MAR-05 RR:CR:SM 561417 BLS
Mr. Edward H. Jordan
Wilson Logistics, Inc.
1850 Greenleaf Avenue
Elk Grove Village, IL 60007
RE: Country of origin marking of parts used in foundry molding machinery;
19 CFR 134.32(h)
Dear Mr. Jordan:
We have received your letter dated June 15, 1999, concerning country of origin marking requirements for certain spare parts imported by Georg Fischer Disa, Inc. ("Disa"), for use in foundry molding machinery. You request that we reconsider our previous decision (Headquarters Ruling Letter (HRL) 561225 dated April 9, 1999) in light of certain additional information.
FACTS:
Disa imports and sells foundry molding machines to its customers who are end-users and also supplies spare parts to these customers solely for repair and refurbishing of the machines. While the majority of the parts are of Danish origin, the countries of origin of other items include Great Britain, Holland, Germany, Japan, etc. Some of the parts are already marked with their country of origin at the time of importation, while others are not so marked. The country of origin of the parts is shown on the commercial invoice used for entry purposes.
Upon importation, the parts are placed in inventory. Smaller parts are placed in bins by part number. Larger parts remain in their packing crates. Disa maintains electronic inventory records which reflect the country of origin of the various imported parts.
Currently, Disa checks each imported part for country of origin marking as it is received in their warehouse. Based on the country of origin information contained in the commercial invoice and Disa’s electronic inventory system, adhesive labels or hangtags with country of origin designation are applied to each unmarked part before it is put into inventory. If unmarked parts are too small for labeling, they are placed in
plastic containers and the plastic containers are labeled. Large spare parts that remain
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in their imported crates are usually shipped to the end-users in those imported crates. Those crates normally show the country of origin. If they do not, Disa applies the
necessary marking. A letter from Disa explaining these procedures is attached to the entry package upon arrival of the goods.
In HRL 561225, Customs ruled on four alternative "marking" scenarios to Disa’s current marking practice. Scenario 1 was as follows:
Disa would not mark those parts that are imported unmarked nor would the outermost containers of such items be marked (except for some items that are shipped in their outermost containers). Instead, the country of origin would be shown on the packing list included as part of the contents of each box.
In HRL 561225, Customs ruled that the articles and their containers could not be excepted from the marking requirements pursuant to 19 CFR 134.32(h).
You now request that we reconsider our response to Scenario 1, in view of certain information not included in the earlier submission. The amended Scenario 1 would also provide :
When acknowledging purchase orders received from their customers, Disa would indicate the two-digit country of origin of all parts ordered. Additionally, the country of origin would be identified on each line item of the end-user’s invoice.
You also state that Disa is the sole U.S. representative of Georg Fisher Disa A/S, from which it orders all its machines and parts, and both Georg Fisher Disa A/S and Disa are wholly-owned subsidiaries of Georg Fisher Disa Switzerland. The spare parts can only be ordered through Disa.
ISSUE:
What are the country of marking requirements for the imported spare parts?
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
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(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 CCPA 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. 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 (or, in the case of a good of a NAFTA country, purchase) the article in the form in which it is imported. In the instant case, the ultimate purchasers will be Disa’s customers, the end-users of the spare parts. Therefore, unless otherwise excepted, the goods must be marked to indicate the country of origin to these purchasers.
Pursuant to 19 U.S.C. 1304(b), neither an article nor its container is required to be marked if the exception provided in 19 U.S.C. 1304(a)(3)(H) is applicable. Section 1304(a)(3)(H) authorizes an exception from marking if "An ultimate purchaser, by reason of the character of such article or by reason of the circumstances of its importation, must necessarily know the country of origin of such article even though it is not marked ..... " (Emphasis added.) (See also 19 CFR 134.32((h), which adds that in the case of a good of a NAFTA country, the ultimate purchaser must "reasonably know" the country of origin.)
Customs has held that it is not sufficient for the exception to apply that the ultimate purchaser be advised personally, by advertising, or brochures of an article’s origin. See HRL 559671 (June 7, 1996) and HRL 734121 (August 12, 1991). Rather, an instance where an ultimate purchaser would necessarily know the country of origin from the character of an article would be when the merchandise is only produced in one country, for example, black diamonds from Brazil. See HRL 732362 (May 26, 1989). In HRL 733291 (July 23, 1990), Customs specifically found that a letter by the ultimate purchaser of the article stating that they knew the country of origin of the imported article was not sufficient to grant a marking exception under 19 CFR 134.32(h).
In Wolfson Bros. Corp. v. United States, 52 Cust. Ct. 86, 91 (1964), the court suggested that the “character of the articles” required something about the articles
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themselves that identified them with a particular country. The court stated:
No contention is made that the character of these tubes is such that an ultimate purchaser, without marking, “must necessarily know the country of origin.” There seems little doubt that such a contention could not be made. Indeed, Mr. John H. Zink, Sr. witness for the plaintiff, testified that fittings, such as those here involved, were imported also from countries other than Scotland. (R.87) This uncontradicted testimony would indicate that an ultimate purchaser could not, absent marking, “necessarily know what the country of origin was.
The court also cited with approval the following statement from "Exporting to the United States":
The clearest application of this [19 CFR 134.32(h)] exemption is when the contract between the ultimate purchaser in the [U.S.] and the supplier abroad insures that the order will be filled only with articles grown, manufactured, or produced in a named country.
In accord with Wolfson, Customs has ruled that under 19 CFR 134.32(h), the “circumstances of importation” 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 HRL 730243 dated March 5, 1987. In C.S.D. 80 144, Customs stated that a 19 CFR 134.32(h) exception is only granted when there is a two party one step transaction between an importer and his foreign supplier, with the importer also being the ultimate purchaser.
In HRL 559671 dated June 7, 1996, the importer argued that a bar code, eye-readable ISO code or an abbreviation on either the containers or semi-conductor devices in lieu of marking the devices (or container) with the name of the country of origin would meet the requirements of 19 U.S.C. 1304. Under this procedure, the importer would provide customers in advance with a key for deciphering the codes or abbreviations. The importer contended that this procedure would entitle it to an exception under 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h).
Customs ruled in that case that an exception was not authorized under 19 U.S.C. 1304(a)(3)(H) as the circumstances of importation did not suggest any evidence of direct contact between the ultimate purchaser and the foreign supplier. Furthermore, as the semi-conductor devices could originate from various countries, we stated that
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"the character of the semiconductor devices do not indicate that they are only made in one particular country absent the abbreviated or code markings and the deciphering key."
In the instant case, as the spare parts may originate from various countries, the ultimate purchaser will not know the country of origin from the "character" of the articles, but only based on the information supplied by Disa. Further, assuming, arguendo, that Disa is acting as the agent of the supplier, as orders may be filled with a part manufactured in one of a number of countries, the ultimate purchaser will not
know the origin of the part from the "circumstances of the importation." See Wolfson Bros. Corp., supra.
HOLDING:
As the supplier may fill orders with spare parts manufactured in more than one country, an exception from marking under 19 U.S.C. 1304(a)(3)(H) and 19 U.S.C. 1304(b) is not authorized as the ultimate purchaser will not "necessarily know" the country of origin from the character of the articles or from the circumstances of the importation.
A copy of this ruling letter should be attached to the entry documents filed at the time the goods are entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.
Sincerely,
John Durant, Director
Commercial Rulings Division