CLA-2 R:C:S 559211 MLR
Ned H. Marshak, Esq.
Sharretts, Paley, Carter & Blauvelt, P.C.
67th Broad Street
New York, NY 10004
RE: Country of origin marking for Unrecorded "Infoguard"
Writable compact discs; CDs; Recording; Repackaging;
Outer container; Mexico; 19 CFR 134.46; 19 CFR
134.32(d)
Dear Mr. Marshak:
This is in reference to your letter of May 17, 1995,
requesting a ruling on behalf of your client, Eastman Kodak
Company ("Kodak"), concerning the country of origin marking
requirements for "Infoguard" writable compact discs and
other writable compact discs imported by Kodak from Mexico.
Samples were submitted with your request.
FACTS:
The goods at issue are two types of unrecorded
Writable compacts discs ("CD") stated to be produced by
Kodak in Mexico, and to be classifiable under heading 8523,
Harmonized Tariff Schedule of the United States (HTSUS).
The CDs are used to store various types of data and
information. The first type of CD is a Writable CD Media
with "Infoguard" system protection (hereinafter "Infoguard
CD"). The Infoguard system consists of stable dye
chemistry, a special gold reflective layer, protective
lacquer coating, and a 12 digit unique bar code etched into
the gold reflective layer at the CD's inner diameter and
the identical 12 digit human readable code number etched
near the hub of the disc. The second type of Writable CD
sold by Kodak is without the Infoguard protection system,
and without the unique 12 digit bar code associated with
Infoguard Writable CDs.
The unrecorded Infoguard CDs are imported in either
plastic jewel cases, which are not shrink wrapped, holding
one unrecorded Infoguard CD in each case, or plastic
beehives, consisting of a spindle and base, holding 50
unrecorded CDs in each beehive. The CDs without Infoguard
protection are also imported either in jewel cases (100 to
a shipping carton, packaged in four inner cardboard
containers holding 25 jewel cases each, without shrink
wrap), or beehives (50 to a beehive, four beehives to a
shipping carton). All of the shipping cartons are marked
with the country of origin of the CDs: "Mexico" or "Made in
Mexico." The Infoguard CDs and their jewel cases are
marked with Kodak's name and Rochester, N.Y., address. The
other CDs without Infoguard protection, jewel cases,
beehives, and inner cartons do not contain any country of
origin marking, nor do they contain any reference to
Kodak's name or address.
Kodak only wishes to mark the outermost shipping
container in which both types of CDs are packed. It is
stated that companies purchasing unrecorded Infoguard CDs
from Kodak either record onto the CDs themselves or resell
the CDs in the packing cartons in which they are purchased
from Kodak. Once the CDs are recorded in the U.S., it is
stated that they are no longer products of Mexico because
they are classifiable under heading 8524, HTSUS, and,
therefore, do not require marking once the recorded CDs are
sold. It is stated that the Infoguard CDs, which are
resold by Kodak's distributors without being recorded, are
only resold in the packing cartons in which the CDs are
purchased from Kodak, and will not be resold in individual
jewel cases or beehives, prior to being recorded, because:
(1) the jewel cases in which the CDs are packaged are not
shrink-wrapped in a tamper-proof factory seal; and (2) the
jewel cases do not contain a UPC bar code, which is needed
to sell a product at retail.
As to the CDs without Infoguard protection, they are
marketed primarily to companies who will repack and resell
them prior to recording. Therefore, Kodak states that it
advises all companies purchasing these CDs that if the CDs
are resold prior to being recorded, the container in which
the CDs will reach the ultimate purchaser (the company
which will do the recording) must be marked with the
country of origin of the unrecorded CD.
ISSUE:
Whether it is acceptable to mark the country of origin
of the CDs only on the outermost container.
LAW AND ANALYSIS:
The marking statute, section 304, Tariff Act of 1930,
as amended (19 U.S.C. 1304), provides 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
in the U.S. the English name of the country of origin of
the article. 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, defines
"ultimate purchaser" as generally the last person in the
U.S. who will receive the article (or purchases the good if
it is a good of a NAFTA country) in the form in which it
was imported. The regulations recognize that a
manufacturer who substantially transforms an article after
importation may be the ultimate purchaser. See 19 CFR
134.1(d)(2); and 19 CFR 134.35.
