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HQ 735447





December 2, 1994

Mar-2-05 CO:R:C:S 735447 AT

CATEGORY: MARKING

Mr. Jack Flynn
Rudolph Miles & Sons, Inc.
4950 Gateway East
P.O. box 11057
El Paso, Texas 79983

RE: Country of origin marking requirements for packaged flashlight bulbs from
Mexico; Article 509; NAFTA Marking Rules; section 134.1(d) of the interim regulations; section 102.11(a) and (b) of the interim regulations; section 102.20 of the interim regulations; section 102.14 of the interim regulations

Dear Mr. Flynn:

This is in response to your letter dated December 1, 1993, on behalf of BRK Electronics ("BRK"), requesting a ruling on the country of origin marking requirements for flashlight bulbs imported from Mexico to be distributed and sold in the U.S. Sample flashlight bulbs and their retail containers were submitted for review. We regret the delay in responding.

FACTS:

According to your submission, BRK intends to import flashlight bulbs from Mexico into the U.S. for retail sale. The flashlight bulbs are manufactured in Japan, China and the U.S., and prior to importation, are repackaged into retail containers in Mexico. You state that approximately 75 percent of the bulbs will be produced in Japan, 10 percent in China and 15 percent in the U.S. The flashlight bulbs themselves are marked with their country of origin on the metal portion of the bulb in lettering approximately 3 points (a point is a unit of measurement approximately equal to 0.01384 inches or nearly 1/72 inches). The country of origin marking cannot be easily seen through the retail container.

You contend that because of anticipated fluctuations in supply from the various manufacturers in the three countries, and because of a commingling inventory system and other variables, it would be extremely difficult, if not impossible, to correctly and individually separate, segregate and mark the bulbs and the retail containers prior to packaging. For control purposes and cost effectiveness, a single, all-purpose retail package, including a single country of origin marking is preferred. Based upon these considerations, you have requested whether the proposed marking "Bulb Made in Japan, China or the United States" is an acceptable country of origin marking for the imported flashlight bulbs.

ISSUE:

What are the country of origin marking requirements for imported flashlight bulbs manufactured in Japan, China and the U.S., that are repackaged in Mexico into retail containers for sale in the U.S.?

LAW AND ANALYSIS:

The marking statute, section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) 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. Part 134, Customs Regulations (19 CFR Part 134) implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304.

The country of origin marking requirements for a "good of a NAFTA country" are also determined in accordance with Annex 311 of the North American Free Trade Agreement ("NAFTA"), as implemented by section 207 of the North American Free Trade Agreement Implementation Act (Pub. L. 103-182, 107 Stat 2057) (December 8, 1993) and the interim amendments to the Customs Regulations published as T.D. 94-4 (59 Fed. Reg. 109, January 3, 1994) with corrections (59 Fed. Reg. 5082, February 3, 1994) and T.D. 94-1 (59 Fed. Reg. 69460, December 30, 1993). These interim amendments took effect on January 1, 1994, to coincide with the effective date of the NAFTA. The Marking Rules used for determining whether a good is a good of a NAFTA country are contained in T.D. 94-4 (adding a new Part 102, Customs Regulations). The marking requirements of these goods are set forth in T.D. 94-1 (interim amendments to various provisions of Part 134, Customs Regulations). Section 134.1(b) of the interim regulations, 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 this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. (Emphasis added).

Section 134.1(j) of the interim regulations, provides that the "NAFTA Marking Rules" are the rules promulgated for purposes of determining whether a good is a good of a NAFTA country. Section 134.1(g) of the interim regulations, defines a "good of a NAFTA country" as an article for which the country of origin is Canada, Mexico or the United States as determined under the NAFTA Marking Rules. Section 134.45(a)(2) of the interim regulations, provides that a "good of a NAFTA country" may be marked with the name of the country of origin in English, French or Spanish.

In this case, flashlight bulbs which are manufactured in Japan, China and the U.S., are repackaged into retail containers in Mexico. Thus, in order to determine the appropriate marking requirements for the imported flashlight bulbs we must determine under the NAFTA Marking Rules the country of origin of the repackaged bulbs imported from Mexico.

Part 102 of the interim regulations, sets forth the "NAFTA Marking Rules" for purposes of determining whether a good is a good of a NAFTA country for marking purposes. Section 102.11 of the interim regulations, sets forth the required hierarchy for determining country of origin for marking purposes. Section 102.11(a) of the interim regulations states that "[t]he country of origin of a good is the country in which:

(1) The good is wholly obtained or produced; (2) The good is produced exclusively from domestic materials; or
(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in section 102.20 and satisfies any other applicable requirements of that section, and all other requirements of these rules are satisfied."

"Foreign Material" is defined in section 102.1(e) of the interim regulations as "a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced." Since the flashlight bulbs are produced in Japan, China and the U.S. (foreign as defined in section 102.1(e) of the interim regulations) the bulbs are neither wholly obtained/produced nor produced exclusively from domestic materials. Therefore, paragraphs (a)(1) and (a)(2) of section 102.11 cannot be used to determine the country of origin of the repackaged bulbs. Thus, paragraph (a)(3) of section 102.11 is the applicable rule that next must be applied to determine the origin of the finished article.

