Country of origin marking requirements for imported seatbelt retractor assemblies

HQ 732278 April 13, 1989 MAR 2-05 CO:R:C:V 732278 pmh CATEGORY: Marking Mr. Kenneth E. Natale Duncan, Allen and Talmage 1575 Eye Street, N.W. Washington, D.C. 20005-1175 RE: Country of origin marking requirements for imported seatbelt retractor assemblies Dear Mr. Natale: This is in response to your letters of January 6, 1989 and March 27, 1989, on behalf of your client, Kern-Liebers USA Inc. (the importer), requesting a ruling on country of origin marking requirements for imported seatbelt retractor assemblies. FACTS: The importer imports large coils of rolled steel from West Germany and subsequently ships them to Mexico where they are slit into strips, which are processed into springs by cutting to length and coiling. These coils are heated at 230 degrees Centigrade for 30 minutes. Each spring is then assembled into a plastic housing, with the spring connected to the spring cup, and lubricated. The spring assemblies are then shipped to unrelated Mexican companies where they are incorporated into completed automotive seat belt retractor assemblies and shipped to the U.S. ISSUE: Whether rolled steel from West Germany, which is sent to Mexico and processed into seatbelt retractor assemblies, has been substantially transformed so as to render the completed seatbelt retractor assemblies products of Mexico. -2- LAW AND ANANLYSIS: Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires, in general, that 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 will permit in such a manner as to indicate to an ultimate purchaser in the U.S. the English name of the country of origin of the article. 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. Further work or material added to the article in another country must effect a substantial transformation in order to render such other country the country of origin. In defining what constitutes a substantial transformation, Customs has held that a new and different article of commerce having a new name, character and use must emerge from the processing. See United States v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267, C.A.D. 98 (1940). In addition, factors such as complexity and cost of the processing operations and whether the essence of the article has been changed, have also been considered. See Uniroyal Inc. v. United States, 3 C.I.T. 220, 542 F. Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). In this case the rolled steel undergoes costly and complex processing and, as a result, is substantially transformed into a new and different article of commerce with a different name, character and use. The identity of the rolled steel is completely lost or subordinated in the finished seatbelt retractor assemblies. After it is cut, coiled and heated into springs and subsequently incorporated into seatbelt retractor assemblies, it is no longer identifiable as rolled steel. Furthermore, the seatbelt retractor assemblies have a specific commercial use, distinctly different from that of the rolled steel. While the rolled steel, in its original form, had a multitude of uses and could be manufactured into various products, the finished seatbelt retractor assemblies are suitable only for seatbelt manipulation in automobiles. Consequently, it is our opinion that the processing operations performed in Mexico effect a substantial transformation of the rolled steel and that the seatbelt retractor assemblies emerging from that processing are products of Mexico. -3- HOLDING: For country of origin marking purposes, as well as for quota purposes, we find that the processing operations to which the rolled steel is subjected in Mexico, substantially transform the rolled steel into an article having a different name, character and use. The seatbelt retractor assemblies, resulting from such processing operations, are products of Mexico and should be marked accordingly when imported into the U.S. Sincerely, John A. Durant, Director Commercial Rulings Division Enclosures