HQ 734782 - Country of origin marking requirements for imported metal housings and coverplates used in making hand pumps; castings; substantial transformation; false or misleading marking; ultimate purchaser; U.S. place references; 19 CFR 134.35; 19 CFR 134.36(b); 19 CFR 134.46 - United States International Trade Commision Rulings

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HQ 734782

December 2, 1993

MAR 2-05 CO:R:C:V 734782 AT

CATEGORY: MARKING

Mr. Grant Nutter
President
Great Plains Industries, Inc.
1711 S. Longfellow St.
Wichita, Kansas 67207-3196

RE: Country of origin marking requirements for imported metal housings and coverplates used in making hand pumps; castings; substantial transformation; false or misleading marking; ultimate purchaser; U.S. place references; 19 CFR 134.35; 19 CFR 134.36(b); 19 CFR 134.46

Dear Mr. Nutter:

This is in response to your letters dated August 11, 1992, and April 30, 1993, concerning the country of origin marking requirements for imported metal housings and coverplates used in making piston and rotary hand pumps. Samples of the housing and coverplate used for the piston pump, a completed piston pump, diagrams of the housing and coverplate used for the piston and rotary pump, cost information, and retail container for the piston pump were submitted with your letters.

FACTS:

Great Plains Industries, Inc. ("GPI") of Wichita, Kansas, intends to import metal housings and coverplates, which are made in Taiwan, into the United States. These metal housings and coverplates are used by GPI in the manufacture of piston and rotary hand pumps for fuel.

GPI's production process consists of combining and assembling, with the housings and coverplates, approximately 95 domestic components for the piston pump and 75 domestic components for the rotary pump (including bearings, PVC hoses, springs, o-rings, screws, tubes, washers, plugs, pins etc.) into the completed pumps. You state that assembly of the piston pump takes approximately 30 minutes for five workers to assemble and 33 minutes for five workers to assemble the rotary pumps. The cost of the imported housings and coverplates represents approximately 32 percent of the cost to manufacture the piston pump and 16 percent for the rotary pump. You indicate that it will be documented on every purchase order that the imported parts will be shipped in bulk and the master carton or crates will be stamped, "Made in Taiwan".

The housings are not marked with their country of origin "Taiwan". Also, no other markings appear on the housings. The coverplates are marked in raised letters with GPI's company address "Wichita, Kansas 67207" on the topside middle of the plate in lettering approximately 14 point (a point is approximately .01384 inch or 1/72 of an inch). The company's name "Great Plains Industries, Inc." and the logo "GPI" also appear on the topside middle of the plate along with the company's address. You state that reference of GPI's location "Wichita, Kansas 67207" is very beneficial to the end user for his service needs on the completed product.

You request that Customs approve the "Wichita, Kansas 67207" marking on the plates and no country of origin marking on the housings as acceptable markings for the imported articles. In the alternative, you suggest that marking the plates "Great Plains Industries, Inc., GPI (logo), with no location and the housings with no country of origin marking or other markings, and marking the outer containers only with "Made in Taiwan" would be acceptable markings for the imported articles and should be accepted by Customs.

ISSUE:

1. Can the imported metal housings which are to be used to make piston and rotary hand pumps in the United States be imported without being marked with their country of origin if their outer containers are marked "Made in Taiwan"?

2. Can the imported metal coverplates which are used to make piston and rotary hand pumps in the United States be marked with the name "Wichita, Kansas" on the plate when they are imported into the United States?

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. The case of U.S. v. Gibson-Thomsen Co., Inc., 27 C.C.P.A. 267 (C.A.D. 98) (1940), provides 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 that 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).

The first matter that must be analyzed is who is the ultimate purchaser of the imported metal housings and cover- plates. 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 731307 (February 23, 1990), Customs held that imported castings which were to used with U.S. components in the manufacture of gate values, butterfly valves and fire hydrants were excepted from individual marking pursuant to 19 CFR 134.35. Customs state that the housings were only one of many components involved in making the fire hydrants and that the assembly operation appeared to be complex. Similarly, in this case, the housings and coverplates are substantially transformed when they are used in the manufacture of piston and rotary hand pumps. As in HQ 731307, both the housing and coverplate are only one of many components involved in making the piston or rotary hand pump. Reviewing the submitted drawings and assembly instructions, it appears that the assembly is complex, requiring approximately 30 minutes for 5 assembly workers to assemble approximately 95 components to make a piston pump and 33 minutes for 5 assembly workers to assemble approximately 75 components to make a rotary pump. These metal housings, which are also known as castings, and coverplates, are substantially transformed when they are used to produce either piston or rotary hand pumps. Therefore, in accordance with 19 CFR 134.35, GPI is the ultimate purchaser of the upper barrels. Further, as provided under 19 CFR 134.35, marking the master cartons or crates "Made in Taiwan" is an acceptable country of origin marking for the housings provided they reach GPI in these marked containers.

However, because GPI intends to have a U.S. place reference, "Wichita, Kansas 67207" cast into the topside of the coverplates 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 (e.g. geographic references which imply that 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.

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 same reasoning applies to this case. Because it is substantially transforming the metal coverplates, GPI is the ultimate purchaser. Therefore, as in C.S.D. 93-15, the question that must be resolved is whether the U.S. reference, "Wichita, Kansas" would mislead GPI as to the origin of the imported merchandise. If GPI 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 cover plates can be excepted from individual country of origin marking.

Here, the submission indicates that GPI knows that the country of origin of the metal coverplates is Taiwan and it will not be misled by the U.S. place reference on the topside of the coverplate. This is evidenced by the fact that GPI has instructed the manufacturer in Taiwan to mark the cover plates with the company's address "Wichita, Kansas 67207". Also, GPI has authorized the foreign manufacturer to use the GPI logo. Furthermore, as you claim, the master cartons or crates in which the coverplates are imported in bulk, and which reach GPI, are marked "Made in Taiwan". Because GPI is the one requesting that the coverplates be imported with the company's address "Wichita, Kansas 67207" cast into them, there is no risk that they will be misled by the U.S. place reference. Based on these considerations, we find that the reference to "Wichita, Kansas" may in these circumstances appear on the imported metal coverplates, without the accompaniment of country of origin marking on the coverplates themselves.

We note that the sample retail container for the piston hand pump is marked with the words "Made in America" on the front and two side panels of the box. Accordingly, we advise you to contact the Federal Trade Commission, Division of Enforcement, 6th & Pennsylvania Avenue, NW, Washington D.C. 20508 before GPI undertakes to mark the retail container in that fashion, since use of the phrase "Made in America" is under the agency's jurisdiction.

HOLDING:

The imported metal housings and coverplates are substantially transformed when GPI uses them to make piston and rotary hand pumps. In accordance with 19 CFR 134.35, GPI is the ultimate purchaser of the housings and coverplates and the imported articles are excepted from marking, provided the district director is satisfied that GPI knows the country of origin of the imported articles as evidenced by proper marking of the containers in which the metal housings and coverplates are imported. Customs officers at the port of entry must be satisfied that these metal housings and coverplates will reach the GPI (U.S. manufacturer) in the original marked containers, and that the housings and coverplates will only be used in the manufacture of piston and rotary hand pumps as described above and not otherwise sold.

Because GPI is aware of the country of origin of the metal coverplates, and is not being misled by the U.S. reference, "Wichita, Kansas", 19 CFR 134.36(b) and 19 CFR 134.46 are not applicable. The metal cover plates may be imported into the United States with the "Wichita, Kansas" reference, and without additional country of origin marking appearing on the articles themselves, provided the conditions above are satisfied.

Sincerely,

John Durant, Director

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