HQ 558957 - Country of origin marking of innovative energy saving device; retrofit kit; assembly; packaging; substantial transformation; Guam; Saipan - United States International Trade Commision Rulings

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HQ 558957

April 17, 1995

MAR-2-05 R:C:S 558957 MLR

CATEGORY: MARKING

Mr. Claude Pulicicchio
Computer Power, Inc.
124 West Main Street
High Bridge, New Jersey 08829

RE: Country of origin marking of innovative energy saving device; retrofit kit; assembly; packaging; substantial transformation; Guam; Saipan

Dear Mr. Pulicicchio:

This is in reference to your letters dated December 19 and 22, 1994, requesting a ruling regarding the country of origin marking for a retrofit kit imported from Guam or Saipan, composed of foreign and U.S. components. Drawings and brochures were submitted with your request.

FACTS:

Computer Power plans to import a retrofit kit from Guam or Saipan, which is used to upgrade exit signs to create innovative energy saving devices. These devices use light-emitting diodes (LEDs). The kit is made from the following U.S. and foreign parts:

Description Source
Retro printed circuit board assemblies Mostly foreign Two Sets of Plastic Housings « U.S.
« Foreign
Two 8 inch lengths of double-sided tape U.S. Polyester plastic diffuser U.S.
Printed User's Manual U.S.
Four 3 x 6 inch aluminum foil reflective tape U.S. Two Plastic cable mounts Initially U.S.
Two Plastic bags (5 and 12 inch) Initially U.S. Decorative box U.S.
Two Cable/socket adapters Foreign
Two Labels U.S.

In a telephone conversation with a member of my staff, you indicated that the printed circuit board assembly is inserted into the plastic housing and the sides of the housing are glued in place. The double sided tape and labels are then taped to the housings. The plastic housing and printed circuit board assembly is referred to as a LED stick. Two LED sticks, one set of cable adapters, two cable mounts, one diffuser, and four sheets of reflective tape with the instruction manual are then placed in a box for shipment to the U.S. You propose to mark these articles "Made in the U.S.A."

ISSUE:

Whether the retrofit kit is a product of Guam (or Saipan) for country of origin marking purposes.

LAW AND ANALYSIS:

As we indicated to you in a telephone conversation, the determination as to whether an article may be marked "Made in the U.S.A.", is under the jurisdiction of the Federal Trade Commission, Division of Enforcement, located at 6th & Pennsylvania Avenue, N.W., Washington, D.C. 20508, and we suggested that you contact them for their approval.

However, for purposes of the U.S. Customs Service, 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. 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. Customs has previously ruled that products of Guam are excepted from country of origin marking requirements under 19 CFR 134.32(1), as products of possessions of the U.S. However, in order to render a country the "country of origin" within the meaning of the marking laws and regulations, further work or material added to an article in another country must effect a substantial transformation

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.

First, in this case, we must determine whether the insertion of the printed circuit board assembly into the plastic housing, and gluing the sides of the housing in place to create a LED stick constitutes a substantial transformation. In Headquarters Ruling Letter (HRL) 555660 dated September 15, 1991, Customs held that the production of an LED assembly by inserting an LED into a plastic housing, attaching LED leads to conducting wires, inserting the wires into an insulating tube, and affixing pins and terminals to the lead wires did not result in a substantial transformation. Accordingly, we find that the insertion of the printed circuit board assembly into the plastic housing also does not result in a substantial transformation.

Secondly, we must determine whether the packaging of the LED sticks with the cable adapters, cable mounts, diffuser, and sheets of reflective tape to create the retrofit kit constitutes a substantial transformation. In HRL 732461 dated December 12, 1989, Customs considered an alarm system, consisting of a siren/speaker alarm made in Mexico, two transmitter/receivers made in Korea, and a LED arming light made in Taiwan, which were packaged together in Mexico. It was found that packaging the components together did not confer Mexican origin. In addition, the importer claimed that since each component of the system was marked with its country of origin, the container was not required to be marked. Customs held that since the ultimate purchaser was not likely to examine the components of the alarm system prior to purchase, the container which would reach the ultimate purchaser had to indicate the origins of the components of the alarm system (i.e., the siren/speaker, transmitter/receivers, and LED arming light), and a phrase on the container, such as "Alarm system

In HRL 734560 dated July 20, 1992, telephone sets were considered, which consisted of a base unit made in Canada or Malaysia, a handset made in Canada or China, a handset cord made in Canada or Mexico, a cord to connect the telephone to the jack made in Mexico, and a transformer made in Taiwan. These items were assembled and tested in either Canada or Malaysia. It was determined that the assembly of these components into a telephone was extremely simple, and that they were not substantially transformed. Therefore, the carton in which the ultimate purchaser received the telephone could be marked: "telephone base made in (name of country); handset made in (name of country); transformer made in (name of country); line cord made in (name of country)."

Similarly, in this case, we find that packaging the LED sticks with the cable adapters, cable mounts, diffuser, and sheets of reflective tape to create the retrofit kit does not result in a substantial transformation, and as in HRL 732461, it is not likely that the ultimate purchaser of the retrofit kit will remove the components to examine each of their country of origin. Accordingly, upon importation into the U.S., each component of foreign origin (i.e., not of U.S.-origin) must be individually marked to indicate its country of origin. Furthermore, although each foreign component is marked with its country of origin, since the ultimate purchaser is not likely to open the container prior to purchasing the kit, the container in which the ultimate purchaser will receive the retrofit kit should be marked with the country of origin of each component. A phrase such as "Contents from (country of origin of imported components); See Marking on Each Article Inside" would be appropriate. See HRL 732679 dated May 4, 1990. On the other hand, each foreign component may be excepted from individual marking pursuant to 19 CFR 134.32(d), if marking the container will reasonably indicate the origin of the components. Therefore, each foreign component need not be individually marked if the container in which the ultimate purchaser receives the retrofit kit lists each foreign component and its country of origin, such as "Printed Circuit Board Assembly Made in _____, Cable/socket adapters Made in ______, and Housing Made in ______." See also 19 CFR 134.24(d)(2). We suggest that you contact the Federal Trade Commission if you wish to mark a component "Made in the U.S.A."

HOLDING:

On the basis of the information submitted, we find that the components of the retrofit kit are not substantially transformed by the simple combining and packaging operation performed in either Guam or Saipan. Accordingly, each individual foreign component of the retrofit kit is required to be marked with its country of origin. In addition, the container must be marked to indicate the countries of origin of the foreign components contained in the retrofit kit; however, this marking does not have to specifically list each component with its country of origin if each component is individually marked with its country of origin. In the alternative, if each foreign component is excepted from marking pursuant to 19 CFR 134.32(d), the container, in which the retrofit kit is sold to the ultimate purchaser, should list each foreign component with its country of origin. The approval of the marking "Made in the U.S.A." is within the jurisdiction of the Federal Trade Commission.

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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