MAR 2-05 CO:R:V:C 733266 RSD
District Director of Customs
40 Gay Street
Baltimore, Maryland 21202
RE: Internal advice request concerning the country of origin
marking of diesel engines
Dear Sir:
This is in response to your memorandum dated April 11, 1990,
forwarding the internal advice request of Cummins Engine Company,
Inc., (Cummins) regarding the country of origin marking of
imported diesel engines.
FACTS:
This matter arises in the context of a seizure of imported
diesel engines. Customs at the Baltimore District determined
that the engines were deceptively marked and seized the shipments
under 19 U.S.C. 1595a(c) for violation of 19 U.S.C. 1304 and 15
U.S.C. 1124. The engines in question are comprised of several
component parts which were manufactured in various countries
other than Brazil. The component parts of the engines are
marked with the country of origin from where they originated. In
Brazil, these component parts were used in the manufacture of the
engines. The country of origin marking of these components
remained visible on the finished engine. A metal data plate
containing pertinent information on the engine was permanently
affixed to the finished engine. On the metal data plate,
"Manufactured by Cummins Brazil S.A." was inscribed.
Cummins sold some of the engines to Steiger Tractor, Inc. of
Fargo, North Dakota. Steiger used the engines to power
agricultural tractors that it manufactures. The remaining
engines imported by Cummins were sold to Onan Corporation of
Minneapolis, Minnesota, for the purpose of manufacturing diesel
electric generator sets. Cummins submitted letters from its
customers, Steiger and Onan, that they were aware that the
engines were manufactured in Brazil.
Cummins submitted a request for internal advice arguing that
the engines were properly marked under 19 U.S.C. 1304. This
ruling is limited to issues concerning 19 U.S.C. 1304 raised in
the request for internal advice.
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 C.C.P.A. 297 at 302; C.A.D. 104 (1940).
Part 134, Customs Regulations (19 CFR Part 134), implements
the country of origin marking requirements and the exceptions of
19 U.S.C. 1304. Section 134.1(b), Customs Regulations (19 CFR
134.1(b)), defines "country of origin" as the country of
manufacture, production or growth of any article of foreign
origin entering the U.S. 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 the meaning of the marking laws and
regulations. The case of U.S. v. Gibson-Thomsen Co., Inc., 27
C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in
manufacture which results in an article having a name, character
or use differing from that of the constituent article will be
considered substantially transformed. In such circumstances the
U.S. manufacturer is the ultimate purchaser. The imported
article is excepted from individual marking and only the
outermost container is required to be marked. (see 19 CFR
134.35).
In the present case, Steiger and Onan, who were using the
engines to manufacture tractors or electrical generating sets,
substantially transformed the engines into different articles of
commerce. Thus they were the ultimate purchasers and under 19
CFR 134.35 the engines would have been excepted from country of
origin marking. Only the outer containers would be required to
be marked with the country of origin of the engines. However,
pursuant to 19 CFR 134.36, an exception shall not apply to any
article or retail container which bears any words, letters, names
or symbols described in 19 CFR 134.46 or 19 CFR 134.47 which
imply that an article was made or produced in a country other
than the actual country of origin. The names of countries other
than Brazil appeared prominently on several components which
remain visible on the finished engines. The country names, other
than Brazil, such as the United States and Canada, which appeared
on the engine components, were likely to cause confusion and be
misleading as to the actual country of origin of the engines.
Therefore, the engines could not be excepted from marking their
country of origin despite the fact that the ultimate purchasers
were substantially transforming the engines into different
articles of commerce.
Cummins maintains that because its customers, the ultimate
purchasers of the engines, were aware of the country of origin,
the articles should have been excepted from marking under section
134.32(h), Customs Regulations (19 CFR 134.32(h)). Under this
section articles for which the ultimate purchaser must
necessarily know the country of origin by reason of the
circumstances of their importation or by reason of the character
of the articles even though they were not marked to indicate
their origin are excepted from individual country of origin
marking. The special "circumstances of importation" for a 19 CFR
134.32(h) exception from marking 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 HQ 700002, (July 18, 1972)
and HQ 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 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
engines by virtue of the circumstances of the importation.
