HQ 735364 - Application for Further Review of Protest 0712-93-100807 concerning the assessment of marking duties on imported glass blood collecting tubes; containers; ultimate purchaser; repacking certification. - United States International Trade Commision Rulings

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HQ 735364

May 16, 1994

MAR 2-05 CO:R:C:V 735364 LR

CATEGORY: MARKING

Assistant District Director of Customs
Commercial Operations
Champlain, NY 12919

RE: Application for Further Review of Protest 0712-93-100807 concerning the assessment of marking duties on imported glass blood collecting tubes; containers; ultimate purchaser; repacking certification.

Dear Sir:

This is in response to your memorandum dated September 16, 1993, which forwarded the Application for Further Review of the above-referenced protest submitted by Tower Group International, Inc. We regret the delay in responding.

FACTS:

The imported articles which are the subject of the protest are glass tubes used by hospitals to collect blood. They are imported by the protestant in bulk packaging containing between 33,152 and 188,160 pieces per package depending upon the size. After importation, the tubes are sold to Teruma Medical Corporation ("Teruma"). Teruma washes and dries the tubes, adds a barrier- forming inert gel (to separate serum from red cells) and a clot activator disk (to facilitate rapid and uniform clotting), evacuates the tubes, inserts a stopper, labels them be with lot number and expiration date, and repacks them 100 tubes per inner trays, four inner trays per case. They are then sold to hospitals for their use. Customs assessed marking duties because protestant failed to provide a repacking certificate as required by 19 CFR 134.26.

Protestant claims that marking duties were improperly assessed based on its claim that the imported articles are containers discarded after initial use and thus excepted from marking. Protestant also claims that the processing done in the U.S. exempts the glass tubes from marking.

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 shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such a manner as to indicate to the ultimate purchaser in the United States the English name of the country of origin of the article. The purpose of the marking statute 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 304; C.A.D. (1940).

Part 134, Customs Regulations (19 CFR Part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. As specified in section 134.1, Customs Regulations (19 CFR 134.1), the ultimate purchaser is generally the last person in the U.S. who will receive the article in the form in which it was imported. 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. However, if the manufacturing process is merely a minor one which leaves the identity of the imported article intact, the consumer or user of the article, who obtains the article after the processing, will be regarded as the ultimate purchaser. See 19 CFR 134.1(d)(1) and (2). (The interim amendments to 19 CFR Part 134 applicable to NAFTA goods went into effect on January 1, 1994 and do not apply to the pending protest).

According to United States v. Gibson-Thomsen Company, Inc., 27 CCPA 267 (C.A.D.), a U.S. manufacturer is considered to be an ultimate purchaser of an imported article if as a result of its processing, the article is substantially transformed in that it loses its identity and becomes an integral part of a new article with a new name, character or use. The court determined that in such circumstances, the imported article is excepted from individual marking. Only the outermost container is required to be marked. See 19 CFR 134.35.

In this case, we consider the hospital that uses the blood collecting tubes to be the ultimate purchaser since it is "the last person in the U.S. who will receive the tubes in their imported form." Although the tubes are subjected to some processing prior to their receipt, such processing does not significantly alter the appearance or use of the glass tube. After processing, it remains completely visible and intact and its use as a blood collecting tube is not changed. In addition, no information was furnished which suggests that the U.S. processing is a complex operation. Based on the information provided and examination of the submitted sample, we would characterize it as minor processing which leaves the identity of the imported tubes intact. We do not consider the washing, drying, evacuation, and addition of the gel, filter, and stopper to constitute a substantial transformation. Accordingly, the hospital that uses the tubes, and not Teruma, is the ultimate purchaser.

Since the purpose of the marking statute is to indicate the country of origin to the ultimate purchaser in the United States, if an imported article will be repacked prior to receipt by the ultimate purchaser, the Customs regulations require the importer to file a repacking certification. Specifically, 19 CFR 134.26 provides that if the article is intended to be sold or transferred to a subsequent purchaser or repacker, the importer shall certify to the district director that the importer shall notify such purchaser or transferee, in writing, at the time of sale or transfer, that any repacking of the article must be properly marked. 19 CFR 134.26(e) provides that failure to comply with the certification requirements may subject the importer for the additional duty under 19 U.S.C. 1304 (i.e., marking duties).

In this case, the imported blood collecting tubes were to be repacked by Teruma before sale to the ultimate purchaser. Accordingly, the importer was required to comply with the above- mentioned certification requirements. The processing by Teruma did not relieve the importer of this requirement. Because the importer failed to file the necessary certification, the imported tubes are considered not legally marked and the assessment of marking duties was proper.

We disagree with protestant's claim that the imported tubes are disposable containers. As specified in 19 CFR 134.24, disposable containers or holders are the usual ordinary types of containers or holders, including cans, bottles, paper or polyethylene bags, paperboard boxes, and similar containers or holders which are ordinarily discarded after the contents have been consumed. We do not consider the blood collection tubes to be containers at all, but rather separate articles of commerce, namely laboratory glassware. We note that for tariff classification purposes, the tubes are considered laboratory glassware classifiable under heading 7017, Harmonized Tariff Schedule of the United States, and not glass containers for the conveyance or packing of goods in heading 7010 (See HRL 084710, July 31, 1989). Moreover, we do not consider glass blood collection tubes to be "similar containers" to those mentioned above. The fact that the glass tubes can only be used once does not mean that they are disposable containers within the meaning of 19 CFR 134.24.

However, marking duties would have been properly assessed even if the imported glass tubes were considered disposable containers. 19 CFR 134.24(b) provides that disposable containers or holders imported for distribution or sale are subject to treatment as imported articles in accordance with the Harmonized Tariff Schedule of the United States and shall be marked to indicate clearly the country of their own origin. The regulation further provides that when these containers are packed and sold in multiple units, this requirement ordinarily may be met by marking the outermost container which reaches the ultimate purchaser. Assuming in this case that the glass tubes are disposable containers, marking of the outermost containers in which they reach the hospitals is required. Because the blood collecting tubes were to be repacked and the containers in which they were imported would not reach the ultimate purchaser, the importer would have been required to file a repacking certification. Therefore, the importer was required to file a repacking certification whether or not the blood collecting tubes are considered disposable containers.

HOLDING:

Because the importer did not file the necessary repacking certification, the assessment of marking duties was proper. Therefore, you are directed to deny the protest. A copy of this decision should be attached to the Customs Form 19 to be sent to the protestant.

In accordance with Section 3A(11)(b) of Customs Directive 099 3550-065, dated August 4, 1993, Subject: Revised Protest Directive, this decision should be mailed by your office to the protestant no later than 60 days from the date of this letter. Any reliquidation of the entry in accordance with the decision must be accomplished prior to mailing of the decision. Sixty days from the date of the decision 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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