HQ 558638 - Country of origin marking requirements for imported gauges incorporated into finished refrigerators, pumps and other products; gauges; substantial transformation; ultimate purchaser; U.S. place references; 19 U.S.C. 1304; 19 CFR 134.35; 19 CFR 134.36(b); 19 CFR 134.46 19 CFR 134.47; C.S.D. 93-15; HQ 733352 - United States International Trade Commision Rulings

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HQ 558638

November 18, 1994

MAR 2-05 CO:R:C:S 558638 AT

CATEGORY: MARKING

Mr. Will E. Leonard, Esq.
Mr. Alexei J. Cowett, Esq.
Stroock & Stroock & Lavan
1150 Seventeenth Street, N.W.
Washington, D.C. 20036-4652

RE: Country of origin marking requirements for imported gauges incorporated into finished refrigerators, pumps and other products; gauges; substantial transformation; ultimate purchaser; U.S. place references; 19 U.S.C. 1304; 19 CFR 134.35; 19 CFR 134.36(b); 19 CFR 134.46 19 CFR 134.47; C.S.D. 93-15; HQ 733352

Dear Sirs:

This is in response to your letter dated July 1, 1994, on behalf of Ametek, U.S. Gauge Division ("U.S. Gauge") concerning the country of origin marking requirements for imported gauges that are to be incorporated into finished refrigerators, pumps and other products in the U.S. Sample gauges and their packaging containers were submitted with your letters.

FACTS:

U.S. Gauge intends to import foreign manufactured gauges for sale to original equipment manufacturers ("OEMs") and to distributors for sale as replacement parts.

Gauges Sold to OEMs for Incorporation Into Finished Articles

You state that those gauges sold to OEMs are to be incorporated and used by the OEMs in the manufacture of finished refrigerators, pumps and other products in the U.S. For purposes of this ruling, we will assume that the gauges that are to be sold to OEMs are used in the manufacture of domestic refrigerators, pumps and other domestic products. The gauges will generally be imported in bulk shipping cartons marked with the country of origin of the gauges (the shipping carton is the outermost container). Unless opened for inspection upon entry, the shipping cartons are delivered sealed and unopened to U.S. Gauge's OEM customers.

The imported gauges that will be sold to OEMs are either marked with U.S. Gauge's registered trademarks "USG" or "USG maltese cross", or with the trade names and trademarks of third-party OEMs, or may also include a reference to the U.S. city, state and telephone number of the third-party OEM. Generally these markings will appear on the face of the gauge. You state that all the imported gauges which are marked with U.S. Gauge's trademarks will be accompanied by the statutory registered trademark designation (" "). A sample gauge marked with the "USG maltese cross" registered trademark was submitted for our review. The sample gauge has the "USG maltese cross" printed in black ink and white lettering with the letter "R" enclosed in a circle directly above the trademark.

Gauges Sold to Distributors for Sale as Replacement Parts

You also state that some of the imported gauges will be sold by OEMs and distributors in the U.S. as replacement parts and will not be used in the manufacture of completed refrigerators, pumps and other products. The gauges sold as replacement parts will either be packaged in a cardboard box marked with the country of origin or will be sold without the box. The gauges sold without the box will be individually marked by means of an adhesive sticker affixed to the top of the gauge incorporated into the product warning label. Samples were submitted for our review. Detailed descriptions of the sample marked boxes and adhesive stickers affixed to the gauges are discussed below.

ISSUES:

1. Are the imported gauges which are to be used and incorporated into finished refrigerators, pumps and other articles by OEMs in the U.S. excepted from being individually marked with their country of origin if their outer containers are properly marked?

2. Can the imported gauges which are to be used and incorporated into finished articles by OEMs in the U.S. be marked to indicate some other geographical location other than the actual country of origin of the gauge, such as the OEMs' U.S. address, when they are imported into the United States? 3. What are the country of origin marking requirements for the imported gauges which are to be sold as replacement parts in the U.S.?

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. In U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), the court held 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 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).

Imported Gauges Used by OEMs in the Manufacture of Finished Articles in the U.S.

