MAR-2-05 CO:R:C:V 734916 RC
Mr. James G. Meagley
Phillips, Lytle, Hitchcock, Blaine & Huber
3400 Marine Midland Center
Buffalo, New York 14203
RE: Country of origin marking requirements for Stuffed Animal
Toys.
Dear Mr. Meagley:
This is in response to your inquiry of December 5, 1992,
requesting a ruling on the country of origin marking requirements
for imported stuffed animal toys.
FACTS:
Your client, Fisher-Price, is in the business of
manufacturing and importing stuffed-animals. Production will
involve operations performed in two countries: Hong Kong and
China. The fabric will be purchased from Japan or Taiwan and
die-cut in Hong Kong. A rattle to be sewn in will be made in
Hong Kong. Lace, an applique, and fiberfill stuffing may or may
not be of Hong Kong origin. Unspecified other components will be
purchased in Hong Kong. The fabric pieces, approximately 19,
will be assembled by sewing in China. Applique and embroidery
will be added in China. Finally, the toy will be stuffed,
closed, cleaned, trimmed, inspected, and metal detected in Hong
Kong. It will be packed for retail sale in the U.S. The
operations performed in China will represent approximately 31
percent of the FOB Hong Kong cost of the toy. The operations
performed in Hong Kong represent approximately 69 percent of the
total value of the finished stuffed toys.
ISSUE:
What is the country of origin of imported stuffed animal
toys processed in the above-described manner?
LAW AND ANALYSIS:
Pursuant to section 304, Tariff Act of 1930, as amended (19
U.S.C. 1304), articles of foreign origin or their containers must
be marked in a conspicuous place legibly, indelibly, and
permanently to indicate to the ultimate purchaser in the U.S. the
English name of the country of origin of the article. The
"country of origin" for marking purposes is defined by section
134.1(b), Customs Regulations (19 CFR 134.1(b)), to mean the
country of manufacture, production, or growth of any article of
foreign origin entering the U.S.
Although the stuffed toys consist of textile materials, the
rules for determining the country of origin for textile products
set forth in section 12.130 are not applicable because the toys
are classified outside of section XI, HTSUS and they are not
subject to quota. Thus, the test for determining the country of
origin of the stuffed animals is substantial transformation.
A substantial transformation is effected when articles, as a
result of their assembly, lose their identity and become new
articles having a new name, character, or use. United States v.
Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940); Koru North
America v. United States, 12 CIT 1120, 701 F.Supp. 229 (1988).
In determining whether the assembly of parts or materials
constitutes a substantial transformation, the issue is the extent
of operations performed and whether the parts lose their identity
and become an integral part of the new article. Belcrest Linens
v. United States, 6 CIT 204, 573 F.Supp. 1149 (1983), aff'd, 2
Fed.Cir. 105, 741 F.2d. 1368 (1984). Assembly operations which
are minimal or simple, as opposed to complex or meaningful, will
generally not result in a substantial transformation. See,
C.S.D.'s 80-111, 85-25, 89-110, 89-118, 89-129 and 90-97. The
question of when a substantial transformation occurs for marking
purposes is a question of fact to be determined on a case-by-
case basis. Uniroyal Inc. v. United States, 3 CIT 220, 542
F.Supp. 1026 (1982), aff'd, 1 Fed. Cir. 21, 702 F.2d 1022 (1983).
In HQ 734193 (January 6, 1992), Customs determined the
country of origin of a stuffed toy consisting of approximately 12
fabric pieces of Korean origin which were cut in Korea and
assembled in China. Customs considered the operations performed
in China to be minimal or simple for the following reasons: (1)
the sewing entailed only 12 pieces of fabric, (2) the 12 pieces
did not lose their identity, and (3) the assembly operation
comprised only 20 percent of the total value of the finished toy,
a relatively low percentage.
Here, the assembly by sewing of approximately 19 cut fabric
pieces is comparbly minimal or simple. The pieces do not become
a new and different article of Chinese origin or lose their
identity by their being sewn together in China. While the cost
of the assembly comprises approximately 31 percent of the
article's total cost, somewhat higher than the 20 percent of HQ
734193, it is still relatively low. Therefore, we consider the
Chinese sewing operation a simple assembly and not a substantial
transformation. As such, Hong Kong is the country of origin of
the finished stuffed animals for marking purposes.
HOLDING:
The country of origin of the stuffed toy mouse for marking
purposes is Hong Kong. The submitted sample mouse and retail box
as marked satisfy the requirements of Part 134. Indicating "Hong
Kong" in lieu of "China" for the country of origin marking on the
sample mouse and retail box will be acceptable. This finding
extends only to the facts set forth herein.
Sincerely,
John Durant, Director