CLA-02 RR:CR:SM 562597 EAC
Ms. Barbara Clausen
Regulatory Services Specialist
FedEx Trade Networks Transport & Brokerage, Inc.
205 West Service Road
Champlain, NY 12919
RE: Country of origin marking of salvaged automotive parts; NAFTA Marking Rules; Ashdown
Dear Ms. Clausen:
This is in response to your letter, dated November 4, 2002, requesting a ruling on behalf of Dave’s Truck and Auto Parts Ltd., pertaining to the proper country of origin marking of salvaged auto parts which have been obtained from auctions within the United States and Canada.
FACTS:
You state that Dave’s Truck and Auto Parts (“Dave’s”) purchases late model automobiles from auctions in the United States and Canada in order to “salvage” parts from the vehicles and resell the salvaged parts to various buyers. You state that “late model” connotes automobiles manufactured in the years 1995 and after. Dave’s obtains approximately 60 percent of their salvage from Canadian sources and 40 percent from U.S. sources, respectively. Subsequent to purchasing the vehicles, Dave’s transports them to a facility in Canada where they are stripped of all usable parts. The stripped parts, along with the vehicle identification number from which they are taken, are catalogued as inventory to be sold. The parts are tested, cleaned and any fluids are removed; however, they are not altered, repaired or upgraded. Upon the completion of this process, some of the parts have identifiable markings which signify their country of origin, while others have no identifiable markings since they were part of the original equipment of the automobile. Subsequent to being subject to the procedures described above, various purchasers will import the products through the port of Ogdensburg, New York.
ISSUES:
For country of origin marking purposes, what is the country of origin of salvaged automobile components when the components have identifiable markings indicating their original country of manufacture?
For country of origin marking purposes, what is the country of origin of the salvaged automobile components when there are no such identifiable markings?
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930 (19 U.S.C. §1304), as amended, provides that unless excepted, every article of foreign origin imported into the United States 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. The purpose of the marking statute is outlined in United States v. Friedlander & Co., 27 CCPA 297 at 302 C.A.D. 104 (1940), where the court stated that: “Congress intended 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.” Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. §1304.
The country of origin marking requirements for a “good of a NAFTA country” are also determined in accordance with Annex 311 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the appropriate Customs Regulations. The marking rules utilized for determining whether a good is a good of a NAFTA country are contained in Part 102, Customs Regulations. The applicable marking requirements of these goods are set forth in Part 134, Customs Regulations.
Section 134.1(b), Customs Regulations, defines “country of origin” as the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin within this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin.”
Section 134.1(j), Customs Regulations, provides that the “NAFTA Marking Rules” are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. 19 CFR 134.1(g) defines a “good of a NAFTA country” as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. 19 CFR 134.45(a)(2) provides that a “good of a NAFTA country” may be marked with the name of the country in English, French or Spanish.
You state that the auto salvage products described above are processed in Canada. Canada is defined as a NAFTA country under 19 CFR 134.1(g). Therefore we must first apply the NAFTA Marking Rules in order to determine whether the imported items are “goods of a NAFTA country”, and thus subject to the NAFTA marking requirements. Accordingly, Part 102 of the Customs Regulations sets forth the “NAFTA Marking Rules” for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Specifically, 19 CFR 102.11 sets forth the required hierarchy for determining the country of origin for marking purposes. Applied in sequential order, the required hierarchy establishes that the country of origin of a good will be the country where:
(a)(1)The good is wholly obtained or produced;
(2)The good is produced exclusively from domestic materials; or
Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in §102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because, based on the information provided, the imported parts are neither wholly obtained or produced, nor produced exclusively from domestic (Canadian) materials. Since an analysis of sections 102.11(a)(1) and 102.11(a)(2) will not yield a country of origin determination, we must look to section 102.11(a)(3).
