MAR-2-05 CO:R:C:V 732087 jd

Harold I. Loring, Esq.
Grunfeld, Desiderio, Lebowitz & Silverman
12 East 49th Street
New York, New York 10017

RE: Country of origin marking requirements applicable to computer diskettes

Dear Mr. Loring:

This is in reply to your letter of January 17, 1989, concerning the application of country of origin marking requirements to imported computer diskettes.


According to your submission, your client will be importing blank computer diskettes, either 5 1/4" or 3 1/2" in size, in bulk. The diskettes come 50 to a package and 8 or 10 packages to a carton. The packages of 50 and the multipackage cartons are marked, in pertinent part, "Made in Canada."

The importer sells some of the diskettes, in carton sized units, to original equipment manufacturers who write software programs onto the diskettes. The importer processes some of the diskettes itself by duplicating software programs onto them. You state your opinion that the party that processes a blank computer diskette by writing or duplicating onto it a software program has substantially transformed the diskette. Accordingly, you believe that such party should be considered the ultimate purchaser of the blank diskette for purposes of marking requirements.


Are blank computer diskettes substantially transformed by having a program "written" onto them so as to make the party doing the programming the ultimate purchaser of the diskettes?

Are the computer diskettes described above eligible for an exception to individual marking if they are received by ultimate purchasers in properly marked, unopened containers?



Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires that, unless excepted, every article of foreign origin (or its container) imported into the United States shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or container) will permit in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. 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 the article in the form in which it was imported."

Section 134.35, Customs Regulations (19 CFR 134.35), provides that an article used in the U.S. in manufacture which results in an article having a name, character, or use differing from that of the imported article will be considered substantially transformed, and therefore the manufacturer or processor in the U.S. who converts or combines the imported article into the different article will be considered the ultimate purchaser of the imported article within the contemplation of 19 U.S.C. 1304(a). Accordingly, the article shall be excepted from marking. However, in accordance with 19 U.S.C. 1304(b) and { 134.22, Customs Regulations (19 CFR 134.22), the outermost container of the imported article shall be marked to indicate the country of origin of the article.

Whether a substantial transformation has occurred depends upon a comparison of the article before the processing which is claimed to effect such transformation and the article after the processing. It is a well established principle of customs law that in order for a substantial transformation to be found, an article having a new name, character or use must emerge from the processing. See United States v. Gibson-Thomsen Co. Inc., 27 C.C.P.A. 267, C.A.D. 98 (1940),

It is the opinion of this office that the writing of a program onto a computer diskette is a substantial transformation of the diskette. Although the name of the article remains the same, the adjectives applied before and after processing, i.e., blank and programmed, indicate that the articles are no longer interchangeable. The character of the diskette has changed from one of a blank storage medium to one with a predetermined electronic pattern encoded onto it. Also, the use of the diskette has changed from that of an unreadable, therefore meaningless, article of software, to that of an encoded instruction guide to enable a computer to perform various commands.


Based on the above analysis, we hold that a blank computer diskette is substantially transformed by having a program "written" onto it. Accordingly, the party performing the programming is considered the ultimate purchaser of the blank diskette for country of origin marking purposes. Therefore, the diskettes are excepted from individual country of origin marking provided customs officials at the port of entry are satisfied the diskettes will reach ultimate purchasers in properly marked, unopened containers.

We observed a photocopy of the label which appears on the multipackage cartons of diskettes imported by your client. Provided the label meets other marking requirements such as conspicuousness, permanency, etc., it satisfies marking requirements. If original equipment manufacturers that purchase carton sized lots of diskettes from your client will receive the same cartons unchanged from the time of import, marking requirements will be satisfied. If any other references to a place not the place of origin of the diskettes are added to the cartons, such as a distributor's address, the origin of the diskettes must be repeated in close proximity to such references ({ 134.46, Customs Regulations (19 CFR 134.46)). If any repacking occurs before receipt by OEMs, the requirements of { 134.26, Customs Regulations (19 CFR 134.26) must be met.


Marvin M. Amernick
Chief, Value, Special Programs
and Admissibility Branch