HQ 0733179 - Country of Origin Marking of Gear Boxes and Spare Parts for Agricultural Equipment - United States International Trade Commision Rulings

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HQ 733179

May 24, 1990

Mar-2-05 CO:R:C:V 733179 NL

CATEGORY: MARKING

Andrew P. Vance, Esq.
Barnes, Richardson & Colburn
475 Park Avenue South
New York, NY 10016

RE: Country of Origin Marking of Gear Boxes and Spare Parts for Agricultural Equipment

Dear Mr. Vance:

This is in response to your letter of February 28, 1990, in which you ask for a ruling that articles imported by your client, Omni USA, Inc., ("Omni"), may be excepted from the country of origin marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.

FACTS:

The articles are imported from China by Omni and consist of gear boxes and spare parts. These are sold after importation by Omni only to original equipment manufacturers of rotary cutters, complete irrigation systems and post hole diggers.

The gear boxes are imported on pallets which are marked with the articles' country of origin. In most cases the articles are delivered to the original equipment manufacturer on the pallets, but on occasion the purchaser orders an amount less than the full contents of the pallet and the requisite amount is removed for delivery. You have indicated that less than 5% of the imported gear boxes are removed from the pallets. While the pallets are marked with country of origin, the articles themselves are not marked. There is no indication as to the marking or packaging of the spare parts at the time of importation.

You ask for a ruling that the articles may be excepted from marking on the basis that marking the pallets with the articles' country of origin satisfies the requirements of 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). You submit that because the original equipment manufacturers substantially transform the gear boxes into finished equipment, they are the ultimate purchasers of the articles within the meaning of 19 CFR 134.1(d)(1) and 19 CFR 134.35. Finally, you urge that the original equipment manufacturers must necessarily know the origin of the gear boxes and parts by reason of the circumstances of their importation or the character of the articles, and thus that the articles may be excepted from individual country of origin marking pursuant to 19 U.S.C. 1304(a)(3)(H) and 19 CFR 134.32(h).

With the approval of Customs officials at Houston, Texas, the gear boxes and parts were excepted from individual country of origin marking pursuant to that latter exception. A copy of Omni's waiver request has been submitted for Headquarters review, together with a photograph showing the marking of the pallets, copies of certificates of usage executed by Omni's customers, and specification sheets concerning the subject merchandise.

You indicate that with respect to articles which may be removed from their marked pallets prior to sale to the original equipment manufacturers, Omni will remark the articles and give notice to subsequent purchasers as required by 19 CFR 134.26.

ISSUES:

Who is the ultimate purchaser of the gear boxes and other parts?

Is the marking of the pallets alone adequate under the circumstances for purposes of 19 U.S.C. 1304 and 19 CFR Part 134?

What marking requirements apply to the spare parts?

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 ito 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.

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 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), 19 CFR 134.35.

On the basis of the information submitted and arguments presented, we are satisfied that Omni's customers, the original equipment manufacturers, are the ultimate purchasers of the gear boxes. By incorporation into substantial articles of manufacture the gear boxes lose their identity as separate articles of commerce and are substantially transformed into parts of rotary cutters, irrigation systems and post hole diggers.

We are unable, however, to authorize an exeption from individual country of origin marking pursuant to 19 CFR 134.32(h). There is nothing in the submission to indicate that the ultimate purchasers were aware prior to sale that the gear boxes originate in China, and more importantly, there is no showing of any direct dealings between the ultimate purchasers and the Chinese manufacturers. Generally, Customs has required such a showing as a condition of granting an exception from marking pursuant to 19 CFR 134.32(h). See, HQ 730243 (March 5, 1987). Moreover, there is nothing about the nature of these gear boxes which would place an ultimate purchaser on notice that their country of origin is China. Pursuant to 19 U.S.C. 1304(b), neither the article or its container is required to be marked if the exception provided in 19 U.S.C. 1304(a)(3)(H) is applicable. However, since this exception is unavailable, the article or the container in which the article is imported is required to be marked.

Based upon the photograph submitted, which shows the gear boxes on stacks of pallets secured by metal bands and marked "Made in China" by stenciling, it is our opinion that the gear boxes may be excepted from individual country of origin marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d). The marking of the article's country of origin on this container reasonably indicates the country of origin of the article. This exception would be valid for gear boxes imported in these containers provided that Customs officials are satisfied that in all foreseeable circumstances the gear boxes reach the ultimate purchasers, the original equipment manufacturers, on these pallets. The importer's representations that the gear boxes are delivered in this fashion, and that they are sold only to these purchasers, satisfy this requirement. For the few gear boxes which are removed from the pallets prior to delivery to the ultimate purchasers, the importer will comply with the certification and notice to subsequent purshasers requirements of 19 CFR 134.26.

Provided that the spare parts for the gear boxes originate also in China, they may be excepted from individual country of origin marking pursuant to 19 CFR 134.33 (the "J-List"), as "parts for machines imported from same country as parts". The detailed requirements for this exception, which are satisfied in this case, are set forth in T.D. 75-85 (March 12, 1975).

It is our opinion that unlike the gear boxes, the ultimate purchaser of the spare parts is the owner of the agricultural equipment. Thus, if the imported parts are to be repacked, the importer must execute the notice to subsequent purchasers prescribed in 19 CFR 134.25. Further, the subsequent purchaser from the importer, the original equipment manufacturer and spare parts distributor, must repack the spare parts in containers whose marking satisfies the requirements of 19 U.S.C. 1304 and 19

CFR Part 134.

HOLDING:

The original equipment manufacturers of rotary cutters, irrigation systems and post hole diggers are the ultimate purchasers of the gear boxes. Provided the district director is satisfied the gear boxes are to be delivered to these ultimate purchasers on the marked pallets in which they are imported, the gear boxes may be excepted from individual country of origin marking pursuant to 19 CFR 134.32(d). The ultimate purchasers of the spare parts, however, are the owners of the agricultural equipment. While the spare parts may be excepted from country of origin marking pursuant to 19 CFR 134.33 (the "J-List"), the containers in which the parts are sold to the ultimate purchasers must be marked with the parts' country of origin. If the parts are to be repacked after importation but prior to sale to the ultimate purchasers, the importer must comply with the procedures specified in 19 CFR 134.25.

Sincerely,

Marvin M. Amernick
Chief, Value, Special Programs

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