The first matter that must be analyzed is who is the ultimate purchaser of the imported gauges which are to be used by OEMs in the manufacture of refrigerators, pumps and other products in the U.S. 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 HQ 733352 (May 3, 1991), Customs held that imported pressure gauges which were to be used by OEMs in the manufacture of commercial dishwashers, drilling equipment and refrigeration equipment in the U.S. were substantially transformed as a result of the U.S. processing, and therefore the OEMs were the ultimate purchasers of the imported gauges. Customs stated that the gauges are only one of many essential components involved in making the finished article and that the gauge itself is not the very essence of the completed equipment, nor does it impart the ultimate shape, form and size to the completed product. Similarly, in this case, the imported gauges are substantially transformed when they are used in the manufacture of refrigerators, pumps and other products. As in HQ 733352, the gauges are only one of many components involved in making the completed article (e.g, refrigerator). Therefore, in accordance with 19 CFR 134.35, the OEMs are the ultimate purchaser of the imported gauges. Further, as provided under 19 CFR 134.35, properly marking the outer container with the country of origin of the gauges is an acceptable country of origin marking for the imported gauges provided they reach the OEMs in these marked containers.

Imported Gauges that are Marked with U.S. references on the Dial

However, because U.S. Gauge intends to have the trademarks "USG" or "USG maltese cross" or the U.S. address of the OEM (a geographical location other than the actual origin of the gauge) printed on the dial of some of the gauges when they are imported into the U.S., it is necessary to consider the necessity for additional marking. 19 CFR 134.36(b) provides that an exception from marking shall not apply to any article or retail container bearing any word letters, names, or symbols described in section 19 CFR 134.46 or 19 CFR 134.47 (geographic references) which imply that the article was made or produced in a country other than actual country of origin. 19 CFR 134.46 requires that when the name of any city or locality in the U.S., other than the name of the city or locality in which the article was manufactured or produced, appears on an imported article or its container, there shall appear, legibly, and permanently, in close proximity to such words, letters or name and in at least a comparable size, the name of the country of origin preceded by "Made in," "Product of" or other words of similar meaning. The purpose of this requirement is to prevent the possibility of misleading or deceiving the ultimate purchaser of an article as to the actual origin of the imported good. In this case we find that the trademarks "USG" and "USG maltese cross" which appear on the gauges do not trigger the special marking requirements of 19 CFR 134.47. However, the U.S. locality references of the OEMs do trigger the special marking requirements of 19 CFR 134.46 and thus only such references will be considered for purposes of the application of the special marking requirements of 19 CFR 134.36(b).

Customs has recently determined that the special requirements of 19 CFR 134.36(b) should not be applied automatically to all imported articles or their containers which bear a non-origin geographical reference. In C.S.D. 93-15 (March 17, 1993) Customs held that imported upper barrels marked "Beaumont, Texas" which were substantially transformed in the U.S. by the ultimate purchaser (manufacturer of fire hydrants) were excepted from marking pursuant to 19 CFR 134.35, and the special requirements of 19 CFR 134.36(b) and 19 CFR 134.46 were not applicable since the ultimate purchaser would not be misled by the U.S. reference, "Beaumont, Texas. Customs stated that the marking law, 19 U.S.C. 1304, is intended to ensure that the ultimate purchaser is informed of the country of origin of the imported article. Applying this rationale, Customs found that because the upper barrels were substantially transformed by the ultimate purchaser in the U.S., the concern that the general public might be misinformed by the reference to "Beaumont, Texas" on the finished fire hydrant is misplaced and beyond the scope of 19 U.S.C. 1304.

This reasoning applies to this case. Because they are substantially transforming the gauges, the OEMs are the ultimate purchasers. Therefore, as in C.S.D. 93-15, the question that must be resolved is whether the U.S. references of the OEMs, such as the OEM's U.S. address, would mislead the OEM as to the actual origin of the imported merchandise. If the OEM, as the ultimate purchaser knows the country of origin and will not be misled by the U.S. place reference, then 19 CFR 134.36(b) would not be applicable and the imported gauges can be excepted from individual country of origin marking.

