MAR-05 RR:CR:SM 561225 BLS
Mr. Edward H. Jordan
Wilson UTC, Inc.
2601 Greenleaf Avenue
Elk Grove Village, IL 60007
RE: Country of origin marking of parts used in foundry molding machinery;
19 CFR 134.32(d); 134.32(h)
Dear Mr. Jordan:
This is in reference to your letter dated November 20, 1998, concerning country of origin marking requirements for certain spare parts imported by Georg Fischer Disa, Inc. ("Disa"), for use in foundry molding machinery.
FACTS:
Disa imports and sells foundry molding machines to its customers who are end-users and also supplies spare parts to these customers solely for repair and refurbishing of the machines. While the majority of the parts are of Danish origin, the countries of origin of other items include Great Britain, Holland, Germany, Japan, etc. Some of the parts are already marked with their country of origin at the time of importation, while others are not so marked. The country of origin of the parts is shown on the commercial invoice used for entry purposes.
Upon importation, the parts are placed in inventory. Smaller parts are placed in bins by part number. Larger parts remain in their packing crates. Disa maintains electronic inventory records which reflect the country of origin of the various imported parts.
Currently, Disa checks each imported part for country of origin marking as it is received in their warehouse. Based on the country of origin information contained in the commercial invoice and Disa’s electronic inventory system, adhesive labels or hangtags with country of origin designation are applied to each unmarked part before it is put into inventory. If unmarked parts are too small for labeling, they are placed in plastic containers and the plastic containers are labeled. Large spare parts that remain in their imported crates are usually shipped to the end-users in those imported crates. Those crates normally show the country of origin. If they do not, Disa applies the
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necessary marking. A letter from Disa explaining these procedures is attached to the entry package upon arrival of the goods.
Disa seeks an alternative to its current marking practice, which would be less costly and time-consuming. Accordingly, Disa has set forth four alternative "marking" scenarios for Customs review as follows:
Scenario 1
Disa would not mark those parts that are imported unmarked nor would the outermost containers of such items be marked (except for some items that are shipped in their outermost containers). Instead, the country of origin would be shown on the packing list included as part of the contents of each box. Additionally, the country of origin would be identified on each line item of the end-user’s invoice.
Scenario 2
The imported unmarked goods would not be marked. However, the outermost packing in which the spare parts are shipped to the end users would be marked with the country of origin. In the event a packing case would contain spare parts of multiple countries of origin, Disa would put the actual names of the countries of origin on the outermost containers, i.e., "Parts made in Denmark, Holland, and Germany."
Scenario 3
Same as Scenario No. 2 except Disa would use a generic statement similar to "Parts made in one or more of the following countries: Denmark, Holland, Germany."
Scenario 4
Neither the imported unmarked spare parts nor the outermost containers in which the parts are shipped to Disa’s customers would be marked with the country of origin. Instead, Disa would obtain a certificate from each of its current as well as any new customers acknowledging that they are aware the parts they are buying are made in various countries of origin. The certificate would be renewed annually.
ISSUE:
Whether the proposed scenarios satisfy the country of origin marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.
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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 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. 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 CCPA 297 at 302; C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. 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 (or, in the case of a good of a NAFTA country, purchase) the article in the form in which it is imported. In the instant case, the ultimate purchasers will be Disa’s customers, the end-users of the spare parts. Therefore, unless otherwise excepted, the goods must be marked to indicate the country of origin to these purchasers.
Section 134.32(d), Customs Regulations (19 CFR 134.32(d)), provides an exception to the marking requirements for articles where their containers will reasonably indicate the country of origin. For an exception to be granted under 19 CFR 134.32(d), the article must generally be imported in the container and that container must generally reach the ultimate purchaser unopened. See also 19 U.S.C. 1304(a)(3)(D).)
An exception under 19 CFR 134.32(d) may also be authorized in the discretion of the port director for imported unmarked articles which are to be repacked after release from Customs custody provided (1) The containers in which the articles are repacked will indicate the country of origin of the articles to an ultimate purchaser in the U.S. and (2) The importer arranges for supervision of the marking of the containers by Customs officers at the importer's expense or secures such verification, as may be necessary, by certification and the submission of a sample or otherwise, of the marking prior to the liquidation of the entry. See section 134.34(a), Customs Regulations (19 CFR 134.34(a)), and the certification requirements for repacked articles set forth under 19 CFR 134.26.
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Although Customs normally requires that an article (or its container) be marked with
its actual country or countries of origin, in some limited cases we have determined that strict compliance with this requirement would be economically prohibitive and alternative methods have been approved.
In Headquarters Ruling Letter (HRL) 734101 (July 9, 1991), we allowed toys sold inside plastic eggs in a vending machine to be individually marked with the actual country of origin, but since this was not visible, to have the machine marked "The Toys Contained In This Machine Are Marked With The Country Of Origin, And May Be Made In One Or More Of The Following Countries: Hong Kong, Taiwan, China". In that case, the items themselves were marked with the actual country of origin but the packaging contained the alternative country of origin designations. In another case, Customs ruled that an importer of automobile parts may mark the packaging "Contents Imported, See Article for Country of Origin". HRL 734491 (April 13, 1992).
