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HQ 735278

July 13, 1994

MAR-2-05 CO:R:C:S 735278 RSD

CATEGORY: MARKING

John S. Rode, Esq.
Rode & Qualey
295 Madison Avenue
New York, New York 10017

RE: Country of origin marking requirements for induction-welded steel mechanical tubing with highly polished surfaces; pipes; ornamental tubes; stickers or tags; tagging the bundles; 19 U.S.C. 1304(c); T.D. 86-15; T.D. 92-70; HRL 734806

Dear Mr. Rode:

This is in response to your letter of July 16, 1993, on behalf of Delhi-Solac Inc., regarding the country of origin marking requirements for induction-welded steel mechanical tubing with a highly polished surface. Enclosed with your request are copies of informational brochures on these products. We regret the delay in responding to your request. In several telephone conversations between you and a member of our staff, we indicated that you needed evidence to support the claims made in your ruling request. However, we have received no further submissions, and therefore this ruling is based only on the information you have already presented. If you want to submit additional evidence to support your allegations, you may do so in a new ruling request and another ruling based on that evidence will be issued.

FACTS:

Delhi-Solac Inc. produces electric induction-welded steel mechanical tubing in plants in Canada. The merchandise will be imported through the ports of Buffalo, Champlain, Detroit, and Port Huron for delivery to customers in the United States. The tubing is manufactured from cold-rolled steel strip, from hot-rolled, pickled, and oiled steel strip; from galvanized steel strip; and from Galvalume coated steel strip, with the choice of starting material being dictated by the particular customer specifications and the end-application. It has a wall thicknesses ranging from Birmingham Wire Gauge 22 (nominally 0.028 inches) through Birmingham Wire Gauge 13 (nominally 0.95 inches). The finished tubes are available in round, square, and rectangular shapes. Round tubing is produced with nominal outer diameters of one half inch through three inches; square tube is produced in sizes ranging from one-half inch by one-half inch through two and one-half inches by two and one-half inches; the range of the rectangular tubing is from one-half inch by one inch through one inch by three inches.

Delhi-Solac's customers in the United States use its tubing in the manufacture of finished products which are in turn sold to the ultimate user. The articles produced in the United States from the tubes that Delhi-Solac imports include exercise equipment, furniture, conveyer rollers, swimming pool ladders, modular scaffold components, greenhouse arches and frames, ornamental fences, and awning support structures.

Delhi-Solac maintains that its customers require that the exterior surface of the tubing must be of the highest standards of finish, appearance, free from contamination of oil, grease, paint, and any other foreign substance. These customers also require that the product not bear any source imperfection or blemishes in the form of dents, chips, cracks, or any other interruption of or discontinuity in, the exterior surface.

All tubing produced by Delhi-Solac from cold-rolled steel strip and imported into the United States is sold to customers which apply a chromium plating upon the exterior of the tube in the course of manufacture. It is claimed that the plating operation has the effect of making any pre-existing surface blemish even more visible, and it is extremely difficult to ensure a satisfactory plate on tube which has been painted or bears residue left after the removal of paint, ink, or self-adhesive labels applied previously. Paint, ink, and adhesive residues are extremely difficult to remove to the extent necessary to ensure that chromium plating can be applied uniformly to the surface of the tube, and that the plating will endure over the anticipated life of the end product.

For tubing produced from hot-rolled, pickled and oiled steel strip, Delhi-Solac contends that any surface imperfection in the basic tube is likely to be magnified from a visual standpoint, by a paint or other coating, and the presence of paint, or adhesive residues on the tube is inconsistent with the application, adhesion, and durability of the final finish. In the case of pipe and tube produced from galvanized or Galvalume strip, most of Delhi-Solac's customers do not apply any coating or finish to the exterior of the tube portion of the products they produce. Delhi- Solac further contends that their customers regard the presence of paint marking, ink legends, labels, or adhesive residue as significant flaws in the appearance of their products, which must be removed at significant cost, prior to sale in the United States. The removal of paint, ink, labels, and adhesive cannot be accomplished without the employment of solvents and other chemicals which, apart from requiring additional labor capital investment and time; also impose significant regulatory compliance burdens because of the environmental, health and safety consequences of using such solvents and chemicals.

