CLA-2 OT:RR:CTF:TCM H243796 EGJ
Margaret L. Thomas
FTZ Foreign Trade Zone Operating Co. of Texas
P.O. Box 613307
Dallas, TX 75261-3307
Re: Revocation of HQ 562543; Country of origin marking for two styles of wristwatches
Dear Ms. Thomas:
This is in reference to Headquarters Ruling Letter (HQ) 562543, dated December 27, 2002, issued to you concerning the country of origin marking of two styles of wristwatches. You submitted the ruling request to U.S. Customs and Border Protection (CBP) on August 19, 2002, on behalf of Fossil Partners, LP.
In HQ 562543, CBP determined that the country of origin for both watches was Japan. We have reviewed HQ 562543 and find it to be in error. For the reasons set forth below, we hereby revoke HQ 562543.
Pursuant to section 625(c)(1), Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI, a notice of proposed action was published on May 27, 2015, in the Customs Bulletin, Vol. 49, No. 21. One comment was received in opposition to this revocation, and it is addressed in the following decision.
The merchandise at issue is described in HQ 562543 as follows:
Fossil Partners submitted two styles of dual function analog and digital wristwatches (Style AM3404 and JR8051). The time of day function of hours and minutes is determined by the quartz analog movement and displayed on a dial with the hour and minute hands. The digital portion of the movement shows the seconds by means of a liquid crystal display. The quartz analog movements are made in Japan. The digital movements are made in China. The various component parts are assembled in China into a wristwatch. The country of origin of the watch cases was not provided.
The samples are marked by means of a paper hang tag attached to the watch. The paper hang tag also has the logo, style number and the price on it. Style AM3404 is marked "Japan Movement Strap Made In China." Style JR8051 is marked "China Movement Strap Made In China." There is no country of origin marking on the case or watch face.
1. What is the country of origin of the two styles of wristwatches?
2. What is the proper country of origin marking for the two styles of wristwatches?
LAW AND ANALYSIS:
The marking statute, 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 U.S. shall be marked in a conspicuous place as legibly, 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.
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. § 1304. Section 134.41(b), Customs Regulations (19 CFR § 134.41(b)), mandates that the ultimate purchaser in the U.S. must be able to find the marking easily and read it without strain. In order to satisfy the requirements of 19 U.S.C § 1304, a watch must be legibly marked with the name of the country of manufacture of the watch movement in a conspicuous place.
For marking purposes under 19 U.S.C. § 1304, CBP has long held that the country of origin of a watch is the country of manufacture of the watch movement. The term “watch movement,” is defined in Note 3 to Chapter 91 of the Harmonized Tariff Schedule of the United States (HTSUS), which provides as follows:
3. For the purposes of this chapter, the expression "watch movements" means devices regulated by a balance wheel and hairspring, quartz crystal or any other system capable of determining intervals of time, with a display or a system to which a mechanical display can be incorporated. Such watch movements shall not exceed 12 mm in thickness and 50 mm in width, length or diameter.
In this case, both styles of wristwatches have two movements: a movement that determines the hours and minutes of day (the quartz analog movement) and a movement that determines the seconds (the digital movement). The quartz analog movements are manufactured in Japan and the digital movements are manufactured in China. As the country of origin for wristwatches is the country of manufacture of the watch movement, the countries of origin for both wristwatches are Japan and China. See NY N237747, dated February 22, 2013 (a wristwatch with a quartz analog movement from Thailand and an opto-electronic movement from China had both Thailand and China as countries of origin – each of the movements displayed the time in hours, minutes and seconds).
The countries of origin for marking purposes are Japan and China. The wristwatches should be marked “Analog Movement-Japan” and “Digital Movement - China”, or with similar words. In order to satisfy the requirements of 19 U.S.C § 1304, they must be legibly marked with the name of the country of manufacture of the watch movement in a conspicuous place. Marking with secure self-adhesive labels or with hangtags is acceptable, as long as the labels or hangtags will reach the ultimate purchaser of the watch. If paper sticker labels or hangtags are used, 19 C.F.R. § 134.44 provides they must be affixed in a conspicuous place and so securely that unless deliberately removed they will remain on the article while it is in storage or on display and until it is delivered to the ultimate purchaser.