The flashlight bulbs are classified under subheading 8539.20, HTSUS. The repackaged flashlight bulbs are classified in the same subheading. The applicable change in tariff classification set out in section 102.20(p), Section XVI, Chapters 84 through 85, 8539.10-8539.40 of the interim regulations provides:

8539.10-8539.40 .... A change to subheading 8539.10 through 8539.40 from any other subheading, including another subheading within that group.

In this case, since the foreign flashlight bulbs (Japan, China and U.S.) are classified under subheading 8539.20 HTSUS both before and after the repacking operations in Mexico, they do not undergo the applicable change in tariff classification set out in section 102.20(p), and, as a result, section 102.11(b) of the hierarchial rules must be applied next to determine the country of origin of the repackaged flashlight bulbs.

Section 102.11(b) of the interim regulations provides that:

Except for a good that is specifically described in the Harmonized System as a set, or is classified as a set pursuant to General Rule of Interpretation 3, where the country of origin cannot be determined under paragraph (a), the country of origin of the good:

(1) Is the country or countries of origin of the single material that imparts the essential character of the good, or

(2) If the material that imparts the essential character of the good is fungible, has been commingled, and direct physical identification of the origin of the commingled material is not practical, the country or countries of origin may be determined on the basis of an inventory management method provided under the Appendix to part 181 of the
Customs Regulations.

Applying section 102.11(b)(1) to the facts of this case, we find that the single material that imparts the essential character of the repackaged flashlight bulbs is the foreign origin flashlight bulbs from Japan, China and the U.S. Therefore, pursuant to section 102.11(b)(1), the country of origin of the repackaged flashlight bulbs for marking purposes is Japan, China and the U.S. (We note that provided the conditions set forth in section 102.11(b)(2) are satisfied, BRK may use an inventory management method prescribed in (b)(2) to determine the country or countries of origin of the repackaged flashlight bulbs).

However, with respect to the U.S. origin repackaged flashlight bulbs, section 102.14 of the interim regulations 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 provisions of this part 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 or improved in condition. (Emphasis added).

"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, other than by means of those "minor processing" operations described in paragraphs (m)(5), (m)(6) and (m)(7) of this section". "Improved in Condition" is defined in section 102.1(i) as "the enhancement of the physical condition of a good as a result of production with respect to that good, other than by means of those "minor processing" operations described in paragraphs (m)(5), (m)(6) and (m)(7) of this section". The minor processing operations described in paragraphs (m)(5), (m)(6) and (m)(7) of section 102.1, include unloading, reloading or any other operation necessary to maintain the good in good condition; putting up in measured doses, packing, repacking, packaging, repackaging; and testing, marking, sorting or grading.

In this case, we find that the U.S. origin repackaged flashlight bulbs are not advanced in value or improved in condition as a result of the repackaging operation performed in Mexico since the repackaging operation is considered to be minor processing as defined in paragraphs (m)(5), (m)(6) and (m)(7) of section 102.1. Accordingly, pursuant to section 102.14, the country of origin of the U.S. origin repackaged flashlight bulbs is the U.S. for purposes of the country of origin marking requirements of 19 U.S.C. 1304.

Since the origin of the repackaged flashlight bulbs imported from Mexico can be either Japan, China or the U.S., or a combination of bulbs from all three countries depending upon the circumstances, the next question which must be addressed is whether it is acceptable to mark the retail container in which the flashlight bulbs are repackaged with the proposed phrase "Bulb Made in Japan, China or the United States". The proposed marking must reasonably indicate to the ultimate purchaser of the flashlight bulbs the origin(s) of such article in order for it to be an acceptable country of origin marking under 19 U.S.C. 1304. In C.S.D. 89-111, Customs considered whether a country of origin marking which designated two countries in the alternative (either/or) as the country of origin of the imported article was sufficient to satisfy the requirements of 19 U.S.C. 1304 and found that alternative marking was deficient for the reason that it did not clearly indicate the actual country of origin. See also, HQ 734011 (May 14, 1991) (alternative marking of brass hardware and plumbing kits, etc., stated in terms such as "one or more" or "and/or" does not generally afford ultimate purchasers the specific indication of the actual country of origin required by 19 U.S.C. 1304).

Similarly, in this case, we find that the proposed marking "Bulb Made in Japan, China or the United States" does not clearly indicate the actual country of origin of the flashlight bulbs to the ultimate purchaser as required by 19 U.S.C. 1304. Accordingly, the proposed marking "Bulb Made in Japan, China or the United States" is not an acceptable country of origin marking for the imported flashlight bulbs.

HOLDING:

Pursuant to section 102.11(b)(1) and 102 .14, of the interim regulations amendments to the Customs Regulations, the country of origin of the repackaged flashlight bulbs imported from Mexico is the country where the bulbs are manufactured -- either Japan, China or the U.S. Marking the repackaged containers with the proposed marking "Bulbs Made in Japan, China or the U.S." is not an acceptable country of origin marking for the imported flashlight bulbs.

A copy of this ruling letter should be attached to the entry documents filed at the time this merchandise is entered. If the documents have been filed without a copy, this ruling should be brought to the attention of the Customs officer handling the transaction.

Sincerely,

John Durant, Director

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