MAR-02 RR:CR:SM 562901 DLD
Customs Freight Coordinator
Roger Cleveland Golf Company
5630 Cerritos Avenue
Cypress, CA 90630
RE: Country of origin marking of golf clubs assembled in U.S. for domestic or foreign sales; marking of sets; substantial transformation; permissible wording of country of origin; modification of HRL 562778
Dear Miss Roemer:
This is in response to your letter of May 30, 2003, in which you request a binding ruling on various questions relating to the permissible country of origin marking of golf clubs assembled by your firm from foreign and domestic parts and sold in the U.S. or abroad. We have reconsidered Headquarters Ruling Letter (HRL) 562778, dated September 5, 2003.
Pursuant to section 625(c), Tariff Act of 1930 (19 U.S.C. 1625(c)),
as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993), notice of proposed modification of HRL 562778 is not necessary as it has not been in effect for at least 60 days.
Your firm, the Roger Cleveland Golf Co., manufactures golf clubs for sale in the U.S. and abroad. The golf heads are imported from China or Taiwan. The grips are made in the U.S., while the shafts are made in the U.S., China or Taiwan. You ask:
Do the foreign components assembled in the U.S. undergo a substantial transformation?
What are the marking requirements for U.S. assembled golf clubs sold as complete sets?
What permissible wording may be used in the marking of the clubs?
What are the marking requirements for golf clubs assembled in the U.S. from foreign components and exported for foreign sale?
LAW AND ANALYSIS:
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 United States 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 United States the English name of the country of origin of the article. Congressional intent in enacting §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 are 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 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 Part 134.
A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, and use which differs from the original material subjected to the process. U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940).
In item 1., you ask for a determination as to whether the foreign components undergo a substantial transformation in the U.S.
You state that the heads used in your finished golf club are imported from China or Taiwan, the grips are of U.S. manufacture and the shafts are of either Chinese, Taiwanese or U.S. origin. Customs ruled in ORR 824-70, dated August 24, 1970, that a U.S. manufacturer who purchased imported golf club heads, either finished or unfinished, and assembled them with shafts and grips of U.S. origin into finished golf clubs, was the ultimate purchaser of the imported golf club heads. If the imported golf club heads are used by an original equipment manufacturer, they will be substantially transformed by being assembled with the
U.S.-origin shaft and therefore excepted from individual marking. See 19 CFR§134.35(a). See also HRL 728213, dated July 3, 1985; HRL 734136, dated
June 17, 1991; HRL 735125, dated November 17, 1993; and HRL 734422, dated June 28, 1993. In these cases, the golf club assembly operations were
performed in the United States, and either the shaft or the club head was of U.S. origin.
A different conclusion was reached in HRL 734256, dated July 1, 1992, where both of the major components of the club, i.e., the head and the shaft, were of foreign origin and were assembled together with a U.S.-made grip. There, Customs stated that “the grips are much less significant components as compared with the heads and shafts and their insertion onto the golf clubs is fairly simple. In other words, we find because the most important components are foreign and the assembly process is very simple, there is no substantial transformation of the shafts and heads.”
In this case, the golf clubs assembled from a Chinese or Taiwanese head, a Chinese or Taiwanese shaft and U.S. grip do not result in a substantial transformation of the foreign components per HRL 734256, cited above. Therefore, these clubs would be required to be marked, for example, “head made in China, shaft made in Taiwan.” As the marking statute pertains to foreign articles imported into the U.S., and in this case the head and shaft imported into the U.S. remain foreign (and dictate the final origin of the finished golf club), Customs would not object to marking the finished golf club, for example, “Head made in China, Shaft made in Taiwan, Assembled in the USA,” as you state you presently mark your clubs. See 19 CFR §134.43(e), HRL 560527, dated September 12, 1997; and New York Ruling Letter C80391, dated October 14, 1997. The Federal Trade Commission, however, should be contacted regarding the use of the phrase “Assembled in the USA.”