While the wristwatches must be conspicuously, legibly, and permanently marked in accordance with 19 U.S.C. § 1304, movements and cases must also be marked in accordance with the special marking requirements set forth in Additional U.S. Note 4 to Chapter 91. Additional U.S. Note 1(b) defines “cases” as follows:
1. For the purposes of this chapter:
b) The term "cases" embraces inner and outer cases, containers and housings for movements, together with parts or pieces, such as, but not limited to, rings, feet, posts, bases and outer frames, and any auxiliary or incidental features, which (with appropriate movements) serve to complete the watches, clocks, time switches and other apparatus provided for in this chapter.
Additional U.S. Note 4 to Chapter 91 provides, in pertinent part, as follows:
4. Special Marking Requirements: With the following exceptions, any movement or case provided for in this chapter, whether imported separately or attached to an article provided for in this chapter, shall not be permitted to be entered unless conspicuously and indelibly marked by cutting, die-sinking, engraving, stamping (including by means of indelible ink), or mold-marking (either indented or raised), as specified below. Movements with opto-electronic display only and cases designed for use therewith, whether entered as separate articles or as components of assembled watches or clocks, are excepted from the marking requirements set forth in this note. The special marking requirements are as follows:
(a) Watch movements shall be marked on one or more of the bridges or top plates to show:
(i) the name of the country of manufacture;
(ii) the name of the manufacturer or purchaser; and
(iii) in words, the number of jewels, if any, serving a mechanical purpose
as frictional bearings.
(c) Watch cases shall be marked on the inside or outside of the back to show:
(i) the name of the country of manufacture; and
(ii) the name of the manufacturer or purchaser.
Additional U.S. Note 4(a), HTSUS, requires that watch movements shall be marked on one or more of the bridges or top plates to show the name of the country of manufacture, the name of the manufacturer or purchaser; and, in words, the number of jewels, if any serving a mechanical purpose as frictional bearings. Additional U.S. Note 4(c), HTSUS, requires that watch cases shall be marked on the inside or outside of the back cover to show the name of the country of manufacture, and the name of the manufacturer or purchaser. The country of manufacture in these requirements refers to where the movements are manufactured rather than where the watch was made. The special marking must be accomplished by one of the methods specified in Chapter 91, Additional U.S. Note 4.
Both wristwatches contain two movements, a quartz analog movement and an opto-electronic digital movement. The special marking requirements of Chapter 91, Additional U.S. Note 4 of the HTSUS do not apply to the opto-electronic movement. Therefore, only the quartz analog movement and its case must be marked in accordance with the special marking requirements set forth in Additional U.S. Note 4 to Chapter 91.
The commenter noted that there are many different styles of watches on the market, including watches which have multiple movements. The commenter observed that when a watch has multiple movements, there is a generally a “primary” movement which displays the hours, minutes and potentially the seconds measurements of time. The commenter observed that this type of primary movement may impart the essential character to the watch, by application of GRI 3(b). GRI 3(b) provides as follows:
When, by application of rule 2(b) or for any other reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:
(b) Mixtures, composite goods consisting of different materials or made up of different components, and goods put up in sets for retail sale, which cannot be classified by reference to 3(a), shall be classified as if they consisted of the material or component which gives them their essential character, insofar as this criterion is applicable …
For further support, the commenter cites to CBP’s Informed Compliance Publication on the Classification and Marking of Watches and Clocks, which provides as follows on p. 8:
Under 19 U.S.C.1304, as interpreted by Customs, the country of origin of the movement of the watch or clock determines the country of origin of the watch or clock. Although the addition of the hands, dial, or case adds definition to the timepiece, they do not substantially change the character or use of the watch or clock movement, which is the essence of the watch or clock. Accordingly, a watch with one country of origin for the movement, another for the case, and another for the battery, is considered, for purposes of 19 USC § 1304, to be a product of the country in which the movement was produced. The movement's country of origin should appear conspicuously and legibly on the dial face or on the outside of the back of the watch or clock.
