HQ 0732923 - Country of origin marking of imported crankshaft forgings - United States International Trade Commision Rulings

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HQ 732923
December 13, 1989

MAR-2-05 CO:R:C:V 732923 KG

CATEGORY: MARKING

Arthur Hatton
Ovako Steel, Inc.
P.O. Box 745
Avon, Connecticut 06001

RE: Country of origin marking of imported crankshaft forgings

Dear Mr. Hatton:

This is in response to your letter of November 17, 1989, requesting a country of origin ruling regarding imported crankshaft forgings.

FACTS:

You import crankshaft forgings from two steel mills in Sweden. Each forging is marked to indicate which mill it originated from. The crankshaft forgings are sold to manufacturing companies in the U.S. who perform finishing operations such as polishing, turning, heat treating and sometimes some annealing and install the crankshafts in engines. The engines are then installed in heavy duty trucks or automobiles either by the same company or by other companies.

You submitted four photographs of crankshafts loaded onto pallets, covered with plastic wrap and marked with large tags identifying the part number, the purchase order number and the phrase "Made in Sweden." Although it is difficult to estimate the size of the country of origin marking from the photos, it is evident that the letters are bold, prominent and of the same size as the other information on the tag. The tag is stapled to the banding of the pallet. The pallets are then placed in containers and shipped to the U.S.

ISSUE:

Whether the imported crankshaft forgings, marked as described above, comply with the country of origin requirements set forth at 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, 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 134.35, Customs Regulations (19 CFR 134.35), states that the manufacturer or processor in the U.S. who converts or combines the imported article into a different article having a new name, character or use will be considered the ultimate purchaser of the imported article within the contemplation of section 304(a) of the Tariff Act of 1930, as amended, and the article shall be excepted from marking. The outermost containers of the imported articles shall be marked.

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 ___, 628 F.Supp. 978 (CIT 1986), Koru North America v. United States, 12 CIT ___, 701 F.Supp. 229 (CIT 1988). Customs ruled in HQ 709253 (August 9, 1978), that imported German crankshaft forgings which underwent further processing in France were substantially transformed in France and therefore, considered to be a product of France for country of origin marking purposes. The processing in France included: turning the main and rod bearing journals, drilling oil feed holes, drilling and tapping the flange of the crankshaft and additional heat treatment. In this case, the further processing performed in the U.S. is similar. Further, the crankshaft forgings are installed in engines after processing. Once installed in engines, the crankshafts lose their identity and become an integral part of a new or different article having a new name, character and use. The crankshaft forgings are substantially transformed in the U.S. Therefore, the ultimate purchaser of the crankshaft forgings is the manufacturer. The country of origin marking described above would inform the manufacturer of the country of origin of the imported crankshaft forgings.

HOLDING:

The U.S. manufacturer that performs the operations described above and installs the crankshafts into engines is the ultimate purchaser of the imported crankshaft forgings. Therefore, marking the country of origin boldly and prominently on tags attached to the banding of the pallet is acceptable provided that Customs officials at the port of entry are satisfied that the U.S. manufacturer will receive the crankshaft forgings on the pallets with the country of origin tags intact.

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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