MAR-2 RR:CR:SM 561345 KSG
Glenn A. Cickello
Customs & Trade Services
KPMG LLP
45 O’Connor Street, 10th Floor
Ottowa ON K1P 1A4
Canada
RE: Country of origin marking of used automotive parts; Ashdown
Dear Mr. Cickello:
This is in response to your letter of April 12, 1999, on behalf of Canadian Tire Corporation Limited, requesting a country of origin marking ruling regarding used starters, power steering pumps, carburetors, distributors, wiper motors, fuel pumps, steering gears, power steering box castings and alternators.
FACTS:
Canadian Tire Corporation Limited is a retailer with over 400 stores across Canada that sell automotive parts. When Canadian Tire sells a new automotive part to a customer, the old part is removed from the car at the service bay or returned by the customer for a credit. This case involves the old parts, called castings, that are removed from cars in Canada and sent to the U.S. for remanufacture into re-built automotive parts. Canadian Tire buys re-built parts back from the U.S. company; and in fact, buys more re-built parts than castings that it had sent to the U.S.
The castings removed from customer’s vehicles are placed in boxes
by the Canadian stores and shipped to a return center. At the return center, the castings are sorted onto different pallets by shipping destination. Canadian Tire states that it cannot further sort these castings
by country of origin due to system and time constraints, expense and occasionally because it does not know the country of origin of the used part.
Canadian Tire is currently marking each individual box with an orange florescent label that reads:
Used merchandise whose country of origin is Japan, Korea, Singapore, Germany, Taiwan, the United States or Canada. Each individual product is marked to indicate its country of origin. Where an individual article has no marking, its country of origin is Canada.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930 (19 U.S.C. 1304), as amended, 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)), 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; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.
Section 134.1(g), Customs Regulations (19 CFR 134.1(g)), defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Consistent with these regulations, the country of origin of the castings imported into the U.S. will be determined pursuant to the NAFTA Marking Rules.
The NAFTA Marking Rules are set forth in 19 CFR Part 102. Section 102.11, Customs Regulations (19 CFR 102.11), sets forth the required hierarchy for determining whether a good is a good of a NAFTA country for the purposes of country of origin marking and determining the rate of duty and staging category applicable to an originating good as set out in Annex 302.2. Paragraph (a) of this section states that the country of origin of a good is the country in which:
(1) The good is wholly obtained or produced;
(2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section
102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because, based on the information provided, the imported castings are neither wholly obtained or produced, nor produced exclusively from domestic (Canadian)materials. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we look to section 102.11(a)(3).
Section 102.11(a)(3) provides that the country of origin is the country in which “each foreign material incorporated in that good undergoes an applicable change in tariff classification as set forth in 19 CFR 102.20....”
In this case, the castings do not undergo a change in tariff classification as a result of being “used” in Canada.
Since 19 CFR 102.11(a)(3) does not apply, pursuant to the hierarchial rules, we proceed to 19 CFR 102.11(b). Section 102.11(b) provides:
Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a), (1)the country of origin of the good is the country or countries of origin of the
single material that imparts the essential character to the good....
Applying 19 CFR 102.18(b), we find that the material that imparts the essential character to the imported parts in this case is the used casting. Therefore, the country of origin of the castings imported into the U.S. is the country of origin of the used castings. For the castings with a known country of origin, the country of origin does not change and no new marking is required.
In Ashdown, U.S.A. Inc. v. United States, 696 F. Supp. 661 (CIT 1988), the court held that a printing press, which was continually used in West Germany for nine years and which was not intended at the time of original sale to be exported to the U.S., became a bona fide part of the commerce of West Germany and was therefore, not an import from East Germany, where the printing press was produced. In Headquarters Ruling Letter (“HRL”) 561209, dated May 4, 1999, Customs held that used automotive parts (master cylinders, brake cylinders, cv joints) incorporated in vehicles in use in the U.S. or Canada and not marked with a country of origin were considered to be of U.S. or Canadian origin respectively. In HRL 559968, dated May 7, 1997, Customs determined that the origin of rebuilt automobile axle assemblies was the country where the automobiles were operated. In HRL 559968, Customs stated that: “Ashdown supports the proposition that the connection to the country where an article was built may be broken due to the extended period of time that the article was in use in another country.” Customs stated in HRL 561209 that “Customs has applied the principles of Ashdown primarily in instances where the country of origin of used articles cannot be determined. Accordingly, we believe that the approach taken in HRL 732258 to articles already marked with their country of origin is appropriate.” Therefore, in regard to this case, we find that the origin of the used automobile parts not marked with a country of origin will be Canada, the country where the castings were taken from automobiles in use.
An exception to the marking requirements is provided under 19 CFR 134.32(d) for articles for which the marking of the containers will reasonably indicate the origin of the articles. Accordingly, the exception will be applicable provided the used parts will reach the ultimate purchaser in the U.S. in the properly marked containers.
With regard to used cores imported into the U.S. and sold to consumers in the U.S. (rather than Canadian Tire), the certification requirements of 19 CFR 134.26 apply. Section 134.26, Customs Regulations (19 CFR 134.26), provides in pertinent part that:
If an imported article subject to these requirements is intended to be repacked in retail containers...after its release from Customs custody, or if the port director having custody of the article, has reason to believe that such article will be repacked after its release, the importer shall certify to the port director that: (1) If the importer does the repacking, he shall not obscure or conceal the country of origin marking appearing on the article, or else the new container shall be marked to indicate the country of origin of the article in accordance with the requirements of this part....
HOLDING:
Used automobile parts taken from vehicles in use in Canada and not marked with a country of origin are considered to be of Canadian origin, and must be marked accordingly. Pursuant to 19 CFR 134.32(d), the used parts are excepted from individual marking; marking the containers of the used parts imported into the U.S. satisfies 19 U.S.C. 1304. With regard to those used parts that are already marked with their country of origin, no further marking is required. Therefore, the marking “Each individual product is marked to indicate its country of origin. Where an individual article has no marking, its country of origin is Canada” is acceptable.
The certification requirements of 19 CFR 134.26 must be satisfied for rebuilt foreign automobile parts that are sold to ultimate purchasers in the U.S.
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