MAR-2 RR:TC:SM 560753 KSG
Donald Alford Weadon, Jr.
Weadon & Associates
Suite 550
The Federal Bar Building
1819 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
RE: 19 U.S.C. 1304; semiconductor devices; 19 CFR 134.46;
may mislead or deceive
Dear Mr. Weadon:
This is in response to your letter of November 10,
1997, asking if your proposed country of origin marking on
semiconductor devices satisfies the country of origin
marking requirements set forth in 19 U.S.C. 1304.
FACTS:
Your client imports and produces semiconductor devices.
The client imports these devices into the U.S. and other
countries. The diffused silicon wafers are made in the U.S.
and exported to various Asian nations where the circuits are
assembled and encapsulated into finished devices. The
finished devices are packaged in plastic carrier trays or in
reels. The plastic carrier trays or reels are then packaged
inside heat-sealed, opaque, anti-static dry-pack bags which
protect the devices from humidity and static electricity.
The anti-static bags are affixed with a label containing
various information and the country of origin marking.
The anti-static bags with the carrier trays and
integrated circuits enclosed are then packaged inside a
cardboard carton which is closed with adhesive tape and
affixed with another label similar to the one utilized on
the anti-static bags.
You state that the other countries to whom your client
imports, such as Japan and the countries that are members of
the European Union (EU), have different origin rules for
marking purposes. You desire to utilize one label that
would comply with the marking statutes in the U.S. and in
different countries. Specifically, you propose the marking
"Country of Origin for U.S.: Japan, For EU: Circuit diffused
in the United States" on the anti-static bags and cartons
containing the devices to be assembled in Japan and marketed
in the U.S. and the EU.
ISSUE:
Whether the proposed marking would satisfy the country
of origin marking requirements set forth in 19 U.S.C. 1304.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930 (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 of 19
U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR
134.1(b)), provides that : "country of origin" means 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" for marking purposes.
A substantial transformation results when a new and
different article emerges from the processing having a
distinctive name, character or use. U.S. v. Gibson-Thomsen
Co., Inc., 27 CCPA 269 (1940). In Headquarters Ruling
Letter (HRL) 732357, dated May 21, 1990, Customs held that
the processing of silicon wafers into integrated circuits,
which includes cutting the wafers into chips, mounting the
individual circuit by eutectic or epoxy mechanisms to the
leadframe, bonding of gold and aluminum wires to circuit and
leadframe and encapsulation of leadframe and circuit
constitutes a substantial transformation of the silicon
wafers into finished integrated circuits. Customs cited
C.S.D. 80-227, dated February 13, 1980, as authority for the
finding of a substantial transformation where silicon
semiconductor chips were assembled into integrated circuits.
Pursuant to HRL 732357 and C.S.D. 80-227, the assembly
and encapsulation of integrated circuits in the instant case
to create finished semiconductor devices would constitute a
substantial transformation. Therefore, in accordance with
19 CFR 134.1(b), the Asian country where the devices are
assembled is the country of origin for marking purposes.
Consequently, the question presented is whether the
proposed marking would clearly convey the country of origin
of the imported article to the ultimate purchaser in the
U.S.
Section 134.46, Customs Regulations (19 CFR 134.46)
provides:
In any case in which the words "United States," or
"American," the letters "U.S.A.," any variation of
such words or letters, or the name of any city or
location in the United States, or the name of any
foreign country or locality other than the country
or locality in which the article was manufactured
or produced appear on an imported article or its
container, and those words, letters or names may
mislead or deceive the ultimate purchase as to the
actual country of origin of the article, there
shall appear legibly and permanently in close
proximity to such words, letters or name, and in
at least a comparable size, the name of the
country of origin preceded by "Made in," "Product
of," or other words of similar meaning.
Therefore, we must determine whether the proposed
marking may mislead or deceive the ultimate purchaser as to
the actual country of origin of the imported article.
Customs stated in Treasury Decision (T.D.) 97-72, dated
September 19, 1997, in response to a comment, that
"references to the U.S. made in the context of a statement
relating to any aspect of the production or distribution of
the products... are misleading to the ultimate purchaser..."
We find that the phrase "For EU: Circuit Diffused in the
United States" in the proposed marking is a reference to the
U.S. made in the context of a statement relating to an
aspect of the production of the imported article and
therefore, this reference may mislead or deceive the
ultimate purchaser in the U.S. as to the article's actual
origin. Therefore, the special marking requirements of 19
CFR 134.46 are triggered. The words "Made in (country of
origin,)" "Product of (country of origin) or a similar
phrase must appear in close proximity and in at least a
comparable size to the U.S. reference . Your proposed
marking would not be acceptable under 19 U.S.C. 1304. We
note that if you marked the article with the words "Country
of origin for U.S.: Made in Japan, FOR EU: Circuit diffused
in the United States", the marking would comply with the
requirements of 19 U.S.C. 1304 and 19 CFR 134.46.
The second question is whether marking the anti-static
bags and cartons and not the article itself would satisfy 19
U.S.C. 1304.
Section 134.32(d), Customs Regulations (19 CFR
134.32(d)), provides an exception from marking for articles
for which the marking of the containers will reasonably
indicate the origin of the articles. In HRL 734443, dated
June 3, 1992, Customs held that semiconductor devices which
reach the ultimate purchaser in the marked containers are
excepted from marking. In the instant case, the ultimate
purchaser receives the imported article in the marked sealed
anti-static bags and cartons. Therefore, pursuant to 19 CFR
134.32(d), the imported semi-conductor devices in this case
are excepted from marking.
HOLDING:
The reference to the U.S. in the proposed marking may
mislead or deceive the ultimate purchaser as to the actual
country of origin of the article. Therefore, pursuant to 19
CFR 134.46, the actual country of origin must appear in
close proximity and in at least a comparable size, to the
U.S. reference, preceded by the words "Made in," "Product
of," or a similar phrase.
Pursuant to 19 CFR 134.32(d), the imported articles are
excepted from marking as long as the marking on the anti-static bags and cartons satisfies the requirements of 19
U.S.C. 1304.
A copy of this ruling letter should be attached to the
entry documents filed at the time this merchandise is
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