It is stated that once the CDs are recorded the
country of origin changes. Therefore, the companies who
record data onto the CDs are the ultimate purchasers of
Kodak's writable CDs. In regard to the Infoguard CDs, it
is contended that since they will not be resold prior to
being recorded, or will be resold only in the outer carton
in which they are purchased from Kodak (which will be
marked with the country of origin), the CDs, jewel cases,
beehives, and inner containers need not be marked with the
country of origin of the CDs. Furthermore, it is contended
that although the jewel cases and CDs contain the Kodak
name and Rochester, N.Y. address, these references are not
deceptive since the outermost container is marked "Mexico"
or "Made in Mexico."
In regard to the other CDs without Infoguard
protection, Kodak states that the possibility exists that
purchasers of these CDs may decide to resell and repack
them prior to recording. Therefore, because Kodak cannot
state with certainty that these CDs will be resold in the
same carton in which they are imported (which is properly
marked with the country of origin), Kodak states that it
will advise its customers that the unrecorded CDs cannot be
resold unless the packaging is properly marked with the
country of origin of the unrecorded CDs.
Pursuant to 19 U.S.C. 1304 (a)(3)(D) and 19 CFR
134.32(d), an exception from individual marking is
applicable where the marking of a container of such article
will reasonably indicate the origin of the article. This
exception is normally applied in cases where the article is
imported in a properly marked container and Customs
officials at the port of entry are satisfied that the
ultimate purchaser will receive it in the original unopened
marked container. Relevant factors regarding whether an
article is likely to remain in its original container
include the chain of distribution, the type of container,
and the nature of the article.
Headquarters Ruling Letter (HRL) 732018 dated February
7, 1990, and HRL 735268 dated October 1, 1993, are cited
for support that only the outermost container for both
types of CDs needs to be marked, and that the CDs, plastic
jewel cases or beehives, and inner containers are not
required to be marked.
In HRL 732018 dated February 7, 1990, Customs
considered microdisk and minidisk products which consisted
of an unrecorded flexible magnetic recording disk, with or
without special coating, and a protective plastic shell
(microdisk) or protective vinyl jacket (minidisk). Some of
the products were sold to companies who recorded computer
programs onto each product before selling it, while some
were resold without any recording. Each bulk container
contained ten shrink wrapped retail cartons, all labeled
with the country of origin on the same side as any
reference to the importer's address. It was stated that
the marking exception under 19 U.S.C. 1304(a)(3)(D) is
generally limited to where the importer is the ultimate
purchaser, or where the ultimate purchaser (other than the
importer) will in all foreseeable circumstances receive the
imported article in its original unopened marked container.
In regard to the products sold to companies who
recorded computer programs onto each product, HRL 732018
determined that the companies doing the recording were the
ultimate purchasers. Therefore, as long as the microdisk
and minidisk products were imported in properly marked
containers and Customs officials at the port of entry were
satisfied that the U.S. computer software company would
receive them in the original unopened marked containers,
the products were excepted from individual marking pursuant
to 19 CFR 134.32(d) and only the outermost bulk container
required marking.
In regard to those products which were resold with no
computer programming, it was stated that although no
information was submitted regarding how these products
would be repackaged and resold, and, therefore, Customs
could not be sure that the ultimate purchaser, in all
foreseeable circumstances, would receive the products in
properly marked containers, the exception was allowed
because the amount resold without programming was small.
However, the importer was required to submit written
certification to Customs at the port of entry that the
products to be resold without programming would be repacked
in containers properly marked to indicate the country of
origin.
Similarly, in this case, some of the Infoguard CDs are
distributed to companies who record onto the CDs. As in
HRL 732018, we find that these companies recording onto the
CDs are the ultimate purchasers because recording
substantially transforms the CDs, or if the CDs are goods
of Mexico, results in a tariff shift to heading 8524 from
any other heading (heading 8523, HTSUS). See 19 CFR
102.20(p), Section XVI: Chapters 84 through 85, 8524.
