MAR-2-05 CO:R:C:V 734121 NL
Mr. Robert J. Cromie
Chief, Transportation and
Packaging Division
Contract Management
Defense Logistics Agency Headquarters
Cameron Station
Alexandria, VA 22304-6100
RE: Country of Origin Marking of Articles Procured for the U.S.
Military or Sold to Third Countries Under the Foreign
Military Sales Program.
Dear Mr. Cromie:
This is in response to your letter of April 4, 1991, in
which you request advice from this office concerning the country
of origin marking requirements applicable to articles imported
from Canada. Your agency imports articles for use by the U.S.
military, and supervises the importation of articles for
incorporation into Department of Defense (DOD) "end items". You
ask also about the marking requirements applicable to articles
shipped to the U.S. for forwarding to third countries under DOD
Foreign Military Sales procedures.
Your letter indicates that your office in Ottawa plans to
gather data concerning specific problems which have arisen with
country of origin marking, but that in the meantime it would be
of benefit to you and Canadian industry for this office to supply
some general guidance.
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.
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and exceptions of 19
U.S.C. 1304.
To determine whether an imported article may be excepted
from country of origin marking Customs must consider who, if
anyone, is the ultimate purchaser in the U.S. In 19 CFR 134.1(d)
the ultimate purchaser is defined generally as the last person in
the U.S. to receive the article in the form in which it was
imported. Thus, for example, the Defense Logistics Agency would
likely be the ultimate purchaser in the U.S. of an article
procured for its account for use by the U.S. military. Such an
article would be required to be marked at the time of
importation, unless otherwise excepted, so as to indicate its
foreign origin to the ultimate purchaser in the U.S.
If an imported article is to be used in manufacture, such
that after processing a new article will emerge having a new
name, character, or use, the manufacturer or processor will be
considered, as provided in 19 CFR 134.35, the ultimate purchaser
of the imported article. Such an article is said to have been
substantially transformed. In that event, only the container of
the imported article is required to be marked with the article's
country of origin. With respect to articles to be imported for
incorporation into Department of Defense "end items", the person
in the U.S. who effects a substantial transformation of the
imported articles into "end items" will be considered the
ultimate purchaser. However, it will not necessarily be the case
that all imported articles incorporated into "end items" will be
considered by Customs to have been substantially transformed. If
a substantial transformation is considered not to have been
effected, the imported article must be marked to indicate its
origin to the ultimate purchaser, e.g, the DOD unit which is
purchasing the "end item".
You have asked about the applicablity of the exception from
marking provided at 19 CFR 134.32(f). That exception is
available for articles imported for use by the importer and not
intended for sale in their imported or any other form. Such
uses, under our rulings, have included samples for sales
presentations, articles imported for testing, articles for
showroom display, and machines, equipment, and supplies used in
carrying on a business. In general, this exception applies only
to articles imported for the importer's personal use. Thus, an
article imported for use in the manufacture of a DOD "end item"
would not be eligible for this exception. Assuming that your
agency serves as the importer of an item destined for delivery
to, and use by, another element of the defense establishment, we
think it unlikely that an article so imported would qualify for
this exception.
You have also asked whether the exception set forth at 19
CFR 134.32(j) is applicable to articles imported from Canada
which are transshipped via the U.S. to third countries under the
Foreign Military Sales program. That provision excepts from the
marking requirements articles entered or withdrawn from warehouse
for immediate exportation or for transportation and exportation.
Assuming compliance with Customs formalities for such entries,
this exception would be available in accordance with the terms of
the exception. The basis for this exception is that there is
deemed to be no ultimate purchaser in the U.S., and therefore
articles imported for transshipment are not required to satisfy
the requirements of 19 U.S.C. 1304 and Part 134, Customs
Regulations.
There is a further exception from country of origin marking
which may be applicable to articles imported by, or for the
account of, your agency. 19 CFR 134.32(h) provides an exception
from marking for articles for which the ultimate purchaser must
necessarily know the country of origin by reason of the
circumstances of their importation, even though they are not
marked as to their origin. It is not sufficient that the
ultimate purchaser be advised personally or by advertising or
brochures of an article's country of origin. In general this
exception may not be approved unless there is evidence of direct
dealings between the producer in the foreign country and the
ultimate purchaser, such as by contractual dealings or if there
is a parent/subsidiary relationship between the foreign supplier
and the ultimate purchaser.
In the context of civilian and defense procurement, it is
likely that the ultimate purchaser, the government, will have
purchased on the basis of prior approval of any foreign-origin
articles. Even if the foreign articles are being procured
through a subcontractor, it is reasonable to assume that the
government retains authority to approve the acquisition of
foreign end-items or components, and to refuse any articles not
specified. In one recent ruling, HQ 731967 (May 11, 1990), this
office approved an exception under 19 CFR 134.32(h) when the
Army 1) retained approval over all foreign subcontractors and
their sources of supply; 2) conducted pre-award surveys; and 3)
regularly monitored production activities of foreign
subcontractors. It is likely that other similar arrangements for
procurement by the government would permit this office to
approve exceptions from marking under 19 CFR 134.32(h), it being
shown by these circumstances that the ultimate purchaser
necessarily knows the country of origin of an article by the
circumstances of its importation.
We are not aware of other exceptions from country of origin
marking which would apply to the importations you describe, but
the possiblity cannot be excluded that other circumstances would
warrant the approval of other exceptions. If we can be of
further assistance please do not hesitate to contact me or Ned
Leigh on (202) 566-5765.
Sincerely,
Thomas L. Lobred
Chief, Value and
Marking Branch