MAR-2-05 CO:R:C:V 733676 EAB
Murray J. Belman, Esquire
1120 Vermont Avenue, N.W.
Washington, D.C. 20005
Re: Country of origin marking requirements for cold finished
steel bar products made in the U.S. from imported hot
finished steel bars. 19 U.S.C. 1304; 19 U.S.C.
1304(a)(3)(G); 19 U.S.C. 1304(b); 19 U.S.C. 1624; 19 CFR
134.1(d)(1); 19 CFR 134.1(d)(2); 19 CFR 134.22(d)(1); 19 CFR
134.25; 19 CFR 134.32(g); 19 CFR 134.35; 19 CFR 134.36(a);
Gibson-Thomsen; Friedlaender; National Juice; RM 363.2 W;
C.S.D. 85-47; C.S.D. 89-6; 729434; 732196 affirmed; 732574
Dear Mr. Belman:
This is in reply to your letter dated July 23, 1990, in
which you request reconsideration of HQ 732574 (June 25, 1990),
affirming HQ 732196 (May 16, 1989).
In HQ 732196, supra, we found that no evidence was
presented to support a marking exception under 19 U.S.C.
1304(a)(3)(G) for imported hot-rolled steel bars not
substantially transformed in the U.S. In your letter dated July
13, 1989, you requested, on behalf of the Cold Finished Steel Bar
Institute, reconsideration of that portion of HQ 732196 which
pertained to the applicability of 19 U.S.C. 1304(a)(3)(G) to
imported hot-rolled steel bars which are processed into cold-
finished bars in the U.S., by a process that would not be
considered a substantial transformation. You also provided
further evidence that any marking of such articles necessarily
would be obliterated by making cold-finished bars from the
imported articles. In HQ 732574, supra, we agreed that 19 U.S.C.
1304(A)(3)(G) would apply. However, we held that an article (and
its container) excepted from country of origin marking under 19
CFR 134.32(g) (and 19 CFR 134.22(d)(1), respectively), but not
substantially transformed as a result of domestic processing,
itself (or its container) thereafter must be marked in any
reasonable method by the U.S. manufacturer/processor who would
have obliterated the marking during the processing.
You are of the opinion that 19 U.S.C. 1304 does not
authorize Customs to require post-manufacturing marking of an
excepted article (or its container) used in domestic manufactur-
ing but not substantially transformed.
May Customs require country of origin marking upon an
article used in manufacture after such manufacturing and before
it reaches the ultimate purchaser?
LAW AND ANALYSIS:
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 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 the English
name of the country of origin of the article. Articles to be
processed in the U.S. by the importer or for his account
otherwise than for the purpose of concealing the origin of such
articles and in such manner that any mark contemplated by this
section would necessarily be obliterated, destroyed, or
permanently concealed are excepted from marking under 19 U.S.C.
1304(a)(3)(G) and 19 CFR 134.32(g). While generally when an
article is excepted from marking, the outermost container or
holder in which the article ordinarily reaches the ultimate
purchaser shall be marked to indicate the country of origin of
the article, the containers or holders in which these articles
are imported are excepted from marking as provided in 19 U.S.C.
1304(b) and 19 CFR 134.22(d)(1).
Customs has limited the applicability of the "G" exception
to precise circumstances. As provided in section 134.36(a),
Customs Regulations (19 CFR 134.36(a)), an article which is to be
processed in the U.S. by the importer or for his account shall
not be considered to be within the "G" exception if there is a
reasonable method of marking which will not be obliterated,
destroyed, or permanently concealed by such processing. In
addition, Customs has ruled that supporting statements of
intended processing to be performed by the importer or for his
account are a condition of entitlement to the exception. See
C.S.D. 89-6, October 3, 1988 (731484); HQ 729434 (May 23, 1986)
and RM 363.2 W (January 25, 1967). Customs has also ruled that
another condition of entitlement to the exception is that the
district director must be satisfied that the processed article
would be marked in a manner to indicate the country of origin to
the ultimate purchaser in the U.S. This would require the U.S.
processor to mark the processed article unless the U.S. processor
is the ultimate purchaser. (Pursuant to 19 CFR 134.35, a U.S.
processor is considered to be the ultimate purchaser if the
processing constitutes a substantial transformation, i.e.,
results in a new name, character or use.) For example, in C.S.D.
89-6, supra, Customs found that certain jewelry was not entitled
to the "G" exception in part because the importer did not mark
the jewelry after the alleged processing. In that case, because
the alleged processing was minor and clearly would not have
substantially transformed the imported jewelry, the processed
jewelry was required to be marked. See also HQ 729434, supra:
glass ornaments and other articles of glass were processed but
not substantially transformed in the U.S. were entitled to the
"G" exception. However, we further ruled that, under the facts,
the retail packages for the finished articles had to be marked
to indicate the foreign origin of the articles, and that the
importer should be prepared to furnish statements or affidavits
to the district director for each entry for which the exception
would be requested.
