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