MAR 2-05 CO:R:C:V 731864 LR
District Director of Customs
477 Michigan Avenue
Detroit, Michigan 48226-2568
RE: J-list Exception: Parts for machines imported from
same country as parts
Dear Sir:
This is in response to your request for internal advice of
October 11, 1988 (MAN-1-CO:CT PM IADVICE/TXTFRISC), concerning
the applicability of Headquarters Ruling Letter (HRL) 720420,
dated September 28, 1982, to certain importations of the J.I.
Case Company (Case). You have also forwarded the August 17,
1988, letter submitted by Katten Muchin & Zavis, counsel for
Case, on this issue. A copy of Case's 1988 Agricultural
Equipment Buyers Guide, a listing of the part numbers, and an
affidavit of Richard B. Ryndak, International Counsel and
Assistant Secretary of Case, was also furnished by counsel during
a meeting at Headquarters on March 6, 1989.
FACTS:
Case manufactures agricultural implements for tractors, such
as plows, disk harrows, mowers, planters and seeders at its plant
in Hamilton, Ontario, Canada. This is the only Case plant
worldwide which manufactures these particular agricultural
implements. The submitted brochure includes pictures of these
implements and is accompanied by a listing of their part numbers.
The implements are die stamped "Made in Canada" when imported
into the U.S.
Case also manufactures service parts for the agricultural
implements manufactured in Hamilton, such as spools, bolts,
bushing and shanks. These parts are also manufactured solely at
the Hamilton plant, and are manufactured specifically for the
agricultural implements made originally at the plant. According
to Case, these parts are not interchangeable and could not be
used on either general purpose equipment or on other types of
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agricultural equipment manufactured by other companies. As a
result, Case indicates that if an agricultural implement
manufactured by Case at the Hamilton plant requires a service
part, the U.S. farmer who owns the implement would order the part
from a Case authorized dealer who will order the part directly
from the Hamilton plant.
Case does not individually mark the country of origin on the
service parts for agricultural implements which are imported from
its Hamilton plant into the U.S. but includes the following
statement on the commercial invoices accompanying each shipment:
This invoice covers agricultural parts manufactured in
Canada for machinery or equipment also manufactured in
Canada. An exception for marking is requested under
Section 134.33 CR per U.S. Customs Headquarters letter
dated 9-28-82, Ref. 720420
OK.
In February 1988, Case received a marking notice on a
shipment of agricultural service parts from Canada which were
entered at Detroit. Your office advised Case, through its
broker, that Headquarters Ruling Letter (HQ) 720420 was not
applicable to Case's importations and that in the future all
shipments of service parts had to be marked. On June 30, 1988, a
shipment of unmarked agricultural service parts from Case's
Hamilton plant was seized by Customs.
ISSUE:
Whether agricultural parts manufactured in Canada
specifically as replacement parts for agricultural implements
made only in Canada are excepted from individual country of
origin under the J-list exception for "parts for machines
imported from same country as parts".
LAW AND ANALYSIS:
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C.
1304), requires, subject to certain specified exceptions, that
all articles 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 will permit in such a
manner as to indicate to an ultimate purchaser in the U.S. the
English name of the country of origin of the article.
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Certain classes of articles which are specified in section
134.33, Customs Regulations (19 CFR 134.33), known as the J-list,
are excepted from individual country of origin marking pursuant
to 19 U.S.C. 1304(a)(3)(J). One of the items on the J-list is
"parts for machines imported from same country as parts". This
item has been interpreted to cover replacement parts which are
manufactured in the same country as the original machine which is
exported to the U.S. As construed by Customs in T.D. 75-85,
dated March 12, 1975, the following principles are applicable to
this exception:
(1) The word "machine" is used in a general sense and also
applies to such things as vehicles.
(2) The exception applies to replacement parts for
machines which may be manufactured in more than one
country, provided that Customs officers are satisfied that
the machines exported to the U.S. are made in only one
country.
(3) The exception applies to replacement parts made and
engineered for use on or in the particular machine
involved, and also to parts made to standard or stock
designs which are used in producing the machine.
(4) The exception is applicable only to replacement parts
manufactured in the same country as the machine which is
exported to the U.S.
On September 28, 1982, Customs issued HQ 720420, regarding
the country of origin marking requirements of service parts
manufactured by International Harvester Canada, Ltd., for use on
agricultural implements also manufactured by International
Harvester Canada, Ltd. In applying the principles set forth in
T.D. 75-85, Customs ruled that if the service parts in question
are all made in Canada, and are intended to be used on
agricultural implements made in Canada that are themselves
properly marked to indicate their country of origin, an exception
from individual marking for the parts would be justified under 19
CFR 134.33. The ruling provided that Customs officers at the
port of entry may require appropriate written statements to this
effect before allowing this exception.
