The Country of Origin of LED Latex Balloons assembled in China

N305763 September 11, 2019 MAR-2 OT: RR: NC: N4:424 CATEGORY: Country of Origin Ms. Lindsay Meyer Venable LLP 600 Massachusetts Avenue, NW Washington, DC 20001 RE: The Country of Origin of LED Latex Balloons assembled in China Dear Ms. Meyer: In your letter dated August 8, 2019, on behalf of Illoom Balloon USA LLC, you requested a ruling on the country of origin of LED Latex Balloons. The three types of LED latex balloons at issue are identified as Supersize Alien Light Up Balloons, Marble Light Up Balloons and regular Light Up Balloons. Each variation consists of a latex balloon and an LED light component. As detailed in your submission, the LED balloons can be inflated and used as a regular balloons but also contain a small plastic pull tab which goes through the neck of each balloon. Prior to inflation of the balloon, the user pulls the insulating tab out, thereby activating a small LED light that will temporarily illuminate the balloon for a few hours. The first product under consideration is referred to as the Supersize Alien Light Up Balloon. The product consists of a 24 inch latex balloon depicting the shape of an alien, inserted with a small LED light that is designed to illuminate the balloon once the plastic tab attached to the LED light is pulled by the user. You indicate in your request that the latex balloon component of the product is sourced from Italy, and the LED light component of the product is sourced from China. The second product at issue is identified as Marble Light Up Balloons. The product consists of multicolored latex balloons with a marbled pattern, inserted with a small LED light that is designed to illuminate the balloon once the plastic tab attached to the LED light is pulled by the user. As noted in your request, the dipping process for the formation of the marbled latex balloons requires specialist knowledge that is limited to fewer manufacturers worldwide. You indicate in your request that the latex balloon component of the product is sourced from Taiwan, and the LED light component of the product is sourced from China. The third product under consideration is referred to as Light Up Balloons. The product consists of 12 inch latex balloons in various colors, also inserted with a small LED light that is designed to illuminate the balloon once the plastic tab attached to the LED light is pulled by the user. You indicate in your request that the latex balloon component of the product is sourced from Malaysia, and the LED light component of the product is sourced from China. As noted in your submission, prior to importing the subject LED balloons into the United States, one of the company’s affiliates located in China, performs certain simple assembly operations. Such operations include placing the LED light, pull tab and small battery into a light housing unit, sealing and inserting the same into the aforementioned latex balloons. As detailed in your request, these steps are performed and completed in a matter of seconds by low-skilled workers. It is further noted that the packaging operations are performed by the same Chinese affiliate prior to importation. Initially, we note that the classification of Illooms LED Balloons has been previously established, please see New York ruling N173614, dated July 28, 2011. With regard to your request for the appropriate country of origin of the three categories of Light Up Balloons, 19 C.F.R. § 134.1(b) provides in pertinent part as follows: Country of origin means the country of manufacture, production, or growth of any article of foreign origin entering the United States. 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. In order to determine whether a substantial transformation occurs when components of various origins are assembled into completed products, all factors such as the components used to create the product and manufacturing processes that these components undergo are considered in order to determine whether a product with a new name, character and use has been produced. No one factor is decisive, and assembly operations that are minimal will generally not result in a substantial transformation. In this instance, the “name, character and use” test must be applied in order to determine whether a substantial transformation had occurred. The court has said that “A substantial transformation is said to have occurred when an article emerges from a manufacturing process with a name, character, or use that differs from the original material subjected to the process”. The court in National Hand Tool Corp. v. United States determined that imported forgings, in that case, were not substantially transformed as (1) the articles had been forged "into their final shape before importation" into the United States and (2) "the form of the components remained the same" after the processes performed in the United States. The court concluded that no substantial change in name, character or use had occurred as a result of the processing performed in the U.S. Likewise, in this case, the latex balloons are all formed to visible identifiable shapes in Italy, Taiwan and Malaysia prior to exportation to China. The articles already have their final shape and their use as balloons is predetermined prior to the addition of the LED light housing unit and simply assembly processing in China. The articles have the same name both before and after processing in China. In addition, with regard to the LED light housing unit assembly operation, the mating of the Chinese components to the Italian, Taiwanese and Malaysian latex balloons does not result in a substantial transformation. Thus, the country of origin for the subject LED light up balloons will be determined by the country from which the latex balloons are sourced. Therefore, the country of origin of the Supersize Light Up Balloons will be Italy, the country of origin for the Marble Light Up Balloons will be Taiwan and the country of origin for the Light Up Balloons will be Malaysia. This ruling is being issued under the provisions of Part 177 of the Customs Regulations (19 CFR Part 177). A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Roseanne Murphy at roseanne.j.murphy@cbp.dhs.gov. Sincerely, Steven A. Mack Director National Commodity Specialist Division