MAR-2-RR:CTF:TCM 968218 RSD
Paul Luther, Esq.
1299 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2400
RE: Country of Origin Marking Requirements for a Watch Designed in Germany and Manufactured in the Philippines, Hangtags, 19 CFR 134.46
Dear Mr. Luther:
This is in response to your letter dated May 11, 2006, on behalf of Timex Corporation (Timex) requesting a binding ruling regarding the country of origin marking requirements for a watch designed in Germany and manufactured in the Philippines. A sample of the watch and its accompanying vinyl covered container was submitted for our consideration. As you requested, the sample will be returned to you under a separate cover.
The merchandise under consideration is a black circular wristwatch that will be imported by Timex. The watch movement was designed in Germany, while Timex intends to manufacture the watch movement in the Philippines. The watch will be packaged for sale by being wrapped around a plastic or a leather display stand. You indicate that you believe that most retailers will likely place the watch in its display stand in a glass display case. When presented for sale to consumers, the watch will be stored inside a sales package, which when opened, will display the watch wrapped around a cushion with the watch face visible to consumers. The back of the watch case of the sample watch is imprinted with the words “MOVEMENT DESIGN GERMANY” “STAINLESS STEEL” “100 METERS” “SAPPHIRE GLASS”. You indicate that the display stand will largely obstruct the information imprinted on the outer back of the watch case from the consumer’s view, unless the consumer unstraps and removes the watch from its stand.
A hangtag will also be attached to the watch inside of the sales package by means of an elastic string. Although not shown on the sample watch, you state that the hangtag will identify the country of origin of the watch. Specifically, you state that the words “MADE IN PHILLPPINES” will appear on the hangtag immediately above the words “MOVEMENT DESIGN GERMANY”. On the other side of the hangtag, the price of the watch will also appear. You have also presented a copy of a mockup of the proposed country of origin marking for the watch that will appear on the hangtag.
The unassembled component parts of the watchstraps will be made in Hong Kong. At this time, in the most likely scenario, Timex intends to send the component parts of the watch strap to the Philippines, where they will be assembled and attached to the watch heads. You state that in the event that the straps are assembled and attached to the watch outside of the Philippines, the information regarding the origin of the watch straps will be identified on the hangtag immediately below the words “MADE IN PHILIPPINES.”
In accordance with Chapter 91, Additional U.S. Note 4(a) of the Harmonized Tariff Schedule of the United States, HTSUS (19 U.S.C. 1202), Timex will stamp the name of the manufacturer and the number of jewels servicing the watch on the train bridge of the watch movements. Timex will also engrave the country of manufacture and the name of the manufacturer on the inner back of the watch case.
Do the words “MOVEMENT DESIGN GERMANY” imprinted on the outer back of the watch case trigger the special marking requirements of 19 CFR 134.46.
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 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. 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." See United States v. Friedlander & Co., 27 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134 of the Customs and Border Protection (CBP) Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b) CBP Regulations (19 CFR 134.1(b)), defines "country of origin" as the country of manufacture, production, or growth. In order to change the country of origin, further work or material added to the article in another country must effect a substantial transformation. A substantial transformation occurs when the further work or material added in another country results in an article having a different name, character, or use. See United States v. Gibson-Thomsen Co., Inc., 27 C.C.P.A., 267 (CAD 98).
Section 134.46, CBP Regulations (19 CFR 134.46), contains more restrictive marking requirements designed to alleviate the possibility of misleading an ultimate purchaser with regard to the country of origin of an imported article. Specifically, 19 CFR 134.46 requires that, in instances where the name of any city or locality in the U.S., or the name of any foreign country or locality other than the name of the country or locality in which the article was manufactured or produced, appears on an imported article or its container, there shall appear, legibly and permanently, in close proximity to such words, letters or name, and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of," or other words of similar meaning. CBP has previously ruled that in order to satisfy the close proximity requirement, the country of origin marking must appear on the same side(s) or surface(s) in which the name of the locality other than the country of origin appears. See HQ 559886, dated August 16, 1996.
As noted in HQ 563070, dated November 16, 2004, CBP has consistently held that the country of origin of a watch or clock is the country of manufacture of the watch or clock movement. The addition of the hands, dial, case, or watchband add definition to the timepiece, but does not change the character or use of the watch or clock movement which is the "guts" of the watch or clock. Thus, in this case, the country of origin of the watch under consideration would be the Philippines, where the watch movement is assembled.
Additionally, with regard to the watch strap or band, CBP has determined that watch strap must be separately marked when its country of origin is different than that of the watch. This is because the attachment of the watch strap to the watch does not effect a substantial transformation of the watch strap; after attachment, the strap maintains its separate identity. See HQ 734565 (October 16, 1992). Therefore, the country of origin of the watch strap must appear legibly, conspicuously, and permanently whether imported together with the watch or separately.
First, we note that Timex indicates that it will put the country of origin marking of the watch, “MADE IN PHILLIPINES” on a hangtag attached to the watch. CBP frequently has allowed alternative methods of marking, such as the use of hangtags or pressure sensitive labels provided that the alternative marking method used is conspicuous, legible and permanent. See HQ 735428, May 12, 1994
35428 HQ 735428
While marking the country of origin of the watch on a hangtag may be sufficient to satisfy the general requirements of 19 U.S.C. 1304, we also note however, because the language “MOVEMENT DESIGN GERMANY” will be imprinted on the outer back of the watch case, the issue that arises in this instance is whether the special marking requirements of 19 CFR 134.46 are triggered. Secondly, if the requirements of 19 CFR 134.46 are in fact triggered, would the marking, “MADE IN PHILIPPINES”, on the attached hangtag satisfy them.
You contend that the words “MOVEMENT DESIGN GERMANY” imprinted on the outer back of the watch case will not mislead the ultimate purchaser regarding the origin of the watch because the outer back of the watch case will be largely obstructed from view by the display stand and by a cushion. Thus, the ultimate purchaser is not likely to see the wording on the outer back of the watch case before purchase. You further maintain that even if the ultimate purchaser bothers to unstrap and remove the watch from its display stand and take out the cushion and observe the wording on the outer back of the watch case, there will still be an opportunity to see the accurate country of origin marking that appears on the hangtag during the inspection of the watch prior to purchase. Therefore, it is your contention that marking the outer back of the watch case with the country of design without mention of the country of origin will neither mislead nor deceive the ultimate purchaser into thinking that the watch was made in a country other than the Philippines.
However, in the course of buying the watch, we do not agree that consumers will not see the imprinted words on the outer back of the watch case. First, we think that it is likely that consumers will want to have the watch removed from its display packaging, including removing the cushion, so that they can try it on and examine it before deciding whether to buy it. Accordingly, during the course of inspecting the watch and prior to purchase, we believe that consumers are likely to see the words that are imprinted on the outer back of the watch case. It seems obvious that these markings are put on the back of the watch case for the purpose of enhancing the watch’s appeal. We doubt that Timex would have gone to the trouble of having information regarding where the watch movement was designed imprinted on the outer back of the watch case, unless it thought that consumers would be likely to see this information prior to purchase, and that it would help promote the sale of the watch.
Although CBP has held that the requirements of 19 CFR 134.46 are not applicable in each and every instance where a non-origin geographic reference appears on a product label, where, such as here, the geographical reference appears in a context which is likely to create confusion to the ultimate purchaser regarding the country of origin of the good, the special marking requirements of 19 CFR 134.46 are triggered. See Treasury Decision (T.D.) 97-72, published in the Federal Register on August 20, 1997, (62 FR 44211). In our judgment, because consumers could be confused and misled regarding the country of origin of the watch by the words “MOVEMENT DESIGN GERMANY” appearing on the outer back of the watch case, we find that the requirements of 19 CFR 134.46 would be triggered.
CBP has had a long standing practice of ruling that the close proximity requirement of 19 CFR 134.46 means that the country of origin marking must appear on the same side or surface as the foreign reference so that the information is viewable in one inspection of the item. Moreover, this "same-side" requirement is applied even if the article is otherwise properly marked with its country of origin. See HQ 733840, February 1, 1991, in which garment hangtags had to be marked with the country of origin of the garment on the same side of the hangtag as the U.S. address despite the fact that the garments were otherwise properly marked with their country of origin. In HQ 729469, dated February 24, 1988, gloves which were otherwise marked with their country of origin did not satisfy the special marking requirements of 19 CFR 134.46
because hangtags bearing a U.S. reference were not also marked with the country of origin on the same side of the hangtag as the U.S. reference. Therefore, in accord with past precedents, we find that putting the country of origin marking “MADE IN PHILIPPINES” on a hangtag attached to the watch is not sufficient to satisfy the close proximity requirement of 19 CFR 134.46. Consequently, if the words “MOVEMENT DESIGN GERMANY” remain on the outer back of the watch case, then the country of origin of the watch, Philippines, must also appear on the outer back of the watch case in a comparable size as the non-origin geographical reference, preceded by the words made in, product of, or other words of similar meaning.
However, we do not believe that the method of marking must be identical to the way the words “Movement Design Germany” are put on the outer back of the watch case. In other words, the country of origin marking does not have to be directly stamped or engraved on the outer back of the watch case. A securely affixed label or an adhesive sticker that contains a phrase such as “Made in Philippines” on the outer back of the watch case would be an acceptable alternative method for marking the country of origin of the watch, which would satisfy the requirements of 19 CFR 134.46.
The phrase “MOVEMENT DESIGN GERMANY” on the outer back of the watch case triggers the special marking requirements of 19 CFR 134.46. In order to satisfy the close proximity requirement of 19 CFR 134.46, the name of the country of origin of the watch, Philippines, must also appear on the outer back of the watch case. In addition, the letters of the country of origin marking must also be in at least a comparable size as the phrase “MOVEMENT DESIGN GERMANY”, and the country of origin of the watch, the Philippines, must be preceded by the words made in, product of, or other words of similar meaning.
It would be acceptable to use an adhesive sticker or a securely affixed label applied to the outer back of the watch case to indicate the country of origin of the watch.
Gail A. Hamill, Chief
Tariff Classification and Marking Branch