CO:R:C:V 732170 EAB

Frederick L. Ikenson, Esquire
1621 New Hampshire Avenue, N.W.
Washington, DC 20009

Re: Country of origin marking of color television chassis

Dear Mr. Ikenson:

This is in reply to your letter of February 27, 1989, requesting a ruling on the country of origin marking requirements of television chassis containing a tuner, speaker and circuit board components. Additional information was obtained from you on October 19, 1989, during a telephone conversation with Mr. Edward A. Bohannon of our staff. We regret the delay in responding.

FACTS:

Your client imports backless television cabinets, each con- taining a tuner, speaker and circuit board. Each cabinet and its respective components are made and then assembled into a discrete unit by your client's foreign subsidiary. The units exported by the subsidiary are exclusively purchased and used by your client in the further and final manufacture of color television receiv- ers, i.e., 100% of the production of your client's foreign sub- sidiary is imported by your client, and your client uses all that it receives from its subsidiary to make its color TVs; none of the subsidiary's production is sold to or used by other than your client, and your client neither re-sells nor uses as replacement parts any of the articles that it imports from its subsidiary.

To produce complete TVs in the U.S., major components such as the color television picture tube, the deflection yoke, the electron beam bender and degousser coil, and a remote control unit are assembled into the chassis by your client. Wire ties are placed and a cabinet back is attached, after which domestic technicians test and align the finished TVs for proper operation. Finally, the individual color TVs are packaged for distribution to retail outlets.

ISSUE:

What are the country of origin marking requirements of un- finished television chassis imported from a foreign subsidiary by an American manufacturer who uses the imported chassis in the further and final manufacture of color TVs.

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that 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 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 pri- mary purpose of the country of origin marking statute 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 the product, if such marking should influence his will." United States v. Friedlaender & Co., 27 CCPA 297, 302, C.A.D. 104 (1940); National Juice Products Association v. United States, 10 CIT, 628 F.Supp. 978 (1986).

According to United States v. Gibson-Thomsen Co., Inc., 27 CCPA 207 (1940), a manufacturer is considered the ultimate pur- chaser if a manufacturing process is performed on an imported item so that the item loses its identity and becomes an integral part of a new article with a new name, character, or use. Under these circumstances, the imported article is excepted from indi- vidual marking requirements, provided the outermost container which reaches the ultimate purchaser is marked with the country of origin, see Section 134.35, Customs Regulations (19 CFR 134.35).

Customs has had the opportunity to rule on the country of origin marking of imported television chassis on at least two occasions.

In Headquarters Ruling Letter HQ 711967, dated March 17, 1980, Customs held that the country of origin of television sets that are assembled in Mexico with printed circuit boards, power transformers, yokes and tuners from Mexico, and picture tubes, cabinets, and additional wiring from the U.S. is Mexico, as all the components are substantially transformed by the assembly process in Mexico. Customs found that the Korean and U.S. components all lose their respective identities when they are assembled together as they become integral parts of new articles - television sets.

In Headquarters Ruling Letter HQ 730515, dated June 29, 1987, Customs held that no substantial transformation occurred when imported chassis or cabinets were combined in the U.S. with televisions, and that the individual television chassis were re- quired to be marked with the country of origin. Customs found that the placement or affixation of television sets to chassis was a mere combining that did not result in a new and different article of commerce.

Customs find that you client does more than merely combine the imported chassis housing a tuner, speaker and circuit board with the U.S. origin color TV picture tube, deflection yoke, electron beam bender and degousser coil, and remote control unit. Customs find that your client assembles imported chassis with domestic components in such a manner that all components lose their respective identities after assembly and become integral parts of a new and different article of commerce, namely a color TV receiver. We further find that the process of assembly in the U.S. requires technical skill.

HOLDING:

Imported television chassis housing a tuner, speaker and circuit board that are used in the final manufacture of color TV receivers are substantially transformed into new and different articles of commerce when combined with essential domestic compo- nents. The manufacturer who uses the imported chassis in the final manufacture of color TV receivers is the ultimate purchaser of the imported chassis. As provided in 19 CFR 134.35, the im- ported chassis are excepted from individual country of origin marking so long as your client only uses them in the further man- ufacturing of color TV receivers, and does not re-sell them or use them as replacements parts, and the outermost containers of the imported articles are marked with the country of origin.

Documentation to this effect may be required by Customs officials at the port of entry.

Sincerely,

John Durant, Director
Commercial Rulings Division