HQ 734227

June 26, 1992

MAR-2-05 CO:R:C:V 734227 AT

CATEGORY: Marking

Mr. Louis DeLeone, Jr.

Purchasing Manager

Corbin & Russwin Architectural Hardware

P.O. Box 4004

Berlin, Connecticut 06037

RE: Country of origin marking of imported lever handles to be

assembled with locksets; substantial transformation;

combining; 19 CFR 134.14

Dear Mr. DeLeone:

This is in response to your letters of June 20, 1991,

January 3, and March 17, 1992, requesting a country of origin

ruling regarding imported lever handles which are to be combined

with locksets manufactured in the U.S. A sample of the lever

handles and a completed lockset with cardboard box packaging

container were submitted for review.

FACTS:

Your company manufactures heavy duty lever locksets for

securing both residential and commercial doors. You intend to

import die cast brass levers from Korea. You state that the

brass levers will be chrome plated in your plant and then

combined with locksets manufactured in the U.S. into the

completed lever locksets. The plating consists of hand

polishing, buffing, placing each lever on a rack plating line and

then removing by hand each lever to be placed into a box. You

also state that the cost of the lever represents approximately

10 percent of the total cost of a completed lever lockset.

Examination of the completed lever lockset indicates that

the levers are attached to the lockset and that an ultimate

purchaser must remove the levers from each side of the lockset in

order to insert the lockset into the door. The cardboard box in

which the completed lever locksets are sold at retail are marked

with the words \"Made in USA\" on the front and right side panel in

black letters approximately 9 point (a point is a unit of type

measurement equal to 0.01384 inch or nearly 1/72 in., and all

type sizes are multiples of this unit). The words \"Berlin,

Connecticut 06037 USA\" are printed on the bottom of the box in

black lettering approximately 16 point. You state that you

intend to mark the box either on the lefthand panel or righthand

corner of the bottom panel with the words \"Lockset Made in USA\"

in black lettering approximately 9 point. The words \"Lever Trim

Made in Korea\" will appear directly below in black lettering

approximately 4 point.

ISSUE:

Whether the imported brass levers are substantially

transformed when they are chrome plated and combined in the U.S.

with U.S. manufactured locksets and packaged for distribution to

retail stores?

Whether the cardboard box marked in the manner described

above satisfies the marking requirements of 19 U.S.C. 1304 and 19

CFR Part 134?

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. The Court of

International Trade stated in Koru North America v. United

States, 701 F.Supp. 229, 12 CIT (CIT 1988), that \"In

ascertaining what constitutes the country of origin under the

marking statute, a court must look at the sense in which the term

is used in the statute, giving reference to the purpose of the

particular legislation involved. The purpose of the marking

statute is outlined in United States v. Friedlaender & Co., 27

CCPA 297 at 302, C.A.D. 104 (1940), where the court stated that:

\"Congress intended 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.\"

Substantial Transformation and Domestic Operations

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), states that the manufacturer or processor in the U.S.

who converts or combines the imported article into a different

article having a new name, character or use will be considered

the ultimate purchaser of the imported article within the

contemplation of 19 U.S.C. 1304 and the article shall be excepted

from marking. The outermost containers of the imported articles

shall be marked.

In this case, the brass levers are polished, buffed and

chrome plated prior to being combined with the locksets. The

Court of International Trade held in National Hand Tools Corp. v.

United States, Slip Op. 92-61 (April 27, 1992), that the heat

treating and nickel-chrome plating of various imported hand tool

components did not substantially change the imported articles.

Customs has also consistently ruled that these types of

operations are finishing operations which do not substantially

transform the imported components within the meaning of 19 CFR

134.35. See, T.D. 74-12(3) (November 1, 1973), the processing

of fully machined components of socket wrench sets by heat

treating, grinding, vibrating, polishing to remove scale or

blemishes resulting from the heat treatment, plating, assembly,

inspection and identification marking does not result in a

substantial transformation of the imported components; HQ 711320

(March 6, 1981), removal of minor imperfection from imported

socket blanks by a grinding or wrench process, die-stamping the

blanks with an appropriate logo, a multi-step heat treatment,

vibratory rotofinishing, chrome plating, further assembly and

packaging did not substantially transform the imported socket

blanks. Similarly, we find that the imported brass levers are

not substantially transformed when polished, buffed and chrome

plated prior to being assembled with the locksets.

The second issue is whether the combining of the chrome

plated levers with domestic manufactured locksets constitutes a

substantial transformation.

In HQ 731432 (June 6, 1988), Customs set forth some factors

to be considered in determining whether imported goods combined

in the U.S. with domestic products were substantially transformed

for country of origin marking purposes. The following six

factors were considered:

1\) whether the article is completely finished;

2\) the extent of the manufacturing process of combining the

imported article with the domestic article as compared with the

manufacturing of the imported article;

3\) whether the article is permanently attached to its

counterparts

4\) the overall importance of the article to the finished

product;

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, we note that the

levers are completely finished, except for plating and other

finishing operations, when they are attached to the domestic

locksets. The assembly operation of attaching two levers to the

completed lockset is neither complex nor requires a great deal of

skill. At the time of purchase the levers are attached to the

locksets in a non-permanent manner. In order to install the

lockset, the lever must be disassembled. The levers are essential

to the function of the completed article. The levers remain

visible after the combining.

Assessing the factors noted above, we find that the chrome

plated levers do not lose their separate identity when they are

combined with domestic locksets to form completed lever locksets.

