HQ 0731864 - J-list Exception: Parts for machines imported from same country as parts - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1990 HQ Rulings > HQ 0731507 - HQ 0731864 > HQ 0731864

HQ 731864

April 7, 1989

MAR 2-05 CO:R:C:V 731864 LR

CATEGORY: MARKING

District Director of Customs
477 Michigan Avenue
Detroit, Michigan 48226-2568

RE: J-list Exception: Parts for machines imported from same country as parts

Dear Sir:

This is in response to your request for internal advice of October 11, 1988 (MAN-1-CO:CT PM IADVICE/TXTFRISC), concerning the applicability of Headquarters Ruling Letter (HRL) 720420, dated September 28, 1982, to certain importations of the J.I. Case Company (Case). You have also forwarded the August 17, 1988, letter submitted by Katten Muchin & Zavis, counsel for Case, on this issue. A copy of Case's 1988 Agricultural Equipment Buyers Guide, a listing of the part numbers, and an affidavit of Richard B. Ryndak, International Counsel and Assistant Secretary of Case, was also furnished by counsel during a meeting at Headquarters on March 6, 1989.

FACTS:

Case manufactures agricultural implements for tractors, such as plows, disk harrows, mowers, planters and seeders at its plant in Hamilton, Ontario, Canada. This is the only Case plant worldwide which manufactures these particular agricultural implements. The submitted brochure includes pictures of these implements and is accompanied by a listing of their part numbers. The implements are die stamped "Made in Canada" when imported into the U.S.

Case also manufactures service parts for the agricultural implements manufactured in Hamilton, such as spools, bolts, bushing and shanks. These parts are also manufactured solely at the Hamilton plant, and are manufactured specifically for the agricultural implements made originally at the plant. According to Case, these parts are not interchangeable and could not be used on either general purpose equipment or on other types of
agricultural equipment manufactured by other companies. As a result, Case indicates that if an agricultural implement manufactured by Case at the Hamilton plant requires a service part, the U.S. farmer who owns the implement would order the part from a Case authorized dealer who will order the part directly from the Hamilton plant.

Case does not individually mark the country of origin on the service parts for agricultural implements which are imported from its Hamilton plant into the U.S. but includes the following statement on the commercial invoices accompanying each shipment:

This invoice covers agricultural parts manufactured in Canada for machinery or equipment also manufactured in Canada. An exception for marking is requested under Section 134.33 CR per U.S. Customs Headquarters letter dated 9-28-82, Ref. 720420
OK.

In February 1988, Case received a marking notice on a shipment of agricultural service parts from Canada which were entered at Detroit. Your office advised Case, through its broker, that Headquarters Ruling Letter (HQ) 720420 was not applicable to Case's importations and that in the future all shipments of service parts had to be marked. On June 30, 1988, a shipment of unmarked agricultural service parts from Case's Hamilton plant was seized by Customs.

ISSUE:

Whether agricultural parts manufactured in Canada specifically as replacement parts for agricultural implements made only in Canada are excepted from individual country of origin under the J-list exception for "parts for machines imported from same country as parts".

LAW AND ANALYSIS:

Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), requires, subject to certain specified exceptions, that all articles 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 will permit in such a manner as to indicate to an ultimate purchaser in the U.S. the English name of the country of origin of the article.

Certain classes of articles which are specified in section 134.33, Customs Regulations (19 CFR 134.33), known as the J-list, are excepted from individual country of origin marking pursuant to 19 U.S.C. 1304(a)(3)(J). One of the items on the J-list is "parts for machines imported from same country as parts". This item has been interpreted to cover replacement parts which are manufactured in the same country as the original machine which is exported to the U.S. As construed by Customs in T.D. 75-85, dated March 12, 1975, the following principles are applicable to this exception:

(1) The word "machine" is used in a general sense and also applies to such things as vehicles.

(2) The exception applies to replacement parts for machines which may be manufactured in more than one country, provided that Customs officers are satisfied that the machines exported to the U.S. are made in only one country.

(3) The exception applies to replacement parts made and engineered for use on or in the particular machine involved, and also to parts made to standard or stock designs which are used in producing the machine.

(4) The exception is applicable only to replacement parts manufactured in the same country as the machine which is exported to the U.S.

On September 28, 1982, Customs issued HQ 720420, regarding the country of origin marking requirements of service parts manufactured by International Harvester Canada, Ltd., for use on agricultural implements also manufactured by International Harvester Canada, Ltd. In applying the principles set forth in T.D. 75-85, Customs ruled that if the service parts in question are all made in Canada, and are intended to be used on agricultural implements made in Canada that are themselves properly marked to indicate their country of origin, an exception from individual marking for the parts would be justified under 19 CFR 134.33. The ruling provided that Customs officers at the port of entry may require appropriate written statements to this effect before allowing this exception.

