MAR-2-05 CO:R:C:V 733783 RSD
Mr. Sheldon Parker
W.M.R. Watch Case Corp.
230 Fifth Avenue, Suite 809
New York, New York 10001
RE: Country of origin marking requirements for imported watch
strap buckles; substantial transformation; combining; 19 CFR
134.35
Dear Mr. Parker:
This is in response to your letter dated September 13, 1990,
requesting a binding ruling on the country of origin marking
requirements for imported watch strap buckles which will be
fitted onto U.S. made leather watch straps.
FACTS:
W.M.R. Watch Case Corp. intends to import watch strap
buckles which are manufactured in Hong Kong. These buckles will
be fitted onto U.S. made leather watch straps in the U.S. The
buckles will be imported and sold in a package which is marked
Hong Kong. The buckles are valued at approximately $0.15 each,
and the value of the leather watch straps ranges from $0.80 to
$4.00 each.
ISSUE:
Whether watch strap buckles which are to be attached to U.S.
made leather watch straps must be individually marked to indicate
their country of origin?
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 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." United States v.
Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. Section 134.35, Customs Regulations (19 CFR
134.35), provides that an article used in the U.S. in manufacture
which results in an article having a name, character, or use
differing from that of the imported article will be within the
principle of the decision of U.S. v. Gibson-Thomsen Co. Inc., 27
C.C.P.A. 267 (C.A.D. 98) (1940). Under this principle, the
manufacturer or processor in the U.S. who substantially
transforms the imported article into an article with a new name,
character, or use will be considered the "ultimate purchaser" of
the imported article within the contemplation of section 304(a),
Tariff Act of 1930, as amended (19 U.S.C. 1304(a)), and the
article shall be excepted from marking. The outermost containers
of the imported articles shall be marked in accord with this
part.
The marking requirements of the watch strap buckles turn on
whether the U.S. manufacturer who uses the buckles in the
manufacture of watch straps is the ultimate purchaser of the
straps. The U.S. manufacturer is the ultimate purchaser if the
combination of the buckles with the straps is a substantial
transformation. In HQ 731432 (June 6, 1988), we set forth the
following six factors to be considered in determining whether an
imported article loses its identity and is substantially
transformed when it is combined with a domestic article:
1) whether the article is completely finished;
2) the extent of the manufacturing process of combining the
article with its counterparts as compared with the manufacturing
of the subject article;
3) whether the article is permanently attached to its
counterparts;
4) the overall importance of the article to the finished
product; see Uniroyal, Inc. v. United States, 3 CIT 220, 542
F.Supp. 1026 (1982), aff'd, 702 F.2d 1022 (Fed. Cir., 1983) (no
substantial transformation occurred where an imported footwear
upper, the essence of the finished article, was combined with a
domestically produced sole);
5) whether the article is functionally necessary to the
operation of the finished article, or whether it is an accessory
which retains its independent function; and,
6) whether the article remains visible after the combining.
These factors are not exclusive and there may be other
factors relevant to a particular case and no one factor is
determinative. See HQ 728801 (February 26, 1986).
Applying these factors to this case and to this product, we
note that the buckle is permanently attached to the watch strap.
While functionally necessary for the completed watch strap, the
buckle is of far less importance to the finished article as
compared to the leather strap. The finished leather watch strap
is composed of a leather strap and a buckle. The major component
of the watch strap is the leather strap, and the buckle is of
minor significance. The buckle, while remaining physically
unchanged, becomes subordinated to the more dominant component,
the leather strap. This is supported by the relative minor
values of the buckles compared with the value of the leather
straps. The leather straps have a value of between 5 to more
than 25 times greater than that of the buckles.
In HQ 708672 (March 14, 1978), Customs determined that
imported dials and knobs were substantially transformed when they
were attached to television receivers because they became
integral parts of a new and different item. The knobs and dials
were relatively minor components which lost their separate
identities when they were combined with a more significant
component, the television receiver. Similarly, we find that the
buckles lose their separate identities and become an integral
part of the leather straps when they are attached to the straps,
a far more significant component of the final product. As such,
the buckles are substantially transformed into a new and
different article i.e., a leather watch strap. Therefore, the
watch strap manufacturer is the ultimate purchaser of the
buckles. Upon importation, only the containers or packages in
which the buckles are imported must be marked to show the country
of origin of the buckles, provided the conditions set forth below
are satisfied.
HOLDING:
When the watch strap buckles are attached to the leather
straps, they lose their separate identity and are substantially
transformed. Accordingly, the individual buckles are excepted
from country of origin marking and only the packages in which the
buckles are imported must be marked with the country of origin of
the buckles. However, for this marking exception to apply, the
district director at the port of entry must be satisfied that
the ultimate purchaser, the watch strap manufacturer, will
receive the buckles in their original unopened properly marked
package and that the buckles will be used only as described in
this ruling and not otherwise sold.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch