HQ 559627 - Country of Origin Marking; Down Comforters; Chinese Shell; Section 334 Uruguay Round Agreements Act; 19 CFR 134.46 - United States International Trade Commision Rulings

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HQ 559627

June 27, 1996

MAR-02 RR:TC:SM 559627 MLR

CATEGORY: MARKING

Sidney H. Kuflik, Esq.
Lamb & Lerch
233 Broadway, 51st Floor
New York, NY 10279

RE: Country of Origin Marking; Down Comforters; Chinese Shell; Section 334 Uruguay Round Agreements Act; 19 CFR 134.46

Dear Mr. Kuflik:

This is in reference to your letter dated January 2, 1996, requesting a ruling on behalf of American Down & Textile Company ("AD&T"), concerning the country of origin marking of down comforters. A meeting was held at the Office of Regulations and Rulings on May 9, 1996.

FACTS:

AD&T plans to import Chinese-origin down proof cotton shells, classifiable under subheading 6307.90, Harmonized Tariff Schedule of the United States (HTSUS), on and after July 1, 1996. It is stated that the special tightly woven cotton shell which contains the down feathers is not available in the U.S. In the U.S., AD&T will fill the shell with down which has been fully processed in the U.S. The filled comforter shell is then closed and quilted to complete the down comforter. It is stated that the only imported component is the shell.

AD&T proposes to mark the finished down comforters classifiable under subheading 9404.90, HTSUS: "Made in the U.S. of U.S. Components and Chinese Shell," "Made in the U.S. of U.S. and Imported Components," or "Comforter Filled, Sewn and Finished in the U.S. With Shell Made in China."

ISSUE:

Whether the finished down comforters may be marked "Made in the U.S. of U.S. Components and Chinese Shell," "Made in the U.S. of U.S. and Imported Components," or "Comforter Filled, Sewn and Finished in the U.S. With Shell Made in China."

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 imported in 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. Inc., 27 CCPA 297, 302, C.A.D. 104 (1940). Part 134, Customs Regulations (19 CFR Part 134), implements country of origin marking requirements and exceptions of 19 U.S.C. 1304.

You contend that section 334 is intended to apply to goods imported into the U.S., but that for goods which undergo post-importation processing in the U.S., the statutorily applicable Customs and Federal Trade Commission (FTC) marking requirements apply, including the Customs country of origin marking exceptions provided for under 19 U.S.C. 1304. Therefore, you allege that the imported shells are entitled to an exception from marking based upon their "substantial transformation" into down comforters by their ultimate purchaser, AD&T. Furthermore, you claim that the identification of the imported origin of the shell is in compliance with applicable FTC requirements, such that the markings "Made in the U.S. of U.S. Components and Chinese Shell," or "Made in the U.S. of U.S. and Imported Components" are acceptable. As support, you cite New York Ruling Letter (NYRL) 899334 dated July 22, 1994, where imported shells were deemed to be substantially transformed when they were converted into down comforters in the U.S. Accordingly, you claim that the imported shells are eligible for a marking exception under 19 U.S.C. 1304(h), which is applicable when:
an ultimate purchaser, by reason of the character of such article or by reason of the circumstances of its importation, must necessarily know the country of origin of such article even though it is not marked to indicate its origin.

In this case, you claim that it is not an expressed or impled rationale underlying the enactment of section 334 that the country of origin marking standards of 19 U.S.C. 1304 be imposed on imports that are substantially transformed in the U.S. You urge that once the country of origin is established for the shells that are imported into the U.S., the marking exemption under 19 U.S.C. 1304 will apply.

As cited above, the marking statute specifically states that "every article of foreign origin (or its container) imported into the U.S. ... shall be marked ... in such a manner as to indicate to the ultimate purchaser in the U.S. ... the country of origin of the article." (Emphasis added). In this case, the article imported into the U.S. is the shell, and it is of foreign origin. In order to determine whether the imported shell, after it has been used to make a down comforter, remains an article of foreign origin for purposes of the marking requirements under 19 U.S.C. 1304, Customs must apply the statutory rules of origin set forth in section 334 of the Uruguay Round Agreements Act (codified at 19 U.S.C. 3592), which are applicable for the determination of the country of origin of all textile and apparel products to be entered, or withdrawn from warehouse, for consumption, on and after July 1, 1996. Thus, Customs regulations set forth in paragraph (c)(1) through (5) of section 102.21, which implement section 334 also will be used to determine the country of origin for marking purposes. See 60 FR 46188 (September 5, 1995).

In Headquarters Ruling Letter (HRL) 559625 dated January 19, 1996, the marking of down comforters produced in the U.S. from imported Chinese origin comforter shells was considered. Without reiterating the law and rationale applied in HRL 559625, it was held that since section 334 applies "for purposes of the customs laws" and 19 U.S.C. 1304 is a Customs law, section 334 must be applied for purposes of determining the country of origin marking requirements under 19 U.S.C. 1304 for the down comforters finished in the U.S. The rule set forth in 19 CFR 102.21 for subheading 9404.90 was applied, which states that:
the country of origin of a good classifiable under subheading 9404.90 is the country, territory, or insular possession in which the fabric comprising the good was formed by a fabric-making process.

Accordingly, the country of origin of the finished down comforters was China based upon the Chinese-origin fabric used to make the shell in China. As such, we also find that the imported shells in this case remain of Chinese origin when combined with down feathers and sewn in the U.S., and, therefore, may not be marked "Made in the U.S. of U.S. Components and Chinese Shell" or "Made in the U.S. of U.S. and Imported Components," as these markings would not comply with 19 CFR 134.46.

Section 134.46, Customs Regulations (19 CFR 134.46), requires the name of the country of origin to appear legibly, permanently, in close proximity, and in at least comparable size, preceded by the additional words "Made in," "Product of," or other words of similar meaning to the name, when any city or locality in the U.S. or the name of any foreign country or locality which is not the country of origin appears on the imported article or its container. The purpose of this section is to prevent the possibility of misleading or deceiving the ultimate purchaser. Accordingly, since the shell's country of origin remains China, for purposes of 19 U.S.C. 1304, the article which reaches the ultimate purchaser must indicate that the shell is from China. If AD&T wishes to make reference on the shell to a locality which is not its country of origin, the name "China" must be preceded by "Made in," "Product of," or words of similar meaning pursuant to 19 CFR 134.46. However, to the extent that AD&T wishes to use any added references on the finished comforters, which include a "Made in USA" claim, this is a matter within the jurisdiction of the FTC.

In regard to the marking "Comforter Filled, Sewn and Finished in the U.S. With Shell Made in China," we find that the requirements of 19 CFR 134.46 are satisfied. Since, the country of origin of the shell will be preceded by "Made in," and the marking will indicate to the ultimate purchaser that the article imported into the U.S. is of foreign origin, we find that the marking "Comforter Filled, Sewn and Finished in the U.S. With Shell Made in China" on the finished down comforter will be acceptable. Furthermore, we note that unlike the marking, "Comforter Assembled in U.S. From Fabric Made in China," which was rejected in HRL 559625, in this case, specific reference is made to the imported article, the shell, as required by 19 U.S.C. 1304. Additionally, upon importation, it will be sufficient to only mark "China" on the container in which the shells are imported, provided the certification requirements of 19 CFR 134.26 are satisfied. Section 134.26, Customs Regulations (19 CFR 134.26), as amended by T.D. 95-78, provides in pertinent part that:

If an imported article subject to these requirements is intended to be repackaged in retail containers (e.g. blister packs) after its release from Customs custody, or if the port director having custody of the article, has reason to believe that such article will be repacked after its release, the importer shall certify to the port director that: (1) If the importer does the repacking, he shall not obscure or conceal the country of origin marking appearing on the article, or else the new container shall be marked to indicate the country of origin of the article in accordance with the requirements of this part . . . .

HOLDING:

Based upon the information submitted and pursuant to 19 U.S.C. 3592(b)(2)(A) and 19 CFR 102.21(c)(2), we find that the country of origin of the imported shell remains China after the additional operations performed in the U.S. When combined with other articles to make the down comforters, the shells may be marked, "Comforter Filled, Sewn and Finished in the U.S. With Shell Made in China." However, upon importation, it will be sufficient only to mark "China" on the container in which the shells are imported, provided the requirements of 19 CFR 134.26 are satisfied. The markings "Made in the U.S. of U.S. Components and Chinese Shell" and "Made in the U.S. of U.S. and Imported Components" are not acceptable for Customs purposes as they do not satisfy the requirements of 19 CFR 134.46.

Due to the changeable nature of the statistical annotation (the ninth and tenth digits of the classification) and the restraint (quota/visa) categories, you should contact your local Customs office prior to importation of this merchandise to determine the current status of any import restraints or requirements.

The holding set forth above applies only to the specific factual situation and merchandise identified in the ruling request. This position is clearly set forth in section 177.9(b)(1), Customs Regulations {19 CFR 177.9(b)(1)}. This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, either directly, by reference, or by implication, is accurate and complete in every material respect. Should it be subsequently determined that the information furnished is not complete and does not comply with 19 CFR 177.9(b)(1), the ruling will be subject to modification or revocation. In the event there is a change in the facts previously furnished, this may affect the determination of country of origin. Accordingly, it is recommended that a new ruling request be submitted in accordance with section 177.2, Customs Regulations (19 CFR 177.2).

A copy of this ruling letter should be attached to the entry documents filed at the time the goods are 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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