marked with the country of origin of imported screws. The screws were not attached to the junction boxes and represented 2.3 percent of the total value of the packaged product. Customs stated that the screws lost their separate identity and became an integral part of the U.S. junction boxes, and the ultimate purchaser in the U.S. was buying the junction box kit and not the individual screws. Similarly, you claim that the imported screws lose their identity and are merged into the hollow wall anchor, and, therefore, the hollow wall anchor boxes should not be required to be marked with the country of origin of the imported screws.

We disagree. In HRL 734227 dated June 26, 1992, Customs found that imported lever handles attached to U.S. lock sets were not substantially transformed. Customs found that even though the levers were only 10 per cent of the total cost of the lock set, they were essential to the lock set's function, and the assembly operation was not complex or did not require a great deal of skill. Furthermore, before installation of the lock set, the levers had to be disassembled. Therefore, the levers were required to be marked with their country of origin.

Similarly, in this case, based upon the samples submitted, the assembly involves screwing the imported screw into the U.S.-origin housing. We do not find that this assembly operation performed in the U.S. constitutes a substantial processing of the imported component. It is a simple combining operation entailing only the screwing together of two components. In addition, the ultimate purchaser must remove the screw from the housing before the hollow wall anchor may be placed into the wall. Furthermore, although it is claimed that the screw only represents 8 percent of the cost of the hollow wall anchor, we find that the screw is an important component of the hollow wall anchor, without which an object cannot be affixed to the wall. Therefore, since the operation performed is minimal and the component parts do not appear to lose their identity and become an integral part of a new article, we find that the assembly operation constitutes a minor processing of the imported component, which leaves the identity of the imported component intact.

However, since screws are listed on the "J" list, they are excepted from individual country of origin marking, and only the outermost container in which the screws will reach the ultimate purchaser (the hollow wall anchor boxes) must be marked to indicate the country of origin of the imported screws. It is acceptable to mark the boxes in which the hollow wall anchors are packed "Screws Made in Taiwan."

HOLDING:

Based on the information and samples submitted, the imported screws which are assembled into the U.S.-manufactured housings in the U.S. to form hollow wall anchors, are not substantially transformed as a result of the U.S. operations. Therefore, the box in which the hollow wall anchors are packaged must be marked to indicate the country of origin of the screws.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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