Country of Origin Marking for Mechanical Pencils; Assembly; Combining; HQ 726001.

HQ 735169 January 26, 1994 MAR-2-05 CO:R:C:V 735169 RC CATEGORY: MARKING Victoria Jacks, Vice President Roatan International Corporation 20 West 38th Street New York, New York 10018 RE: Country of Origin Marking for Mechanical Pencils; Assembly; Combining; HQ 726001. Dear Ms. Jacks: This is in response to your letter of April 29, 1993, requesting a ruling on the country of origin marking requirements for mechanical pencils forwarded to us by Customs New York office. Samples of the components were submitted for examination. FACTS: Roatan International Corporation imports clutch mechanisms from Japan for assembly in the U.S. with U.S. components to produce completed mechanical pencils. The U.S. parts comprise the (1) plastic pencil barrel, (2) plastic erasure cup, (3) the erasure, and (4) snap-on clip (nickel plated); all exterior portions of the completed pencils. The assembly operation entails inserting clutch mechanism into a pencil barrel, screwing in and attaching the erasure accoutrements, and placing a cap over the pencil tip. The imported clutch mechanism accounts for less than 50 percent of the total cost of the completed pens. ISSUE: Whether the imported plastic pencil parts must be marked to indicate their country of origin, as required by 19 U.S.C. 1304. 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 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. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. The "ultimate purchaser" is defined generally as the last person in the U.S. who will receive the article in the form in which it was imported. 19 CFR 134.1(d). The "country of origin" for marking purposes is defined by section 134.1(b), Customs Regulations (19 CFR 134.1(b)), to mean the country of manufacture, production, or growth. 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" for marking purposes. An article used in manufacture resulting in a new article having a different name, character, or use will be considered substantially transformed. If the manufacturing process is a minor one which leaves the identity of the imported article intact, the consumer or user of the article, who obtains the article after the processing, will be regarded as the "ultimate purchaser." 19 CFR 134.1(d)(1) and (2). The facts presented in the instant case are right on point with the facts in Headquarters Ruling Letter (HRL) 726001 dated September 11, 1984. There, Customs found that domestic assembly of the foreign-manufactured clutch mechanism with the U.S. components were substantially transformed, not required to be marked. Likewise, here, we find that the domestic assembly of the Japanese-manufactured clutch mechanism with the U.S. components effects a substantial transformation in the U.S. Therefore, the clutch mechanisms are not required to be marked "Japan". HOLDING: The shipping cartons containing the Japanese-manufactured clutch mechanism are required to be marked to indicate the country of origin, "Japan". However, the clutch mechanisms and the finished pens do not need to be marked. If you wish to indicate the U.S. origin of the pens, be advised that any articles labeled "Made in USA" must comply with the requirements of the Federal Trade Commission. We suggest that you direct any questions on this aspect to the Federal Trade Commission. Sincerely, John Durant, Director