It is also alleged that marking by die stamping, etching or engraving will require additional effort, time and expense in the manufacture of the finished article. Supposedly it is difficult to apply a uniform layer of chromium to any surface which has concave indentations; the application of electrostatic primers, paints, and other coatings to such depressions is also difficult and is highly likely to yield a substantial number of rejects. In the case of galvanized and Galvalume tubing, any surface scratch or interruption of the exterior surface, including that which necessarily results from die stamping, etching, or engraving, is a potential threat to the integrity of the protective metal surface and in turn, increases the likelihood of accelerated corrosion.

Delhi-Solac also points out that there could be confusion over the origin of the finished products, if the tubes used to make the finished products, bear a visual and permanent indication of their Canadian origin.

Because the vast majority of tubes sold by Delhi Solac are directly sold to the ultimate purchaser, and the difficulty of marking such articles by paint stenciling, ink, or by application of adhesive labels, they seek to mark the country of origin of the tubes by tagging the bundles or containers. However, no evidence is presented to support the claims that the tubes would be very difficult to sell if they had to be marked by one of the methods indicated in 19 U.S.C. 1304(c)(1).

ISSUE:

Do the tubes with a highly polished surface described above have to be marked to indicate their Canadian origin by cast-in mold lettering, die-stamping, etching, engraving or continuous paint stenciling?

Is tagging the containers or bundles an acceptable method of marking the above described tubes?

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). C.A.D. 104 (1940).

Section 207 of the Trade and Tariff Act of 1984, (Pub. L. 98- 573), amended 19 U.S.C. 1304 to require, without exception, that all pipe, tube, and pipe fittings of iron or steel be marked to indicate the proper country of origin by means of die stamping, cast-in-mold lettering, etching or engraving. 19 U.S.C. 1304(c). However, after the enactment of Section 207, it was brought to the attention of Customs that certain pipe and pipe fittings of iron or steel cannot be marked by any of the methods prescribed by the section without rendering such articles unfit for the purpose for which they were intended. Customs solicited comments on this subject, and issued T.D. 86-15 published in the Federal Register on February 5, 1986, 51 FR 24, setting forth certain categories of articles which may be marked by alternative methods. For certain categories of articles, paint stencilling was the requisite method. For other categories, paint stencilling or tagging of the bundles or the containers was permitted. These categories included thin- walled pipes and fittings, small-diameter pipes and fittings, other fittings, line pipe, coated pipes, and spun iron pipe. These categories of articles are described in detail in T.D. 86-15. In addition, for ornamental pipes, tube, and fittings of all types, having a highly polished surface, T.D. 86-15 permitted marking by means of a durable tag or sticker securely affixed or marking the protective wrapper.

In 1986, Congress enacted Pub. L. 99-514 which amended 19 U.S.C. 1304(c) to authorize such alternative methods of marking if, because of the nature of an article, it is technically or commercially infeasible to mark by one of the four prescribed methods. 19 U.S.C. 1304(c)(2) provided that in such case, "the article may be marked "by an equally permanent method of marking such as paint stenciling or in the case of small diameter pipe tube and fittings, by tagging the containers or bundles."

In order to carry out Congressional intent, on July 22, 1992, Customs published, in the Federal Register, T.D. 92-70, which amended T.D. 86-15 by permitting the country of origin marking of pipes, tubes, and fittings by tagging of bundles or containers only with respect to small diameter pipes, tubes, and fittings. T.D. 92-70 specifically stated that pipe, tubes and fittings which could not be marked by a prescribed method must be marked by "paint stenciling or an equally permanent method." The notice indicated that Customs does not consider tagging the containers or bundles an equally permanent marking method as paint stencilling. Therefore, marking pipe, tube, and fittings by tagging the bundles or containers is acceptable only for small diameter product. In T.D. 86-15, Customs determined that small diameter product included fittings that have a nominal diameter of one-fourth inch or less and pipe with an inner diameter of 1.9 inches or less.

