MAR-2-05 CO:R:C:V 732409 KG
Joel R. Junker
Bogle & Gates
The Bank of California Center
Seattle, Washington 98164
RE: Country of origin marking of used clothing
Dear Mr. Junker:
This is in response to your letters of May 12, and September
11, 1989, your reference 01287/01301, requesting a ruling on the
country of origin marking of used clothing being imported from
Canada.
FACTS:
Your client ("the importer") anticipates importing
containers of used clothing in bales purchased from the Salvation
Army in Canada. There are several intended uses for the used
clothing after it is sorted in the U.S. About 15% will be sold
in the U.S. after fabrication into industrial wipers. Wool items
will be sorted and sold for re-export to Italy. General clothing
will be sorted by type and sold for re-export to a number of
countries. About 10 to 15% will be taken to landfills for
destruction.
The used clothing to be made into industrial wipers go
through several steps in the U.S. The used clothing is inspected
and separated. The clothing appropriate for fabrication into
industrial wipers is opened to lay flat by cutting the seams and
removing the collars, buttons and zippers. The flat fabric is
cut into square pieces, the edges of the fabric are folded over
and sewn closed and fabric which is soiled is washed.
In support of the importer's argument that the importation
of used clothing and marking it with the proper country of
origin cannot be conducted except at an expense economically
prohibitive of their importation, cost figures were submitted.
The current cost of a 40 ton container of used clothing is about
$3,200 or $.08 per pound. The importer estimates that the
additional cost of sorting by country of origin, if possible to
identify, would be $6,000 per container. Further, the imported
estimates that the additional cost of individually marking each
piece of clothing would be approximately $.25 per pound or an
additional $10,000 per container. The importer states that this
estimate is based on the labor cost of examining each piece of
clothing, removing any label indicating a country of origin other
than Canada and properly labeling each garment.
ISSUE:
What is the proper country of origin marking for imported
used clothing.
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (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 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. Congressional intent in
enacting 19 U.S.C. 1304 was "that the ultimate purchaser should
be able to know by an inspection of the marking on the imported
goods the country of which the goods is the product. The evident
purpose is to mark the goods so that at the time of purchase the
ultimate purchaser may, by knowing where the goods were produced,
be able to buy or refuse to buy them, if such marking should
influence his will." United States v. Friedlaender & Co., 27
C.C.P.A. 297 at 302 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304. The importer asserts that the used clothing should
be excepted from country of origin marking pursuant to 19 U.S.C.
1304(a)(3)(C) and 19 CFR 134.32(c), which allows an exception
from country of origin marking for "articles that cannot be
marked prior to shipment to the United States except at an
expense economically prohibitive of its importation."
In HQ ruling 730174 (March 31, 1987), Customs addressed the
issue of used clothing purchased in the U.S., exported to Mexico
for sorting and re-imported for sale in the U.S. Customs found
that an exception from marking pursuant to 19 CFR 134.32(c), was
unnecessary. The used clothing was regarded as of U.S. origin
because it was purchased from the Salvation Army, Goodwill
Industries stores and similar organizations within the U.S. and
therefore, presumed to have been worn and used in the U.S. In
this case, the used clothing is purchased from the same type of
organization in Canada. Therefore, it is presumed that the
clothing was worn and used in Canada and the imported used
clothing can all be marked "Made in Canada". This would
eliminate the need to sort the clothing by original country of
origin and also eliminate the problem of not knowing the original
country of origin of every single garment.
The ultimate purchaser is defined in section 134.1, Customs
Regulations (19 CFR 134.1), as generally the last person in the
United States who will receive the article in the form in which
it was imported. The regulation gives the following relevant
examples: If an imported article will be used in manufacture, the
manufacturer may be the ultimate purchaser if he subjects the
imported article to a process which results in a substantial
transformation of the article, even though the process may not
result in a new or different article. If the manufacturing
process is merely a minor one which leaves the identity of the
imported article intact, the consumer or user of the article, who
obtains the article after the processing will be regarded as the
ultimate purchaser.
A substantial transformation occurs when articles lose their
identity and become new articles having a new name, character or
use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at
270 (1940), National Juice Products Association v. United
States, 10 CIT____ , 628 F. Supp. 978 (Ct. Int'l Trade 1986),
Koru North America v. United States, 12 CIT ____, 701 F. Supp.
229 (Ct. Int'l Trade 1988).
The question presented is whether that portion of the
imported used clothing that is processed into industrial wipers
by the importer is substantially transformed in the U.S. If the
imported used clothing is substantially transformed in the U.S.,
the importer would be considered the ultimate purchaser and
pursuant to section 134.35, Customs Regulations (19 CFR 134.35),
only the outermost container in which the used clothing is
imported must be marked. In this instance, the name of the
imported article changes from used clothing to cloth squares or
rags. However, the change in name alone is not determinative.
Koru North America at 235. The use of the article clearly
changes; the used clothing can be worn as clothing while the
cloth squares clearly cannot be worn as clothing. Further, the
character of the article changes. The used clothing has
zippers, buttons and collars, is different sizes and presumably
would include pants, blouses, jackets, sweaters, etc., while the
processed used clothing is merely cloth squares of uniform size.
The used clothing that is processed by the importer in the U.S.
is substantially transformed and therefore, pursuant to 19 CFR
134.35, the individual items of used clothing are excepted from
country of origin marking and only the outermost containers of
the used clothing to be processed into industrial wipers must be
marked with the country of origin.
For the used clothing that will be re-exported or destroyed,
the importer is the last person in the U.S. to receive the goods
in the form in which they were imported. Therefore, the
importer is the ultimate purchaser. Marking the outermost
container will inform the importer of the country of origin.
HOLDING:
The country of origin for the imported used clothing is
Canada. The used clothing that is processed into industrial
wipers in the U.S. as described above is substantially
transformed and therefore, is excepted from individual country of
origin marking. For the remainder of the used clothing which is
either re-exported or destroyed, marking the outermost container
will inform the ultimate purchaser of the country of origin. As
long as the District Director is satisfied that the used clothing
not made into industrial wipers is re-exported or destroyed, only
the outermost container of the used clothing must be marked with
the country of origin.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch
cc: District Director
Blaine, Washington