Your submission argues that the OEMs necessarily know the country of origin of the imported gauges and will not be misled by the U.S. address of the OEM printed on the dial of the gauge. This is evidenced by the fact that, for those gauges which are marked with the OEM's address, the OEMs have instructed the foreign manufacturer to mark the dial with the OEM's U.S. address. Also, the outermost cartons in which the gauges are imported in bulk, and which reach the OEMs, will be properly marked with the country of origin of the gauges. Based on these considerations, we find that the OEM's U.S. address may in these circumstances appear on the dial of the imported gauges, without the accompaniment of country of origin marking on the gauges themselves.

Country of Origin Marking for the Gauges Sold as Replacement Parts in the U.S.

Imported gauges which are not used in the manufacture of finished articles in the U.S., but rather are sold as replacement parts by OEMs and distributors are not substantially transformed in the U.S. Thus, the ultimate purchaser of the imported gauges that are sold as replacement parts is not the OEM or the distributor but rather is the person who purchases the gauge as a replacement part. Accordingly, the gauges are not excepted from marking pursuant to 19 CFR 134.35 and the gauge and/or its container must be marked in accordance with the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134.

1. Imported Gauges Sold with a Cardboard box

You indicate that some of the gauges sold as replacement parts will be packaged in individually sealed cardboard boxes which will be of two different styles. One is plain and white, marked only with the country of origin of the gauge on its flap along with product information. The other type of box contains the same country of origin and product description information on its flap, but also is printed with the trademark and trade names of Ametek, U.S. Gauge. Samples of both boxes were submitted for our review. The plain and white sample box has the words "Made in China" printed on the top flap of the box in black lettering approximately 6 point. Other product information, such as the part number, the rated PSI of the gauge, diameter of the gauge dial and type of socket threading also appears on the top flap above the country of origin marking. No other markings appear on the box. The other sample box is predominantly white, although red and blue colors also appear all over the box. Like the plain box, the words "Made in China" are printed on the top flap of the box in black lettering approximately 6 point. Other product information, such as the part number, the rated PSI of the gauge, diameter of the gauge dial and type of socket thread also appears on the top flap. The company's name "Ametek" appears on the bottom of all four sides of the box. Directly below the company's name "Ametek", on the front and bottom panel of the box, U.S. Gauge's trade name "U.S. Gauge Division" is printed in white lettering (over a blue background) approximately 8 points. A warning label is printed on one of the side panels indicating that "Misuse of product may cause explosion and personal injury. Read ANSI-B40.1 and apparatus installation/operating instructions before using". With respect to the plain and white sample box marked with the country of origin "Made in China" on the top flap of the box in the manner described above, we find that the country of origin marking is conspicuous, permanent and legible in satisfaction of the marking requirements of 19 U.S.C. 1304 and 19 CFR Part 134. The origin marking "Made in China" is easy to find and read and is located in a place where an ultimate purchaser would look and find the marking since other product information, such as the PSI of the gauge and diameter of the dial is printed on the same flap directly above the country of origin.

The other cardboard box (blue, white and red colored) has the trademark "U.S. Gauge" printed on the bottom of the front and pack panels of the box triggering the special marking requirements of 19 CFR 134.47.

Section 134.47, Customs Regulations (19 CFR 134.47), provides that when the name of a place other than the country of origin appears as part of a trademark or trade name or as part of a souvenir marking, the name of the actual country of origin must appear in close proximity to the place name "or in some other conspicuous location" (emphasis added). Whether the country of origin appears "in close proximity" or in some other conspicuous place, the name of the country of origin must be preceded by "Made in," "Product of," or words of similar meaning. In other words, if the question concerns a trademark, as is the case here, the country of origin marking need only meet the general standard of conspicuousness.

In this case, we find that the marking "Made in China" which appears on the top flap of the box, directly below other product information, is conspicuous, permanent and legible. Also, the country of origin "China" is preceded by the words "Made in". Accordingly, the country of origin marking on this box satisfies the marking requirements of 19 CFR 134.47.

2. Marking the Box in Lieu of Marking the Gauges Themselves

The remaining issue is whether it is acceptable to mark the two different styles of sealed cardboard boxes with the country of origin in lieu of marking the gauges themselves.

