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HQ 735588





February 10, 1995

Mar-2-05 CO:R:C:S 735588 AT

CATEGORY: MARKING

District Director of Customs
Laredo, Texas 78044-3130

RE: Internal Advice Request No. 27/94; country of origin marking requirements for imported glass bottles to be filled in the U.S.; Article 509; NAFTA Marking Rules; usual containers; container marking; U.S. references; section 134.22(d)(2) of the interim regulations; section 102.14 of the interim regulations; 19 CFR 134.46

Dear Madam:

This is in response to your memorandum dated April 15, 1994, forwarding the February 23, 1993, Internal Advice Request of Brownstein, Zeidman and Lore on behalf of Vitro Packaging, Inc. ("Vitro") concerning the country of origin marking requirements for glass containers imported from Mexico to be filled in the U.S. with beverages (or other similar products). We regret the delay in responding.

FACTS:

Vitro imports glass containers, consisting of bottles or jars, from Mexico to be filled in the U.S. with beverages (or other similar products) in the two following situations. Vitro is the importer of record. However, in both situations, Vitro will not be the party actually filling the containers. Rather, Vitro receives orders for these containers from its customers in the U.S., who will be the ones actually filling these containers.

Situation 1. Vitro imports glass containers made in Mexico. The containers have labels permanently printed on them (by one of a number of methods) which state the name of the product with which it will be filled (e.g., Coca-Cola), and other information required by the U.S. Food and Drug Administration ("FDA") labeling requirements, including the name of the bottler (Vitro Packaging's customer) and its address (or at least the name of the city in the United States where the customers are located). The containers are filled by the bottler with beverages (or other similar products), and then shipped to wholesalers/retailers for distribution and sale. These containers are not intended to be reused.

Situation 2. Vitro ships U.S. manufactured glass containers to Mexico, where they will be labeled with an applied ceramic label ("ACL"). These ACLs will contain the name of the product and all other information required by the FDA, including the bottler's U.S. address (or at least the name of the U.S. city of the bottler). The containers will then be reimported by Vitro, sent to its U.S. customers, who will fill the containers and then ship them to wholesalers/retailers for distribution and sale. These containers are not intended to be reused.

You have requested a determination of the country of origin marking requirements for the imported glass containers imported into the U.S. to be filled with beverages under the two situations described above.

ISSUE:

What are the country of origin marking requirements for imported glass containers that are to be filled in the U.S. in the two situations described above?

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 for these goods are set forth in T.D. 94-1 (interim amendments to various provisions of Part 134, Customs Regulations).

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 U.S. as determined under the NAFTA Marking Rules.

Country or Origin of the Imported Glass Containers

In this case, glass containers manufactured in Mexico (situation 1), or U.S. manufactured glass containers exported to Mexico for labeling (situation 2), are imported from Mexico into the U.S. to be filled with beverages. Thus, in order to determine the appropriate marking requirements of the imported glass containers, we must first determine under the NAFTA Marking Rules the country of origin of the imported articles.

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."

In situation 1, the glass containers are manufactured in Mexico, thus we will assume for purposes of this case, that the requirements of section 102.11(a)(1),(2) or (3) are satisfied and the country of origin of the glass containers is, Mexico. Since, in situation 2, the glass containers are manufactured in the U.S. and exported to Mexico where they are labeled with an applied ceramic label and then returned to the U.S., the containers 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 glass containers. Thus, paragraph (a)(3) of section 102.11 is the applicable rule that next must be applied to determine the origin of the containers.

The glass containers are classified under heading 7010, HTSUS. The labeled glass containers returned to the U.S. are classified in the same subheading. The applicable change in tariff classification set out in section 102.20(m), Section XIII, Chapters 68 through 70, 7010-7018 of the interim regulations provides:

7010-7018 .... A change to 7010 through 7018 from any other heading, except from heading 7020; or

.... A change to heading 7010 through 7018 from heading 7020 if that change results in a substantial transformation.

In this case, since the U.S. glass containers are classified under heading 7010, HTSUS, both before and after the labeling procedure in Mexico, they do not undergo the applicable change in tariff classification set out in section 102.20(m), and, as a result, section 102.11(b) of the hierarchial rules must be applied next to determine the country of origin of the imported glass containers.

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.

Also, relevant to this determination is the rule of interpretation set forth under section 102.18(b)(2), which states that:

For purposes of applying section 102.11, only domestic and foreign materials (including self-produced materials) that are classified in a tariff provision from which a change in tariff classification is not allowed in the rule for the good set out in section 102.20 shall be taken into consideration in determining the parts or materials that determine the essential character of the good.

Applying sections 102.11(b)(1) and 102.18(b)(2) to the facts of this case, we find that the single material that imparts the essential character of the ceramic labeled glass containers is the glass container. Therefore, pursuant to section 102.11(b)(1), the country of origin of the glass containers imported into the U.S. for marking purposes, is the U.S.

However, 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 glass containers are not advanced in value or improved in condition as a result of the labeling operation performed in Mexico. The labeling operation is considered to be the equivalent of "marking", one of the minor processing operations identified as excluded from the definition of "advanced in value" or "improved in condition". Accordingly, section 102.14 is not applicable, and pursuant to section 102.11(b)(1),the country of origin of the labeled glass containers imported into the U.S., is the U.S. for purposes of the country of origin marking requirements of 19 U.S.C. 1304.

