HQ 0732258 - Country of origin marking of imported rebuilt automotive alternators - United States International Trade Commision Rulings

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HQ 732258
March 28, 1990

MAR-2-05 CO:R:C:V 732258 KG

CATEGORY: MARKING

Bernard R. Nottling
Rudolph Miles & Sons
4950 Gateway East
P.O. Box 144
El Paso, Texas 79942

RE: Country of origin marking of imported rebuilt automotive alternators

Dear Mr. Nottling:

This is in response to your letter of March 22, 1989, requesting a country of origin ruling regarding imported rebuilt automotive alternators. We regret the delay in responding to your inquiry.

FACTS:

Your client will be exporting repairable automotive alternators into Mexico. Your client is unsure of the origin of the alternators when originally made, but all the alternators are taken out of used cars which were scrapped in the U.S. In Mexico, a series of operations will be performed. First, the alternators will be sorted by type, disassembled and the parts will be cleaned. Then the parts will be electrically tested and inspected to identify the defective and worn parts. The defective parts will be scrapped and the reusable parts will be stored by part number in storage containers. The alternators will then be reassembled using both the original alternator parts and new U.S.-made replacement parts. The alternators are electrically tested , permanently ink stamped "Assembled in Mexico" on the housing shell and packaged for shipment. Each shipping carton will be stamped "Assembled in Mexico." The alternators will then be imported and entry made as fully dutiable.

Approximately 10 to 15% of the repairable alternators sent into Mexico have a raised phrase "Made in U.S.A." die cast into one of the two alternator end housings. Your client proposes to permanently ink stamp "Assembled in Mexico" immediately adjacent to the phrase "Made in U.S.A." which appears on the housing. You asked if the phrases "Rebuilt in Mexico," or "Remanufactured in Mexico" would be an acceptable country of origin marking.

ISSUE:

Whether the marking of the rebuilt automotive alternators described above satisfies section 304 of the Tariff Act of 1930, as amended.

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 (or 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. The Court of International Trade stated in Koru North America v. United States, 701 F.Supp. 229, 12 CIT (CIT 1988), that: "In ascertaining what constitutes the country of origin under the marking statute, a court must look at the sense in which the term is used in the statute, giving reference to the purpose of the particular legislation involved. The purpose of the marking statute is outlined in United States v. Friedlaender & Co., 27 CCPA 297 at 302 C.A.D. 104 (1940), where the court stated that: "Congress intended 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."

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(b), Customs Regulations (19 CFR 134.1(b)), defines the country of origin of an article 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 for country of origin marking purposes.

A substantial transformation occurs when articles lose their identity and become new articles having a new name, character or use. United States v. Gibson-Thomsen Co., 27 C.C.P.A. 267 at 270 (1940), National Juice Products Association v. United States, 10 CIT 48, 628 F.Supp. 978 (CIT 1986), Koru North America v. United States, 12 CIT ___, 701 F.Supp. 229 (CIT 1988). In this instance, there is no new article; the alternators are rebuilt so that they can function in their intended use. The rebuilt alternators do not have a new name, character or use; they are merely made functional again. The rebuilding of the alternators in Mexico is not a substantial transformation.

Since the alternators are not substantially transformed in Mexico, pursuant to 19 CFR 134.1(b), Mexico is not the country of origin for these articles. The country of origin of these rebuilt alternators would be the country where the alternators were originally built. If the rebuilt alternators which contain the marking "Made in the U.S.A." were originally made in the U.S., then no country of origin marking is required by 19 U.S.C. 1304. However, to accurately advise the ultimate purchaser as to these articles, Customs has no objection to the markings "Rebuilt in Mexico" or "Remanufactured in Mexico" appearing thereon.

The issue of which country is considered the country of origin for used imported articles which were not originally intended for destination to the U.S. has been considered by both the Court of International Trade and by Customs. In a case involving the proper rate of duty to be assessed by Customs with regard to a used imported printing press originally manufactured in East Germany, the Court held in Ashdown, U.S.A. v. United States, 696 F.Supp. 661 (CIT 1988), that the printing press, which was continually used in West Germany for nine years and which was not intended at the time of original sale to be exported to the U.S., became a bona fide part of the commerce of West Germany and was therefore, not an import from a Communist country. The case is not directly on point because it involves the proper rate of duty and not country of origin marking and also because it involves General Headnote 3 of the Tariff Schedules of the United States and is not a country of origin determination. Further, in that case, Customs was able to determine the original country of origin. However, the reasoning involved in determining that the "connection between merchandise and country of origin has been so effectively broken that it could no longer be regarded as an import from East Germany" is relevant to determining the country of origin for all used machinery or goods.

Used clothing worn in Canada was held by Customs in HQ 732409 (September 25, 1989), to be from Canada for country of origin marking purposes. The ruling cited HQ 730174 (March 31, 1987), in which Customs addressed the issue of used clothing purchased in the U.S., exported to Mexico for sorting and re- imported for sale in the U.S. Customs found that an exception from marking pursuant to 19 CFR 134.32(c), which excepts articles that cannot be marked prior to shipment to the U.S. except at an expense economically prohibitive of its importation, was unnecessary. The used clothing was regarded as of U.S. origin because it was purchased from the Salvation Army, Goodwill Industries stores and similar organizations within the U.S. and therefore, presumed to have been worn and used in the U.S. These rulings eliminated the need to sort the clothing by original country of origin and also eliminated the problem of not knowing the original country of origin of every single garment. In this instance, the used alternators were installed and used in automobiles in the U.S. There is no indication of any intent to transship alternators through the U.S. and it is not possible to determine where each and every alternator was originally made. Therefore, the used alternators which are not already marked with a foreign country of origin and for which it is impossible to trace the original country of manufacture are considered to be of U.S. origin. Those alternators which are already marked with a foreign country of origin are properly marked pursuant to 19 CFR 134.1(b) and require no further marking. Since the used alternators which are not otherwise marked with a foreign country of origin are considered to be of U.S. origin for country of origin marking purposes, they are excepted from marking pursuant to section 134.32(m), Customs Regulations (19 CFR 134.32(m)), which excepts products of the U.S. exported and returned to the U.S. from marking.

HOLDING:

Rebuilding an automotive alternator is not a substantial transformation. Since the alternators were not substantially transformed in Mexico, Mexico is not considered the country of origin for the purposes of 19 U.S.C. 1304. Customs has no objection to the markings "Rebuilt in Mexico" or "Remanufactured in Mexico" appearing on the alternators. The used alternators, which were used in automobiles in the U.S., but were not intended to be used in the U.S. merely to attain a U.S. country of origin and for which it is not possible to determine the original country of origin for each and every alternator, are considered to be products of the U.S. Therefore, the used alternators already marked with a foreign country of origin are properly marked. The used alternators not already marked with a foreign country of origin and for which it is impossible to trace the original country of manufacture are considered products of the U.S. exported and returned, which are excepted from marking pursuant to 19 CFR 134.32(m).

Sincerely,

John Durant
Director,

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