MAR-2-05 CO:R:C:V 731967 EAB
M.C. Hagerman, Subcontract Administrator
GTE Tactical Systems Division
GTE Government Systems Corporation
400 John Quincy Adams Road
Taunton, MA 02780-1069
Re: Country of origin marking of communication devices and
components imported pursuant to DOD procurement contracts
Dear Mr. Hagerman:
This is in reply to your letters dated October 11, 1988, and
December 14, 1989, regarding the country of origin marking
requirements of items imported pursuant to U.S. military
procurement contracts Nos. DAAB07-86-C-K022 and DAAB07-86-D-K023,
both dated December 19, 1985. We regret the delay in responding.
FACTS:
Since 1985, your company has been under contract with the
U.S. Army for the production and fielding of Mobile Subscriber
Equipment (MSE) communication systems. The term of the Prime MSE
Contract if all options are exercised by the Army is through
1993. Under the MSE Requirements Contract, GTE is obligated to
provide spare parts, repairs and training for 15 years after
final acceptance of the last equipment deliveries to the Army.
The two contracts involve a significant amount of equipment
imported from Army-approved subcontractors in Canada, France,
Italy, Sweden and the United Kingdom. Under the terms of the MSE
contracts, all subcontractors must be approved by the Army, and
all foreign subcontractors are identified in the contract. Prior
to the award of the contracts, GTE informed the Army of its
proposed sources of supply including most of the foreign
subcontractors that are now part of the MSE contract and the
Government conducted pre-award surveys of many of the foreign
subcontractors identified at this time. Both the Army and the
Government, via the Defense Contract Administration Service,
regularly monitor production activities at the various foreign
subcontractors.
Pursuant to these procurement contracts, your company
imports mobile radio assemblage and components from France;
microwave radio units and components and telescopic radio masts
from Sweden; radio antennae and line-of-sight radios from the
United Kingdom; and, other line-of-sight radios from Canada. As
imported, each item is fully manufactured. You match the items
into the MSE communications systems for the Army.
As specifically required by contract, pursuant to the
mandatory labelling requirements and methods set forth in MIL-
STD-130G, Military Standard, Identification Marking of U.S.
Military Property, the equipment is marked by means of a
nameplate, bar code labels, or both. The nameplates or bar
codes identify the item and manufacturer via an Army database.
From this database, the manufacturer's country of origin can be
identified. Where the particular components are too small to be
marked directly, the packages usually contain the markings. All
items imported prior to the date of the ruling request have been
cleared through Customs marked in this manner.
You indicate that the Army is well aware of the country of
origin of all imported MSE items and request an exception from
marking under {134.32(h), Customs Regulations (19 CFR 134.32(h)).
ISSUE:
May foreign articles imported in accordance with U.S.
military procurement contracts be excepted from individual
country of origin marking pursuant to 19 CFR 134.32(h)?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19
U.S.C. 1304) and implemented in 19 CFR Part 134, provides that,
unless excepted, every article of foreign origin (or its contain-
er) imported into the U.S. shall be marked in a conspicuous place
as legibly, indelibly and permanently as the nature of the arti-
cle (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.
The ultimate purchaser is defined in 19 CFR 134.1(d) as
"generally the last person in the U.S. who will receive the
article in the form in which it was imported." Section 134.35,
Customs Regulations (19 CFR 134.35) further provides that a
manufacturer who converts or combines an imported article into a
different article will be considered the ultimate purchaser of
the imported article so long as the manufacturing process
substantially transforms the article into a new and different
article, having a new name, character or use.
In this case, we find that your company does not substan-
tially transform the imported articles. Essentially, you repack
finished articles and match them with others to deliver a MSE
communications system to your customer. In view of this, we
find that the U.S. defense agency with which you have contracted
is the ultimate purchaser of the foreign articles.
Articles described or meeting the specified conditions set
forth in 19 CFR 134.32 are excepted from marking requirements.
In particular, {134.32(h) provides an exception from marking for
articles for which the ultimate purchaser must necessarily know
the country of origin of the articles by reason of the circum-
stances of their importation. Section 134.22(d)(1), Customs
Regulations (19 CFR 134.22(d)(1)) excepts from marking the
containers of articles excepted by reason of {134.32(h).
Generally speaking, Customs requires that the importer be the
ultimate purchaser of the imported article and have direct
contact with the foreign supplier for 19 CFR 134.32(h) to apply.
Rulings 730243 (March 5, 1987) and 731583 (May 31, 1989). In
U.S. Wolfson Bros. Corp. v. United States, 52 Cust. Ct. 86, 91
(1964), the court cited with approval the following statement
from "Exporting to the United States":
The clearest application of this [19 CFR
134.32(h)] exemption is when the contract
between the ultimate purchaser in the [U.S.]
and the supplier abroad insures that the
order will be filled only with articles
grown, manufactured, or produced in a named
country.
In view of the fact that the procurement contracts 1)
conform to the labelling requirements of MIL-STD-130G; 2)
identify the foreign subcontractors supplying each type of item;
and, 3) provide that your customer will regularly monitor the
production activities of the foreign manufacturers, Customs finds
that the ultimate purchaser necessarily knows the country of
origin of each article, and, therefore, the articles are excepted
from country of origin marking pursuant to 19 CFR 134.32(h). As
a result, their containers are excepted from marking by reason of
19 CFR 134.22(d)(1).
HOLDING:
Articles and their containers imported by GTE pursuant to
U.S. military procurement contracts Nos. DAAB07-86-C-K022 and
DAAB07-86-D-K0023, both dated December 19, 1985, are excepted
from marking under 19 CFR 134.32(h) and 19 CFR 134.22(d)(1).
Sincerely,
Marvin M. Amernick, Chief
Value, Special Programs and
Admissibility Branch