HQ 0735256 - Internal Advice request concerning the country of origin marking requirements for U.S. made thermostats imported from Canada; U.S. goods exported and returned; foreign origin; misleading or deceptive marking; 19 U.S.C. 1304; 15 U.S.C. 1124/1125; Annex 311 of the North American Free Trade Agreement - United States International Trade Commision Rulings

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HQ 735256

February 22, 1994

Mar-2-05 CO:R:C:V 735256 AT

CATEGORY: MARKING

District Director of Customs
300 2nd Avenue South
Great Falls, Montana 59403

RE: Internal Advice request concerning the country of origin marking requirements for U.S. made thermostats imported from Canada; U.S. goods exported and returned; foreign origin; misleading or deceptive marking; 19 U.S.C. 1304; 15 U.S.C. 1124/1125; Annex 311 of the North American Free Trade Agreement

Dear Sir:

This is in response to your internal advice request dated May 5, 1993, concerning the country of origin marking requirements for U.S. made thermostats imported from Canada. A sample thermostat and shipping box was submitted for review.

FACTS:

You state that Ruffneck Heaters of Canada is a regular shipper of products to the U.S. One of the products that Ruffneck Heaters ships is a thermostat manufactured by Columbus Electric Mfg., Co. in the U.S. The thermostat is an independent product which is shipped to various consignees in the U.S. You indicate, as verified by Import Generalist Ross Lyle during a telephone conversation on January 13, 1994, with a member of my staff, Anthony Tonucci, that the thermostats are entirely manufactured in the U.S. and exported to Canada to be used with heating systems in Canada. However, when orders are received from U.S. buyers for the thermostats, they are returned to the U.S. in the same condition. As imported, the thermostat components are enclosed in a cast metal box. The back of the cast metal box (thermostat) is marked with cast in mold letters in the following manner:

Columbus Electric
MFG Co,
Piney Flat, TN
PN 1992

The front of the thermostat has a metal plate riveted to it. The plate is marked:
listed: Ruffneck Heaters,
Calgary, Canada

The word "listed" in the marking refers to an Underwriters Laboratory certification. UL appears on the plate with other technical information.

The cardboard box used to ship the thermostat is marked on two panels with an adhesive sticker in the following manner:

Ruffneck Heaters,
Calgary, Alberta, Canada

You advise that because the thermostats and shipping boxes, as imported into the U.S. from Canada, were marked in the manner described above, a marking notice (CF 4647) was issued to Ruffneck Heaters on April 6, 1993. Although you inform that the marking has been corrected as directed by your district (affixing a paper sticker marked "Made in U.S.A." on the thermostat itself), two questions concerning the marking on the thermostats may still apply to future importations in the Great Falls District. Accordingly, you have requested our office to address the two issues set forth below.

ISSUES:

1. Is the product deceptively marked in violation of 15 U.S.C. 1124 or 1125?

2. Does the thermostat have to meet the country of origin marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134, especially 19 CFR 134.46? LAW AND ANALYSIS:

Is the thermostat, as imported, deceptively marked in violation of 15 U.S.C. 1124 or 1125?

It is the district's position that the imported thermostats are deceptively marked in violation of 15 U.S.C. 1124/1125 because a person purchasing the product in the U.S. would probably believe that the thermostat was made in Canada, rather than its actual country of origin, U.S.

15 U.S.C. 1124 provides in pertinent part that imported merchandise which "shall bear a name or mark calculated to induce the public to believe that the article is manufactured in the United States, or that it is manufactured in any foreign country or locality other than the country or locality in which it is manufactured shall not be admitted to entry."

15 U.S.C. 1125 provides in pertinent part that imported merchandise which bears "...any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which is likely to cause confusion, or to cause mistake, or to deceive ... as to the actual country of origin shall not be admitted to entry."

Whether merchandise is violative of these provisions must be decided on a case-by-case basis and the totality of the circumstances presented in the specific case must be taken into account.

In this case the imported thermostats are mark with a Canadian reference on the metal plate "Ruffneck Heaters, Calgary, Canada" as well as a U.S. reference "Columbus Electric MFG, Co., Piney Flats, TN." on the back of the cast metal box. We find that the Canadian references on the thermostats are neither false nor misleading within the meaning of 15 U.S.C. 1125 or "calculated to induce the public to believe" that the thermostats were manufactured in Canada within the meaning of 15 U.S.C. 1124. Although it would be preferable to have the Canadian reference removed, the actual words do not specify that the thermostats were made in Canada. The words make reference to the name and address of the heaters, i.e. "Ruffneck Heaters", not to the thermostats. Moreover, the name and U.S. address of the U.S. manufacturer of the thermostats "Columbus Electric MFG, Co." is also displayed. In such circumstances, we find that the thermostats are not violative of these provisions. Does the thermostat have to meet the country of origin marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134?

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. Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. (Emphasis added).

The marking requirements of 19 U.S.C. 1304 are only applicable if the article imported into the U.S. is of foreign origin. Foreign origin refers to a country of origin other than the U.S. 19 CFR 134.1(c). Thus, it must be determined whether the country of origin of the imported thermostats is other than the U.S.

The rules for determining when, for marking purposes, the country of origin of an imported good is one of the parties to the North American Free Trade Agreement ("NAFTA") are set forth in Part 102, Customs Regulations. The "NAFTA" was implemented by the North American Free Trade Agreement Implementation Act. Public Law 103-182, 107 Stat. 437 (December 8, 1993).

The rules were published in the Federal Register on January 3, 1994, as an interim rule effective on January 1, 1994, for all goods imported into the United States for purposes of determining whether or not the country of origin of such goods is either Canada, Mexico or the United States. 59 Fed Reg 115. Certain amendments to the interim rule were published in the Federal Register on February 3, 1994. 59 Fed Reg 5083.

Section 102.14, Customs Regulations, as amended (19 CFR 102.14), provides in pertinent part that no good, last advanced in value or improved in condition outside the United States has United States origin. If under any other provision of part 102 such a good is determined to be a good of the United States, that determination will be disregarded and the country of origin of the good will be the last foreign country in which the good was advanced in value of improved in condition.

Based on your representation that the thermostats are entirely manufactured in the U.S., for purposes of this ruling, we assume that the thermostats are goods of the United States. (See, 19 CFR 102.11(a); the country of origin of a good is the country in which the good is wholly obtained or produced exclusively from domestic materials). "Advanced in Value" is defined in section 102.1(a) as "an increase in the value of a good as a result of production with respect to that good...". "Improved in Condition" means the enhancement of the physical condition of a good as a result of production with respect to that good...". Based on the fact that the thermostats undergo no production in Canada but are merely exported and returned, they are not advanced in value or improved in condition in Canada and are considered products of the U.S. Accordingly, based on the above provisions, thermostats imported into the U.S. on or after January 1, 1994, are not of foreign origin and not subject to the requirements of 19 U.S.C. 1304 upon importation into the U.S. (Thermostats imported prior to this date are also not subject to the requirements of 19 U.S.C. 1304 based on the fact that they undergo no substantial transformation prior to their return to the U.S).

HOLDING:

U.S. manufactured thermostats exported to Canada and returned to the U.S. marked in the manner described above are not marked in violation of 15 U.S.C. 1124 and 1125. They are also not subject to the country of origin marking requirements of 19 U.S.C. 1304.

This decision should be mailed by your office to the internal advice requestor no later than 60 days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the decision available to Customs personnel via the Customs Rulings Module in ACS and the public via the Diskette Subscription Service, Lexis, Freedom of Information Act and other public access channels.

Sincerely,

John Durant, Director

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