MAR-2-05 RR:TC:SM 559671 MLR

David W. Rose, Esq.
Intel Government Affairs
1634 I Street, N.W.
Suite 300
Washington, D.C. 20006

RE: Country of origin marking for semiconductors; container; abbreviations; ISO code

Dear Mr. Rose:

This is in reference to your letter of February 2, 1996, requesting a ruling concerning the country of origin marking requirements for semiconductor devices and their containers.

FACTS:

Intel imports semiconductor devices from several countries, including the Philippines and Malaysia. It is stated that Intel currently marks both the individual semiconductor devices and their containers with the country of origin. Original equipment manufacturers (OEMs) receive about 75 percent of the semiconductor devices imported by Intel, and roughly 25 percent are sold to distributors. It is stated that OEMs generally know where Intel assembles the semiconductors through the qualification process. OEMs are also stated to be ultimate purchasers because they substantially transform the semiconductor devices by incorporating them into various electronic articles. On the other hand, distributors sell the devices to ultimate purchasers, and the devices may be repacked prior to these sales. In this situation, it is stated that Intel marks the devices and their containers with the country of origin, and notifies the distributors in writing of the marking requirements pursuant to 19 CFR 134.26.

Intel wishes to use an abbreviated marking on semiconductor devices which are packed in properly marked containers. For example, Intel proposes the use of "Phil" or ISO codes for Philippine origin devices. Intel also seeks confirmation concerning an exception from marking both the container and the semiconductor devices pursuant to 19 CFR 134.32(h).

ISSUES:

I. If the semiconductor devices' container is properly marked with the country of origin pursuant to T.D. 75-187, may the devices be marked with what otherwise would be an unacceptable abbreviation or other indicator of the country of origin?

II. Are semiconductor devices and their containers excepted from country of origin marking because the ultimate purchaser is aware of the country of origin by virtue of the devices' character or the circumstances of their importation if either the devices or containers are marked with bar code or eye-readable ISO codes?

LAW AND ANALYSIS:

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) 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. Inc., 27 CCPA 297, 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 134.32(d), Customs Regulations {19 CFR 134.32(d)}, excepts an article from marking if its container will reasonably indicate the origin of the article.

I. Abbreviation Marking

In T.D. 75-187, Customs stated that semiconductor devices are excepted from individual marking if their containers are properly marked and Customs officials at the port of entry are satisfied that the devices will reach the ultimate purchaser in the marked containers. Furthermore, it was stated that when semiconductor devices made in a number of different foreign countries are commingled and subsequently repackaged for sale to the ultimate purchaser, the marking requirements of 19 U.S.C. 1304 are met if the containers are legibly and conspicuously marked to indicate that the devices were made in one or more of the countries listed on the container.

You also cite HRL 734761 dated October 16, 1992, where Customs stated that the use of a multi-origin marking statement on semiconductor containers is acceptable. However, you state that Intel is not applying this ruling because semiconductor repackers find the multiple origin statement too lengthy to satisfy their packaging specifications. In addition, some users want to know the particular country of origin of the semiconductor device. The problems in marking both the semiconductor devices and their containers are space constraints on the devices, the abbreviations used are not necessarily recognized by Customs, and it is not cost effective to mark the containers if the devices are already marked.

Therefore, Intel wishes to place a marking such as the abbreviation "Phil" or an ISO code on Philippine origin semiconductors. Intel alleges that under T.D. 75-187, the legible and conspicuous marking of the container reaching an ultimate purchaser is all that is required to comply with 19 U.S.C. 1304, and as long as the abbreviation marking does not conflict with the country of origin information provided on the container, this should be acceptable despite HRL 727843 dated July 3, 1985, and HRL 731021 dated June 24, 1988. In HRL 727843, Customs held that the use of "Phil" was not an acceptable marking on integrated circuits because it did not unmistakably indicate the name of the country of origin even if the ultimate purchaser knew that the Phillippines was one of three or four common locations for the assembly of integrated circuits and the ultimate purchaser would understand "Phil" to be an abbreviation for the Phillippines.

In HRL 735268 dated October 1, 1993, Customs considered intravenous sets packaged in master cartons and shipping cartons, which were both marked with the country of origin. The individual intravenous pouches indicated a U.S. address, and pointed to a lot code for the country of origin. The intravenous sets were only to be sold to the ultimate purchasers in the master cartons, and no intravenous sets were supposed to be taken out of the master carton and sold separately. It was found that since the master cartons were properly marked to indicate the country of origin of the intravenous sets, the ultimate purchaser would be advised of the country of origin, and, therefore, the individual intravenous sets were excepted from marking under 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). Furthermore the reference on the individual pouches to the lot number for the country of origin was determined to satisfy the marking requirements because the ultimate purchasers would not be misled by the U.S. address as the intravenous sets were only received in the properly marked master carton and the lot code printed on the individual pouches explained how to determine the country of origin.

