HQ 0735303 - Country of origin marking requirements for imported advertising inserts bound in the U.S. with domestic printed pages into trade journals; journals; substantial transformation; ultimate purchaser; 19 CFR 134.35; M.B.I. Merchandise v. United States - United States International Trade Commision Rulings

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HQ 735303

June 10, 1994

MAR 2-05 CO:R:C:V 735303 AT

CATEGORY: MARKING

Mr. Walter McMickle
Publisher
International Fiber Journal
2919 Spalding Drive
Atlanta, Georgia 30350-4628

RE: Country of origin marking requirements for imported advertising inserts bound in the U.S. with domestic printed pages into trade journals; journals; substantial transformation; ultimate purchaser; 19 CFR 134.35; M.B.I. Merchandise v. United States

Dear Mr. McMickle:

This is in response to your letters dated August 9, 1993 and May 19, 1994, concerning the country of origin marking requirements for imported advertising inserts. Samples of the advertisement inserts and a finished bound trade journal were submitted for review.

FACTS:

The imported inserts will be printed in either Germany, Switzerland or Italy. You state that the imported advertising inserts are to be bound by your company, McMickle Publications, Inc. ("McMickle Publications") in the U.S. with domestic printed pages into trade journals. You also state that an average trade journal is comprised of approximately 92 pages of which only 4 pages will consist of imported inserts and the remaining pages are domestically printed.

The sample trade journal "International Fiber Journal" is comprised of 92 pages including the front and back cover. Pages 17, 18, 27 and 28 consist of the imported advertisement inserts. The remaining pages consist of domestically printed material including editorials and other advertisement inserts. ISSUE:

What are the country of origin marking requirements for imported advertisement inserts which are to be incorporated and bound with domestically printed material in the U.S. into completed trade journals?

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

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and the 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 and that the manufacturer or processor will be considered the ultimate purchaser of the constituent materials. In such circumstances, the imported article is excepted from marking and only the outermost container is required to be marked (see section 134.35, Customs Regulations).

The first matter that must be analyzed is who is the ultimate purchaser of the imported advertisement inserts. 19 CFR 134.1(d)(1) states that if an imported article will be used in manufacture, the manufacturer may be the ultimate purchaser if he subjects the imported article to a process which results in a substantial transformation of the article. In M.B.I. Merchandise Industries, Inc. v. United States, Slip Op. 92-95 (June 26, 1992) the Court of International Trade ruled that Korean magnetic pages were substantially transformed in Taiwan and China as a result of their incorporation into the photo albums. The court concluded that the name, character, and use of the individual pages were changed when they were assembled with the binders to make the photo albums. It also found that the "pages are not the essence of the photo albums and the pages lost their identity when incorporated into the albums."

Similarly, in this case, we find that the imported advertisement insert's name, character and use are changed when they are incorporated and bound with domestic printed material into trade journals in the U.S. As in M.B.I. Merchandise, the imported inserts cannot be considered to be the essence of the bound article since only four inserts out of a 92 page trade journal consists of these imported inserts, the remaining pages are made up of domestic printed material. Also, the imported advertisement inserts loose their separate identity once they are bound and incorporated into the finished trade journal. Accordingly, the imported advertisement inserts are substantially transformed as a result of being bound and incorporated into the trade journals in the U.S., and McMickle Publications is the ultimate purchaser of the imported advertisement inserts. Only the outermost containers which reach McMickle Publications must be marked with the actual country of origin of the inserts. See, 19 CFR 134.35.

HOLDING:

Imported advertisement inserts which are to bound and incorporated by McMickle Publications into trade journals in the U.S. are substantially transformed as a result of the U.S. operations performed. Accordingly, pursuant to 19 CFR 134.35, McMickle Publications is the ultimate purchaser of the advertisement inserts and the imported articles are excepted from origin marking and only the outermost container in which the inserts are imported and reaches McMickle Publications must be marked with the country of origin of the advertisement inserts.

Sincerely,

John Durant, Director

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