HQ 0733291 - Country of origin marking requirements for imported rubber hose; substantial transformation: 19 CFR 134.35; 19 CFR 134.32(g) 19 CFR 134.32(h) - United States International Trade Commision Rulings

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HQ 733291

July 23, 1990

MAR-2-05 CO:R:V:C 733291 RSD

CATEGORY: MARKING

Ms. Marian Duntley
Price Waterhouse
Arco Center
200 Oceangate, Suite 600
Los Angeles, California 90802

RE: Country of origin marking requirements for imported rubber hose; substantial transformation: 19 CFR 134.35; 19 CFR 134.32(g) 19 CFR 134.32(h)

Dear Ms. Duntley:

This is in response to your letter dated April 17, 1990, requesting a ruling regarding the country of origin marking requirements of imported rubber hose from Taiwan.

FACTS:

Your client, United Pacific Distributors Supply, Inc., imports rubber hose from Taiwan.
The hose is imported on long length reels. Each reel contains approximately 600 feet hose and is marked "AMFLO - MADE IN TAIWAN." United Pacific Distributors sells the reels of hose to a company named Amflo. Amflo uses the hose in the manufacture of air tool products. These products include tire inflator gauges and hose assemblies. The hose is cut to length, and then assembled with various hardware to form the finished products. Amflo has requested that the hose provided them be unmarked for use in their manufacturing process. A letter was submitted from Amflo, which states that cutting the hose into lengths to use as a sub-assembly would obliterate the country of origin marking.

ISSUE:

Does imported hose which is to be processed into air tool products such as tire gauges and hose assemblies have to be marked to indicate the country of origin?

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. Congressional intent in enacting 19 U.S.C. 1304 was 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." United States v. Friedlaender & Co., 27 C.C.P.A. 297 at 302 (1940).

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 "country of origin" 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" within the meaning of the marking laws and regulations. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides that an article used in manufacture which results in an article having a name, character, or use differing from that of the constituent article will be considered substantially transformed.

The standard for determining the ultimate purchaser of an article used in manufacture is set forth in section 134.35, Customs Regulations (19 CFR 134.35), which provides that the manufacturer or processor who converts or combines the imported article into an article having a name, character or use differing from that of the imported article is considered the ultimate purchaser. Under such circumstances, the imported article is substantially transformed and the article itself need not be individually marked. Only the outermost container in which the article is imported must be marked.

In the instant case, when the hose first arrives in the U.S. in its imported condition, the hose is on large reels without a specified use. It has the potential to be used in a variety of different ways, but it is not ready for any specific use. In cutting the hose to meet a specified length and attaching an end piece, Amflo changes the nature and the character of the article. The hose becomes dedicated to a particular purpose. The product is no longer simply a hose but an air tool product such as a hose assembly or tire inflator gauge. The hose becomes part of these devices and it loses its separate identity. The product has a specific use, related to the distribution or measuring of water or compressed air. Accordingly, we find that Amflo, by processing the hose to manufacture hose assembly and tire inflator gauges, substantially transforms the hose into an article with a new name, character and use. In accordance, with 19 CFR 134.35, we find that Amflo is the ultimate purchaser of the hose. Accordingly, the hose itself may be excepted from country of origin marking, provided the reels are properly marked with the country of origin of the hose.

You also request an exception from marking under 19 CFR 134.32(g), which pertains to articles which are processed by the importer or for his account in such manner that any country of origin marking would be necessarily obliterated, destroyed, or permanently concealed. Insufficient evidence has been presented in support of this claim.

Finally, you request an exception to marking the hose based on 19 CFR 134.32(h) because Amflo, the ultimate purchaser, knows the country of origin of the hose. This provision excepts from marking articles for which the ultimate purchaser must necessarily know the country of origin by reason of the circumstances of their importation. A letter from Amflo which indicates that it knows the hose is manufactured in Taiwan was submitted. If an article is excepted from country of origin marking under 19 CFR 134.32(h), then the containers of the articles do not have to be marked under 19 CFR 134.23(d)(1). Customs has ruled that for the 19 CFR 134.32(h) exception, an ultimate purchaser necessarily knows the country of origin by reason of the circumstances of their importation only if the ultimate purchaser has direct contact with the foreign supplier. See HQ 731967, May 11, 1990. In this case, there is no evidence that Amflo has direct contact with the foreign supplier of the hose in Taiwan, and therefore the hose is not excepted from country of origin marking under 19 CFR 134.32(h).

HOLDING:

Amflo, by processing the hose into tire gauges and hose assemblies, performs a substantial transformation and is the ultimate purchaser of the imported hose. Insufficient evidence has been presented in support of either the 19 CFR 132.32(g) or (h) exceptions. Therefore, the hose is excepted from marking provided that the reels are marked to indicate the country of origin of the hose and Customs officials at the port of entry are satisfied that the hose will be used only in the manner described above and that Amflo will receive the hose on the marked reels.

Sincerely,

Marvin M. Amernick

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