It is our opinion that, since T.D. 75-187 allows commingled semiconductor devices of various origins to be excepted from marking if they are packaged in properly marked containers which indicate that the devices were made in one or more countries, and this may also be applied to devices repackaged for sale to ultimate purchasers, the additional marking on the individual semiconductor devices with an abbreviation, such as "Phil," or the use of an ISO code will be acceptable provided the container itself is marked with the proper country or countries of origin of the devices and the markings on the individual devices does not conflict with the container marking. As in HRL 735268, where the intravenous pouches were excepted from marking under 19 CFR 134.32(d) and a lot code pointed to the country of origin in order to satisfy the requirements of 19 CFR 134.46 so that the ultimate purchaser was not misled by the U.S. address, here the semiconductor devices are also excepted from marking pursuant to T.D. 75-187. Furthermore, in this case, as long as the individual marking on the devices does not conflict with the container marking, the ultimate purchaser would be able to discern the actual country of origin, which is more than the information required by T.D. 75-187. Accordingly, it is our opinion that since the proposed abbreviations are not the actual markings required for country of origin marking purposes, unlike HRL 727843, these additional marking along with proper container markings will satisfy the requirements of T.D. 75-187 and 19 U.S.C. 1304.

II. Exception from Marking

In regard to the second issue, Intel seeks an exception from marking the semiconductor devices and their containers pursuant to 19 U.S.C. 1304(a)(3)(H) and 19 U.S.C. 1304(b). Pursuant to 19 U.S.C. 1304(b), neither the article nor its container is required to be marked if the exception provided in 19 U.S.C. 1304(a)(3)(H) is applicable. Under 19 CFR 134.32((h), 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.

Intel claims that its customers only need an indication of the country of origin on semiconductor devices or their containers, and that this indication need not be the full English name or even an unmistakable abbreviation of the country to convey origin information. Rather, Intel suggests that semiconductor distributors only need a bar code or eye-readable ISO code. Intel wishes to use abbreviations, such as "Phil," or bar code or eye-readable ISO codes, on either the containers or devices in place of marking semiconductor devices and containers with the name of the country of origin. It is stated that the codes or other abbreviations contemplated would not, by themselves, qualify as country of origin markings under 19 U.S.C. 1304. However, under this procedure, Intel would provide customers in advance with a key for deciphering the codes or abbreviations. Intel also would continue giving customers engaged in repacking operations a written notification of marking pursuant to 19 CFR 134.26.

Accordingly, Intel contends that this procedure would entitle it to an exception under 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h). U.S. Wolfson Bros. Corp. v. United States, 52 Cust. Ct. 86, 91 (1964), is cited concerning the court's suggestion that the "character of the articles" required something about the articles themselves that identified them with a particular country. The court stated:

No contention is made that the character of these tubes is such than an ultimate purchaser, without marking, "must necessarily know the country of origin." There seems little doubt that such a contention could not be made. Indeed, Mr. John H. Zink, Sr. witness for the plaintiff, testified that fittings, such as those here involved, were imported also from countries other than Scotland. (R.87) This uncontradicted testimony would indicate that an ultimate purchaser could not, absent marking, "necessarily know" what the country of origin was.

We also note that the court stated that:

The clearest application of this [19 CFR 134.32(h)] exemption is when the contract between the ultimate purchaser in the [U.S.] and the supplier abroad insures that the order will be filled only with articles grown, manufactured, or produced in a named country.

Indeed, Customs has ruled that under 19 CFR 134.32(h), the "circumstances of importation" 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 730243 dated March 5, 1987. In C.S.D. 80-144, Customs stated that a 19 CFR 134.32(h) exception is only granted when there is a two party one-step transaction between an importer and his foreign supplier with the importer also being the ultimate purchaser. In the present case, no evidence of such direct contact between the ultimate purchaser, i.e., the OEMs or distributors, and the foreign manufacturer has been submitted.

Under Intel's proposal, it is suggested that the attribute, feature or distinctive quality of the semiconductors that would provide ultimate purchasers with the name of the country of origin is the country abbreviation or code on the device or container. While the abbreviation or code may not meet Customs country of origin marking requirements in another situation, Intel states that these abbreviations or codes are part of the article because they would be deployed in circumstances where customers accept, use and, in some cases, even require it. Moreover, Intel submits that customers would necessarily know the origin represented by using the deciphering key.

Customs has held that it is not sufficient that the ultimate purchaser be advised personally or by advertising or brochures of an article's country of origin. See HRL 734121 dated August 12, 1991. Rather, an instance where an ultimate purchaser would necessarily know the country of origin from the character of an article would be when the merchandise is only produced in one country, for example, black diamonds from Brazil. See HRL 732362 dated May 26, 1989. In this case, the character of the semiconductor devices does not indicate that they are only made in one particular country. Rather, the ultimate purchaser will only know the country of origin because of the bar code or eye-readable code. However, under 19 CFR 134.32(h), no marking is required. As held in HRL 727843, the use of "Phil" was not an acceptable marking because it did not unmistakably indicate the name of the country of origin even if the ultimate purchaser knew that the Phillippines was one of three or four common locations and the ultimate purchaser would understand "Phil" to be the abbreviation for Phillippines. Therefore, to the extent that a deciphering key is required to know the country of origin, 19 CFR 134.32(h) is not applicable. Additionally, 19 U.S.C. 1304 specifically requires the country of origin to be marked in the English language, which bar code or eye-readable markings do not satisfy.

HOLDING:

Based on the facts submitted, as long as the semiconductor devices' container is properly marked with the country or countries of origin of the devices, the individual devices may be marked with abbreviations or ISO codes provided these abbreviations or ISO codes are not in conflict with the container marking.

An exception from marking under 19 U.S.C. 1304(a)(3)(H) and 19 U.S.C. 1304(b) is not authorized as the circumstances of importation do not suggest any evidence of direct contact between the ultimate purchaser and the foreign supplier. Moreover, the character of the semiconductor devices also does not indicate that they are only made in one particular country absent the abbreviated or code markings and the deciphering key.

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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
Tariff Classification Appeals
Division