Therefore, the engines are not excepted from marking under 19 CFR
134.32(h).
Cummins also contends that it did in fact properly mark the
engines with the country of origin by putting the country name
Brazil on the engine data plate. It further argues that the
ultimate purchasers were sophisticated buyers who knew to look at
the data plate to find all vital information regarding the
engine, including where the engine was made. However, we note
that the inscription on the data plate only stated "Manufactured
by Cummins Brazil S.A." Cummins Brazil S.A. was presumably a
company name. Customs has ruled placing a company name which
includes the name of the country of origin on an article or a
container without a separate country of origin marking does not
satisfy the requirement of 19 U.S.C. 1304 to indicate the country
origin. See 732652, June 20, 1990. Moreover, the prominent
display of the names, U.S.A. and Canada, on the engine components
was likely to be confusing and misleading as to the correct
country of origin of the finished engines without a marking which
also clearly specifies the country of origin of the engine. See
HQ 722110, (August 9, 1983), (imported golf clubs with a "Made
in U.S.A." marking on the U.S. made shaft and grip would cause
confusion as to the country of origin of the golf clubs).
In order to satisfy the requirements of 19 U.S.C. 1304 to
indicate the country of origin, the engine should be
conspicuously marked "Engine made in Brazil." Also, additional
explanation is necessary to clarify that the country marking on
the components refer only to the country of origin of the
components. In accordance with 19 U.S.C. 1304, and 19 CFR
134.41(b), the country of origin marking on the engines must be
sufficiently conspicuous that it can be easily found and read
without strain. Based on the photographs submitted, we are
unable to tell whether the location of the marking on the data
plate was sufficiently conspicuous.
The only remaining issue is the applicability of 19 CFR
134.46 to the facts of this case. 19 CFR 134.46 requires that
when the name of a city or locality in the U.S. or the name of
any foreign country or locality other than the country or
locality in which the article was manufactured or produced,
appears on an imported article or its container, there shall
appear, legibly and permanently, in close proximity to such
words, letters or name, and in at least a comparable size, the
name of the country of origin preceded by "Made in," "Product
of," or other words of similar meaning. The purpose of this
section is to prevent the possibility of misleading or deceiving
the ultimate purchaser as to the actual origin of the imported
goods. Although the country of origin of the finished engine is
different than the country of origin of the component parts and
the parts are marked with their own country of origin, we find
that the requirements of 19 CFR 134.46 do not apply if the engine
is conspicuously marked with a phrase such as "Engine Made in
Brazil - country of origin of components parts as marked." The
prominence of the markings on the components parts is to be taken
into account in determining whether the required marking is
sufficiently conspicuous.
HOLDING:
Steiger and Onan performed a substantial transformation and
were the ultimate purchasers of the engines, if they used the
engines to manufacture tractors and generator sets.
The exception to marking a foreign article with its country
of origin found in 19 CFR 134.35, did not apply in this case,
because in accordance with 19 CFR 134.36(b), the country names
other than the country of origin of the engines were visible on
various engine components.
The engines were not excepted from marking under 19 CFR
134.32(h) because the ultimate purchasers of the engines did not
have direct contact with the foreign suppliers and did not have
knowledge of the country of origin by the circumstances of the
importation.
"Cummins Brazil S.A." was not an acceptable country of
origin marking under 19 U.S.C. 1304. Additional information was
necessary to clarify that country markings on the component parts
refer only to the component parts and not the country of origin
on the entire engine. A marking such as "Engine Made in Brazil-
country of origin of components parts as marked" is required.
Based on the information submitted we are unable to judge
whether the country of origin marking on the data plate on the
engine was sufficiently conspicuous to satisfy the requirements
of 19 U.S.C. 1304.
Sincerely,
Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch