CLA-2 CO:R:C:G 083711 JMH
Richard G. Seley
Rudolph Miles & Sons, Inc.
4950 Gateway East
P.O. Box 144
El Paso, Texas 79942
RE: Ball point pen and pen holder
Dear Mr. Seley:
Your letter of December 27, 1988, requesting a
classification ruling under the Harmonized Tariff Schedule of the
United States Annotated (HTSUSA) and a country of origin
determination for a ball point pen and pen holder desk set has
been referred to this office for a reply.
FACTS:
The merchandise in question is a desk set consisting of a
ball point pen with an ostrich feather glued to its end and a
metal and plastic pen holder. The items are packaged together.
The pen, pen holder and packaging materials are made in the
United States. The ostrich feather is from Israel. We
understand that the ostrich feather is Israeli grown.
Furthermore, it has also been bleached and dyed in Israel. The
ostrich feather is glued to the pen in Mexico and the items are
packed for sale in Mexico.
ISSUES:
1. What is the proper classification of the ball point pen and
pen holder under the HTSUSA?
2. Is the pen holder entitled to treatment as American good
returned, not advanced in value or improved in condition
within subheading 9801.10.00, HTSUSA? Is there an allowance
for the U.S. pen under subheading 9802.00.80, HTSUSA?
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3. Does the assembly operations within Mexico affect the country
of origin of the packaged pen set for marking purposes?
4. Do restrictions exist on the importation of Israeli ostrich
feathers?
LAW AND ANALYSIS:
Issue 1: What is the proper classification of the ball point
pen and pen holder under the HTSUSA?
The classification of merchandise under the HTSUSA is
governed by the General Rules of Interpretation (GRI's). GRI 1
states in part that "for legal purposes, classification shall be
determined according to the terms of the headings and any
relative section or chapter notes...and according to the
following provisions."
The following provisions" includes GRI 3(b) which refers to
articles in sets "for retail sale..." GRI 3(b) states:
goods put up in sets for retail sale... shall be
classified as if they consisted of the material or
component which gives them their essential character,
as far as this criterion is applicable.
To determine what is a "set" so to implement this rule, the
Explanatory Notes to the HTSUSA must be examined. The
Explanatory Notes, although not dispositive, are to be looked to
for the proper interpretation of the HTSUSA. 54 Fed. Reg. 35127,
35128 (August 23, 1989). The Explanatory Note for Rule 3(b) gives
a three part test for "goods put up in sets for retail sale."
Harmonized Commodity Description and Coding System (HCDCS), Vol.
1, p. 4.
The three step definition states "For the purposes of this
Rule, the term 'goods put up in sets for retail sale' shall be
taken to mean goods which:
(a) consist of at least two different articles which
are prima facie, classifiable in different
headings.
(b) consist of products or articles put up together to
meet a particular need or carry out a specific
activity; and
(c) are put up in a manner suitable for sale directly
to users without repacking (e.g., in boxes or
cases or on boards)." (emphasis added)
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Since these three steps are listed in the conjunctive, all
three must be met. First, the pen and pen holder are different
articles, classifiable within different headings. Secondly,
they are put together to meet a particular writing need.
Finally, the items are packaged together for sale directly to
users without further packing. Therefore, the pen and pen holder
are a "set" within the meaning of GRI 3(b), HTSUSA.
The classification of sets is determined by the item which
gives the set its "essential character." This office agrees that
the ball point pen gives the set in question its essential
character. Therefore, the ball point pen set is classifiable
within subheading 9608.10.00, HTSUSA, which describes "Ball
point pens...".
Issue 2: Is the pen holder entitled to treatment as American
goods returned, not advanced in value or improved in
condition within subheading 9801.00.10, HTSUSA? Is
there an allowance for the U.S. pen under subheading
9802.00.80, HTSUSA?
Subheading 9801.00.10, HTSUSA, provides for the duty free
entry of U.S. origin merchandise when returned to the United
States from abroad without an advancement in value or improvement
in condition. The constructive segregation of the items or
components forming a set is not allowed under this tariff
provision. The application required is "all or nothing." If the
imported article consists of any foreign materials or components
or U.S. origin goods that have been advanced or improved, then
the requirements of subheading 9801.00.10 are not met. See
Headquarters Ruling Letter 084930, dated September 14, 1989.
The instant imported article is a set with the essential
character of a ball point pen. Part of the materials, the
Israeli ostrich feather, is foreign. Additionally, the pen has
been advanced or improved with the attachment of the feather.
Since all of the set does not meet the requirements of subheading
9801.00.10, HTSUSA, none of the set is granted American goods
returned status. The U.S. made pen holder, although not advanced
or improved while abroad, is a part of the set and, therefore,
does not fall within the classification of subheading 9801.00.10,
HTSUSA.
However, the entire set does fall within the purview of
subheading 9802.00.80, HTSUSA. This subheading describes:
Articles assembled abroad in whole or in part of
fabricated components, the product of the United
States, which (a) were exported in condition ready for
assembly without further fabrication, (b) have not lost
their physical identity in such articles by change in
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form, shape or otherwise, and (c) have not been
advanced in value or improved in condition abroad
except by being assembled and except by operations
incidental to the assembly process such as cleaning,
lubricating and painting...
The application of subheading 9802.00.80, HTSUSA,
essentially results in the segregation of the U.S. components
from the remainder, or dutiable portion, of the imported
article. It is clear that this tariff provision does not
contemplate an "all or nothing" approach. Therefore, the duty on
the ball point pen set is placed on the full value of the
imported article, minus the cost or value of the U.S. origin pen.
No deduction may be made for the cost or value of the pen holder
since it is not assembled abroad.
Issue 3: Does the assembly operations within Mexico affect the
country of origin of the packaged pen set for marking
purposes?
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), requires that every article (or its container) imported
into the United States, subject to specified exceptions, shall be
marked to indicate the country of origin to the ultimate
purchaser in the United States. Country of origin is generally
determined on the basis of substantial transformation. In this
regard, 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 this part."
The substantial transformation test is also used to
determine whether U.S. articles which are exported and returned
to the United States are subject to the requirements of 19 U.S.C.
1304. Except as discussed below, such articles are excepted from
marking under 19 CFR 134.32(m) as U.S. articles exported and
returned, unless the articles are substantially transformed prior
to their return to the United States.
An exception to the substantial transformation rule is found
in 19 CFR 10.22, which applies to the country of origin marking
requirements of articles assembled abroad in whole or in part
from U.S. components and entitled to a partial exemption from
duty under subheading 9802.00.80, HTSUSA. Section 10.22 provides
that assembled articles entitled to the exemption are considered
products of the country of assembly for the purposes of the
country of origin marking requirements of 19 U.S.C. 1304.
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In this case, a pen holder in the United States and a ball
point pen assembled in Mexico from U.S. and Israeli components
are to be imported. Although they are considered a set for
tariff classification purposes, this fact is not relevant to the
country of origin marking requirements for these items. See
Headquarters Ruling Letter 084935, dated August 23, 1989.
In this case, the pen holder manufactured in the United
States is excepted from marking under 19 CFR 134.32(m), as a U.S.
article exported and returned. Nothing is done in Mexico to the
pen holder to substantially transform it into a product of
Mexico. The pen, however, which is eligible for importation
under subheading 9802.00.80, HTSUSA, is subject to the
requirements of 19 CFR 10.22. As indicated above, under this
provision, the country of assembly in considered the country of
origin for purposes of 19 U.S.C. 1304, which in this case is
Mexico. The pen may be marked "Mexico", "Product of Mexico",
"Assembled in Mexico", "Assembled in Mexico from U.S. and foreign
components", etc. See Headquarters Ruling Letter 731507, dated
October 17, 1989.
Issue 4: Do restrictions exist on the importation of Israeli
ostrich feathers?
You state that the ostrich feather which is to be glued to
the ball point pen is a product of Israel and is bleached and
dyed in Israel. There is no prohibition or restriction on such
ostrich feathers.
HOLDING:
The U.S. ball point pen with an attached Israeli ostrich
feather, packaged in U.S. packing materials with a U.S. made pen
holder are a set and classified within subheading 9608.10.00,
HTSUSA. The U.S. produced goods which are assembled in Mexico
are within subheading 9802.00.80, HTSUSA. There is no allowance
for the U.S. made pen holder.
Since the pen holder is manufactured in the United States
and is not substantially transformed while in Mexico, it is
excepted from the marking requirements. The ball point pen is
assembled abroad of U.S. and foreign components and is eligible
for the allowance within subheading 9802.00.80, HTSUSA.
Therefore, according to 19 CFR 10.22, the pen's country of origin
for marking purposes is the country in which it was assembled.
The pen may be marked "Mexico", "Product of Mexico",
Assembled in Mexico, or "Assembled in Mexico from U.S. and
foreign components."
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There are no prohibitions or restrictions on the importation
of ostrich feathers from Israel.
Sincerely,
John Durant, Director
Commercial Rulings Division