Marking Requirements of the Imported Glass Containers

I.
In situation 1, glass containers of Mexican origin are imported into the U.S. to be filled with beverages (or other similar products) by U.S. customers.

Section 134.22(d)(2), Customs Regulations (19 CFR 134.22(d)(2)), provides that:

A good of a NAFTA country which is a usual container, whether or not disposable and whether or not imported empty or filled, is not required to be marked with its own country of origin. If imported empty, the importer must be able to provide sufficient evidence to Customs at the time of importation that it will be used only as a usual container (that it will be filled with goods after importation and that such container is of a type in which these goods ordinarily reach the ultimate purchaser).

A usual container is defined in section 134.22(d)(1), (19 CFR 134.22(d)(1)), which provides, in part, that:

For purposes of this subpart, a usual container means the container in which a good will ordinarily reach its ultimate purchaser. Containers which are not included in the price of the good with which they are sold, or which impart the essential character to the whole, or which have significant uses, or lasting value independent of the contents, will generally not be regarded as usual containers.

Since the glass containers of Mexican origin are to be filled with beverages in the U.S. after importation, we find that the glass containers are considered to be the type of usual containers defined in 19 CFR 134.22(d)(1) regardless of whether the containers are returned by the consumer after the contents have been consumed. Thus, pursuant to 19 CFR 134.22(d)(2), the glass containers are excepted from being marked with their own country of origin. However, the outermost containers in which the glass containers are imported and reach the ultimate purchasers in the U.S., (the U.S. customers which fill the glass containers), are required to be marked with the country of origin--Mexico--of the glass containers. See, 19 CFR 134.24(c)(1).

Thus, the appearance of a U.S. reference on the glass container itself would not trigger the special marking requirements of 19 CFR 134.46 and 19 CFR 134.47, since the ultimate purchaser who receives the imported glass containers will not be misled by the U.S. references because the outermost container will be marked with the country of origin--Mexico--of the imported glass containers.

Nevertheless, under these circumstances, the existence of 134.46 and 134.47 type references on the outermost container of such articles, cause the special marking requirements of these sections to apply for the marking of the outermost containers which reach the ultimate purchasers in the U.S.

II.

In situation 2, the U.S. origin glass containers which are exported to Mexico for ceramic labeling and are then returned to the U.S. to be filled with beverages (or similar products) by U.S. customers, are determined to be of U.S. origin. Section 134.32(m), Customs Regulations (19 CFR 134.32(m)), provides that products of the U.S. exported and returned are excepted from country of origin marking requirements. Accordingly, since the country of origin of the ceramic labeled glass containers imported from Mexico is the U.S., the glass containers are excepted from country of origin marking requirements under section 134.32(m). Also, because the ceramic labeled glass containers are of U.S. origin, an ultimate purchaser of the glass containers would not be misled by any U.S. reference which appears on the glass containers or their outermost containers in which the articles are imported.

Please note that, if a phrase such as "Made in the U.S.A." is marked on the glass containers or the outermost containers in which the articles are imported, we advise you to contact the Federal Trade Commission (FTC), Division of Enforcement, 6th & Pennsylvania Avenue, NW, Washington D.C. 20508, since use of the phrase "Made in U.S.A." is under the FTC's jurisdiction.

HOLDING:

Assuming that the glass containers, in situation 1, imported from Mexico are goods of Mexico, a NAFTA country, and are to be used in the U.S. in the manner described above, the containers are considered to be "usual containers" as defined in 19 CFR 134.22(d)(1) and thus are excepted from country of origin marking pursuant to 19 CFR 134 22(d)(2), regardless of whether the containers are returned by the consumer after the contents have been consumed.

Pursuant to 19 CFR 134.24(c)(1), the outermost containers in which the glass containers are imported and reach the ultimate purchasers in the U.S., (the U.S. customers which fill the glass containers), are required to be marked with the country of origin--Mexico--of the glass containers. Accordingly, any instance where a U.S. reference appears on the glass container itself would not trigger the special marking requirements of 19 CFR 134.46 and 19 CFR 134.47, since the ultimate purchaser which receives the imported glass containers will not be misled by the U.S. references because the outermost container will be marked with the country of origin--Mexico--of the imported glass containers.

Nevertheless, under these circumstances, the existence of U.S. references on the outermost container of such articles, cause the special marking requirements of 19 CFR 134.46 and 19 CFR 134.47 to apply for the marking of the outermost containers which reach the ultimate purchasers in the U.S.

The country of origin of glass containers of U.S. origin exported to Mexico to be labeled with ACLs and returned to the U.S. to be used in the manner described in situation 2, is the U.S. Accordingly, pursuant to 19 CFR 134.32(m), the glass containers are excepted from country of origin marking requirements. Because the glass containers are of U.S. origin an ultimate purchaser of the glass containers would not be misled by any U.S. reference which appears on the glass containers or their outermost containers in which the articles are imported.

This decision should be mailed by your office to the internal advice requester no later than 60 days from the date of this letter. On that date the Office of Regulations and Rulings will take steps to make the 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.

Sincerely,

John Durant, Director

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