MAR-2-05 CO:R:C:V 734363 RSD

Richard M. Belanger, Esq.
Powell, Goldstein, Frazer & Murphy
Sixth Floor
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004

RE: Country of origin marking requirements for modems kits containing a modem, transformer, and telephone cable, sets, components, sealed containers; 19 CFR 134.24; T.D. 91-7

Dear Mr. Belanger:

This is in response to your letter dated September 25, 1991, on behalf of your client, Hayes Microcomputer Products, requesting a ruling concerning the country of origin marking requirements for modem kits. Subsequently, you submitted a sample of the sealed box containing the modem kit for our consideration. An additional letter detailing cost information was submitted on January 23, 1992.

FACTS:

Hayes Microcomputer Products, Inc. ("Hayes") produces modems at its manufacturing facility in Norcross, Georgia. A modem is a device that adapts a terminal or a computer to a communications network. Modems turn digital pulses from a computer into frequencies (modulate) within the audio range of the telephone system and convert the frequencies back into digital pulses (demodulate) on the receiving side.

Each modem is inserted into a cardboard box together with both a direct plug-in transformer (used to plug the modem into the standard three-prong wall socket) and a 7-foot section of telephone cable (used to connect the modem to the telephone wall jack). The product containing the modem, the transformer, and the telephone cable is retailed under the name V-series Smartmodem 2400.

The transformers can be sourced from any of several countries (United States, Taiwan, Korea, Malaysia, Mexico, Hong Kong, Singapore, etc.). The telephone cables currently are sourced from Taiwan, but may be sourced from other countries in the future.

The sample transformer is marked to indicate its country of origin, Korea, in white letters about 1/16th of an inch high on the same side as the prongs near other informational writing. The phone plug is marked with its country of origin, Taiwan, by an adhesive sticker wrapped around the cable. You state that whenever the transformers and cable are sourced from aboard, they will be individually marked conspicuously, legibly, and permanently with the English name of the country of origin. The marked components are combined in a retail package with the U.S. made modem. Before it reaches the ultimate purchaser, the cardboard box is shrinked-wrapped. Hayes seeks to have the package marked as follows:

Modem made in U.S.A. Transformer and telephone cable of foreign origin are individually marked with specific country origin.

The transformer represents less than 2% of the retail cost of the kit, and the cable, less than 1%. Because the source countries for the cable and transformer can constantly change, the importer contends that it would extremely costly and burdensome to develop different retail packages for all the various country of origin combinations for the modems, cables, and transformers.

ISSUE:

Does the proposed country of origin marking on the sealed box containing the modem and accessories satisfy the country of origin marking law if there is no indication of the country of origin of the transformer and the telephone cable on the box?

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 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 exceptions of 19 U.S.C. 1304. As provided in section 134.41, Customs Regulations (19 CFR 134.41), the country of origin marking is considered to be conspicuous if the ultimate purchaser in the U.S. is able to find the marking easily and read it without strain. That section further provides that the degree of permanence should be at least sufficient to insure that in any reasonably foreseeable circumstance the marking shall remain on the article until it reaches the ultimate purchaser unless it is deliberately removed. Under 19 CFR 134.24(d)(2) for articles which are sold in sealed containers which are normally unopened by the ultimate purchaser before purchase, the containers must be marked to indicate the country of origin of its contents.

Although the modem kits contain a transformer and a phone cord of foreign origin, these items are minor pieces of the modem set, in terms of both function and value. As noted above, their combined retail cost is less than 3% of the modem. Their function is simply to plug the modem into the wall socket and to connect the modem to the telephone wall jack. Customs has previously indicated that for various reasons, the marking of every item in a collection of goods may not be consistent with the purpose of the statute, or may be impractical and/or undesirable. See T.D. 91-7, January 16, 1991. Although in this case, both the transformer and the telephone cable are individually marked with their country of origin, the ultimate purchaser will not see these markings prior to purchase because the items will be sold in a sealed container which will not indicate the country of origin of these items. However, because these components represent a very small part of the cost of the kits, they are of relatively minor significance, and there are difficulties associated with marking the containers with the country of origin of the cable and transformer, in accordance with T.D. 91-7, we find that it is not necessary to mark the containers to indicate the country of origin of the transformer and the telephone cable. The increased costs and difficulties associated with constantly changing the containers to reflect the different the countries of origin of the transformer and the cable cannot be justified in view of the fact that the cable and transformer are not likely to significantly effect the purchasing decision involved in buying the modem. This is especially true when these items are individually marked with their country of origin and the marking on the package does alert the ultimate purchaser that the transformer and cable are of foreign origin. HOLDING:

The proposed marking of the container is acceptable provided that the transformer and cable are individually marked conspicuously, legibly, and permanently with their country of origin.


Sincerely,

John Durant, Director
Commercial Rulings Division