MAR 2-05 CO:R:C:V 734785 RSD

Frederick L. Ikenson, Esq.
1621 New Hampshire, N.W.
Washington, D.C. 20009

RE: Country of origin marking requirements for imported metal castings used in making a fire hydrant; upper barrels; substantial transformation; false or misleading marking; ultimate purchaser; U.S. place references; 19 CFR 134.35; 19 CFR 134.36(b); 19 CFR 134.46; HQ 734327; HQ 709965

Dear Mr. Ikenson:

This is in response to your letter dated August 20, 1992, on behalf of Southland Marketing concerning the country of origin marking requirements for imported metal castings known as upper barrels used in making fire hydrants. Attached to your letter are diagrams of the components of the fire hydrants.


Southland Marketing (Southland) of Little Rock, Arkansas, imports metal castings, which are made in Brazil, into the United States through the port of New Orleans, Louisiana. These metal castings, known as upper barrels, are sold to Southland's customer, American Valve, which uses them to produce fire hydrants at its facility in Beaumont, Texas.

American Valve's production process consists of combining and assembling, with the upper barrel, three brass nozzles, six O-rings, five gaskets, three iron caps, a bearing housing and cover, a brass operating nut, a machined and threaded upper rod and copper sleeve, an iron dome, and 16 bolts and nuts. To this subassembly, American Valve adds a lower barrel with a machined and threaded lower rod and seat assembly, consisting of three machined brass castings, two machined cast iron parts, and a rubber seal. Finally, the hydrant base, with gaskets, is attached with bolts, and the completed assembly is painted to American Valve's customers' specifications. The cost of the imported upper barrel represents approximately five percent of the cost to manufacture American Valve's hydrants.

The upper barrels are marked in raised letters on the inside surface with the name "Brazil", the foundry code and the production date code. The New Orleans District determined that the upper barrels were not conspicuously marked with their country of origin. However, once the district was satisfied that the American Valve was aware of the origin of the articles, it did not require any further or alternative country of origin marking. As a condition of not requiring any additional marking, the district required a certification from American Valve for each entry that it had affirmative knowledge of the origin of the articles. It is our understanding that the containers bearing the upper barrels are also marked to indicate that their contents are made in Brazil.

American Valve wants to have the name "Beaumont, Texas" cast into the outside of the upper barrels when they are produced at Southland's Brazilian foundry. The name "Beaumont, Texas" will be visible on the completed fire hydrant produced by American Valve, and will remain visible after the hydrant is installed into service. American Valve and Southland claim that this is the industry standard; all manufacturers of fire hydrants identify the producer and the location of the production facility on the outside of the hydrant.

Based on 19 CFR 134.36(b) and 19 CFR 134.46 the New Orleans District has prohibited the importation of the upper barrels marked with "Beaumont, Texas" and required that these words be removed from all the upper barrels that have not yet been exported from Brazil. Southland has complied with those instructions, and the upper barrels currently being produced for American Valve do not carry such markings. Southland seeks a ruling which would allow them to import the upper barrels into the United States marked with the name "Beaumont, Texas".


Can the imported upper barrels which are used to make fire hydrants in the United States be marked with the name "Beaumont, Texas" when they are imported into the United States?


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 and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked (see section 134.35, Customs Regulations).

The first matter that must be analyzed is who is the ultimate purchaser of the imported upper barrels. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. There is no dispute that the upper barrels are substantially transformed when they are used in the manufacture of fire hydrants. The upper barrels are only one of many components involved in making the fire hydrants. It appears that the assembly is complex. We note that the upper barrels account for only about 5 percent of cost of the finished fire hydrants. Most significantly, in HQ 731307 (February 23, 1990), Customs held that imported castings which were to used with U.S. components in the manufacture of gate values, butterfly valves and fire hydrants were excepted from individual marking pursuant to 19 CFR 134.35. These upper barrels, which are also castings, are substantially transformed when they are used to produce fire hydrants. Therefore, in accordance with 19 CFR 134.35, American Valve is the ultimate purchaser of the upper barrels.

Because the upper barrel are being substantially transformed in the U.s. after importation, normally under 19 CFR 134.35, they would be excepted from marking as long as their outermost containers which reach the ultimate purchaser were properly marked. However, American Valve wants to have a U.S. place reference, "Beaumont, Texas", cast into the upper barrels when they are imported into the United States. 19 CFR 134.36(b) provides that an exception from marking shall not apply to any article or retail container bearing any word letters, names, or symbols described in section 19 CFR 134.46 or 19 CFR 134.47 (e.g. geographic references which imply that article was made or produced in a country other than actual country of origin). 19 CFR 134.46 requires that when the name of any city or locality in the U.S., other than the name of the city 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 requirement is to prevent the possibility of misleading or deceiving the ultimate purchaser of an article as to the actual origin of the imported good.

