Country of origin marking of imported belt buckles to be assembled in the U.S. with domestic leather belts;substantial transformation; 19 CFR 134.35; HQ 734008.

HQ 734875 May 6, 1993 MAR-2-05 CO:R:C:V 734875 AT CATEGORY: Marking Steven S. Weiser, Esq. Siegel, Mandell & Davidson, P.C. One Astor Plaza 1515 Broadway, 43rd Floor New York, New York 10036 RE: Country of origin marking of imported belt buckles to be assembled in the U.S. with domestic leather belts;substantial transformation; 19 CFR 134.35; HQ 734008. Dear Mr. Weiser: This is in response to your letter of October 30, 1992, on behalf of Liz Claiborne Accessories, Inc. (Liz Claiborne), requesting a ruling on the country of origin of imported belt buckles (Style Nos. 2407 and 2408) which are to be assembled in the U.S. with domestic leather belts. Samples of the belt buckles, style nos. 2407 and 2408, and the finished belts were submitted for examination. We regret the delay in responding. FACTS: You state that Liz Claiborne intends to import two styles of belt buckles (Style Nos. 2407 and 2408) from Taiwan. Both buckles will be used as components in two styles of belts manufactured by Better Belts of Hoboken, New Jersey, on behalf of Liz Claiborne. The belting leather will also be manufactured by Better Belts in the U.S. The belt buckles cost between $.48 (Style No. 2407) and $.75 (Style No. 2408) and will be permanently sewn together with leather belting which is made of two panels cut from leather and sewn around a filler, and which has a cost of between $2.75 (Style No. 2407) and $3.10 (Style No. 2408). The buckles will be imported and delivered to the manufacturer in containers marked with their country of origin, Taiwan. Both sample belt buckles are made of zinc and are gold in color. The Liz Claiborne trademark (a triangle with a diagonal line through it) also appears on each buckle on the front of the clasp. The leather belts each have the words "Made in Taiwan" permanently stamped into the backside of the belt in lettering 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 style number, size and RN number also appears on the backside of the belt near the origin marking. However, you indicate that the leather belts that are to be assembled with the imported buckles for purposes of this ruling will be sourced in the U.S. rather than Taiwan and will be marked with the domestic origin in the exact same manner as the "Made in Taiwan" marking on the submitted sample, although no sample was submitted for our review. ISSUE: Whether belt buckles which are used in the manufacture of belts must be individually marked to indicate their country of origin? 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. 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 134.35, Customs Regulations (19 CFR 134.35), provides that an article 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 will be within the principle of the decision of U.S. v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940). Under this principle, the manufacturer or processor in the U.S. who substantially transforms the imported article into an article with a new name, character, or use will be considered the "ultimate purchaser" of the imported article within the contemplation of section 304(a), Tariff Act of 1930, as amended (19 U.S.C. 1304), and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked in accord with this part. The marking requirements for the belt buckles turn on whether the U.S. manufacturer who uses the buckles in the manufacture of belts is the ultimate purchaser of the belt buckles. The U.S. manufacturer is the ultimate purchaser if the buckles are substantially transformed when they are assembled with the leather belt strap to form a completed belt. In HQ 734008 (March 19, 1991), Customs ruled that metal belt buckles which were imported into the U.S. to be assembled with domestic leather straps in the manufacturing of completed belts were substantially transformed as a result of the assembly operation and excepted from marking provided the outermost containers were marked with the country of origin. Customs determined that the belt buckles, which ranged in cost between $1.00 and $2.00, were minor components of the completed belts because they were neither "so unique nor so expensive that the consumer would be buying the belt mainly in order to get the buckle"; that although they were functionally necessary for the completed belt, they were of far less importance to the finished belt than the leather belting and, therefore, they lost their separate identity when combined with the more significant component, the belt strap. Similarly, in this case, we find that the metal belt buckles are substantially transformed when assembled with domestic belt straps in the manufacturing of completed belts and are excepted from marking provided that the outside container is marked with the proper country of origin "Taiwan". With respect to the proposed marking of the belts, we cannot make a determination as to whether the marking complies with the requirements of 19 U.S.C. 1304 and 19 CFR Part 134, since a marked sample was not submitted for our review. However, the marking would be considered conspicuous, permanent and legible if it is to be marked in the same manner as the "Made in Taiwan" that appears on the submitted sample. If a phrase such as "Made in the U.S.A." is proposed to be marked on the completed belts, we advise you to contact the Federal Trade Commission (FTC), Division of Enforcement, 6th & Pennsylvania Avenue, NW, Washington D.C. 20508, before Liz Claiborne undertakes to mark its finished product in that fashion, since use of the phrase "Made in U.S.A." is under the FTC's jurisdiction. HOLDING: When the metal buckles are used to make a leather belt, they lose their separate identity and they are substantially transformed. Accordingly, pursuant to 19 CFR 134.35, the individual buckles are excepted from country of origin marking and only the container in which the buckles are imported must be marked with the country of origin of the buckles. However, for this marking exception to apply, the district director must be satisfied that the ultimate purchaser, the belt maker, will receive the buckles in their original unopened properly marked container and that the buckles will be used only as described in this ruling and not otherwise sold. Sincerely, John Durant, Director Commercial Rulings Division