The levers are a significant component of the completed article,

due to the fact that one could not open or close the door without

the levers essential character. Assembly of the levers with the

domestic locksets in no way changes the characteristic of the

lever, and the levers are clearly recognizable both before and

after the assembly. In fact, as noted above, the lever is a

separate component which must be disassembled from the rest of

the lockset prior to installation. Although the levers only

accounts for approximately 10 percent of the total cost of the

finished article, this fact is not determinative. After

examining all the factors we find that the imported levers are

not substantially transformed when combined with domestic

locksets into finished lever locksets and your company is not the

ultimate purchaser of the imported levers under 19 CFR 134.35.

Section 134.1(d), Customs Regulations (19 CFR 134.1(d)),

defines the ultimate purchaser as generally the last person in

the U.S. who will receive the article in the form in which it was

imported. The definition then gives examples of who might be the

ultimate purchaser if the imported article is used in

manufacture, if the imported article is sold at retail in its

imported form and if an imported article is distributed as a

gift. If an article is to be sold at retail in its imported

form, the purchaser at retail is the ultimate purchaser. Since

the imported levers are not substantially transformed, they are

not considered to undergo a change in their imported form.

Therefore, the retail purchaser of the lever lockset is the

ultimate purchaser and the levers must be individually marked

with their country of origin. Because the levers are combined

with domestic locksets before delivery to the ultimate purchaser,

the levers should be marked in a manner which clearly shows that

the origin indicated is that of the levers alone (e.g. \"Levers

Made in Korea\"). See 19 CFR 134.14. In addition, because the

levers will be repacked in the U.S. prior to sale to the ultimate

purchaser the certification requirements of 19 CFR 134.26 apply.

Country of Origin Marking of Repackaging Container

However, if certain conditions are met, the district

director may authorize an exception under 19 CFR 134.32(d) from

marking the levers at the time of importation. In this regard,

19 CFR 134.34(a) provides that:

an exception under section 134.32(d) may be authorized in

the discretion of the district director for imported

articles which are to be repacked after release from

Customs custody under the following conditions:

\(1\) The container in which the articles are repacked will

indicate the origin of the articles to an ultimate

purchaser in the U.S.

\(2\) The importer arranges for supervision of the marking

of the containers by Customs officers at the importer\'s

expense or secures such verification, as may be

necessary, by certification and the submission of a

sample or otherwise, of the marking prior to liquidation

of the entry.

Whether or not the district director authorizes the above

exception the retail box must satisfy the requirements of 19 CFR

134.46. Examination of the cardboard box in which the finished

lever locksets are intended to be repackaged into reveals that

the words \"Lockset Made in U.S.A\" and \"Lever Trim Made in Korea\"

will be printed on either the lefthand panel or righthand corner

of the bottom panel. Also, the words \"Berlin, Connecticut 06037

USA\" are printed on the bottom of the box. Section 134.46,

Customs Regulations (19 CFR 134.46) requires that in any case in

which the words \"U.S.,\" or \"American,\" the letters \"U.S.A.,\" any

variation of such words or letters, or the name of any city or

locality other than the country or locality in which the article

was manufactured or produced, appear on an imported article or

its container, there shall appear, legibly and permanently, in

close proximity to such words, letters or name, and in at least a

comparable size, the name of the country of origin preceded by

\"Made in,\" \"Product of\", or other words of similar meaning

(emphasis added). In order to satisfy the close proximity

requirement of this regulation, the country of origin marking

must appear on the same side(s) or surface(s) on which the name

of the locality other than the country of origin appears.

Therefore the marking on the box must satisfy the requirements of

section 134.46 since the words \"USA\" and \"Berlin, Connecticut

USA\" appear on the box.

We note that with respect to your proposed marking \"Lockset

Made in USA; Lever Trim Made in Korea\" to be printed on either

the lefthand panel or righthand corner of the bottom panel, the

lettering \"Made in Korea\" is not in a comparable size to the

marking \"Made in USA\", and therefore it does not meet the

comparable size requirement of 19 CFR 134.46.

With respect to each \"Made in USA\" marking printed on the

packaging container in which the lever locksets are sold to

retail stores, we advise that an additional marking indicating

that the levers are made in Korea is required in close proximity

to and in comparable size letters. Further we advise you to

contact the Federal Trade Commission, Division of Enforcement,

6th & Pennsylvania Avenue, NW, Washington, D.C. 20508 before you

undertake to mark your finished product in that fashion since use

of the phrase \"Made in USA\" is under that agency\'s jurisdiction.

Also, we are referring a copy of your March 3, 1992, letter

to the Office of Trade Operations, regarding marking practices of

your competitors along with a copy of this ruling to ensure that

competitors are complying with country of origin marking

requirements.

HOLDING

The levers are not substantially transformed when they are

chrome plated and then assembled with domestic manufactured

locksets to make lever locksets. The buyers of the lever

locksets are the ultimate purchasers of the levers. The levers

must be marked to indicate their country of origin in accordance

with the requirements of 19 CFR 134.14. Because the levers will

be packaged in the U.S. prior to receipt by the ultimate

purchaser the certification procedures set forth in 19 CFR 134.26

apply. Alternatively, you may request from the district director

an exception from marking the levers itself under the procedures

set forth in 19 CFR 134.34.

Sincerely,

John Durant, Director

Commercial Rulings Division