HQ 560024 - Reconsideration of NYRL 817080; country of origin marking for semiconductors; container; repackaging; size; 19 CFR 134.26 - United States International Trade Commision Rulings

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HQ 560024

December 20, 1996

MAR-2-05 RR:TC:SM 560024 MLR

CATEGORY: MARKING

Mr. Ronald E. Edelstein
Texas Instruments
P.O. Box 655303
Mailstop 8205
Dallas, Texas 75265

RE: Reconsideration of NYRL 817080; country of origin marking for semiconductors; container; repackaging; size; 19 CFR 134.26

Dear Mr. Edelstein:

This is in reference to your letter of February 6, 1996, requesting clarification of New York Ruling Letter (NYRL) 817080 dated December 27, 1995, concerning the country of origin marking requirements for semiconductor devices and their containers. Pursuant to section 625, Tariff Act of 1930 (19 U.S.C. 1625(c)(1)), as amended by section 623 of Title VI (Customs Modernization) of the North American Free Trade Agreement Implementation Act, Pub. L. 103-182, 107 Stat. 2057, 2186 (1993) (hereinafter "section 625"), notice of the proposed modification of NYRL 817080 was published November 13, 1996, in the Customs Bulletin, Volume 30, Number 45/46.

FACTS:

NYRL 817080 is herein incorporated by reference. However, the pertinent facts are as follows: Texas Instruments states that it imports semiconductor devices (hereinafter "devices") packaged in plastic sleeves which hold each semiconductor chip in place, which in turn are packaged in a cardboard carton marked with the devices' country of origin. Either Texas Instruments will use the devices in the further manufacture of its own products, the devices will be sold to other manufacturers who use them in further manufacturing, or the devices will be sold to unrelated distributors who may resell them in the original import containers or in smaller quantities. In the third scenario, Texas Instruments states that it will ensure that the immediate container is properly marked before shipment to the distributors, and that it will notify the distributors of their obligation to further notify their customers of the origin of the devices if they repackage them before resale.

In NYRL 817080, it was determined that the articles repackaged after release from Customs custody may be excepted from individual marking under 19 CFR 134.32(d) subject to the port director's discretion, as provided in 19 CFR 134.34. You state that it will not be feasible to rely on the port director's discretion each time the devices are entered.

Additionally, Texas Instruments seeks a determination as to when devices are incapable of being marked, so that only the container in which the devices are packaged must be marked in order to satisfy the marking requirements. Texas Instrument submits that a device which is smaller than 12 millimeters (mm) in its longest dimension is incapable of being marked as any marking would be too small to be legible.

ISSUES:

I. Whether the procedures of 19 CFR 134.26 may be used for the semiconductor devices imported in properly marked containers which will subsequently be sold to unrelated distributors who may resell them in their original import containers or in smaller quantities.

II. Whether a device smaller than 12 mm in its longest dimension is incapable of being marked, and whether labeling the outside container in which the devices are imported will satisfy the marking requirements of 19 U.S.C. 1304.

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. 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 the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.32(d), Customs Regulations {19 CFR 134.32(d)}, excepts an article from marking if its container will reasonably indicate the origin of the article.

I. Repackaging

In T.D. 75-187, Customs stated that semiconductor devices are excepted from individual marking if their containers are properly marked and Customs officials at the port of entry are satisfied that the devices will reach the ultimate purchaser in the marked containers. In T.D. 75-187, it was stated that the ultimate purchaser of the devices, within the meaning of 19 U.S.C. 1304(a), may be a manufacturer who uses the devices in the manufacture of new and different articles such as television sets, radios, or other electronic equipment, or a hobbyist, experimenter, or repairman who purchases the devices in their original imported condition for use in his hobby or profession. Accordingly, in the first and second scenarios where Texas Instruments or another manufacturer uses the devices to produce other products, if the devices reach Texas Instruments or the other manufacturer in a properly marked container, the requirements of 19 U.S.C. 1304 will be satisfied.

In T.D. 75-187, it was also stated that semiconductor devices may be excepted from individual marking in appropriate cases under the provisions of 19 CFR 134.34, if the devices are imported in bulk, and repackaged in containers in the U.S. that are marked to indicate the country of origin to an ultimate purchaser. It was noted that permitting the country of origin marking to appear on the containers in which the devices were repackaged in the U.S., was conditioned on a requirement that the correct country of origin of each of the devices was to appear on the package. Accordingly, we note that T.D. 75-187 appears to have addressed containers of devices imported in bulk which were not marked or not marked with the exact country of origin of the devices, so that the procedures of 19 CFR 134.34 had to be followed. When neither the imported article nor its container is properly marked, and the container in which an article is to be repackaged after release from Customs custody will be marked with the article's proper country of origin, the provisions of 19 CFR 134.34 should be used.

While it is not necessarily erroneous to use the procedures of 19 CFR 134.34 for the repacking of the semiconductor devices, the procedures of 19 CFR 134.26 may be applied to articles properly marked at the time of importation that will be repackaged in retail containers after their release from Customs custody. In Headquarters Ruling Letter (HRL) 559244 dated March 12, 1996, Customs stated that it is clear that 19 CFR 134.26 "covers situations where the containers and not the articles are marked (as an exception to the marking requirements) and the articles will be repacked." This is contrasted with C.S.D. 92-25 (November 20, 1991), where Customs stated that the certification procedures of 19 CFR 134.26 for the marking of repackaged articles may not be used by an importer to satisfy his obligations if the goods are not correctly marked or excepted from marking at the time of importation, but rather that the procedures of 19 CFR 134.34 shall be used.

Accordingly, the certification requirements provided at 19 CFR 134.26 will apply to those articles marked with their country of origin, or to those articles which are imported in properly marked containers. See HRL 559671 dated June 7, 1996. While Texas Instruments has indicated that the imported devices are not individually marked, but rather are imported in properly marked containers (cardboard cartons), the requirements of 19 CFR 134.26 may be used. See also HRL 559252 dated October 5, 1995.

Section 134.26, Customs Regulations (19 CFR 134.26), provides in pertinent part that:

If an imported article subject to these requirements is intended to be repacked in retail containers ... after its release from Customs custody, or if the port director having custody of the article, has reason to believe 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; or (2) if the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall notify such purchaser or transferee, in writing, at the time of sale or transfer, that any repacking of the article must conform to these requirements. The importer, or his authorized agent, shall sign the following statement.

Therefore, this procedure may be used if the container in which the devices are packed is properly marked with the device's country of origin, and if Texas Instruments notifies the U.S. distributor that the devices intended for resale must be properly marked after any subsequent repackaging. Please note that 19 CFR 134.26(a) also provides that the certification statement may be submitted in blanket form to cover all importations of a particular product for a given period.

II. Incapable of Being Marked

Additionally, Texas Instruments seeks a determination regarding when devices may be considered incapable of being marked so that the marking requirements may be satisfied by marking the devices' container. First, please note that the marking requirements may be satisfied by marking the outside container in which the devices are packaged, whether or not they are themselves capable of being marked, so long as the container indicates to the ultimate purchaser the country of origin of the devices.

However, in regard to the specific example whether a device smaller than 12 mm in its longest dimension is incapable of being marked as any marking would be too small to be legible, we note that no single factor is considered conclusive in determining whether a marking meets the conspicuous requirement of 19 CFR 134.41 and 19 U.S.C. 1304. Customs has stated that the concept of conspicuousness embraces two concerns: (1) visibility, which addresses the requirement that the marking must be able to be found easily, and (2) legibility, which addresses the requirement that the marking must be able to be read without strain.

In HRL 734191 dated August 8, 1991, semiconductors measuring approximately 1 3/8 inches in length and « inches in width, were marked on the bottom corner of the ejector pin area with the word "Philippines" in lettering approximately 2 points (a point is a unit of type measurement equal to 0.01384 inch or nearly 1/72 inch, and all type sizes are multiples of this unit), and in the same color as the article. It was determined that the marking was neither easy to find nor easy to read. It was also noted that the semiconductor could easily accommodate a larger conspicuous and legible country of origin marking. In HRL 733965 dated June 3, 1991, Customs ruled that a small paper label affixed to a plastic watch container marked with the country of origin in lettering approximately 3 points was not conspicuous since the small print was not easy to read.

In HRL 734639 dated August 13, 1992, it was stated that it is a combination of factors which determines whether the marking is acceptable. In some cases, a marking may be unacceptable even when it is in a large size because the letters are too hard to read or it is in a location where it would not be easily noticed. In other cases, even if the marking is small, the use of contrasting colors, which make the letters particularly stand out, could compensate to make the marking acceptable. Therefore, while we cannot issue you a definite ruling for each instance when a device is incapable of being marked, it is our opinion that for a device of no more than 12 mm in its longest dimension, a marking smaller than 5 points in non-contrasting lettering would be illegible. See HRL 735371 dated October 19, 1993, (marking on components of an "Oodles" toy craft kit had to appear in a conspicuous location in lettering of at least five points); and HRL 734639 dated August 13, 1992, (the suggested marking on a small plastic container known as a "SUBMARIN" was at least five point type).

HOLDING:

Based on the facts presented, the devices may be excepted from marking pursuant to 19 U.S.C. 1304(a)(3)(D) and 19 CFR 134.32(d) and only the outer container in which the devices are packed must be marked with the country of origin of the devices. Furthermore, the devices may be repackaged after their release from Customs custody if the requirements of 19 CFR 134.26 are satisfied. The requirements of 19 CFR 134.26 will be satisfied if the devices are imported in properly marked containers, and Texas Instruments informs the U.S. distributor that if the devices are repackaged, they must be repackaged in properly marked containers. Additionally, marking a device measuring no more than 12 mm in its longest dimension with less than five point type size in non-contrasting lettering will be illegible.

NYRL 817080 is hereby modified. In accordance with section 625, this ruling will become effective 60 days after its publication in the Customs Bulletin. Publication of rulings or decisions pursuant to section 625 does not constitute a change in practice of position in accordance with section 177.10(c)(1), Customs Regulations (19 CFR

Sincerely,

John Durant, Director

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