Section 102.11(a)(3) also does not result in a country of origin determination as section 102.17 provides that a foreign material shall not be considered to have undergone an applicable change in tariff classification merely by reason of “dismantling or disassembly.” Therefore, since 19 CFR 102.11(a)(3) does not apply, our analysis proceeds to 19 CFR 102.11(b). Accordingly, section 102.11(b)(1) provides:
(b) Except for a good that is specifically described in the
Harmonized System as a set, or is classified as a set
pursuant to General Rule of Interpretation 3, where
the country of origin cannot be determined under
paragraph (a) of this section:
The country of origin of the good is the country
or countries of origin of the single material that imparts
the essential character to the good…
Applying 19 CFR 102.11(b)(1) to the instant case, the material that imparts the essential character of the parts is the parts themselves. However, you state that only some of the parts are marked with their country of manufacture and that the remaining parts lack any such marking.
In cases where the articles are already marked with their country of origin, we believe that the approach taken in Headquarters Ruling Letter (“HRL”) 732258, dated March 28, 1990, is appropriate. In HRL 732258, involving used automotive parts installed in vehicles in the United States, we stated the following:
There is no indication of any intent to transship alternators
through the United States and it is not possible to determine
where each and every alternator was made. Therefore, the
used alternators which are not already marked with a foreign
country of origin and for which it is impossible to trace the
original country of manufacture are considered to be of U.S.
origin. Those alternators which are already marked with a
foreign country of origin are properly marked pursuant to
19 CFR 134.1(b) and require no further marking.
Therefore, those salvaged automobile parts which are marked with their country of origin will retain the country of origin as marked on these articles prior to being removed from the automobile during the salvage process. See, HRL 561345, dated September 2, 1999; HRL 561642, dated January 9, 2002.
However, where the parts are not marked with any such marking indicating the country of origin, Ashdown, U.S.A. Inc. v. United States, 696 F. Supp. 661 (CIT 1988), will apply. In Ashdown, the Court of International Trade held that a printing press, which was continually used in West Germany for nine years and which was not intended at the time of the original sale to be exported to the United States, became a bona fide part of the commerce of West Germany and was therefore, not an import from a Communist country. While not directly on point here because the issue in controversy involved the proper rate of duty to be assessed rather than a country of origin determination, we note that Customs has previously used the theory of divestiture in Ashdown as support for the proposition that the connection to the country where an article was made may be broken due to the extended period of time that the article was in use in another country.
Therefore, in HRL 561209, dated May 4, 1999, Customs held that used automotive parts (master cylinders, brake cylinders, CV joints) removed from vehicles that were in use in the United States and not marked with a country of origin were considered to be of U.S. origin, while those unmarked, used parts removed from vehicles in use in Canada were considered to be of Canadian origin. Additionally, in HRL 559968, dated May 7, 1997, Customs determined that the origin of rebuilt automobile axle assemblies was the country where the automobiles were operated.
Therefore based upon the precedent established by Ashdown and Customs’ application of the principles thereof, we find that the origin of the unmarked salvaged automobile parts depends on where the salvaged parts were taken from the automobiles in use. If the non-marked parts were taken from automobiles in use in Canada, the country of origin for marking purposes will be Canada. However, if the non-marked parts were taken from automobiles in use in the United States, the country of origin for marking purposes will be the United States.
It should be noted that an exception to the individual marking requirements is provided under 19 CFR 134.32(d) for articles for which the marking of the containers will reasonably indicate the origin of the articles. Accordingly, the exception will be applicable provided the salvaged parts will reach the ultimate purchasers in the United States in properly marked container(s).
HOLDING:
Based upon the facts of this case, salvaged automobile parts taken from vehicles in use in Canada and not marked with a country of origin are considered to be of Canadian origin and must be marked accordingly. Similarly, salvaged automobile parts taken from vehicles in use in the United States and not marked with a country of origin are considered to be of U.S. origin. Parts considered to be of U.S. origin are not subject to the country of origin marking requirements of 19 U.S.C. §1304. With regard to those salvaged parts that are already marked with their country of origin, no further marking is required as they will retain their original country of origin.
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,
Myles B. Harmon
Director,
Commercial Rulings Division