Customs recognized in T.D. 92-70 that there might be some cases where paint stenciling or an equally permanent method of marking could damage the product and render it unfit for the purpose it was intended. Customs indicated that in such instances it would consider alternative methods of marking on a case by case basis.

In section 207 of the NAFTA implementing legislation, (P.L. 103-182, December 8, 1993), Congress again amended section 19 U.S.C. 1304(c) by designating "continuous paint stenciling" as one of the specified methods of marking pipe, tube and pipe fitting of iron or steel. In other words, Congress added an additional method by which imported pipes and tubes of iron and steel could be marked with their country of origin, "continuous paint stenciling". In order to mark by paint stenciling, it was no longer necessary to show that it was commercially or technically infeasible to mark pipe or tube by the other methods listed in 19 U.S.C. 1304(c). By enacting this amendment to 19 U.S.C. 1304(c), Congress reaffirmed its decision that pipes must be permanently marked by only certain methods. Only in cases where it is technically or commercially infeasible to mark by one of the mentioned methods can an alternative be considered and that alternative must be equally as permanent.

In HRL 734806 (April 22, 1993), the importer presented evidence that demonstrated that paint stenciling of highly polished ornamental mechanical tube would seriously mar the product, make it unusable for the purpose for which it was intended and thus make the products unsalable. Customs, therefore, authorized alternative methods of marking. We pointed out that in T.D. 86-15, the prescribed alternative methods of marking for ornamental pipes, tubes and fittings of all types having highly polished surfaces, were to have each piece separately marked with a durable tag or sticker securely affixed to the surface of the article, or separately wrapped in a protective wrapping which clearly indicates the country of origin. We found that these methods would be the most permanent method of marking possible that would not cause damage to the products and were the best methods for marking the products.

Delhi-Solac has made representations through its attorney that in order to be commercially viable the exterior surface of the mechanical tubes in question must be smooth and free of chips, cracks or other imperfections. However, unlike the importer in HRL 734806, Delhi-Solac presented no evidence to substantiate its claims. In order for Customs to find that it is commercially infeasible to mark by all of the five specified methods mentioned 19 U.S.C. 1304(c), including continuous paint stenciling and that alternative methods of marking should be permitted, we must determine that marking the tubes by the methods specified in 19 U.S.C. 1304(c)(1) would seriously impair their exterior surface and their outer appearance and thus make them very difficult sell. Because evidence regarding whether it is commercially infeasible to mark the tube in accordance 19 U.S.C. 1304(c) has not been presented, the methods specified in T.D. 86-15, and again authorized in HRL 734806, for ornamental tubing which required unblemished exterior surfaces, will not be permitted in this case.

On the other hand, an exception can be made for the small diameter tube, that is tube with a nominal inner diameter of 1.9 inches or less, because 19 U.S.C. 1304(c)(2) specifically indicates that tagging of the containers or bundles is an acceptable alternative method of marking. However, in accordance with 19 U.S.C. 1304(c)(2) and T.D. 92-70, for larger size tubes, we find that the tagging of the bundles or containers is not equally as permanent and not an acceptable method of marking. Therefore, the larger tubes that Delhi-Solac's wants to import must be marked to indicate their country of origin by one of the five methods specified in 19 U.S.C. 1304(c). If Delhi-Solac eventually does present evidence which will establish that it would be commercially infeasible to mark by any of the five methods specified in 19 U.S.C. 1304(c), Customs will consider authorizing alternative methods of marking the tubes, such as those permitted in T.D. 86- 15 and HRL 734806. In order to receive such consideration however, a new ruling request should be made.

HOLDING:

Delhi-Solac has not established that it is commercially infeasible to mark the mechanical tubing that it imports by all five methods specified 19 U.S.C. 1304(c)(1), and therefore the tubes must be marked by one of these five methods. However for tubes with a nominal inner diameter of less than 1.9 inches, marking by tagging the bundles or containers is acceptable. For tubes of a larger size marking by tagging the containers or bundles is unacceptable.

Sincerely,

John Durant, Director

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