HQ 558919

March 20, 1995

MAR-2-05 CO:R:C:S 558919 MLR

CATEGORY: Marking

John A. Bessich, Esq.

Follick & Bessich, P.C.

1 Cross Island Plaza

Suite 226

Rosedale, New York 11422

RE: Country of origin marking of extruder subassemblies;

vertical extruder; feed section; stainless steel hopper;

gear reducer; thrust housing; barrel; drive unit; control

cabinet; screw; assembly; substantial transformation;

Dear Mr. Bessich:

This is in reference to your letter of November 17, 1994,

requesting a ruling on behalf of Davis-Standard Division of

Crompton & Knowles Corporation (\"Davis-Standard\") regarding the

country of origin marking of extruder subassemblies.

FACTS:

Davis-Standard is a domestic manufacturer and supplier of

various machine tools and equipment, including several models of

extruders. Extruders are machine tools which form metal or

plastic components by \"extruding\"; that is, by pushing or driving

the materials through a die with great force. Among the extruder

models supplied by Davis-Standard are certain \"vertical\"

extruders. The vertical extruders are mounted on a pedestal and

are capable of swiveling or pivoting on a column bracket, thereby

allowing the extruders to be positioned at any angle, from fully

vertical to fully horizontal. Literature describing two models

of vertical extruders were submitted with the ruling request.

The principal components of both vertical screw models

consist of the following: (1) the extruder subassembly which

includes the feed section and stainless steel hopper, the gear

reducer and thrust housing, and the barrel; (2) the drive unit

which includes the DC motor, power unit, and belt drive; (3) the

electrical control cabinet or panel which incorporates solid-state
temperature controllers, screw-speed indicator, drive

ammeter, pilot light on-off controls, and wiring; and (4) the

extruder screw which mixes and moves the material to be extruded

through the die.

The extruder subassembly is manufactured in England and

shipped to Davis-Standard in a partially knocked-down condition.

After importation into the U.S., it is stated that the

subassembly is assembled together with the drive unit which is

made in the U.S. by an unrelated manufacturer, and the electrical

control panel and the extruder screw which are both manufactured

in the U.S. by HES, a separate division of Crompton and Knowles

Corp. Assembly includes the complete wiring of the motor and

control panel to the subassembly, followed by a complete set up

and testing program to insure that the vertical extruder is

operating within its design parameters.

The relative costs of the various components and their

assembly are included in the record. The completed and tested

vertical extruders are sold to domestic and foreign manufacturers

of plastic components, which either specify the dies to be

supplied by Davis-Standard or supply their own dies for use with

the extruders.

ISSUE:

Whether the incorporation of the subassemblies into the

vertical extruders constitutes a substantial transformation,

thereby excepting the subassemblies from country of origin

marking.

LAW AND ANALYSIS:

The marking statute, section 304, 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. Inc., 27 CCPA 297, 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), Customs Regulations {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 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 the meaning of the marking laws and

regulations.

For country of origin marking purposes, a substantial

transformation of an imported article occurs when it is 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. In such circumstances, the manufacturer or processor in

the U.S. who converts or combines the imported article into the

different article will be considered the \"ultimate purchaser\" of

the imported article, and the article is excepted from marking

and only the outermost container is required to be marked. See

19 CFR 134.35.

In determining whether the combining 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, 573 F. Supp. 1149 (CIT 1983), aff\'d, 741 F.2d

1368 (Fed. Cir. 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. 85-25.

However, the issue of whether a substantial transformation occurs

is determined on a case-by-case basis.

It is claimed that the imported articles at issue consist of

partially unassembled portions of vertical extruders which, in

their imported forms, are totally and completely incapable of

operation. Without the addition of the drive unit which includes

the DC motor, power unit and belt drive; the electrical control

cabinet or panel which incorporates solid-state temperature

controllers, screw-speed indicator, drive ammeter, pilot light

on-off controls, and wiring necessary to operate the extruder;

and the extruder screw which mixes and moves the material to be

extruded through the die, it is stated that the extruder

subassembly is totally inoperative for any purpose. Even the

addition of a suitable die would not enable the extruder to

operate, since there is no power/drive source, control device or

conveying mechanism, all of which are stated to be essential to

enable the extruder to operate for its intended purpose. It is

also stated that the U.S. components added, and the assembly and

testing performed in the U.S. is substantial. Consequently, it

is claimed that the imported subassemblies, when combined with

the U.S. components, become new articles with a different name,

character, and use. Accordingly, it is claimed that Davis-Standard is
the ultimate purchaser of the imported extruder

subassemblies, and therefore the subassemblies should be excepted

from marking pursuant to 19 CFR 134.35.

In several rulings, Customs has considered six factors in

order to determine whether imported goods combined in the U.S.

with domestic products were substantially transformed for country

of origin marking purposes:

\(1\) 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;

\(5\) 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.

In Headquarters Ruling Letter (HRL) 732940 dated July 5,

1990, Customs considered water pump assemblies comprised of 6-8

components including a casting, bearing, impeller, hub, seal,

mounting gasket, and in some cases, a spacer, and tubes or plugs.

The casting and bearing were the most costly components.

Although the assembly process was not exceedingly complex, and in

one instance a Taiwanese-origin casting was used to produce the

water pump, which remained visible after assembly, a substantial

transformation was found. The main reason was because the

casting was only one of several important components of the water

pump (the others were of U.S.-origin), and because it was

permanently attached to the remaining components. See also HRL

731330 dated July 13, 1988 (imported spark plug insulator

assemblies consisting of a ceramic insulator and a center

electrode mounted in the insulator, and a ground electrode were

considered substantially transformed in the U.S. by the welding

of the ground electrode to a steel shell, bending the ground

electrode to the desired shape, and mounting the insulator

assembly in the steel shell using seals; accordingly, the

imported items did not require individual marking); and HRL

732350 dated June 23, 1989 (imported transducers (i.e.,

microphones and receivers) wired to a faceplate, along with a

signal processing circuit, which was then cemented into a shell

to create hearing aids were considered substantially transformed

and excepted from individual country of origin markings pursuant

to 19 CFR 134.35, primarily because the transducers could not be

removed from the shell).

Similarly, in this case, while the extruder subassembly

consists of pertinent components of the extruder, we find that

the drive unit, extruder screw, and control cabinet are also

important components of the vertical extruder. The direct

current motor drive is important for accuracy of control; the

extruder screw heats, fluidizes, and transports the plastic to

the die; and the controller cabinet ensures precise control of

the heating or cooling zones on the barrel. See McGraw Hill

Encyclopedia of Science & Technology (6th Ed. 1987); and

Encyclopedia Britannica (15th Ed. 1975). Consequently, it is our

opinion that the imported subassembly is substantially

transformed in the U.S. when it is wired and combined with the

U.S. components to create a vertical extruder. Accordingly, the

imported subassemblies will be excepted from individual marking,

provided the cartons in which Davis-Standard receives them are

properly marked with their country of origin, and Customs

officials at the port of entry are satisfied that the components

will be assembled in this manner.

HOLDING:

On the basis of the information submitted, we find that the

imported subassemblies are substantially transformed, and,

therefore, are excepted from individual marking, provided the

cartons in which Davis-Standard receives them are properly marked

with their country of origin, and Customs officials at the port

of entry are satisfied that the components will be assembled in

this manner.

A copy of this ruling letter should be attached to the entry

documents filed at the time the goods are 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

Commercial Rulings Division