MAR-2-05 CO:R:C:V 731460 KG
District Director of Customs
40 South Gay Street
Baltimore, Maryland 21202
RE: Country of origin marking requirements of reversible bits
for battery-operated screwdriver
Dear Mr. Beikirch:
This is in response to your memorandum of May 18, 1988,
(MAR-2-05-DD:CO:TT:1 LJB) requesting advice concerning the proper
country of origin marking of imported reversible bits intended to
be repackaged in the U.S. and sold as part of an assembly kit
with a battery-operated screwdriver.
FACTS:
The bit is made in Taiwan and is double-ended, specifically
designed to fit both a slotted or a phillips head screw. The bit
is sold with a rechargeable battery-operated cordless screwdriver
manufactured in the U.S. It measures about 2 inches long and
1/2 inch wide.
The goods in question are imported in shipping boxes which
are marked "Made in Taiwan." Several plastic bags are enclosed
in each shipping box. The plastic bags contain many bits and are
also marked "Made in Taiwan". The bits are not individually
marked with the country of origin.
The importer repackages the bits with two U.S. made screws
and screw holders into "assembly kits" which are sold to a
company that manufactures battery-operated screwdrivers. The
screwdriver manufacturer repackages each assembly kit with a
screwdriver in either a box or a blister pack which is sold to a
retail company. The retail company sells the packaged
screwdriver and assembly kit to its customers without any
marking. The importer has asserted that the screwdriver
manufacturer is the ultimate purchaser of the bits and that since
the manufacturer is aware of the country of origin of the bits,
no marking other than the marking of the shipping boxes is
required.
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ISSUE:
Whether the importer is required by 19 U.S.C. 1304 to mark
the country of origin on reversible bits made in Taiwan and
repackaged with battery-operated screwdrivers.
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 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.
Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 134.1(d), Customs Regulations (19 CFR
134.1(d)), defines the ultimate purchaser as "generally the last
person in the U.S. who will receive the article in the form in
which it was imported." Examples are given in the regulation:
(1) If an imported article will be used in manufacture,
the manufacturer may be the "ultimate purchaser" if he
subjects the imported article to a process which
results in a substantial transformation of the article,
even though the process may not result in a new or
different article.
(2) If the manufacturing process is merely 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."
(3) If an article is to be sold at retail in its
imported form, the purchaser at retail is the "ultimate
purchaser."
The resolution of the issue turns on whether the retail
consumer is the ultimate purchaser of the reversible bits.
Pursuant to 19 CFR 134.1(d), the retail consumer would be the
ultimate purchaser if the imported article is not substantially
transformed in the U.S. In the instant case, the only processing
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of the imported good done in the U.S. is repackaging.
Therefore, it is essential to determine whether or not
repackaging constitutes substantial transformation. A
substantial transformation occurs when articles lose their
identity and become new articles having a new name, character or
use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270
(1940).
In this case, the imported article arrives in the U.S. in
its finished form. The imported article is not modified or
affixed to any other object. There is no change in the character
of the article. The bit can be used as either a phillips or flat
screwdriver after being inserted into a screwdriver. This use
does not change when the bit is placed in a package with screws.
This use again does not change when the assembly kit is placed in
a package with a screwdriver. The repackaging process itself
cannot be characterized as more than a minor manufacturing
process. There is no evidence to suggest that repackaging is a
complex process, expensive, time consuming or significantly
increases the value of the "processed" product. Although the
bits and screws once combined, are referred to as assembly kits,
the bits themselves still exist independently of the screws and
would still be referred to as bits. Thus there is no change in
name. Therefore, the reversible bits have not been substantially
transformed.
Since there has been no substantial transformation of the
imported article, the retail consumer is the ultimate purchaser
as defined in 19 CFR 134.1(d). Consequently, the reversible
bits must be marked with the country of origin in accordance with
19 U.S.C. 1304 so that the retail consumer will be able to
determine what country the imported goods were made in.
HOLDING:
Repackaging of reversible bits does not result in
substantial transformation. Pursuant to 19 U.S.C. 1304 and 19
CFR Part 134, the reversible bits must be marked with the country
of origin.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch