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HQ 559198




November 20, 1995

MAR-2-05 R:C:S 559198 KR

CATEGORY: MARKING

Joseph Stinson
United Customhouse Brokers, Inc.
9950 Marconi Dr., Ste. 101
Otay Mesa, CA 92173

RE: Country of origin marking of video cassettes; Article 509, NAFTA

Dear Mr. Stinson:

This is in reference to your letter to the U.S. Customs Service, on behalf of Saehan Media America, Inc., dated May 11, 1995, concerning whether imported BASF blank video cassettes assembled in Mexico may be marked with the country of origin "Assembled in Mexico". You have included a sample video cassette for our review.

FACTS:

You state that the video cassette is assembled in Mexico by having a machine wind reel tape into a completed housing, cutting the tape and splicing the tape together to form the completed video cassette. The housing is inspected prior to attaching the tape. The tape, in "pancake" form, is cut to length and spliced to attach it to the housing and then wound onto the housing. Serial numbers and logos are jet-ink printed onto the cassettes. The cassette is inspected and sent to packaging. The tape is inserted with an advertising insert into a paperboard sleeve, wrapped and inspected. The housing is a product of Hong Kong and is classified in subheading 3926.90.9890, HTSUS. The reel tape is a product of the U.S. and is classified in subheading 8523.13.0060, HTSUS. The splicing tape is a product of Korea and is classified in subheading 3919.10.2055, HTSUS. You wish to use the country of origin marking "Assembled in Mexico". The sample submitted has the U.S. and Canadian address of the BASF Corporation and immediately beneath each of these is "Assembled in Mexico" and "Printed in the U.S.A." in English below the U.S. address and in french below the Canadian address, and also in Spanish.

ISSUE:

Whether the video cassette may be marked with the country of origin "Assembled in Mexico".

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. Friedlander & 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) of the interim regulations, 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 this part; however, for a good of a NAFTA country, the NAFTA marking rules will determine the country of origin. (Emphasis added).

Section 134.1(j), of the interim regulations, provides that the "NAFTA marking rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico, or the U.S. as determined under the NAFTA marking rules.

Section 134.35(b), provides that:

A good of a NAFTA country which is to be processed in a manner that would result in the good becoming a good of the United States under the NAFTA Marking Rules is excepted from marking. Unless the good is processed by the importer or on its behalf, the outermost container of the good shall be marked in accord with this part.

Part 102 of the interim regulations sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the interim regulations, sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) of the interim regulations states that "[t]he country of origin of a good is the country in which:

(1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or (3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied."

Since the finished video cassettes are neither wholly obtained or produced in a single country nor produced exclusively from domestic materials, ?102.11(a)(1) and (2) are not applicable. Therefore, it must be determined whether pursuant to ?102.11(a)(3), the foreign materials incorporated into the finished video cassettes meet the specific tariff rule of ?102.20. The video cassette has three components; the housing, the reel tape, and the splicing tape. The housing is a product of Hong Kong, the reel tape is a product of the U.S., and the splicing tape is a product of Korea. The finished video cassette is classified in subheading 8523.13.0040, HTSUS. Thus, the specific tariff rule for these goods is set out in section 102.20(p) (Section XVI: Chapters 84 through 85) of the regulations, which states: "A change to heading 8523 from any other heading." The housing is classified in subheading 3926.90.98, HTSUS, and meets the necessary tariff shift. The splicing tape is classified in subheading 3919.10.2055, HTSUS, and meets the necessary tariff shift. However, the U.S. reel tape, classified in subheading 8523.13.0060, HTSUS, does not undergo the necessary tariff shift.

The next step in the hierarchy, 19 CFR ?102.11(b), states that where ?102.11(a) is not applicable, the country of origin will be the country or countries of origin of the single material that imparts the essential character to the good. Unless a good is classified as a set, if a good is made from a single material that is classified in a tariff provision from which a change is not allowed, the single material will be found under 19 CFR ?102.11(b) to impart the essential character to the good.

Pursuant to section 102.18(b)(2), "for purposes of applying section 102.11, only domestic and foreign materials (including self-produced materials) that are classified in a tariff provision from which a change in tariff classification is not allowed in the rule for the good set out in section 102.20 shall be taken into consideration in determining the parts or materials that determine the essential character of the good."

Therefore, taking into account only those domestic and foreign materials that are classified in a tariff provision for which a change in tariff classification is not allowed in the rule for the good under section 102.20, we are of the opinion that the reel tape, the only material which does not undergo the requisite tariff shift, is the material which imparts the essential character of the video cassette. Thus, the country of origin of the video cassette is the country of origin of the reel tape -- the U.S.

However, section 102.14 of the interim regulations states that:

No good, last advanced in value or improved in condition outside the United States has United States origin. If under any other provision of this part such a good is determined to be a good of the United States, that determination will be disregarded and the country of origin of the good will be the last foreign country in which the good was advanced in value or improved in condition.

"Advanced in value" is defined in section 102.1(a) of the interim regulations as "an increase in the value of a good as a result of production with respect to that good, other than by means of those "minor processing" operations described in paragraphs (m)(5), (m)(6) and (m)(7) of this section." "Improved in Condition" is defined in section 102.1(I) as "the enhancement of the physical condition of a good as a result of production with respect to that good, other than by means of those "minor processing" operations described in paragraphs (m)(5), (m)(6) and (m)(7) of this section." "Minor processing" operations described in sections 102.1(m)(5), (m)(6) and (m)(7) of the interim regulations include unloading, reloading or any other operation necessary to maintain the good in good condition; putting up in measured doses, packing, repacking, packaging, repackaging; testing, marking, sorting or grading.

We find that the operation of assembling the U.S.-origin reel tape with the cassette housing in Mexico to produce the video cassette results in an advancement in value or improvement in condition of the reel tape. Accordingly, pursuant to section 102.14 of the interim regulations, the country of origin of the imported video cassette is Mexico, the last foreign country in which the good was advanced in value or improved in condition.

Pursuant to ?134.43(e), articles for which country of origin is determined under ?102.14 may be marked with the country of origin designation of, "Assembled in (name of the foreign country) from U.S. components". We, therefore, find that the designation "Assembled in Mexico" is an acceptable country of origin marking for the finished video cassette.

HOLDING:

Based on the information submitted, the imported video cassette is a product of Mexico, and may be marked with the country of origin "Assembled in Mexico".

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is 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
Tariff Classification Appeals Division

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