MAR-2-05 CO:R:C:V 732461 jd
Mr. Allan J. Rappoport
District Director of Customs
880 Front Street
Room 5-S-9
San Diego, California 92188
RE: IA 23/89; Country of origin marking requirements applicable
to automobile alarm systems
Dear Mr. Rappoport:
This is in response to your request for internal advice (IA
23/89; your file CLA-1-07:C:DAB PT), concerning the application
of country of origin marking requirements to automobile alarm
systems.
FACTS:
Two automobile alarm systems were described. One system
contains the following components: (1) a control module assembled
in Mexico with parts from various countries; (2) a
transmitter/receiver made in Singapore- it is contained in
separate styrofoam packaging which is placed into the retail box
holding all the components; (3) a speaker made in Taiwan- the
speaker itself is labeled and it is in a white cardboard box also
marked "Made in Taiwan", that box is placed into the retail box
holding all the components; (4) a microphone made in Taiwan; and
(5) a connector assembly assembled in Taiwan from U.S. and
foreign components.
The other alarm described consists of: (1) a siren/speaker
alarm made in Mexico; (2) two transmitter/receivers made in
Korea; and (3) a LED arming light made in Taiwan.
Both alarms are sold with mounting hardware (not described
but we assume it to be nuts, bolts, screws, and possibly mounting
brackets), and come in retail packages marked "Assembled in
Mexico." The importer does not propose to remove any of the
existing country of origin marking from the components.
The importer argues that the "Assembled in Mexico" marking
satisfies marking requirements because:
(1) the articles are treated as an entirety for
classification purposes and therefore Customs has no
justification to require separate country of origin marking for
components;
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(2) the bringing together of components and the addition of
installation instructions constitutes a substantial
transformation and an assembly.
Should we have rejected those two arguments, the importer argues
in the alternative that if an article is correctly marked, the
immediate container need not be marked, and that matters
involving protection of the public from deceptive labeling are
the jurisdiction of the Federal Trade Commission, not the Customs
Service.
ISSUE:
Does the marking "Assembled in Mexico" on the retail
packaging of the automobile alarm systems described above satisfy
country of origin marking requirements?
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 United States 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 United
States 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 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 marking laws and regulations. The case of U.S. v.
Gibson-Thomsen Co., Inc., 27 CCPA 267 (C.A.D. 98), provides that
an article used in manufacture which results in an article having
a name, character or use differing from that of the constituent
article will be considered substantially transformed.
CLASSIFICATION OF AN ARTICLE DOES NOT CONTROL MARKING
We do not agree that the classification of an article must
control the country of origin marking of the article. Courts
have acknowledged the reality that the application of differing
laws relating to the importation of goods into the U.S. can
result in differing origins for the same product. In discussing
the differences between the marking laws, drawback laws and the
the Generalized System of Preferences (GSP), the court in
National Juice Products Association v. United States, 10 CIT 48,
628 F.Supp. 978 (1986), concluded, "Thus, although the language
of the tests applied under the three statutes is similar, the
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results may differ where differences in statutory language and
purpose are pertinent." National Juice, note 14, at 58-59. We
believe that the differing purposes of the marking laws compared
with the classification schedules justify different results in
the present instance; one for origin, one for duty assessment.
The pertinent statutory purpose involved in application of
the marking laws was explained in United States v. Friedlaender &
Co., 27 CCPA 297, C.A.D. 104 (1940) thusly:
Congress intended that the ultimate purchaser
should be able to know by an inspection of the
marking on 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 pur-
chase 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.
We do not believe that the marking "Assembled in Mexico"
informs the ultimate purchaser of the origin of the alarm systems
being considered here. The retail package may contain an entire
alarm system, but upon opening the box an ultimate purchaser will
be confronted with separate, distinct components of varying
origins. Each of the major components is necessary for the
proper operation of the system and carries out a distinct
function of its own. Ultimate purchasers are entitled to origin
information concerning all these vital components. In both
systems there are components not of Mexican origin which were
imported to Mexico in finished condition ready for repacking.
That mere act of repacking does not confer Mexican origin.
PACKAGING AN ALARM SYSTEM IS NEITHER AN ASSEMBLY
NOR A SUBSTANTIAL TRANSFORMATION
In response to the importer's contention that his Mexican
operations constitute a substantial transformation, we do not
agree that "bringing together all of the essential elements of a
system whose parts are specifically designed to function together
and ... the addition of the installation instructions", amount to
a substantial transformation.
The importer has, in an additional submission dated
May 5, 1989, attempted to liken the packaging of the subject
automobile alarm systems to two Customs rulings, one concerning
typewriters, the other automobiles.
In ruling 730837 (June 10, 1988), Customs held that the
assembly of a typewriter from hundreds of parts was a substantial
transformation of the parts and the country of assembly was the
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country of origin of the typewriter. The assembly involved
procedures such as joining parts with screws, nuts and bolts, and
soldering. Components which were imported in a finished
condition into the country of assembly were not merely repackaged
in a retail carton and called a typewriter. Such components were
physically joined to the emerging new article and lost their
separate identities.
