HQ 559198

November 20, 1995

MAR-2-05 R:C:S 559198 KR

CATEGORY: Marking

Joseph Stinson

United Customhouse Brokers, Inc.

9950 Marconi Dr., Ste. 101

Otay Mesa, CA 92173

RE: Country of origin marking of video cassettes; Article 509, NAFTA

Dear Mr. Stinson:

This is in reference to your letter to the U.S. Customs Service, on
behalf of Saehan Media America, Inc., dated May 11, 1995, concerning
whether imported BASF blank video cassettes assembled in Mexico may be
marked with the country of origin \"Assembled in Mexico\". You have
included a sample video cassette for our review.

FACTS:

You state that the video cassette is assembled in Mexico by having a
machine wind reel tape into a completed housing, cutting the tape and
splicing the tape together to form the completed video cassette. The
housing is inspected prior to attaching the tape. The tape, in
\"pancake\" form, is cut to length and spliced to attach it to the
housing and then wound onto the housing. Serial numbers and logos are
jet-ink printed onto the cassettes. The cassette is inspected and sent
to packaging. The tape is inserted with an advertising insert into a
paperboard sleeve, wrapped and inspected. The housing is a product of
Hong Kong and is classified in subheading 3926.90.9890, HTSUS. The reel
tape is a product of the U.S. and is classified in subheading
8523.13.0060, HTSUS. The splicing tape is a product of Korea and is
classified in subheading 3919.10.2055, HTSUS. You wish to use the
country of origin marking \"Assembled in Mexico\". The sample submitted
has the U.S. and Canadian address of the BASF Corporation and
immediately beneath each of these is \"Assembled in Mexico\" and
\"Printed in the U.S.A.\" in English below the U.S. address and in
french below the Canadian address, and also in Spanish.

ISSUE:

Whether the video cassette may be marked with the country of origin
\"Assembled in Mexico\".

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.\" United States v. Friedlander & Co., 27 C.C.P.A.
297 at 302; C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR
Part 134), implements the country of origin marking requirements and the
exceptions of 19 U.S.C. 1304.

Section 134.1(b) of the interim regulations, defines \"country of
origin\" as:

the country of manufacture, production, or growth of any article of
foreign origin entering the U.S. 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 this
part; however, for a good of a NAFTA country, the NAFTA marking rules
will determine the country of origin. (Emphasis added).

Section 134.1(j), of the interim regulations, provides that the \"NAFTA
marking rules\" are the rules promulgated for purposes of determining
whether a good is a good of a NAFTA country. Section 134.1(g) of the
interim regulations, defines a \"good of a NAFTA country\" as an article
for which the country of origin is Canada, Mexico, or the U.S. as
determined under the NAFTA marking rules.

Section 134.35(b), provides that:

A good of a NAFTA country which is to be processed in a manner that
would result in the good becoming a good of the United States under the
NAFTA Marking Rules is excepted from marking. Unless the good is
processed by the importer or on its behalf, the outermost container of
the good shall be marked in accord with this part.

Part 102 of the interim regulations sets forth the \"NAFTA Marking
Rules\" for purposes of determining whether a good is a good of a NAFTA
country for marking purposes. Section 102.11 of the interim regulations,
sets forth the required hierarchy for determining country of origin for
marking purposes. Section 102.11(a) of the interim regulations states
that \"\[t\]he country of origin of a good is the country in which:

\(1\) The good is wholly obtained or produced;

\(2\) The good is produced exclusively from domestic materials; or

\(3\) Each foreign material incorporated in that good undergoes an
applicable change in tariff classification set out in section 102.20 and
satisfies any other applicable requirements of that section, and all
other requirements of these rules are satisfied.\"

