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HQ 735401

April 5, 1994

MAR-2-05 CO:R:C:V 735401 RC

CATEGORY: MARKING

District Director of Customs
Portland, Maine

RE: Country of origin marking for promotional items, conspicuous, give-aways, ultimate purchaser; 19 CFR 134.41; HQ 733940

Dear Sir:

This is in response to your memorandum of October 15, 1993, requesting Internal Advice regarding the country of origin marking requirements for novelty promotional items. A sample shell was submitted. Please furnish a copy of this decision to the importer.

FACTS:

Falcon Rule imports miniature wooden baseball bats manufactured in Taiwan. In the U.S., imported bats will be combined as shells with pen or key ring components of U.S. origin. Falcon Rule will distribute the finished products to various companies who in turn will give them away to their clients or customers for promotional purposes. Any promotional message will be imprinted upon the bats in the U.S.

ISSUE:

Whether the imported shells undergo a substantial transformation in the U.S. and are excepted from marking under 19 U.S.C. 1304.

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.

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Under 19 CFR 134.1(d), the ultimate purchaser is defined generally as the last person in the U.S., who will receive the article in the form in which it was imported. With respect to promotional items, 19 CFR 134.1(d)(2) indicates that if the imported article is distributed as a gift the recipient is the "ultimate purchaser."

The country of origin for marking purposes is defined at section 19 CFR 134.1(b), to mean 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 Part 134. A substantial transformation is effected, under 19 CFR 134.35, when a manufacturer or processor in the U.S. converts or combines an imported article into a new and different article resulting in a change in name, character, or use. As such, the U.S. manufacturer or processor is considered the "ultimate purchaser" of the imported article and the article shall be excepted from marking.

In HQ 734053, (copy enclosed) Customs ruled that the domestic assembly of foreign-manufactured pen components, a barrel, plug, cap, and conical tip, did not effect a substantial transformation. Likewise, Customs has ruled that the promotional painting or printing of the shells does not effect a substantial transformation. See HQ 734202 (November 12, 1991)(copy enclosed). Because the pens or key rings are given away by businesses for promotional or advertising purposes, under the Customs regulations, the recipient of the pens is considered the ultimate purchaser. Therefore, the finished pens and key rings must be marked permanently, legibly and conspicuously, to indicate their country of origin to their recipient. See Pabrini, Inc. v. United States, 630 F.Supp 360 (C.I.T., 1986); HQ 734053 (September 20, 1991) and HQ 734202 (November 12, 1991).

HOLDING:

The foreign-manufactured bats do not undergo a substantial transformation in the U.S. by being further processed in the U.S. In order to satisfy 19 U.S.C. 1304, the pens must be properly marked to indicate the country of origin to the person who receives them as a promotional item. The Office of Regulations and Rulings will take steps to make this 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 60 days from the date of this decision.

Sincerely,

John Durant, Director

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