In ruling 731076 (November 1, 1988), Customs determined
that subassemblies from various countries of an automobile
brought together in another country for assembly lost their
separate identity and emerged from a lengthy, multi-worker
manufacturing process as a new article of commerce. Contrary to
the importer's opinion as expressed on page six of his
April 10, 1989, submission, we would not determine that if the
major components and subassemblies of a car were brought together
and packaged in one country that the country of packaging was,
for purposes of 19 U.S.C. 1304, the country of origin of the
automobile kit.
The importer's situation is more like ruling 708610
(February 21, 1978), wherein a domestic manufacturer of an
amateur radio transceiver sought a marking exception for the
Japanese microphone he attached to the set before sale. His
request was denied since the microphone was sold in its condition
as imported and the purchaser at retail was considered the
ultimate purchaser.
Similarly, in ruling 084935 (August 23, 1989), it was
determined that a small nylon bag used to hold the pieces of a
"pocket gym" required individual country of origin marking. The
bag was not subjected to any processes in the country where the
pieces where inserted into the bag that would permit an exception
to individual marking.
An additional submission from the importer dated
October 20, 1989, attempts to liken the importation of the alarm
systems with ruling 083455 (September 6, 1989). That ruling, in
pertinent part, said that roller bearings assembled in Mexico
could be marked "Assembled in Mexico" or "Assembled in Mexico
from Romanian and U.S. components". The Mexican assembly
involved the physical joining of components to produce a finished
roller bearing. The presence of U.S. components triggered the
operation of { 10.22, Customs Regulations (19 CFR 10.22), which
accounts for the suggested use of the "Assembled in" language.
The importation of the alarm systems is distinguishable in that
distinct components are received by ultimate purchasers. The
components have been brought together into one box, but they are
not subjected to any type of assembly which could be said to
transform the components into one article with one country of
origin.
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MARKING ON THE IMMEDIATE CONTAINER OF A PROPERLY
MARKED ARTICLE IS OFTEN REQUIRED
The importer states his belief that the marking on the
components of the alarm system make marking on the container
unnecessary. We disagree. In limited instances, a correctly
marked article may be packaged in a container without the
necessity of repeating country of origin marking on the package.
For example, a correctly marked crystal vase could be placed in
an unmarked container, provided the container remains unsealed at
the point of sale. Customs believes an ultimate purchaser is
extremely likely to open the container of such an article and
closely examine the vase before purchase, consequently seeing the
origin marking (see { 134.26(f), Customs Regulations (19 CFR
134.26(f)).
However, in the case of an alarm system, we do not believe
an ultimate purchaser is likely to closely examine the components
before purchase. The requirement that a purchaser be able to
find marking easily will be accomplished by requiring the origins
of the components to be listed in one statement on the immediate
container of the article.
CUSTOMS HAS JURISDICTION OVER THE MARKING ISSUES PRESENTED
We are not persuaded by importer's reliance on Baldwin
Bracelet Corporation v. FTC, 325 F.2d 1012 (D.C. Cir 1963), or
U.S. v. Mersky, 361 U.S. 431 (1960). The importer cites to
Baldwin for the proposition that "[m]atters involving protection
of the general public from deceptive acts arising from country of
origin labelling are for the Federal Trade Commission, not the
Customs Service." However, the Baldwin court acknowledged the
authority of Customs and the FTC to have coexistant jurisdiction
over marking and stated "the authority granted the Secretary of
the Treasury by { 304 of the Tariff Act of 1930, as amended in
1938, was not intended to repeal { 5 of the Federal Trade
Commission Act, nor to diminish the jurisdiction and authority of
the Commission with relation to such practices as are involved
here."
Mersky involved the interpretation of T.D. 53210, a
decision to facilitate collection of duties on goods from areas
dominated by the Soviet Union. The Supreme Court agreed that the
statute involved, 65 Stat. 73; 19 U.S.C. 1362, and the
regulations issued pursuant thereto were designed to "protect and
expedite the collection of customs duties." Mersky at 440.
However, the emphasis of this statute on duty collection did not
amount to a repeal of the consumer protection aspects of marking
law. "Certainly its emphasis on duties and its silence on the
protection of the public from deceit support the conclusion that
the old provisions were to continue insofar as markings after
importation are concerned." Mersky at 440-41 [footnote omitted].
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HOLDING:
The classification of an automobile alarm system does not
control the country of origin marking required on such article.
The bringing together of the components of such a system is not
an assembly of a new and different article for purposes of
marking. The party packaging the components, some manufactured
in the country of packing, some imported into the country of
packing in a finished condition, is not the ultimate purchaser of
the components; the packing is not a substantial transformation.
Marking on the container that will reach the ultimate
purchaser must indicate the origins of the components of the
respective systems, i.e., control module, transmitter/receiver,
speaker, microphone and connector assembly; or siren/speaker,
transmitters/receiver, and LED arming light. A phrase such as
"Alarm system components from ______, _______, and ______", or
words of similar meaning would be sufficient.
Sincerely,
John Durant
Director
Commercial Rulings Division