While not specifically stated in either case, we think it is
clear that our authority not only to apply the "G" exception in
those specific instances, but to condition it as we did, is
founded on the specific authority granted in 19 U.S.C.
1304(a)(3), as well as the general rule making powers granted by
Congress in 19 U.S.C. 1624, i.e., "to make such rules and
regulations as may be necessary to carry out the provisions of
The purpose of the marking statute is outlined in United
States v. Friedlaender & Co., 27 CCPA 297 at 302 (1940):
"Congress intended 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." See also United States v. Gibson-Thomsen Co., Inc.,
27 CCPA 267 (1940). The foregoing cases are basic to the
development of country of origin marking law. Both cases were
the first judicial interpretation of Section 3 of the Customs
Administration Act of 1938, Pub. L. 721, 52 Stat. 1077, the law
implied in the phrase "section 304 of the Tariff Action of 1930,
Prior to Pub. L. 721, the phrase "ultimate purchaser" was
not a consideration in making marking determinations. See e.g.,
Section 304 of the Tariff Act of 1930 and Section 6 of the Tariff
Act of 1890. The "ultimate purchaser" is specifically defined in
19 CFR 134.1(d) as "generally the last person in the United
States who will receive the article in the form in which it was
imported." As the examples in 19 CFR 134.1(d) demonstrate, the
ultimate purchaser may be someone who receives the article after
it has been processed in some manner. In particular, "if the
manufacturing process is merely a minor one which leaves the
identity of the imported article intact, the consumer or user of
the article who obtains the article after the processing will be
regarded as the 'ultimate purchaser.'" 19 CFR 134.1(d)(2)
(emphasis added). In such case, we believe that requiring
marking of the processed article (or its container) is
permissible and is consistent with the purpose of the marking
In C.S.D. 85-47, September 4, 1985 (728557) the issue was
whether retail packages of frozen concentrated orange juice and
single-strength orange juice from concentrate, both of which were
made from foreign orange juice concentrate for manufacturing,
must be marked to indicate that the products contain foreign
concentrate. The ruling states that "we believe that the
legislative purpose of the marking statute would be thwarted if
no country of origin marking was required on the retail package
of orange juice, [emphasis in original] " 19 Cust.Bull. 593, 599.
We held that the imported orange juice concentrate further
processed in the U.S. was not substantially transformed, and
stated "If the final repacked product of orange juice contains
any foreign concentrate . . . [then] the certification
requirements of 19 CFR 134.25 apply, [emphasis in original] "
As you know, C.S.D. 85-47, supra, was challenged in
National Juice Products Association v. United States, 10 CIT 48,
628 F.Supp. 978 (CIT 1986). "The court concludes that Customs'
ruling that manufacturing juice concentrate is not substantially
transformed when it is processed into retail orange juice
products is not arbitrary or capricious, but is in accordance
with applicable law. The orange juice processors are not the
ultimate purchasers of the imported product because consumers are
the last purchasers to receive the product in essentially the
form in which it is imported. In accordance with 19 U.S.C. 1304,
the retail packaging must bear an appropriate country-of-origin
marking." National Juice, 10 CIT 48, 61-62.
The purpose of the statute would be frustrated if a
processor who is not the ultimate purchaser obliterates the mark
and does not thereafter mark the article, thereby denying the
ultimate purchaser his right to make an informed decision. The
exception in 19 U.S.C. 1304(a)(3)(G) must be considered to be a
practical concession to reality: requiring imported articles or
their containers to be marked with the country of origin at the
time of importation when such marking would necessarily be
obliterated during subsequent processing that does not result in
a substantial transformation would neither effectuate the
Congressional intent nor serve the purpose of the marking law.
We remain of the opinion that the finished article must be
marked in a manner to indicate the country of origin to the
You also indicate that HQ 729434 should be read to provide
that only the containers of articles excepted under 19 U.S.C.
1304(a)(3)(G) must bear the country of origin marking of the
processed articles within. We do not believe that such a
restrictive reading is appropriate. In that case, Customs
determined that certain imported articles were excepted from
marking under this provision because "any mark placed on them
prior to importation would be obliterated or destroyed in the
U.S. finishing operations." However, the decision states that
"the retail packages for the finished articles shall be marked to
indicate Mexico as the country of origin." The significance of
this ruling is the determination that the processed article had
to be marked in a manner to indicate the country of origin to the
ultimate purchaser. If, as in HQ 729434, the processed article
is to be sold to the ultimate purchaser in a container, it would
be acceptable to mark the container.
We affirm HQ 732196 in its entirety. An article and,
therefore, its container, excepted under 19 CFR 134.32(g) and 19
CFR 134.22(d)(1), respectively, but not substantially transformed
as a result of domestic processing, must itself (or its
container) be marked in any reasonable method by the U.S.
manufacturer/processor following such processing that would have
obliterated the marking.
Harvey B. Fox, Director
Office of Regulations and Rulings