Case indicates that it acquired the Canadian plant from
International Harvester Company in 1985. Case claims that except
for the change in legal ownership, none of the facts on which the
ruling was based have changed since the ruling was issued in
1982. As was the situation in 1982, Case claims that both the
agricultural machinery in question and the replacement parts for
these machines are still made only in Hamilton. In addition,
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Case claims that because the parts are not interchangeable, they
can only be used on a machine originally manufactured at that
plant. An affidavit from Richard B. Ryndak, dated September, 8,
1988, International Counsel and Assistant Secretary of Case, has
been submitted attesting to these facts.
Accordingly, Case argues that the actual facts continue to
fit squarely within the "J-list" exception which was applied in
the 1982 ruling, namely that they are "parts for machines
imported from same country as parts" and that HQ 720420 is still
valid with respect to Case's importation of the identical
merchandise from the Canadian plant.
Your office is of the opinion that the parts for
agricultural implements imported by Case are not entitled to the
J-list exception for "parts for machines imported from same
country as parts" because Case does not satisfy the requirement
that the machines exported to the U.S. market are made in only
one country. You indicate that Case's market for implements and
parts is global in nature and is not limited solely to one
country. Whereas International Harvester (the recipient of the
1982 ruling) manufactured implements only in Canada, you state
that Case manufactures agricultural and construction implements
in various foreign countries. As such, you conclude that the J-
list exception does not apply to any of Case's importations of
parts for agricultural implements.
You base this conclusion on your observation that previous
Headquarters rulings have used the term "machine" in a generic,
rather than model specific sense. In your opinion, the word
"machine" would include all machines of a particular product
group rather than the specific models that are produced by a
particular plant. In your opinion, the fact that the specific
types of agricultural implements manufactured by Case in Canada
are manufactured only in Canada, is immaterial.
You also indicate that because of Case's global market, the
granting of an exception from marking would be inconsistent with
the intent of 19 U.S.C. 1304(a)(3)(H), which permits a waiver of
marking "when the ultimate purchaser, by reason of the character
of the article or by reason of the circumstances of its
importation, necessarily must know the country of origin of such
article even though it is not marked to indicate its origin."
You note that a farmer cannot "necessarily know" the country of
origin of the imported parts now that Case manufactures
implements in several countries.
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After careful consideration of the arguments presented, we
are of the opinion that the agricultural service parts imported
from Case's Hamilton plant are entitled to an exception from
marking as "parts for machines imported from same country as
parts". We believe that a common sense approach should be used
to determine whether or not this J-list exception applies to a
particular situation. The underlying rationale for the exception
appears to be that if the ultimate purchaser buys a specific
machine which is properly marked as to its country of origin,
then there is no need to mark a replacement part for that machine
if it is manufactured in the same country as the original
machine. The presumption is that the ultimate purchaser will
assume that unless otherwise marked, the replacement part was
manufactured in the same country as the machine itself.
The prerequisites set forth in T.D. 75-85, including the one
that requires that the machines exported to the U.S. are
manufactured in only one country, are for the purpose of ensuring
that the unmarked replacement parts can be used only in a machine
which was manufactured in the same country as the replacement
parts. We see no reason to deny the exception from marking in a
case such as this, where the importer has shown that both the
particular machines and the parts for these machines are made
only in one country, namely Canada, and that the parts do not fit
any other machine. Since the imported Canadian parts can only
fit the Canadian machine, the purpose of the exception is served.
In our opinion, the fact that Case may manufacture other
implements (that could not incorporate the imported replacement
parts) in countries other than Canada, is not material.
Headquarters determination in T.D. 75-85 that the word
"machine" should be applied in the general sense was so the
exception would apply to products such as vehicles, which may not
generally be thought of as machines. Whether or not the articles
in question are eligible for an exception from marking under 19
U.S.C. 1304(a)(3)(H) is not determinative of whether they are
excepted from marking under 19 U.S.C. 1304(a)(3)(J).
HOLDING:
Parts manufactured in its Canadian plant to be used
exclusively as replacement parts for agricultural implements also
manufactured in the same plant are excepted from individual
marking pursuant to 19 U.S.C. 1304(a)(3)(J) and 19 CFR 134.33 as
"parts for machines imported from same country as parts."
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The outermost container in which the parts ordinarily reach the
ultimate purchaser is required to be marked to indicate the
origin of its contents.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch
cc: Penalties Branch: Burt Schlissel