The assembly of the clubs in the U.S. with Chinese or Taiwanese heads, U.S. shafts and U.S. grips would result in a substantial transformation of the foreign heads and therefore these clubs would be excepted from marking. Pursuant to 19 CFR §134.35(a), where foreign components assembled in the US. into golf clubs undergo a substantial transformation, the U.S. manufacturer is considered to be the “ultimate purchaser” within the contemplation of 19 U.S.C. §1304(a), and the finished article is excepted from marking. Only the outermost containers of the imported foreign components need be marked with the country of origin. Therefore, only the outermost containers in which the foreign heads are shipped to Roger Cleveland Golf Company must be marked with their country of origin.
You seek clarification on the marking requirements for clubs sold in full sets of at least eight clubs (item 2.). Clubs to be sold as a full set are packaged
together in a retail box, with or without a golf bag. You state that if a golf bag is included, it would be of Chinese manufacture. For golf clubs with or without bags, to be sold in boxed sets, be advised that an exception to the marking requirements is allowed for articles for which the marking of the container will
reasonably indicate the origin of the articles. See 19 CFR §134.32(d). The retail box may be marked with the country of origin of the foreign articles or components of foreign origin of articles in the box, in lieu of marking each separate article.
You also ask what permissible wording may be used to mark your products (item 3.). “China” and “Taiwan” are generally the conventional spellings as approved by the U.S. Board on Geographic Names. The name “P.R. China” is also acceptable. See HRL 730578, dated July 10, 1987. The designations “P.R.C.” or “PRC” and “R.O.C.” or “ROC” are not acceptable. For individual clubs which are not substantially transformed, the country of origin of each foreign component must be indicated either on the club or on the container. A label reading “parts made of foreign components” or similar wording would not be acceptable for clubs to be sold in the U.S. after assembly and which have not undergone substantial transformation. If the head and the shaft are made in two different countries, each country of origin must be indicated in the marking such as “shaft made in China” and “head made in Taiwan.” If the head and the shaft are both made in the same country, the marking need only reference that country.
With regard to your question on the marking requirements of foreign components assembled into golf clubs in the U.S. and exported for foreign sale, as the “ultimate purchaser” is generally the last person in the U.S. who will receive the article in the form in which it is imported, the U.S. manufacturer (Roger Cleveland Golf Company) will be the ultimate purchaser for the golf clubs to be exported. Therefore, it is only necessary that the containers in which the foreign parts are shipped to Roger Cleveland be marked with the parts’ origin. See HRL 732851 of January 26, 1990; and HRL 559872 of February 20, 1997. It is suggested that you consult with customs officials in the countries to which you will be exporting your goods to determine their marking laws and regulations with regard to goods entering their countries.
Note that although clubs that have undergone a substantial transformation in the U.S. are not subject to the country of origin marking requirements of 19 U.S.C. §1304, whether they may be marked “Made in the U.S.A.” or similar words, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC, Division of Enforcement, 6th and Pennsylvania Avenue, NW, Washington, DC 20508, on the propriety of markings indicating that articles are made in the U.S., for sales both in the U.S. and abroad. The main phone number of the FTC is (202) 326-2222.
Chinese or Taiwanese golf club heads are substantially transform if they are assembled with a U.S.-made shaft and U.S.-made grip in the U.S. to make finished golf clubs. Therefore, the imported heads are excepted from the country of origin marking requirements of 19 U.S.C. §1304, and no country of
origin marking is necessary on the finished golf club to be sold in the U.S. However, the outermost container in which the imported golf club heads are imported must be marked with the country of origin of the heads.
For clubs assembled in the U.S. for which there is no substantial transformation, i.e., those with both the shaft and the head made in China or Taiwan, the country of origin of each foreign component must be indicated on the club or the container. For clubs to be sold as sets in a container, it is acceptable to mark the container with the country of origin of the foreign articles packaged therein in lieu of marking each item. A label reading “parts made of foreign components” or similar is not acceptable. HRL 562778 is hereby modified.
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.
Myles B. Harmon, Director
Commercial Rulings Division