HQ 0730030 - Country of Origin Marking of Battery Jackets - United States International Trade Commision Rulings

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HQ 730030

March 15, 1989

MAR 2-05 CO:R:C:V 730030 LR

CATEGORY: MARKING

Mr. C. K. Murphy
Manager, Export and Import Services
Eveready Battery Company, Inc.
2900 Westchester Avenue
Purchase, New York 10577

RE: Country of Origin Marking of Battery Jackets

Dear Mr. Murphy:

This is in response to your request of November 25, 1986, for a ruling on the country of origin marking requirements for lithographed steel sheets manufactured in Japan. We regret the delay in responding to your request. It was misplaced in the course of an office move. Pursuant to section 177.1, Customs Regulations (19 CFR 177.1), this ruling pertains only to prospective transactions.

FACTS:

The inquirer, a manufacturer of batteries, imports lithographed steel sheets from Japan for use as battery jackets. The importer cuts the sheets to form 180 individual battery jackets and attaches them to U.S. manufactured batteries. The legend "MADE IN USA" along with a "Guarantee" which instructs the consumer to return a defective battery to an address in the U.S. appear on each of the 180 segments of the lithographed steel sheet. The importer is of the opinion that the steel sheets are excepted from country of origin marking because any marking on the reverse side of the steel would not be visible to the consumer.

ISSUE:

Are imported lithographed steel sheets that are printed with a U.S. address and a MADE IN USA" legend and processed in the U.S. by cutting them to form individual battery jackets and attaching them to U.S. batteries excepted from individual country of origin marking?

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), generally requires, subject to certain specified exceptions, that every article of foreign origin imported into the U.S. be marked to indicate the country of origin to the ultimate purchaser in the U.S. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. An ultimate purchaser is defined in section 134.1, Customs Regulations (19 CFR 134.1), as "the last person in the U.S. who will receive the article in the form in which it was imported." The regulation further provides 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. However, if the manufacturing process is merely a minor one which leaves the identity of the imported article intact, 19 CFR 134.1(d)(2) provides that the consumer or user of the article, who obtains the article after the processing, will be regarded as the ultimate purchaser.

According to U.S. v. Gibson-Thomsen Company, Inc. 27 CCPA 267 (1940), a manufacturer would be considered an ultimate purchaser if a manufacturing process is performed on an imported item so that the item loses its identity and becomes an integral part of a new article with a new name, character or use. The court determined that in such circumstances, the imported article is excepted from individual marking. See also section 134.35, Customs Regulations (19 CFR 134.35).

In this case, we find that the imported steel sheet loses its separate identity and becomes an integral part of a new article with a new name, character and use, when it is cut and attached to a battery in the U.S. Although very little processing is required to render the steel sheets into useable battery jackets, the jackets by themselves lack the essential characteristics of finished batteries. In our opinion, the attachment of the jacket to the battery changes its fundamental character from a useless piece of steel sheet to an integral component of a functioning battery. Based on these considerations, we find that the U.S. battery manufacturer is the ultimate purchaser of the imported steel sheets.

Although under these circumstances, the imported steel sheet would normally be excepted from individual country of origin marking, as explained below, in this case, due to the presence of the U.S. address and the "MADE in USA", the exception does not apply.

Section 134.36(b), Customs Regulations (19 CFR 134.36(b)), states that an exception from marking shall not apply to any article bearing any words described in section 134.46, Customs Regulations (e.g. the name of a city or locality in the United States), which imply that an article was made or produced in a country other than the actual country of origin. Customs has determined that this section of the regulations is to be strictly construed to protect against markings that are potentially misleading to the final consumer.

Thus, in C.S.D. 79-412, dated May 18, 1979, the Customs Service held that valve bodies which were made in Canada and marked "Cleveland, Ohio, U.S.A." could not be excepted from marking requirements even though the importer/ultimate purchaser knew their true origin. Customs found that the final consumer of the automatic pressure relief valve, of which the valve body is a component, might incorrectly conclude by seeing the valve body marked "Cleveland" that the automatic pressure relief valve was made entirely in the U.S. See also Customs Ruling 730069 dated December 23, 1986 (jack components with U.S. address must be marked with country of origin even though the importer is the ultimate purchaser).

In this case, the "MADE IN USA" legend on the Japanese steel sheet does more than imply that the product was made or produced in a country other than the actual country of origin. The legend affirmatively states this to be the case. The U.S. address is a further indicia of U.S. origin. In our opinion, these markings, without another marking to show that the jacket is a product of Japan, would be misleading to the consumer in that they create the erroneous impression that the entire battery, including the steel jacket, was made in the U.S. Even though the imported steel is substantially transformed, it is nonetheless a major foreign component. In fact, the battery jacket is the only part the consumer sees. Accordingly, notwithstanding the fact that the manufacturer is the ultimate purchaser, pursuant to 19 CFR 134.36(b), the imported lithographed steel which bears a "MADE IN USA" legend and U.S. address is not excepted from individual country of origin marking.

HOLDING:

The U.S. company that imports lithographed steel sheets, cuts them to form individual battery jackets and attaches the jackets to U.S. batteries is the ultimate purchaser of the imported steel. If the "MADE IN USA" legend and the U.S. address are removed prior to importation, the steel sheets are excepted from individual country of origin and only their outermost containers are required to be marked. If, however, the "MADE IN

USA" legend and the U.S. address remain on the imported steel sheets in a place where these words will be visible to the consumer, the exception is not applicable. In such case, the words "Jacket Made in Japan", or other words of similar meaning, must also appear on each segment of steel where they will be visible to the final consumer.

Sincerely,

John Durant

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