Country of origin marking of a LAP-BAND® SYSTEM with Access Port I

October 13, 2009 HQ H068255 CLA-2 OT:RR:CTF:TCM H068255 MG CATEGORY: Marking Ms. Iliana Fuller Allergan, Inc. 2525 Dupont Drive Irvine, CA 92623 RE: Country of origin marking of a LAP-BAND® SYSTEM with Access Port I Dear Ms. Fuller:  This is in regard to your request for a prospective ruling, dated June 10, 2009, on behalf of Allergan, Inc., in which you request the country of origin marking of a LAP-BAND® SYSTEM with Access Port (AP) I. FACTS: The merchandise at issue is identified as the LAP-BAND® SYSTEM AP I. As stated in your submission, the LAP-BAND® SYSTEM AP I is composed of five components identified as the belt, buckle, ring, shell, and end plug. All of the components which make up the LAP-BAND® SYSTEM AP I, originate in the United States. The LAP-BAND is assembled in Costa Rica through the following steps: (1) adhesive preparation (2) insertion of the ring into the shell (3) submersion of the ring/shell in xyelene for swelling and bonding (4) drying the ring/shell assembly (4) curing in a conveyor oven (5) inspection (6) application of adhesive (7) bonding (8) curing in conveyor oven 2 (9) belt and buckle assembly (10) curing in conveyor oven 3 (11) dip coat application (12) air drying and (13) quality control inspection. The LAP BAND ACCESS PORT is also assembled in Costa Rica through the following steps: (1) application of primer (2) adhesive preparation (3) gluing the access port catheter and tapered port connector (4) cure assembly conveyor oven and (5) quality control inspection. Once assembly of the lap-band is finalized, it is leak tested, packaged with an access port needle, flushing needle, access port, end plug, priming needle, connectors and calibration silicone tubing and sterilized. ISSUE:       Whether the operations performed in Costa Rica constitute a substantial transformation.  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." See United States v. Friedlaender & Co. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940).       Part 134, Customs and Border Protection (CBP) Regulations (19 C.F.R Part 134), implements the country of origin marking requirements and the exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 C.F.R 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. Since the U.S. origin components are subjected to additional operations in Costa Rica, we must determine whether they undergo a substantial transformation. A substantial transformation results when a new and different article emerges from the processing having a distinctive name, character or use. See U.S. v. Gibson-Thomsen Co., Inc., 27 CCPA 269 (1940). If the manufacturing or combining process is merely a minor one which leaves the identity of the imported article intact, a substantial transformation has not occurred. See Uniroyal, Inc. v. United States, 542 F. Supp. 1026 (CIT 1982), aff'd, 702 F.2d 1022 (Fed. Cir. 1983). Assembly operations which are minimal or simple, as opposed to complex or meaningful, will generally not result in a substantial transformation. 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. See Belcrest Linens v. United States, 573 F. Supp.1149 (CIT 1983), aff'd, 741 F.2d 1368 (Fed. Cir. 1984). See also C.S.D. 85-25. However, the issue of whether a substantial transformation occurs is determined on a case-by-case basis. In C.S.D. 80-111, dated September 24, 1980, CBP (then the U.S. Customs Service) ruled that the U.S. assembly of imported ceiling fan components on an assembly line did not constitute a substantial transformation.  This was the case because the manufacturing processes described were “basically assembly line procedures” not requiring large amounts of skilled labor or specialized equipment. In HQ 734050, dated June 17, 1991, we held that the manual assembly in China of five components from Japan (head unit, mechanical unit, power source and outer case) using screwdrivers and screws into finished computer printers did not constitute a substantial transformation. The simplicity of the assembly operations combined with the low value of the assembly process relative to the manufacture of the components in Japan resulted in the finding that subject printers originated in Japan for country of origin marking purposes. In HQ 561167, dated December 14, 1998, CBP determined that foreign origin surgical sutures did not undergo a substantial transformation as a result of a sterilization process in the U.S. In HQ H035441 and in NY N043539, dated December 1, 2008, we found that the assembly and sterilization processes performed in Costa Rica to create the LAP-BAND® SYSTEM AP II were relatively simple and, therefore, those operations did not result in a substantial transformation of the components. As was the case with that product, in the instant case the components have not lost their physical identity by change in form, shape, or otherwise; and they have not been advanced in value or improved in condition except by being assembled or by operations incidental to the assembly process. The subassembly process in the manufacture of the Lap-band and access port is semi-automated and does not require mechanical skill or dexterity. We note that the majority of the time used to create the subassemblies is devoted to drying. In this regard, we find that the additional operations taking place in Costa Rica, namely, swelling, bonding, priming, gluing and putting the components in the oven, are not sufficient to constitute a substantial transformation of the product. Therefore, the country of origin is the United States. Goods determined to be an article of U.S. origin are not subject to the country of origin marking requirements of 19 U.S.C. §1304. Whether an article may be marked with the phrase "Made in the USA" or similar words denoting U.S. origin, is an issue under the authority of the Federal Trade Commission (FTC). We suggest that you contact the FTC Division of Enforcement, 6th and Pennsylvania Avenue, N.W., Washington, D.C. 20508 should you intend to mark the LAP-BAND® SYSTEM AP-I to indicate that it is "Made in the USA." HOLDING:       On the basis of the information submitted, we find that the LAP-BAND® SYSTEM AP-I is not substantially transformed by the operations performed in Costa Rica. In accordance with 19 U.S.C §1304, the LAP-BAND® SYSTEM AP I need not be marked. 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 CBP officer handling the transaction.                                               Sincerely,       Gail A. Hamill, Chief                      Tariff Classification and Marking Branch