Since the finished video cassettes are neither wholly obtained or
produced in a single country nor produced exclusively from domestic
materials, §102.11(a)(1) and (2) are not applicable. Therefore, it must
be determined whether pursuant to §102.11(a)(3), the foreign materials
incorporated into the finished video cassettes meet the specific tariff
rule of §102.20. The video cassette has three components; the housing,
the reel tape, and the splicing tape. The housing is a product of Hong
Kong, the reel tape is a product of the U.S., and the splicing tape is a
product of Korea. The finished video cassette is classified in
subheading 8523.13.0040, HTSUS. Thus, the specific tariff rule for these
goods is set out in section 102.20(p) (Section XVI: Chapters 84 through
85) of the regulations, which states: \"A change to heading 8523 from
any other heading.\" The housing is classified in subheading 3926.90.98,
HTSUS, and meets the necessary tariff shift. The splicing tape is
classified in subheading 3919.10.2055, HTSUS, and meets the necessary
tariff

shift. However, the U.S. reel tape, classified in subheading
8523.13.0060, HTSUS, does not undergo the necessary tariff shift.

The next step in the hierarchy, 19 CFR §102.11(b), states that where
§102.11(a) is not applicable, the country of origin will be the country
or countries of origin of the single material that imparts the essential
character to the good. Unless a good is classified as a set, if a good
is made from a single material that is classified in a tariff provision
from which a change is not allowed, the single material will be found
under 19 CFR §102.11(b) to impart the essential character to the good.

Pursuant to section 102.18(b)(2), \"for purposes of applying section
102.11, only domestic and foreign materials (including self-produced
materials) that are classified in a tariff provision from which a change
in tariff classification is not allowed in the rule for the good set out
in section 102.20 shall be taken into consideration in determining the
parts or materials that determine the essential character of the good.\"

Therefore, taking into account only those domestic and foreign materials
that are classified in a tariff provision for which a change in tariff
classification is not allowed in the rule for the good under section
102.20, we are of the opinion that the reel tape, the only material
which does not undergo the requisite tariff shift, is the material which
imparts the essential character of the video cassette. Thus, the country
of origin of the video cassette is the country of origin of the reel
tape \-- the U.S.

However, section 102.14 of the interim regulations states that:

No good, last advanced in value or improved in condition outside the
United States has United States origin. If under any other provision of
this part such a good is determined to be a good of the United States,
that determination will be disregarded and the country of origin of the
good will be the last foreign country in which the good was advanced in
value or improved in condition.

\"Advanced in value\" is defined in section 102.1(a) of the interim
regulations as \"an increase in the value of a good as a result of
production with respect to that good, other than by means of those
\"minor processing\" operations described in paragraphs (m)(5), (m)(6)
and (m)(7) of this section.\" \"Improved in Condition\" is defined in
section 102.1(I) as \"the enhancement of the physical condition of a
good as a result of production with respect to that good, other than by
means of those \"minor processing\" operations described in paragraphs
(m)(5), (m)(6) and (m)(7) of this section.\" \"Minor processing\"
operations described in sections 102.1(m)(5), (m)(6) and (m)(7) of the
interim regulations include unloading, reloading or any other operation
necessary to maintain the good in good condition; putting up in measured
doses, packing, repacking, packaging, repackaging; testing, marking,
sorting or grading.

We find that the operation of assembling the U.S.-origin reel tape with
the cassette housing in Mexico to produce the video cassette results in
an advancement in value or improvement in condition of the reel tape.
Accordingly, pursuant to section 102.14 of the interim regulations, the
country of origin of the imported video cassette is Mexico, the last
foreign country in which the good was advanced in value or improved in
condition.

Pursuant to §134.43(e), articles for which country of origin is
determined under §102.14 may be marked with the country of origin
designation of, \"Assembled in (name of the foreign country) from U.S.
components\". We, therefore, find that the designation \"Assembled in
Mexico\" is an acceptable country of origin marking for the finished
video cassette.

HOLDING:

Based on the information submitted, the imported video cassette is a
product of Mexico, and may be marked with the country of origin
\"Assembled in Mexico\".

A copy of this ruling letter should be attached to the entry documents
filed at the time this merchandise is entered. If the documents have
been filed without a copy, this ruling should be brought to the
attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

Tariff Classification Appeals Division