Customs had previously held that the presence of a U.S. reference on an article would trigger application of 19 CFR 134.36(b) and 19 CFR 134.46 even if the article would be substantially transformed in U.S. prior to its sale. In HQ 709965, (May 18, 1979), published as C.S.D. 79-412, Customs ruled that valve bodies made in Canada which were marked "Cleveland, Ohio, U.S.A." could not be excepted from country of origin marking even though the ultimate purchaser, the U.S. company that purchased and used the valve bodies in the manufacture of automotive pressure relief valves, knew the country of origin of the valve bodies and would not be misled by the "Cleveland" marking. The rationale for this determination was that the "final consumer" of the valves might incorrectly conclude that the automatic pressure relief valve was made entirely in the U.S. The ruling stated "because section 19 CFR 134.36(b) is to be strictly construed and the marking on the valve body is potentially misleading to the final consumer there should be compliance with the specific marking requirements of 19 CFR 134.46."

Customs has recently determined that this policy pertaining to 19 CFR 134.36(b) should not be applied automatically to all imported articles or their containers which bear a non-origin geographical reference. In HQ 734327 (February 17, 1993), a case involving sunglasses frames imported with a trademark containing a U.S. reference, we determined that this policy was inappropriate in cases where an imported article, bearing an importer's trademark or trade name with a U.S. reference, will be substantially transformed by the importer in the U.S. In such an instance, the importer will be the ultimate purchaser, and if there is sufficient evidence to establish that it knows the origin of the article then the ultimate purchaser will not be misled by the trademark or trade name and there is no reason to require the article to be individually marked.

Moreover, in HQ 734327 we explained that the term "final consumer" is not found within the framework of 19 U.S.C. 1304 or its implementing regulations. Rather, 19 CFR 134.36(b) must be read as referring to words, symbols, etc. which imply to the ultimate purchaser a country of origin other than the actual country of origin of an article. In cases in which the ultimate purchaser is arranging the importation of articles to which his own trademark is affixed, there is no risk that the ultimate purchaser will be misled as to actual country of origin of the imported article. If markings which appear on the substantially transformed articles are misleading to subsequent purchasers, there exist other legal remedies which are beyond the scope of 19 U.S.C. 1304.

The same reasoning applies to this case. The marking law, 19 U.S.C. 1304, is intended to ensure that the ultimate purchaser is informed of the country of origin of the imported article. Because it is substantially transforming the imported upper barrels, American Valve is the ultimate purchaser. Therefore, the question that must be resolved is whether the U.S. reference, "Beaumont, Texas", would mislead American Valve as to the origin of the imported merchandise. If American Valve as the ultimate purchaser knows the country of origin and will not be misled by the U.S. place reference, then 19 CFR 134.36(b) would not be applicable and the imported merchandise can be excepted from individual country of origin marking.

Here, the evidence indicates that American Valve knows that the country of origin of the upper barrels is Brazil and it will not be mislead by the U.S. place reference on the upper barrels. This is evidenced by the fact that in every shipment American Valve has certified that it is aware that the country of origin of the merchandise is Brazil and is willing to continue to submit similar certifications in the future. Furthermore, it is our understanding that the shipping containers containing the upper barrels, which reach American Valve, are marked with the country of origin of upper barrels. Because American Valve is the one who is requesting that the upper barrels be imported with "Beaumont, Texas" cast into them, there is no way that they will be misled by this U.S. place reference. Because the upper barrels are substantially transformed in the United States, the concern that the general public might be misinformed by the reference to "Beaumont, Texas" on the finished fire hydrant is misplaced and beyond the scope of 19 U.S.C. 1304. Accordingly, the reference to "Beaumont, Texas" may in these circumstances appear on the imported upper barrels.


The imported upper barrels are substantially transformed when American Valve uses them to make fire hydrants. In accordance with 19 CFR 134.35, American Valve is the ultimate purchaser of the upper barrels. Because American Valve is aware of the country of origin of the upper barrels, and is not being misled by the U.S. reference, "Beaumont, Texas", 19 CFR 134.36(b) and 19 CFR 134.46 are not applicable. The upper barrels may be imported into the United States with "Beaumont, Texas" reference. They can also be excepted from individual marking provided that the district director is satisfied that American Valve knows the country of origin of the imported articles as evidenced by proper marking of the containers in which the upper barrels are imported. Customs officers at the port of entry must be satisfied that these upper barrels will reach the fire hydrant manufacturer in the original marked containers, and that the upper barrels will only be used in the manufacture of fire hydrants as described above and not otherwise sold. All rulings or the relevant sections of those rulings applying the prohibition of 19 CFR 134.36(b) to articles imported bearing the U.S. location of the ultimate purchaser who substantially transforms the imported article, and which are inconsistent with this ruling are revoked.


John Durant, Director
Commercial Rulings Division

cc: District Director
New Orleans