MAR-2-05 CO:R:C:V 732087 jd
Harold I. Loring, Esq.
Grunfeld, Desiderio, Lebowitz & Silverman
12 East 49th Street
New York, New York 10017
RE: Country of origin marking requirements applicable to
computer diskettes
Dear Mr. Loring:
This is in reply to your letter of January 17, 1989,
concerning the application of country of origin marking
requirements to imported computer diskettes.
FACTS:
According to your submission, your client will be importing
blank computer diskettes, either 5 1/4" or 3 1/2" in size, in
bulk. The diskettes come 50 to a package and 8 or 10 packages to
a carton. The packages of 50 and the multipackage cartons are
marked, in pertinent part, "Made in Canada."
The importer sells some of the diskettes, in carton sized
units, to original equipment manufacturers who write software
programs onto the diskettes. The importer processes some of the
diskettes itself by duplicating software programs onto them. You
state your opinion that the party that processes a blank computer
diskette by writing or duplicating onto it a software program has
substantially transformed the diskette. Accordingly, you believe
that such party should be considered the ultimate purchaser of
the blank diskette for purposes of marking requirements.
ISSUE:
Are blank computer diskettes substantially transformed by
having a program "written" onto them so as to make the party
doing the programming the ultimate purchaser of the diskettes?
Are the computer diskettes described above eligible for an
exception to individual marking if they are received by ultimate
purchasers in properly marked, unopened containers?
-2-
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19
U.S.C. 1304), requires that, unless excepted, every article of
foreign origin (or its container) imported into the United States
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 United States the English name of the country of origin of
the article. Section 134.1(d), Customs Regulations (19 CFR
134.1(d)), defines ultimate purchaser 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),
provides that an article used in the U.S. in manufacture which
results in an article having a name, character, or use differing
from that of the imported article will be considered
substantially transformed, and therefore the manufacturer or
processor in the U.S. who converts or combines the imported
article into the different article will be considered the
ultimate purchaser of the imported article within the
contemplation of 19 U.S.C. 1304(a). Accordingly, the article
shall be excepted from marking. However, in accordance with 19
U.S.C. 1304(b) and { 134.22, Customs Regulations (19 CFR 134.22),
the outermost container of the imported article shall be marked
to indicate the country of origin of the article.
Whether a substantial transformation has occurred depends
upon a comparison of the article before the processing which is
claimed to effect such transformation and the article after the
processing. It is a well established principle of customs law
that in order for a substantial transformation to be found, an
article having a new name, character or use must emerge from the
processing. See United States v. Gibson-Thomsen Co. Inc., 27
C.C.P.A. 267, C.A.D. 98 (1940),
It is the opinion of this office that the writing of a
program onto a computer diskette is a substantial transformation
of the diskette. Although the name of the article remains the
same, the adjectives applied before and after processing, i.e.,
blank and programmed, indicate that the articles are no longer
interchangeable. The character of the diskette has changed from
one of a blank storage medium to one with a predetermined
electronic pattern encoded onto it. Also, the use of the
diskette has changed from that of an unreadable, therefore
meaningless, article of software, to that of an encoded
instruction guide to enable a computer to perform various
commands.
-3-
HOLDING:
Based on the above analysis, we hold that a blank computer
diskette is substantially transformed by having a program
"written" onto it. Accordingly, the party performing the
programming is considered the ultimate purchaser of the blank
diskette for country of origin marking purposes. Therefore, the
diskettes are excepted from individual country of origin marking
provided customs officials at the port of entry are satisfied the
diskettes will reach ultimate purchasers in properly marked,
unopened containers.
We observed a photocopy of the label which appears on the
multipackage cartons of diskettes imported by your client.
Provided the label meets other marking requirements such as
conspicuousness, permanency, etc., it satisfies marking
requirements. If original equipment manufacturers that purchase
carton sized lots of diskettes from your client will receive the
same cartons unchanged from the time of import, marking
requirements will be satisfied. If any other references to a
place not the place of origin of the diskettes are added to the
cartons, such as a distributor's address, the origin of the
diskettes must be repeated in close proximity to such references
({ 134.46, Customs Regulations (19 CFR 134.46)). If any
repacking occurs before receipt by OEMs, the requirements of
{ 134.26, Customs Regulations (19 CFR 134.26) must be met.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch