Country of origin marking of drawer slides; substantial transformation

HQ 559020 March 28, 1995 MAR-2-05 CO:R:C:S 559020 MLR CATEGORY: Marking Mr. Todd F. Radke ATC Hardware Systems for Innovators 125 W. 3rd Street Suite B Chico, California 95928 RE: Country of origin marking of drawer slides; substantial transformation Dear Mr. Radke: This is in reference to your letter of February 1, 1995, requesting a ruling regarding the country of origin marking of drawer slides. Samples of a drawer slide and its components were submitted with your request. FACTS: Drawer slides are commonly used on kitchen cabinet drawers, and residential furniture, such as entertainment centers and desks for home offices. The slides consist of three basic components: (1) two stamped steel "members" for each side of the drawer or cabinet; (2) an injection molded plastic roller wheel; and (3) a formed hardened steel rivet which attaches the roller wheels to the members. Each member receives one roller wheel and rivet. A set or "pair" of slides for one drawer consists of four pieces: (1) a cabinet left, (2) cabinet right, (3) drawer left, and (4) drawer right. Although there are some minor differences in the exact configurations of the steel member, such as different screw hole locations and lengths, all slides of this type are essentially identical. Chiang Yao Enterprise Co., Ltd., manufactures the drawer slides and components in Taiwan. Certain drawer slide components will be shipped from Taiwan to the People's Republic of China (PRC), where the stamped steel members will be painted with epoxy, the plastic roller wheels will be riveted to the steel member, and the assembled members will be packaged for shipment. Orders will then be shipped through the Port of Hong Kong to customers worldwide. The drawer slides are then sold on a wholesale basis to manufacturers who will then install the slides in their products and then sell their completed products to retail furniture stores and mass merchandisers. ISSUE: Whether the drawer slides must be marked to indicate their country of origin. 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 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, although the outermost container of the imported article 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. The first question to be resolved is whether the Taiwanese components are substantially transformed in the PRC by painting and assembly. In Headquarters Ruling Letter (HRL) 733579 dated August 20, 1990, Customs determined that formed pots and pans, imported from Venezuela and further manufactured into finished pots and pans by operations consisting of deburring, polishing, painting, coating with a non-stick surface, and attaching handles, were not substantially transformed within the meaning of 19 CFR 134.35, as the U.S. manufacturing process constituted a minor operation which left the identity of the imported articles intact. Accordingly, the imported aluminum pots and pans remained products of Venezuela. Similarly, in this case, we find that the painting of the stamped steel members, and riveting the plastic roller wheels to the steel member does not result in a substantial transformation of the components, as the members are recognizable as drawer slides and are the essence of the finished product. Therefore, the country of origin of the drawer slides is Taiwan. The second question to be resolved is whether the drawer slides must be individually marked to indicate their country of origin. This will depend on how the drawer slides are sold. Pursuant to HRL 735183 dated December 17, 1993, drawer slides used in the manufacture of finished furniture are substantially transformed, and the ultimate purchaser is the person who manufactures the furniture and the slides need not be individually marked. However, where the slides are sold as separate parts of kits, they may constitute significant components requiring marking. In HRL 734737 dated December 17, 1992, Customs found that foreign-made drawer slides which were sold in unassembled furniture kits representing between 6 and 12 percent of the cost of the finished furniture were not insignificant and were required to be marked with their foreign country of origin. Accordingly, the required method of marking the slides is determined by reference to the condition in which they reach the ultimate purchaser. Here, you state that the slides are not sold in furniture kits, but are sold on a wholesale basis to manufacturers who will install the slides into their products and then sell these completed products to retail furniture stores and mass merchandisers. Therefore, as determined in HRL 735183, the slides will be substantially transformed in the U.S. by being installed into the furniture. Pursuant to 19 CFR 134.35, the manufacturer of the furniture who installs the slides into the furniture is considered the ultimate purchaser of the slides, and therefore the slides will be excepted from marking and only the outermost container in which the imported slides will reach the ultimate purchaser needs to be marked. HOLDING: On the basis of the information submitted, we find that the country of origin of the drawer slides is Taiwan; the components are not substantially transformed in the PRC by the painting and assembly operations. However, the drawer slides will be substantially transformed in the U.S. by their incorporation into furniture. Accordingly, the manufacturer of the furniture is the ultimate purchaser and only the outermost container in which the drawer slides are imported and in which the manufacturer receives them must be marked with the country of origin "Taiwan." 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