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NY H83328

July 26, 2001

MAR-2 RR:NC:1:110 H83328


Mr. Mitchell Neriah
Customs Consulting Services
415 So. Prospect Ave., Ste. 110
Redondo Beach, CA 90277


Dear Mr. Neriah:

This is in response to your letter dated July 2, 2001, on behalf of your client Toshiba America Information Systems, Inc. (TAIS), requesting a ruling on country of origin marking for imported components, and a notebook computer assembled in the United States from the imported components. A marked sample was not submitted with your letter for review.

Toshiba America Information Systems, Inc. intends to assemble complete, finished notebook computers at their facility in Irvine, CA from U.S. and foreign components. Upon completion of assembly, the finished notebook computers will be packaged for retail sale with the model designation of “Prototype 2800.” The notebooks will be assembled from numerous imported components from various countries of origin. The motherboard will be imported without the basic input/output system (BIOS) integrated circuit (IC). This IC will be hand soldered onto the motherboard in Irvine, CA. The motherboard is then tested and assembled into the notebook computer. In your ruling request, you indicated the country of origin for each of the 90+ individual components imported into the U.S. from China, Germany, Japan, Korea, Malaysia and the Philippines.

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 (or its container) 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.

The “Country of origin” is defined in 19 C.F.R. §134.1(b) 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.” For tariff purposes, the courts have held that a substantial transformation occurs if a new and different article emerges having a distinctive name, character or use. Anheuser-Busch Brewing Association v. The United States, 207 U.S. 556 (1908) and Uniroyal Inc. v. United States, 542 F. Supp. 1026 (1982).

Noting 19 C.F.R. §134.35(a), “Articles other than goods of a NAFTA country. An article used in the United States in manufacture which results in an article having a name, character, or use differing from that of the imported article, will be within the principle of the decision in the case of United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98). Under this principle, the manufacturer or processor in the United States who converts or combines the imported article into the different article will be considered the “ultimate purchaser” of the imported article within the contemplation of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked in accord with this part.”

With regard to the permanency of a marking, section 134.41(a), Customs Regulations (19 C.F.R. §134.41(a)), provides that as a general rule marking requirements are best met by marking worked into the article at the time of manufacture. For example, it is suggested that the country of origin on metal articles be die sunk, molded in, or etched. However, section 134.44, Customs Regulations (19 C.F.R. §134.44), generally provides that any marking that is sufficiently permanent so that it will remain on the article until it reaches the ultimate purchaser unless deliberately removed is acceptable.

As provided in section 134.41(b), Customs Regulations (19 C.F.R. §134.41(b)), the country of origin marking is considered conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain.

In this case, we find in accordance with previous rulings, that the further processing of the motherboard along with the complete assembly of the finished notebook computer constitutes a substantial transformation. The assembly and testing in the U.S. creates a product with a name, character and use differing from the individual components. Accordingly, no country of origin markings is required on the finished notebook computer. However, if a phrase such as “Made in the U.S.A.” is proposed to be marked on the product, we advise you to contact the Federal Trade Commission (FTC), Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508, since use of any U.S. origin claim is under the FTC’s jurisdiction. The Customs Service does not have the authority to approve such a marking.

In regard to the 90+ individual components, we find that the imported components are substantially transformed when incorporated into the notebook computer, and, therefore, as per 19 C.F.R. §134.35(a), are excepted form individual marking, provided the cartons in which TAIS receives them are properly marked with their country of origin, and Customs officials at each port of entry are satisfied that the components will be assembled in this manner.

This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177).

A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Eileen S. Kaplan at 212-637-7019.


Robert B. Swierupski

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