An article is excepted from marking under 19 U.S.C. 1304 (a)(3)(D) and section 134.32(d), Customs regulations (19 CFR 134.32(d)), if the marking of a container of such article will reasonably indicate the origin of such article. You indicate that the gauges which are sold with either of the two cardboard boxes will reach the ultimate purchaser in these sealed marked boxes. Accordingly, if Customs is satisfied that the gauges will remain in the sealed cardboard boxes until they reach the ultimate purchaser and if the boxes are marked in the manners described above, the individual gauges would be excepted from marking under this provision. Accordingly, marking the two different styles of boxes in lieu of the gauges themselves is an acceptable country of origin marking for the gauges that are to be sold as replacement parts and that are marked with the trademark "USG" or "USG maltese cross". However, this exception does not apply if the gauges themselves contain a reference to a geographic location other than the actual country of origin which triggers the special marking requirements discussed below. In those instances, the gauge must be individually marked with the country of origin, irrespective of whether it is sold with one of the two types of sealed cardboard boxes marked with the country of origin.

3. Gauges Marked With a Geographical Reference Other Than the Actual Country of Origin of the Gauge

You contend that some of the gauges, whether sold with or without one of the two mentioned boxes, will depict a reference to a geographic location other than the actual country of origin of the gauge in that the face of the gauge will be marked with the U.S. address of the OEM. You claim that the gauges which are sold without the cardboard boxes will be individually marked with its country of origin by means of an adhesive label affixed to the dial housing which will also display the product warning. A sample label affixed to a gauge was submitted for review. The sample label is affixed to the top portion of the gauge. The label states that "Misuse of product may cause explosion and personal injury. Read ANSI-B40.1 and apparatus installation /operating instructions before using. Do Not Use On Oxygen Service". Directly below the warning, the words "Made in China" are printed in black lettering approximately 3 points.

As previously stated, the imported gauges that will be marked with the U.S. address of the OEM or distributor, triggers the special marking requirements of 19 CFR 134.46. Accordingly, the actual country of origin of the gauge must appear "in close proximity" to the U.S. reference and in lettering of at least a comparable size. In this case, a label marked with the country of origin "Made in China" is affixed to the top of the gauge. Although we do not have a sample marked with a U.S. address with the label affixed to the gauge to review, we find that the label is conspicuous and satisfies the other requirements of 19 CFR 134.46 if the label appears in close proximity to the U.S. address and is in lettering of at least a comparable size. However, we note that, if the U.S. reference of the OEM is part of a trade name or trademark, 19 CFR 134.46 is not applicable-- rather, the 19 CFR 134.47 marking requirements must be satisfied. In other words, if the question concerns a trade name or trademark, the country of origin marking need only meet the general standard of conspicuousness. We find that marking thesegauges with the country of origin label, in the manner described above, satisfies the conspicuousness requirement of 19 CFR 134.47 and is an acceptable country of origin marking for the gauges marked with a U.S. reference which is part of a trade name or trademark.

HOLDING:

Imported gauges that are to be incorporated and used by OEMs in the manufacture of finished refrigerators, pumps and other products in the U.S. are substantially transformed as a result of the U.S. processing. Thus, the OEMs are the ultimate purchasers of the imported gauges and the gauges are excepted from individual country of origin marking provided the outermost containers are marked with the country of origin and the district director is satisfies that the gauges will reach the OEMs in these marked containers.

Because the OEMs as the ultimate purchasers, are aware of the country of origin of the imported gauges, and are not misled by the OEM's U.S. address for the reasons stated above, 19 CFR 134.36(b), 19 CFR 134.46 and 19 CFR 134.47 are not applicable. The imported gauges that are to be incorporated and used by the OEMs in the manufacture of refrigerators, pumps and other products in the U.S. may be imported into the United States with the OEMs' U.S. address references, and without additional country of origin marking appearing on the articles themselves, provided the above conditions are satisfied.

Imported gauges that are sold as replacement parts and packaged in cardboard boxes, marked with the country of origin as described above, are excepted from individual country of origin marking, provided the district director is satisfied that the gauges will remain in these marked boxes until they reach the ultimate purchasers of the gauges. This assumes that the gauges themselves are not marked with a U.S. reference.

Imported gauges that are sold as replacement parts and which are marked with a U.S. reference, whether or not packaged in boxes marked with the country of origin, must be individually marked to indicate their origin in accordance with the conditions set forth above.

Sincerely,

John Durant, Director

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