The commenter cites to this paragraph to support the proposition that a primary movement may impart the essential character. The commenter also suggests that only the primary watch movement be marked on the watch.
We decline to adopt GRI 3(b) as a method of determining the country of origin of wristwatches. CBP has a long-standing policy, reflected in the aforementioned Informed Compliance Publication (ICP), which states that the country of origin of the watch movement determines the country of origin of the watch. If a wristwatch has multiple movements manufactured in multiple countries, then the country of origin of the watch will be each country where a movement was manufactured. This policy mirrors the statutory country of marking requirements set forth in Additional U.S. Note 4 to Chapter 91.
Next, the commenter notes that Additional U.S. Note 4 to Chapter 91 already places burdensome marking requirements on wristwatch manufacturers. The commenter asserts that marking the hang tags for its wristwatches with multiple countries of origin will add to the marking burdens which are already faced by the industry. Moreover, the commenter notes that software inventory platforms are generally not equipped to track multiple countries of origin for a single product. The commenter notes that the wristwatch industry is already required to track the country of manufacture of each movement and each watch strap.
The country of origin decision set forth in this ruling letter mirrors the special marking requirements set forth in Additional U.S. Note 4 to Chapter 91. We agree that these special marking requirements only apply to watches and clocks. However, we also note that Additional U.S. Note 4 to Chapter 91 is a statutory provision. As such, CBP does not have the authority to disregard or change the special marking requirements referenced by the commenter.
Next, the commenter asserts that using origin language such as “Movement(s) made in (Country A) and (Country B)” would confuse the ultimate purchaser. We disagree. CBP requires many other singular products to be marked with more than one country of origin whenever the facts require a product to be so marked. See, e.g. HQ 734479, dated January 29, 1993 (coffee blend with coffee from different countries had multiple countries of origin), HQ 560944, dated April 27, 1998 (olive oil which consisted of a blend of both Spanish and Italian olive oils required to be marked with both countries of origin), and HQ 562176, dated August 21, 2002 (blend of tobacco from different countries had multiple countries of origin).
The commenter notes that the Automated Commercial Environment (ACE) does not currently allow more than one country of origin to be provided for a single line item. ACE is the primary system through which the trade community reports imports and exports. We agree that ACE does not currently have this functionality, and this has been brought to the attention of the ACE Business Office in CBP’s Office of International Trade. In the meantime, the subject merchandise must be marked in the manner stated above. ACE’s system limitation does not preclude importers from properly marking the merchandise.
Finally, the commenter notes that the instant ruling does not mention whether this country of origin analysis also applies to clocks. We note that according to 19 C.F.R. § 177.9(a), “a ruling letter issued by [CBP] under the provisions of this part represents the official position of [CBP] with respect to the particular transaction or issue described therein and is binding on all [CBP] personnel … until modified or revoked.” Each CBP ruling is specific to a certain product or transaction. It would be improper to use this ruling to set forth CBP’s position on the country of origin determination of clocks. In addition, we note that CBP’s policy on the country of origin of clocks is already set forth in the aforementioned Informed Compliance Publication.
Japan and China are the countries of origin for both wristwatches. Under 19 U.S.C. § 1304, each wristwatch must be marked conspicuously, legibly and permanently with these two countries of origin. Additionally, the quartz analog movement and its case must be marked according to the special requirements set forth in Additional U.S. Note 4 to Chapter 91, HTSUS.
EFFECT ON OTHER RULINGS:
HQ 562543, dated December 27, 2002, is hereby REVOKED.
Joanne Roman Stump, Acting Director
Commercial Trade and Facilitation Division