Case indicates that it acquired the Canadian plant from International Harvester Company in 1985. Case claims that except for the change in legal ownership, none of the facts on which the ruling was based have changed since the ruling was issued in 1982. As was the situation in 1982, Case claims that both the agricultural machinery in question and the replacement parts for these machines are still made only in Hamilton. In addition,

Case claims that because the parts are not interchangeable, they can only be used on a machine originally manufactured at that plant. An affidavit from Richard B. Ryndak, dated September, 8, 1988, International Counsel and Assistant Secretary of Case, has been submitted attesting to these facts.

Accordingly, Case argues that the actual facts continue to fit squarely within the "J-list" exception which was applied in the 1982 ruling, namely that they are "parts for machines imported from same country as parts" and that HQ 720420 is still valid with respect to Case's importation of the identical merchandise from the Canadian plant.

Your office is of the opinion that the parts for agricultural implements imported by Case are not entitled to the J-list exception for "parts for machines imported from same country as parts" because Case does not satisfy the requirement that the machines exported to the U.S. market are made in only one country. You indicate that Case's market for implements and parts is global in nature and is not limited solely to one country. Whereas International Harvester (the recipient of the 1982 ruling) manufactured implements only in Canada, you state that Case manufactures agricultural and construction implements in various foreign countries. As such, you conclude that the J- list exception does not apply to any of Case's importations of parts for agricultural implements.

You base this conclusion on your observation that previous Headquarters rulings have used the term "machine" in a generic, rather than model specific sense. In your opinion, the word "machine" would include all machines of a particular product group rather than the specific models that are produced by a particular plant. In your opinion, the fact that the specific types of agricultural implements manufactured by Case in Canada are manufactured only in Canada, is immaterial.

You also indicate that because of Case's global market, the granting of an exception from marking would be inconsistent with the intent of 19 U.S.C. 1304(a)(3)(H), which permits a waiver of marking "when the ultimate purchaser, by reason of the character of the article or by reason of the circumstances of its importation, necessarily must know the country of origin of such article even though it is not marked to indicate its origin." You note that a farmer cannot "necessarily know" the country of origin of the imported parts now that Case manufactures implements in several countries.

After careful consideration of the arguments presented, we are of the opinion that the agricultural service parts imported from Case's Hamilton plant are entitled to an exception from marking as "parts for machines imported from same country as parts". We believe that a common sense approach should be used to determine whether or not this J-list exception applies to a particular situation. The underlying rationale for the exception appears to be that if the ultimate purchaser buys a specific machine which is properly marked as to its country of origin, then there is no need to mark a replacement part for that machine if it is manufactured in the same country as the original machine. The presumption is that the ultimate purchaser will assume that unless otherwise marked, the replacement part was manufactured in the same country as the machine itself.

The prerequisites set forth in T.D. 75-85, including the one that requires that the machines exported to the U.S. are manufactured in only one country, are for the purpose of ensuring that the unmarked replacement parts can be used only in a machine which was manufactured in the same country as the replacement parts. We see no reason to deny the exception from marking in a case such as this, where the importer has shown that both the particular machines and the parts for these machines are made only in one country, namely Canada, and that the parts do not fit any other machine. Since the imported Canadian parts can only fit the Canadian machine, the purpose of the exception is served. In our opinion, the fact that Case may manufacture other implements (that could not incorporate the imported replacement parts) in countries other than Canada, is not material.

Headquarters determination in T.D. 75-85 that the word "machine" should be applied in the general sense was so the exception would apply to products such as vehicles, which may not generally be thought of as machines. Whether or not the articles in question are eligible for an exception from marking under 19 U.S.C. 1304(a)(3)(H) is not determinative of whether they are excepted from marking under 19 U.S.C. 1304(a)(3)(J).

HOLDING:

Parts manufactured in its Canadian plant to be used exclusively as replacement parts for agricultural implements also manufactured in the same plant are excepted from individual marking pursuant to 19 U.S.C. 1304(a)(3)(J) and 19 CFR 134.33 as "parts for machines imported from same country as parts."

The outermost container in which the parts ordinarily reach the ultimate purchaser is required to be marked to indicate the origin of its contents.

Sincerely,

Marvin M. Amernick

Previous Ruling Next Ruling