Therefore, an exception from marking the individual CDs
should be allowed pursuant to 19 CFR 134.32(d) and 19 CFR
134.35. Furthermore, as in HRL 732018, Kodak also states
that some of the Infoguard CDs are not recorded but are
resold only in the outer carton in which they are purchased
from Kodak. In regard to these CDs, as long as Customs
officials at the port of entry are satisfied that the
ultimate purchasers receive the CDs in the original
unopened outer container, the CDs, jewel cases or beehives,
and inner containers may also be excepted from individual
marking pursuant to 19 CFR 134.32(d). Since the jewel
cases do not contain shrink wrapping or the UPC bar codes
which is stated to be necessary to sell a product at
retail, it is our opinion that this adds assurance that the
CDs will not be sold in these unmarked jewel cases, but
that the ultimate purchaser will receive the CDs in the
properly marked outer container.
As to Kodak's name and U.S. address on the outer
container, we find that the marking requirements of 19 CFR
134.46 are triggered. Section 134.46, Customs
Regulations (19 CFR 134.46), requires that when the name of
any 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. Customs has specifically ruled that in
order to satisfy the close proximity requirement, the
country of origin marking must generally appear on the same
side(s) or surface(s) in which the name of the geographical
reference other than the country of origin appears.
In HRL 735268 dated October 1, 1993, Customs
considered intravenous sets packaged one set to a plastic
pouch, forty pouches to a master carton, and four master
cartons to a shipping carton. Both the shipping cartons
and the master cartons were marked with the country of
origin. The individual intravenous pouches indicated a
U.S. address, and pointed to a lot code for the country of
origin. The intravenous sets were only to be sold to the
ultimate purchasers in the master cartons, and no
intravenous sets were supposed to be taken out of the
master carton and sold separately. It was found that since
the master cartons were properly marked to indicate the
country of origin of the intravenous sets, the ultimate
purchaser would be advised of the country of origin, and,
therefore, the individual intravenous sets were excepted
from marking under 19 U.S.C. 1304(a)(3)(D) and 19 CFR
134.32(d). Furthermore the reference on the individual
pouches to the lot number for the country of origin was
determined to satisfy the requirements of 19 U.S.C. 1304
and 19 CFR Part 134 because the ultimate purchasers would
not be misled by the U.S. address as the intravenous sets
were only received in the properly marked master carton and
the lot code printed on the individual pouches explained
how to determine the country of origin.
In this case, it is our opinion that 19 CFR 134.46 is
satisfied because the outer containers of the samples
submitted are marked "Made in Mexico" in the same size and
on the side as the U.S. address. In regard to the U.S.
references on the CDs and jewel cases, we do not find that
the requirements of 19 CFR 134.46 are triggered because
these references cannot be seen until the outer container
which is properly marked is opened. Therefore, we do not
find that these U.S. references on the CDs and jewel cases
are deceiving.
In regard to the CDs without Infoguard protection,
Kodak states that some of the CDs will be repackaged prior
to being recorded, and, therefore, Kodak cannot state with
certainty that these CDs will be resold in the same carton
in which they are imported. Because some of the CDs will
be repackaged and Kodak cannot state which ones will be
repackaged, the requirements of 19 CFR 134.26 must be
satisfied.
Section 134.26, Customs Regulations (19 CFR 134.26)
provides in pertinent part that:
If an imported article subject to these requirements
is intended to be repackaged in retail containers ...
after its release from Customs custody, or if the
district director having custody of the article, has
reason to believe that such article will be repacked
after its release, the importer shall certify to the
district director that: ... (2) if the article is
intended to be sold or transferred to a subsequent
purchaser or repacker, the importer shall notify such
purchaser or transferee, in writing, at the time of
sale or transfer, that any repacking of the article
must conform to these requirements.
Accordingly, for the CDs without Infoguard protection which
are unlikely to be received by the ultimate purchaser in
the properly marked outer container, Kodak must comply with
the certification and notify subsequent purchaser of the
requirements of 19 CFR 134.26.
HOLDING:
Based on the facts presented, the individual Infoguard
CDs, jewel cases or beehives, and inner containers are
excepted from individual country of origin marking provided
customs officials at the port of entry are satisfied that
the Infoguard CDs will reach the ultimate purchasers in
properly marked, unopened containers. Furthermore, we find
that the outer containers are marked to satisfy the
requirements of 19 CFR 134.46, and that Kodak's address on
the Infoguard CDs and jewel cases do not trigger the
requirements of 19 CFR 134.46 because these references are
not seen until the ultimate purchaser opens the properly
marked outer container. In regard to the CDs without
Infoguard protection, the requirements of 19 CFR 134.26
must be satisfied.
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