In C.S.D. 84 56, Customs allowed fasteners to be marked "from one or more of the following countries...." to indicate the country of origin of such articles, where there were many varieties from many countries. The major source countries were required to be indicated. That ruling allowed a country of origin label which listed only the major source countries from which a repackager acquired his stock. Customs decision in
that case was intended to "eliminate the economic prohibitions of strict compliance but preserve the repackager's obligation to advise the ultimate purchaser of the foreign origin of the repackaged fasteners." C.S.D. 84 56.
In HRL 735482 (April 4, 1995), the issue was whether the country of origin marking on boxes of fasteners could list alternative countries as the possible country of origin where the fasteners were not commingled. The actual marking on the boxes referred to "Domestic fasteners and/or fasteners produced in Taiwan." After discussing prior Customs decisions in which alternative forms of marking were allowed, Customs stated the following:
Whitesell is not marking the fasteners themselves with their country of origin, nor is Whitesell commingling the fasteners. Whitesell will actually know the country of origin of the fasteners it is putting in each box. Therefore, we do not find it necessary to allow an alternative means of marking the boxes of fasteners. We do not believe that the possibility of an error in placing a country of origin label establishes sufficient grounds for finding a legal exception to the marking requirements.
Therefore, we disallowed the proposed disjunctive form of marking in that case.
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Thus, as applied to Scenarios 2 and 3, we find that the exception to the marking requirements for articles set forth under 19 CFR 134.32(d) will apply where the containers in which the parts are imported are properly marked with the country of origin and the articles are not repacked but shipped in this condition to Disa’s customers, who are the ultimate purchasers of the articles. Where the parts are imported unmarked and are repacked by Disa after release from Customs custody, 19 CFR 134.32(d) will be applicable provided the containers in which they are repacked are properly marked with the country of origin and the exception is authorized by the port director pursuant to 19 CFR 134.34(a).
However, the proposed forms of marking under Scenarios 2 and 3 listing multiple potential countries of origin when two or more types of parts from different countries are packaged together is not acceptable. Under these scenarios, Disa will know the country of origin of each item and the ultimate purchaser must be made aware of the country of origin of each part received.
Under 19 U.S.C. 1304(b), neither an article nor its container is required to be marked if the exception provided in 19 U.S.C. 1304(a)(3)(H) is applicable. 19 U.S.C. 1304(a)(3)(H) provides that if the circumstances of the importation or character of the articles is such that the ultimate purchaser must necessarily know the country of origin of the unmarked articles imported, then the articles imported need not be marked. (See also 19 CFR 134.32((h), which adds that in the case of a good of a NAFTA country, the ultimate purchaser must "reasonably know" the country of origin.)
The special "circumstances of importation" for an exception from marking under this provision generally refers to a situation where the importer is the ultimate purchaser of the imported article and there is a direct contract with the foreign supplier in which the supplier insures that the order will be filled only with articles manufactured in a named country. See HRL 700002 (July 18, 1972) and HRL 731967 (May 11, 1990). Informing customers either through advertising or personally or both of the country of origin of imported articles is not sufficient to satisfy the requirements of 19 CFR 134.32(h). See U.S. Wolfson Bros. Corp. v. United States, 52 Cust. Ct. 86, 91 (1964). In HRL 733266 dated August 15, 1990, we stated the following:
In this instance, there is no evidence to show that the ultimate purchasers of the engines had any direct contact with the production facilities in Brazil. Despite the fact that letters were submitted which indicate that Cummins' customers were aware that the country of
origin of the engines was Brazil, there is no indication that the
ultimate purchasers necessarily knew the country of origin of the
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engines by virtue of the circumstances of the importation. Therefore,
the engines are not excepted from marking under 19 CFR 134.32(h).
Accordingly, as there is no evidence that the ultimate purchasers in the instant case have any contact with the manufacturers, and thus no indication that these purchasers necessarily know the country of origin of the spare parts by "virtue of the circumstances of the importation", we find that as applied to Scenarios 1 and 4, the articles and their containers will not be excepted from the marking requirements pursuant to 19 CFR 134.32(h).
HOLDING:
As applied to Scenarios 2 and 3, the exception under 19 CFR 134.32(d) will apply where the containers in which the parts are imported are properly marked with the country of origin and the articles are not repacked but shipped in this condition to the end users. Where the parts are repacked by Disa after release from Customs custody, and neither the parts nor the container in which they are imported are properly marked, 19 CFR 134.32(d) will also be applicable provided the containers in which they are repacked are properly marked and the exception is authorized by the port director pursuant to 19 CFR 134.34(a). If the article or its container is properly marked upon importation and the goods are repacked, Disa must comply with the certification requirements set forth in 19 CFR 134.26.
Based on the information submitted, the proposed forms of marking in Scenarios 2 and 3 which refer to multiple potential countries of origin when more than one type of part is repackaged together is not acceptable. When such form of packaging is used, Disa must identify the specific part and its country of origin on the packaging so that the ultimate purchaser will be aware of the country of origin of each part received.
As there is no indication that the ultimate purchasers necessarily know the country of origin of the spare parts by "virtue of the circumstances of the importation", we find that the exception to the marking requirements under 19 CFR 134.32(h) is not applicable. Therefore, proposed Scenarios 1 and 4 in which neither the article nor its container will be marked will not satisfy the marking requirements.
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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